Dr Rita McGrath: Using culture to go beyond hierarchy
Dr Rita McGrath is a globally recognised expert on strategy, innovation, and growth with an emphasis on corporate entrepreneurship. Ahead of her keynote talk at the HRD Summit UK, she discusses why hierarchy no longer works in fast-paced environments, as well as talking about the importance of inflection points.
HRD Connect speaks exclusively with DrRita McGrath, our keynote speaker at this year’s HRD Summit UK 2019. Rita discusses the need to go beyond hierarchy in organisations, and how the shift to an entrepreneurial mindset is required as inflection points have more severe effects and happen more rapidly.
What is your opinion about hierarchies within an organisation?
In the past, Taylorist theories of efficiency dominated how we designed organisations. Managers would segment their employees into functional units, with each function knowing what they were working on, but not much about what others were doing. This created silos and blind spots, as valuable information didn’t transfer across units. This theory also suggested that decisions be made at the “top” of the organisation, because that is where all the information came together. What with today’s fast moving nature, leaders need visibility into what is going on at the ‘edges’ of the organisation, meaning where technology, customers and ecosystem partners are interacting with the organisation. Increasingly, we’re seeing that traditional hierarchy is dissolving. Increasingly, rather than a command and control form of leadership, what we’re seeing is that leaders seek to have people generate a wide variety of options from which they can then choose.
“What with today’s fast-moving nature, the kind of information that you need to make good decisions can only be found at the edges of the organisations”
Can you give a brief summary of what you’ll be discussing at HRD Summit UK?
I’ll be focusing on new forms of leadership and how this relates to strategic inflection points. One of the more important ideas is how to position your organisation to spot the early warnings of change. There’s an interesting phrase that was coined a few years ago called ‘crescive leadership’. This is the whole notion of shaping the options of an organisation that it explores. The theme of the conference ‘the conscious organisation’ is very consistent with the themes of my new book called, ‘Seeing around corners; spotting inflection points in business before they happen’.
What do you think are the biggest misconceptions around organisational structure?
That formal structures are the dominant factor, it’s the structure among individuals that will make the difference.
What is fundamentally wrong with leadership currently?
The notion that the organisation revolves around the leader. Even today, we see people that value their own self-worth in accordance with where they are in the hierarchy. Yes, we need formal authority, but one of the biggest issues is that very often the best problem solvers are the people closest to the issue regardless of their position in the hierarchy. We don’t act on that understanding as much as we need to.
What behaviour traits should leaders be role modelling?
Curiosity, empathy, humility, the willingness to be somewhat vulnerable. They all contribute to the creation of psychological safety which an increasing amount of research suggests is highly related to an organisation’s ability to make the right decisions, to be creative and making these decisions going forward.
“An inflection point is something that occurs which changes the fundamental assumptions of which a business is based”
Can you clarify what you mean by inflection points?
An inflection point is something that occurs which changes the fundamental assumptions on which a business is based, so more specifically, it changes the constraints that drive the key metrics in business. It is very easy for people who have spent their whole careers with one set of assumptions to miss an inflection because it is outside their frame of reference.
The behaviour traits that you listed (curiosity, empathy, humility) how can these become habitual within a business?
This starts at the top, where senior people have a disproportionate influence. Their behaviour sets the standard for the rest of the organisations. They have to live it, and if they’re living it then everyone else gets the message that it’s important. That is in their own behaviour and how they treat people, in how they expect people to be treated.
Can you think of any organisations who adopt this culture?
One of the most significant changes I’ve seen is what’s happening at Microsoft. Satya Nadella, their CEO, has made empathy a cornerstone of his leadership – a big change from the traditional, very competitive, culture at the company. He has said that empathy was the only way to gain customer love, and usage, which are leading indicators of future success. Things like profit and revenue, those are lagging indicators. Those are the result of something that you did in the past. If you want to look to a leading indicator you have to look at things like utilisation, customer love. Microsoft was famous for being internally combative, so that’s a remarkable turnaround.
“The very phrase of human resources implies that a human resource is like electricity where it just does what it’s told. Where in reality, humans are incredibly ingenious, we can harness that ingenuity”
What would you like to see change in this field in the coming years?
The first thing we have to get our heads around is a different way of thinking of unleashing individual ingenuity. This notion that humans are really just badly designed robots who should come to work and do one thing and do exactly what they’re told is such a waste of talent and human potential. The very phrase “human resources” implies that a human resource is like electricity where it just does what it’s told. Where in reality, humans are incredibly ingenious, we can harness that ingenuity.
Rita McGrath will be our keynote speaker at HRD Summit UK 2019, her talk will be at 9am on Tuesday 5th February 2019, click here for more details.