June 19, 2020

Digital Leadership Development

Why Self-Organization and Decentralization Will Be The Management Model of the Digital Era

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In the last issue of Your Digital Future, I explored why it was essential that you transform your business and operating model if you want to remain relevant — as an organization, and as a leader — in the Digital Era.

I hope you took my message to heart and are starting to act on it.

If you have been taking some first steps in this direction — or even if you’ve just been giving it a good think — you’ve probably realized just how daunting of an effort it is.

So, what I’m about to say will probably not be welcomed news. But here goes anyway: that’s only the half of it.

If you really want to lead your organization into the digital era, you’re going to have to transform more than just your business and operating models. 

You’re going to have to fundamentally change the way you organize and manage work itself. 

If you really want to lead your organization into the #DigitalEra, you’re going to have to fundamentally change the way you organize and manage work itself. #FutureOfWork #DigitalTransformation Click To Tweet
Three team members having a casual conversation at work
Photo by Austin Distel on Unsplash

The Big Idea: A Fresh Take on Self-Organization

The idea that we need to somehow flatten the management hierarchy, reduce overhead, and push decision making functions deeper into the organization has been around for some time.

Likewise, the concept of creating self-organizing teams and embracing so-called holocratic management models have also been talked about (and used in a number of well publicized organizations) for decades.

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In both cases, however, organizations pursued these approaches for what I’ll call secondary reasons. In the first case, the drive to flatten the management layer came from the belief that it represented bureaucratic overhead — fat that could be cut.

In the second, it represented a sort of egalitarian view of empowering workers. Again, the management layer needed to be cut, but in this case because it inhibited workers from achieving their potential and working more effectively, rather than merely costing the organization money.

But in either case, the foundational business driver was inwardly focused. 

The problem is that the inward focus of these past efforts caused them to leave a bad taste in our mouths — just the latest failed attempt to adopt some management fad.

This time around, however, the drive to decentralize decision making and adopt self-organizing management models is completely different. 

The shift in power to the customer and the fact that delivering a differentiated customer experience is now the source of competitive business value is forcing organizations to move more quickly and adapt more rapidly than ever before.

Delivering a differentiated customer experience is now the source of competitive business value. Click To Tweet

And the hierarchical, management-heavy decision making structures of the past are simply too slow to keep up.

The challenge is that because of failed past efforts, too many people are dismissing the need for decentralization and self-organization at precisely the time that they should be embracing them.

The Impact: Courage is the Differentiator

One of the reasons that decentralization and self-organization are tough pills to swallow is because of just how deeply embedded current management models are within the modern enterprise.

Moving away from the traditional, Industrial Age hierarchical model is no trivial matter.

The implications of making such a move run wide and deep, impacting everything from hiring practices, human resource policies, and compensation models, to strategic planning, project management, and succession planning practices. 

It would be fair to say, in fact, that moving to a self-organizing, decentralized management model represents the complete remaking of an organization’s way of being.

And that’s the point.

This sort of fundamental reshaping of an organization’s way of operating is the only way it will transform itself for the digital era.

A fundamental reshaping of an organization’s way of operating is the only way it will transform itself for the #DigitalEra. Click To Tweet

So, what will it take to lead such a transition? In short: courage.

In an article I wrote for CIO, entitled Why a Computer May Be Your Next Manager, I explored this very topic — and the challenge it will pose to managers and leaders everywhere.

There will be no easy answers. 

But I am confident that those who move in this direction last will leave the playing field first. It will be the leaders who have the courage to change everything that will have a fighting chance.

Those who move toward #SelfOrganization last will leave the playing field first. It will be the leaders who have the courage to change everything that will have a fighting chance. #DigitalTransformation #DigitalEra Click To Tweet

The Next Step

The big question you should probably be asking yourself is, “So now what?”

The reason this sort of big change is hard is that very few people have the sufficient domain authority to make it happen.

But here’s the deal — change like this doesn’t happen in some kind of top-down Big Bang explosion. In fact, the only way it ever happens is little-by-little from the ground up.

So when it comes to understanding your next step, you need to start by asking yourself, “What can be my first step?”

How can you begin to embrace and implement elements of decentralized decision making and self-organization within your own teams right now? How can you perhaps partner with another progressive leader whose teams work closely with yours and start experimenting with ways to apply these ideas across your functions?

How can you begin to embrace and implement elements of decentralized decision making and self-organization within your own teams right now? #DigitalEra Click To Tweet

To help you get started, I’ve created what I call a Resource Hub on the Future of Work so you can do your own research and start coming up with your own ideas. Start there.

But whatever you do, take the first step and start exploring. Your future — and the future of your teams — depends on it.


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