How do organizations deal with the changes in today’s business environment? How do they keep up with the pace of change, let alone get ahead of it? How do they innovate and stay competitive? How do they increase their adaptability? How do they create organizational alignment quickly enough? Do they hang on to hierarchical structures as the main drivers for change? Or do they explore and stimulate cross-organizational networks as a new way to enable people and teams to collaborate more effectively across borders?
I witness a tenacious tendency within many organizations: the more things change around us, the more we tend to hold on to what is familiar to us. We tend to focus more on hierarchical structures and managerial processes. It gives us a feeling of control and overview. But, in fact, it is limiting collaboration, flexibility and adaptability. Many organizations struggle with this phenomenon.
“WHEN BUSINESS WAS FINE WE DIDN’T HEAR ANYBODY ABOUT IT. BUT NOW THE MARKET IS CHANGING EVERYBODY COMPLAINS ABOUT HOW INTERNAL SILOS ARE HINDERING US AND HOW THEY SEEM TO GROW STRONGER.”
Leaders need to stimulate exactly the opposite of what is often the organization’s reflex. Encourage people to collaborate more across borders instead of less. Leaders need to stimulate the creation of cross-border networks that combine the best knowledge, skills, experience, attitude available across the organization, needed to get a certain job done.
To be clear, in itself this is not new. Cross-unit and cross-team collaboration have always been important for a company’s success. But in the 21st century business reality there are two main reasons why cross-organizational collaboration has become more crucial than ever before:
- The accelerated rate of change: organizations need to be able to adapt quicker in a more agile way
- The changing relationships between companies and their customers, suppliers, and competitors: traditional boundaries are diminishing, and this calls for new ways of cross-border collaboration
I am not saying that hierarchical structures and managerial processes are no longer needed, but they will no longer be enough to deal with today’s challenges. Leaders need to put focus on creating and stimulating cross-organizational networking as an additional structure for collaboration. A new way of collaboration that leads to higher adaptability, agility, and responsiveness with respect to the new circumstances.
“Traditional hierarchies and processes, which together form an organization’s “operating system”, do a great job of handling the operational needs of most companies, but they are too rigid to adjust to the quick shifts in today’s marketplace. The most agile, innovative companies add a second operating system, built on a fluid, network like structure, to continually formulate and implement strategy.” – John Kotter, Harvard Business Review, Accelerate, 2012 (read the article)
Yet, many organizations do not have cross-organizational networks or leaders are not aware of these networks and don’t use them.
“While common sense might suggest that cross-departmental support for innovation would be a good thing, getting everyone involved is not a widespread practice. Survey respondents said they typically ask only certain departments for ideas, while other departments are relegated to implementation.” – Economist Intelligence Unit, Cultivating Business-led Innovation, 2012 (download the research report)
I have witnessed with my own eyes how cross-organizational networks can have a positive impact on collaboration and how they can boost a company’s success. One of the examples is a client we work with who has faced fundamental changes in the market. Growing competition from the east; increasingly demanding customers; technological advancements that require longer, more complex, and more expensive research and development cycles; alliances with suppliers to create pools of joint innovation, research and knowledge sharing. The board has chosen early in the process to fundamentally change the way divisions, units and teams needed to collaborate. Existing structures are not thrown overboard but are supplemented with cross-organizational networks. Key objectives are on the one hand to speed up the research & development process and on the other hand to create more alignment between the departments and teams of engineering, sales, and customer service. Networks can have a different focus: streamline knowledge sharing, tackle specific cross-border issues, act as sounding board to provide a second opinion, etc. Networks don’t stop at the company borders but can also include customers and suppliers. Some networks have become institutionalized; others are contemporary and will dissolve over time.
Together with the top 30 executives of the company we shared and discussed the progress they made over the past year. They reported the following results:
- A higher level of innovative thinking
- Better and faster decision making
- Better use of knowledge, expertise, experience, ideas
- Stronger basis for successful implementation/execution
- Better detection and development of key talent
- Motivating environment for employees to learn and grow
How did they do it? How did this team of executives create the new way of cross-organizational collaboration? Three aspects in their leadership behavior stick out:
Stimulate networks actively and openly:
- Analyze existing networks. Every organization has its hidden and informal networks. Make sure you understand where they are, who is in it, how they operate, and what their outcome is. Focus on stimulating and supporting the networks that add value. Stop or replace the networks that are not.
- Make networks a ‘formal’ part of your organization. Make them visible to everyone. Explain their importance and encourage them. At the same time discourage silo behavior.
- Focus your energy on communicating vision and strategic priorities and less on managing processes. Focus on the results and set the strategic boundaries. Allow the networks to fill in the rest of the strategy and to come up with ways to manage the results.
- Stimulate diversity within the networks. Make sure they combine people from different teams, cultures, expertise, and locations.
“The most effective networks connect to people with diverse expertise, from a broad range of functions, and across different locations.” – MIT Sloan Management Review, The collaborative organization: How to make employee networks really work, 2010 (read the article)
Make your people’s ability to create cross-border alignment a top priority:
- Invest time and energy in supporting leaders, employees and teams to learn how to create people alignment across borders and cultures. Define it as a core competency for everybody. Set up development and coaching programs to build the required mindset and skills.
- Create an alignment culture throughout the organization. Make the importance of people alignment explicit in your communication, in your strategy, in your behavior, and in your reward system.
- Stimulate a learning environment where people can build successes together. Register these successes. Share, communicate and celebrate them actively throughout the organization.
“Being a successful network requires more than having the right knowledge around the table. If the people are not able to align their different areas of expertise, experiences, objectives, cultures, they will be useless as a network.” – cross-divisional network member
Change the mindset of people towards failure:
- Start at the top. Understand that cross-organizational networks need a certain level of space, if you want them to become successful. Make sure the strategic priorities are clear, but allow networks to fill it in and experiment. Let go of the urge to control every part of the process.
- Give networks space to make mistakes and to learn from it. This can be in contradiction with what people are used to. There can be a fear for failure within the organization that can hinder this new way of collaboration. Be explicit to your people that mistakes are not failures, as long as they allows us to learn and grow individually and collectively (also read my earlier article on this).
“One who fears the future, who fears failure, limits his activities. Failure is only the opportunity more intelligently to begin again. There is no disgrace in honest failure; there is disgrace in fearing to fail.” – Henry Ford, My Life and Work, p. 47
What do you think of cross-organizational networks? What are your experiences with networks? What are your questions? Share your comments below.
Aad is an international business advisor, change leader, people alignment expert, leadership team facilitator and executive coach. He is founder and managing partner at HRS Business Transformation Services where he works with executives and leadership teams internationally on four topics: ‘leading complex change’, ‘cross-cultural leadership’, ‘post-merger integration’, and ‘amplifying business performance’. Find out more about Aad and HRS’ services. If you would like to invite Aad to your organization or team feel free to contact Aad here.