It's times of stress that really test the strength or weakness of your organization. During stressful times, you learn what the people in your organization are made of—but also whether the systems, functions, and processes you’ve put in place are resilient to withstand the crises that inevitably come your way. Industry shifts, market downturns, unexpected competitors: when stress comes, it shouldn't make your organization or process fall to pieces. Instead, stressful times should be when positive discourse, growth, and resiliency thrive.
This is what writer Nassim Nicholas Taleb calls antifragile: systems and organisms that become stronger through disorder. How can your organization grow in the midst of chaos instead of breaking under the pressure?
Resilient By Decentralization
Centralized authority is one of the fastest ways for systems to fail under pressure. When you decentralize, on the other hand, you create a much more agile, adaptable and resilient system. Decentralization creates several key advantages:
- No one feels as though they are trapped on the outside, in a meaningless peripheral role
- Everyone has “skin in the game”—that is, they have real motivation regarding the ultimate outcome
- Reactions can happen more quickly
Decentralized units are better able to respond to situations on their own, without looking to an arbitrary set of rules created by individuals who haven't found themselves in that particular situation.
Say a development team hears about a new product or trend hitting the market that competes with theirs, one they think will be a big deal. If they have the autonomy to start exploring how to respond with a new product or feature on their own, the organization will be better prepared to deal with that competition. If they had to send their ideas up a long, rigid chain of command, there’s a good chance it would be too late to do any good by the time anything was approved.
If you have the right people on your team, decentralization leads to more adaptability within each individual unit and has the added benefit of producing further innovation that may be of use to other parts of your business.
The more rules you have, the harder it is to keep any system running smoothly. Complex systems don't have to have a complicated series of rules and regulations. In fact, the most efficient systems tend to be as simple as possible in both design and execution. Complex rules can lead to employees being so busy trying to “follow the rules” that they're unable to make logical jumps or improvements of their own.
Following the instructions set out in Six Simple Rules: How to Manage Complexity Without Getting Complicated is a great place to start. The rules boil down to this:
- Understanding the actual function and processes performed by employees to gain insight into why they act the way they do
- Finding conflict and rewarding the healthy kind, the kind that indicates people are “actually doing the hard work of cooperating”
- Spreading power more equally
- Reducing resources to increase collaboration
- Letting employees live with the real consequences of their actions, not manufactured ones
- Punishing failure to work together, not failure to complete a task
If these rules lead to throwing out your current company handbook and starting from scratch, great! As long as you’ve got the basics covered and you trust your team, simplicity is always better than complexity, because complexity usually stifles change and doesn’t encourage collaboration or creativity.
If employees are constantly worried about what will happen if they fail, they're likely to have two fairly consistent responses. First, they will keep their creative solutions to themselves because they are worried about the potential cost of failure. Second, many employees will attempt to hide failure or potential failure, rather than opening up about the problems they're having. Neither of these responses is conducive to a strong, resilient organization.
Look back to the Six Simple Rules. Note that what is punished within these rules is not failure, but failure to operate together, as part of a team. Teams of individuals working together can often overcome potential problems long before they become larger issues. And a good team atmosphere is more able to embrace failure and treat it as a learning opportunity than one in which individuals struggle and are held accountable for their own failures alone.
Even when failure occurs, it doesn't exist in a void. Rather, failure brings with it lessons: this is what didn't work, this is why it didn't work, and this is what might work better in the future. Failure brings with it new ideas and the potential for future growth, making it much better to embrace than punish.
Taleb notes that practitioners are more valuable than theoreticians in antifragile organizations. Theoretical models are a great way to look at a potential innovation before actually putting it into practice. Even the best theoretical models, however, can't fully predict everything that will happen when the model meets reality. There are unpredictable human elements, real-world situations, and other problems that can make the model seem ridiculous within a matter of moments.
The solution? Real-world experimentation. Models certainly have their time and place, but there’s just no substitute for witnessing the operation of true, albeit smaller scale, experiments.
Continuous experimentation—allowing employees to explore and experiment within the realm of their jobs while remembering to embrace failure—allows organizations to grow and adapt on a continuous basis. Employees, when given the tools to regularly try things out, are often able to solve complex problems and create things that will remain resilient in the face of real-world challenges simply because they were developed with those challenges already in mind. These employees are on the ground, dealing with those issues, every day—and their solutions will reflect that reality.
Creating an organization that is resilient enough to withstand market highs and lows, antifragile enough to get stronger in the face of a crisis, and functional for employees at every level of the organization takes time and effort. It’s not easy to turn complexity into simplicity or redistribute power more evenly. The result of your efforts, however, will be a continuously evolving organization that only gets stronger the more pressure it’s under.
To learn more about improving your innovation practices, contact me.