Transformational change for organizations
Are you feeling discouraged and tired? You're not the only one. The global challenges are overwhelming and the pace of disruptive change is accelerating. Organizations and professionals are running to keep up, learn and innovate. Uncertainty, turmoil, despondency, and exhaustion are part of the equation. This period is tough, but also special. "We are the lucky ones who are experiencing a change of era," says Jan Rotmans.
"We are not living in an era of change, but in a change of era,” says Jan Rotmans, professor of transition science and sustainability at Erasmus University. "That creates turmoil. But chaos is necessary for complex systems to move toward a transition." In his new book "Embrace Chaos," written by Rotmans and Mischa Verheijden, he offers a realistic but also positive perspective.
In the previous blog post, we looked at the crisis as an opportunity and what you can do as an individual. In this post, we look at organizations.
Organizations can make a major positive contribution to the transition. Rotmans sees an important role for them, as does Paul Polman in his book Net Positive. But organizations will have to change quickly. Governments and companies are now insufficiently agile, resilient, and therefore not future-proof. They need to think (culture), organize (structure), and execute (practice and methods) differently.
I also see this in my work. Many organizations are strongly focused on the Control and Compete culture types in the Competing Values Framework of culture. Everything is about profit, efficiency, production, and return on investment. Planning and control, leading from spreadsheets, social engineering, is the motto. Many organizations use top-down pyramid thinking, where the top decides, decisions only slowly make their way down and reporting and meetings are the norms. I'm exaggerating a bit, but you probably recognize it. That takes time and energy that is not spent on innovation and change. People are tired and don't have time for innovation.
In nature, resilient systems that learn from a crisis have buffer capacity for unexpected circumstances. But because of the emphasis on efficiency and output in the control-mindset, many of my clients have little buffer capacity - especially in time, attention, and energy. Let alone space to think further ahead. Research by Rotmans, Loorbach, and Lijnis shows that only 5-10% of mid-sized companies are transformative, 15-20% proactive and the remaining 70-80% are reactive. A transformative company picks up signals from outside and quickly translates them into new concepts and business models. These are still the exceptions today. Future-proof organizations need agility and resilience.
Rotmans defines agility: if you are simply organized without much overhead and bureaucracy. If you have a learning organization that records what you learn and translates that to people and projects. If you bring disciplines together, work from trust and give employees responsibility and room for development. And if you understand your clients. Organizations score especially low on "trust, a learning organization and understanding customers". What is often missing is a positive organizational culture, as I explain in my book Developing a Positive Culture. For a positive culture, you need the four elements positive thinking & deviation, positive purpose, connection & collaboration, learning & autonomy.
Resilience means: being future-oriented, where you can deal with structural uncertainties. Also, events with a small chance, but with a great impact might happen. Think of the pandemic, for instance. You need buffer capacity for this; you must be prepared for different scenarios so that you can switch quickly and scale-up.
In a future-proof organization, continuity and change complement each other. You do what you always do: that’s the primary line, with which you earn money and add value. In addition, you invest in a second line and look at what has potential. If a second line becomes viable, more budget shifts toward it. This is how you innovate and build and change.
It can be done: DSM transformed from petrochemical to fine chemical to biochemical company, to medicine and now to biomass and health. Ikea too is working on a transformation from sustainable to circular. Ikea has its own wind farms, solar panels, LED lighting, and sustainable food in the stores and they work half with sustainably grown wood. But Ikea is yet to do something about the "disposable culture": cheap furniture that you replace quickly. Their real challenge is resource consumption. Ikea consumes 16 million cubic meters of wood per year: 1% of global wood production. Not the energy transition, but the raw material transition will be their true transformation. They might go from selling furniture and other products to renting raw materials, which you return after use and that can be recycled into other products. This is how Ikea can evolve into a circular business model. They own the raw materials in your Billy bookcase and are therefore responsible for them. Ikea wants to be circular in ten years with wood, paper, plastic. They are experimenting with renting and leasing. Possession is increasingly shifting to use; we are going to rent, lease, share and borrow.
A positive impact on people, environment, and surroundings is part of a positive culture and matters. Companies extract value from their environment: raw materials, energy, knowledge. What do they give back in terms of value? And what is their contribution to the environmental, social, and bureaucratic challenges we face? This is what companies, and the investments in them, are increasingly judged on. NN IP research among 15,000 listed companies shows that 3,000 have a positive impact. They reduce CO2, they work circularly and take care of employees.
These companies have higher sales, grow faster, and offer higher returns than companies without positive impact. This is the business case for transformation. How far along are you?
Positive culture with positive purpose
As a company, you can start strengthening the four elements of a positive culture: positive thinking & deviance, positive purpose, connection & collaboration, learning & autonomy. Culture is the foundation and also supports the necessary changes in structure and practices.
Although you need everything, you could start by strengthening your positive purpose. A shared positive purpose is what gives teams and organizations wings. It is not a goal, but a long-term, meaningful purpose that serves a greater whole than yourself. It is a higher mission - but not a mission statement on paper. Such a positive goal inspires everyone's thinking and doing, all actions and interactions, decisions, and priorities. It is alive. A positive goal focuses on possibilities, not limitations. It positively formulates what you want to achieve (not what you want to avoid) and what you can do yourself (not what is beyond your control).
The positive goal makes a positive contribution to the ecological and social situation. As a beneficial side effect, you will also find that performance and financial results respond accordingly.
Check out my book Developing a Positive Culture and you can get started.
© Marcella Bremer, 2022
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