The biggest hurdle for companies undergoing an agile transformation is the perceived loss of control. At its core, agility means self-organization. The more decentralized decisions are made, the more flexibly the organization can react to new situations and the more adaptable it is as a result. So far, so good. But the more decentralized decisions are made, the messier things appear for the existing management and especially for the management in companies with a high proportion of engineers, as is often the case in Germany. However, this disorder is not a flaw, but an expression of creativity and liveliness. Only those who can accept this and recognize that this lively disorder can be reconciled into a coherent whole with the right leadership can overcome this first hurdle in their agile transformation.
Control and order is an important asset in classical hierarchical organizations. Everything must be regulated (and sometimes overregulated) and properly managed. Then the business runs smoothly like a well-oiled machine. And vice versa, order, control and management are naturally lacking when things don’t run so smoothly. Then heroes and alpha males are needed to restore order and bring everything under control.
It seems as if we in Germany are particularly fond of order. We are proud of the gap size and love our lawn edges. Lenin is therefore ascribed this statement that cannot be completely dismissed: “Revolution in Germany? That will never happen, if these Germans want to storm a station, they’ll buy a platform ticket first!
In a forest, there is no master tree that plans and dictates change when rain fails to fall or when the spring comes early. The whole ecosystem reacts creatively, in the moment.Frederic Laloux
Buurtzorg in the Netherlands proves that order is not everything and that companies also work differently and even better. After more than ten years in other nursing organizations, Jos de Blok was fed up in 2006 with people’s care degenerating into an industrialized product, which degraded him to a cog in a centrally controlled nursing machine and prevented him from devoting himself adequately to his patients. That’s why he founded Buurtzorg and started a revolution.
Buurtzorg is rigorously focused on the well-being of its patients. Jos de Blok consistently relies on the principle of decentralization. A team at Buurtzorg consists of 10 – 12 nurses who care for 40 – 50 patients in a clearly defined neighbourhood. The nursing staff at Buurtzorg are all generalists with regard to the different clinical pictures as well as with regard to the way they organize their work.
The teams plan and organize the care themselves, conduct job interviews, rent offices, plan training courses and much more, where the typical controller would immediately sense wasted synergies. At Buurtzorg in the Netherlands, more than 10,000 employees now work in 850 teams. They are supported by a very lean back office with 45 employees plus 15 coaches and zero managers (cf. Buurtzorg). Instead of hierarchy and control, Jos de Blok relies on the lively networking of the teams (among other things in Buurtzorg’s flourishing Social Intranet).
Does Jos de Blok have his business under control? In the classic sense that he knows everything or decides everything himself certainly not. Is everything consistently regulated and ordered there? Certainly not. Is that a problem? By no means! Precisely because of this lively disorder and because of the resulting creativity and adaptability, Buurtzorg is far superior to other and in the classical sense “orderly” care organizations.
The numbers tell their own tale. In just 10 years Buurtzorg has grown to over 10,000 employees in the Netherlands alone and is now operating in 24 countries. Customer satisfaction is significantly higher than with other care organizations, as is employee satisfaction. And all this at significantly lower costs: A study by KPMG in 2012, for example, stated: “Indeed, by changing the model of care, Buurtzorg has accomplished a 50 percent reduction in hours of care, improved quality of care and raised work satisfaction for their employees (cf. Buurtzorg).
The type of work done by a home care organization is of course particularly suitable for this rigorous decentralization, but this pattern can also be found where one would expect it less, for example at the French die casting manufacturer FAVI. There, too, the approximately 500 employees worked in autonomous and self-contained mini factories with 15 to 35 employees, each of which was assigned to a specific product or customer.
I was aware that in order to become a responsive organization, decisions needed to be made by the workers themselves, directly on the production floor. I believe that a good employee is an employee that takes initiatives.Jean François Zobrist
When Jean-François Zobrist became CEO in 1983, FAVI’s then 80 employees, as in most manufacturing companies, were organized strictly hierarchically and functionally: The workers reported to a chef d’equipe, who reported to a chef d’atelier, who in turn reported to a chef de service and who finally reported to a chef de production, who in turn reported to the CEO. In addition to this production area, there were, as usual, the supporting areas HR, Sales, Engineering, Planning, Maintenance and Finance.
Within two years, Zobrist completely rebuilt FAVI by dissolving all centralized support areas and moving these tasks into the mini factories, so that they themselves were responsible for sales, planning, engineering, HR, etc. (similar to Buurtzorg). The success of this transformation was remarkable: FAVI was able to grow from 80 to over 500 employees and continue to produce profitably with above-average wages in Europe, where other suppliers had long since relocated production to the Far East. (cf. Frederic Laloux, Reinventing Organizations. Amazon Affiliate Link).
Did Jean François Zobrist have his business under control? In the classic sense of a business leader, he certainly has as little control as Reed Hasting over Netflix, who is proud to make as few decisions as possible and instead puts context over control. As well as Captain David Marquet had no control over his nuclear submarine USS Santa Fe, on which he no longer gave orders. Did it work anyway? Yes, and it worked even better because of it, that is, because of this lively disorder!
Everybody gets all the information. So what we’re trying to do is build a sense of responsibility in people and the ability to do things. I find out about big decisions now that are made all the time, I’ve never even heard about it, which is great. And mostly, they go well.Reed Hastings
The example of FAVI also shows, however, how quickly organizations fall back into their old and seemingly overcome patterns. After Zobrist had handed over FAVI to his successor, the shareholder structure changed and the new majority owner wanted to bring more order into the “chaos”. So liberties were gradually reduced and more control and order were introduced.
Jean François Zobrist himself describes the result of this restored “order” in this way: „As a result the 20% net cash flow first dropped till 15%, then to 10%. And today only 5% is left. Surely, next year the net cash flow will be dropped till 0%. The more the net cash flow went down, the more the shareholders increased the control. Subsequently, the increased control led to unhappy workers leading to poor results. It’s a vicious circle. To me this is the proof that there is a direct relation between the happiness of productive people and the net cash flow.“ (cf. Corporate Rebels, Teil 2)
Happy workers make happy customers who make happy shareholders.Jean François Zobrist
Both examples show the pattern of uncompromising customer orientation through decentralization: autonomous units work close to the customer instead of close to the head office. This necessarily goes hand in hand with a perceived loss of control and a certain lively disorder. Both – and these examples also show this – can be compensated by leadership, such that these self-sufficient units align themselves to a common whole.