The Power of Three

In the quest of finding how companies are organizing themselves to face an ever more complex and diverse environmentwhile keeping their employees highly engaged, I am privileged to be able to visit or study a number of what I call Future Proof Organizations (FPO). While doing so with companies as diverse as Altassian (an enterprise software company ), Statoil ( an international energy company and the world’s largest offshore operator) or General Electric (an multinational conglomerate corporation) in the past months, three main principles arise where Future Proof Organizations are organizing themselves very differently.

The backbone values 

It is not a cliché. With colleagues we visited or studied 18 companies having practices to face future challenges like external market complexity. While we wanted to discuss many topics with them link to bureaucracy, decision making or coordinating activities, not even five minutes into our conversations, our host could not stop taking about their values and how they act on it. All these organizations have a clear purpose but what articulates this purpose into concrete actions is the set of values associated to it.

For instance, Altassian has its 7 values flagged in their cafeteria. This is actually the first thing you see when you enter their office. Visualization is a first important step in making these values alive.  VALUES are the backbone for behaving in these organizations.

Beyond budgeting

In many organizations, a backbone process is the yearly building of budget or financial planning.  A process that often combines forecasting, budget allocation and performance evaluation. In these FPO organizations, these 3 objectives are usually de-correlated and decentralized. Business units define their long term ambition independently and review only short term performance based on actual-to-actual or league table principles. Budget allocation is often done on demand and not fixed yearly.

Check this video of Bjarte Bogsnes from Statoil, the Norwegian multinational oil and gas company where they implemented these beyond budgeting principles.

Development leads to performance

Often the appraisal process comes once a year, you look back with your manager at your yearly pre-defined performances. Most of the time, it is a “beauty contest” meeting where you try to appear as great as one can be. The outcome is a yearly individual bonus. In an FPO, either there is no yearly appraisal (which often results in either having no individual financial reward but only team or company results based rewards) or it is combined with a strong development process that includes constant feedback (see here on how it is done at General Electric think of the GE story). Furthermore, this feedback is strongly based on the set of values that fosters the organization culture.  So the reasoning here is that if people developed themselves continuously in line with the company’s values, performance will follow.

Every company visited or studied has its own way of being Future Proof but surely these three key principles change drastically how they are organized leading to higher employee engagement while insuring business performance. More to come on the other companies visited soon…

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