This week, Tara Neven, co-founder and co-director of neuresource group, looks at the ins and outs of implementing strategy in today’s complicated world and shows how neuroscience insights just might be the answer.
Sally is the CEO of a large national organisation, and she hasn’t had a good year. Profits are down, she is struggling to get her leadership team to engage and to deal with complexity and change. As a whole, her workforce is just not all that productive. Sally desperately needs her people to think differently, become more entrepreneurial, build more connections between different parts of the business, and to be more innovative in the way problem solving and decision are made. Yet her organisation has a command and control structure and the mentality that goes with it: competition and aggression are rife within and among different parts of the organisation.
So, how can Sally support a mindset change in her business in order that the strategy she and her leadership team worked hard to design is implemented and successfully executed?
Managing a business of any size today is fundamentally different than it was just 30 years ago. We can comfortably say we are living in an era of unprecedented change. One of the most profound differences is the level of complexity our business decision makers and leaders confront on a daily basis — everything from new and exciting technologies to the constant flow of information, to the myriad connections with others that social media allows.
Don Tapscott, the author of Wikinomics, argues that the information revolution is replacing one kind of management (command-and-control) with another (based on self-organising networks). And John Hagel of Deloitte speaks about the growing disconnect between “linear institutions and the non-linear world that is developing around us”.
Complex organisations have always existed — and business life has always featured the unpredictable. But complexity has gone from something found mainly in large systems and networks, such as cities and airports, to something that affects almost everything, especially our organisations, whether large or small. Most of this increase has resulted from the information technology revolution of the past few decades. Systems that used to be separate are now interconnected and interdependent, which means that they are, by definition, more complex.
In reality, strategy execution is the result of thousands of decisions made every day by employees acting on the information they have together with their own self-interest. The key to this isn’t just talent development.
Even organisations that focus on talent development as a key business driver are still struggling to change entrenched and outdated mindsets in order to execute new business strategies. This is primarily because the way we run and design our businesses is disconnected from the way people actually work. Organisational success isn’t possible without changing the way people make decisions, problem solve and communicate day-to-day.
We also need to teach a new mindset to support people to effectively function in this new organisational structure. We know from lessons from neuroscience that the brain (individual or collective brain) resists change as the brain is an energy conserving organ and change takes energy and effort. This is why change is so damn hard.
People often see the value of changing their behaviour, but, given our neurobiological drive to conserve energy, they are unable to follow through.
So what about changing the way a whole organisation behaves? The consistently poor track record in this area tells us it’s a challenging aspiration at best.
Traditional hierarchical and paternalistic business structures provide limited availability for collaboration or free-flowing decision-making and problem solving. New methods for structuring organisations are critical in the wisdom age, where many workers are employed to think. We need to be reviewing our governance structures, how decisions are made, how we design strategy as well as how power is distributed to support organisations to be agile in a time of constant change. Holocracy, one approach being adopted by organisations in Australia and overseas, provides a good example of this move to a new, wiser brain-friendly structure for business success and subsequent strategy execution.
As organisational leaders, we need to be ‘thinking about our thinking’ when it comes to strategy, rather than just following the processes we have always done. We need to start noticing when we, or others, are paying too much attention to a problem rather than focusing on a solution. By being solutions-focused, we develop and strengthen new neural pathways associated with a goal or an intention and we need to re-think how we view performance ‘management’.
In the emerging field of organisational neuroscience, where management and leadership integrates organisational behaviour with neuroscience, we see a multilevel approach involving factors both internal to the individual (individual differences, internal mental processes) and external to the individual (environmental factors, organisational contexts), something that is adding significantly to our capacity to build human capital value in a business.
Human capital is the stock of knowledge, habits, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value. In the search for a competitive advantage, many organisations tend to focus the majority of their time and effort on the functions of business strategy, such as governance, marketing, sales, client services, and finance, yet often fail to effectively manage the area of human capital. This is despite the vast array of evidence identifying the contribution of people as the single most important driver of organisational success and strategy execution.
We regularly see clients who don’t even have people mentioned in their organisational strategic plan. What organisations should be doing instead is cultivating in people their ability to align purpose, vision, values, character, and commitment with demonstrated competency. More focus on people and less on process will always create better outcomes.
Carol Dweck’s book Mindset, The new psychology of success gives some very sound advice about engaging the collective brain of the organisation and the people in it. When considered in light of many of the old business models and frameworks, Dweck’s observations are revolutionary and show what a powerful impact neuroscience research is having on how we approach, design, and execute strategy.
This thinking challenges the assumption that we make decisions in a rationale way. Yet we know emotions play a significant role in making decisions. The rational prefrontal cortex works in concert with the emotion centre of the brain. Cognitive bias also plays a significant role in how we approach problems and design strategy.
According to Dweck, a growth mindset is the conviction that qualities such as intelligence, courage, and creativity — the things many organisations are looking for — can help their organisation cope with constant change. This can be cultivated through effort and deliberate practice. Not only are organisational leaders with a growth mindset not discouraged by failure and constant change, they see it as a learning opportunity that leads to innovation. Imagine if you could build those competencies into your organisational leadership framework, tools, philosophies and in the process, get your leaders to practice this.
Here are some things you can do to challenge the way you develop, design, and implement strategy.
- Get rid of outdated philosophies. Telling others what to do and what symbols and language to use (which is often the case in some organisations) doesn’t work. In fact, the more we try to convince people of something, the more they push back. It’s our brains telling us something doesn’t add up. Don’t hesitate to shed what isn’t working and actually ask your people what will work.
- Design strategy in a way that promotes growth mindset. Imagine if you could build strategy that isn’t about pass or fail but about mindful growth and performance.
- Apply language that speaks to the limbic system when sharing the strategy. Find language that resonates with our emotional centre of the brain. Teach your leaders to change the way they interact with people. Great leaders know how to intuitively align their communication to support their people to be in a reward rather than threat state.
- Give people the ability to influence. We know from neuroscience that people are rewarded more by ‘being valued’ than by high salaries. Let all employees know their contributions and viewpoints are important and provide opportunities for the collective brain to provide input into the organisational strategy – the more ownership they feel the more they will commit to it. Give people control and influence over how strategy is applied to the business and facilitate autonomy over the application of what tools.
Strategy is one of the key domains in the neuresource group STEAR model. Without considering human capital value, organisation or team structure, how people communicate, problem solve, and make decisions, an organisation will struggle to become an intelligent and productive entity.
Image credit for featured image for this post: Henrik Schnabel