The 3 A’s of Organizational Agility
In 2012, T-Mobile was flailing. Losing customers at a staggering rate, the company had just seen its proposed merger with AT&T derailed, was ranked last in customer service and market share among its competitors and was about to be left in the dust in a quickly evolving wireless industry.
At that time, John Legere was just months into his tenure as T-Mobile’s president and CEO, and a relative unknown among corporate leaders. Today, most know Legere. He has cultivated rockstar-like status as an audacious executive who is anything but conventional. Embracing its role as “The Un-Carrier,” T-Mobile has become a disruptive force in an industry in which it was once nearly obsolete.
Legere and T-Mobile’s 50,000-plus employees built that reputation with bold moves—both internally and externally—to execute a stunning turnaround for the Bellevue, Wash.-based wireless-network operator.
Externally, T-Mobile ditched the long-term contracts and eliminated costly global roaming fees that had long been commonplace among wireless carriers. The impetus for such changes, Legere has said, was simply asking customers what they wanted. “Shut up and listen” to customers and employees is one of the key mantras that Legere says has guided him throughout his T-Mobile tenure.
Internally, the company got rid of metrics that incentivized employees to dissuade customers from leaving T-Mobile for another carrier in favor of setting employee goals based on customer satisfaction and more proactive measures.
Adopting a new, more customer-centric strategy has paid off. Since 2012, T-Mobile has more than doubled its customer base, from 33 million to nearly 70 million. It has also deployed a nationwide 4G LTE network that now covers 315 million people, a number that stood at zero in 2012. And in its biggest move to date, this spring T-Mobile announced it is merging with Sprint to form a new company called … T-Mobile, with Legere remaining at the helm. Before the deal can be finalized, it will have to be approved by the Justice Department, which will review it for antitrust violations.
Today, T-Mobile serves as an example of an organization that recognized the need to disrupt itself. In order to not only survive but thrive, the company had to instill a mindset that change should not be feared or loathed. Instead, it should be embraced. T-Mobile’s willingness to move away from industry conventions is what distinguishes an agile organization, but shaking things up externally is only half of the equation. The workforce must be willing to shake itself up as well.
This is where the HR team can and should play a key strategic role. T-Mobile recognized this and created an internal agile mindset that was instrumental to its external success. Organizations that strive to embrace agility should follow the formula of the “Three A’s”—anticipate, adapt, act—an intentional approach designed to encourage employees to take an active role in cultivating and sustaining meaningful change.
Are You Really Agile?
Like Legere, many other CEOs see themselves as committed to becoming more agile. KPMG’s recent Global CEO Outlook discovered that a full 74 percent of nearly 1,300 CEOs surveyed said their organization seeks to be a disruptor in its industry. But true agility doesn’t reside solely at the top, and one of the biggest issues facing most companies is the misalignment these CEOs face with the workforce that is expected to execute on their vision.
i4cp’s new study, titled Three A’s of Organizational Agility: Reinvention Through Disruption, finds that only 9 percent of employees in 1,824 organizations indicated their approach to change is to actually be disruptors. Compared to 74 percent of CEOs, that’s essentially the definition of misalignment.
Part of how an organization reacts to change—and whether it becomes the kind of company that actually effects change in the marketplace—lies in how the company perceives upheaval. The report finds that high-performance organizations are likely to see change as “expected” and “manageable,” and are nearly three times more likely than lower-performing companies to see change as an opportunity to shake things up.
Lower-performing firms, meanwhile, are 3.5 times more likely to view change as bad for business, with 55 percent indicating it’s “overwhelming,” “wearing us down” or “a threat.”
Don’t count Unilever in the latter group. In fact, like other high-performance organizations, Unilever actively seeks opportunities to cause disruption, and isn’t afraid to look outside its own walls for help in doing so.
The Rotterdam, Netherlands-based consumer-goods company is in the midst of making itself a “borderless organization” that encourages greater experimentation and collaboration internally and externally, says Jeroen Wels, executive vice president of human resources at Unilever. The company’s research and development function, for example, has begun partnering with smaller, third-party companies—start-ups, in many cases—to test products and bring them to market more quickly.
Called the Unilever Foundry, the initiative provides a single entry point for innovative start-ups seeking to partner with Unilever, enabling the company’s global brands and functions to experiment with and pilot new technologies and products. It provides start-ups and entrepreneurs the opportunity to develop and work on global projects, access mentoring from company professionals and tap into funding through Unilever Ventures. Since creating the Foundry, Unilever has launched pilots with more than 100 start-ups around the world, with almost half of the start-ups moving on to scale their products across Unilever brands and geographies.
For internal innovation, Wels has turned to the Foundry team to stay abreast of technological developments that might affect the human resource space, including those that could improve the Unilever HR team’s performance. “I ask the team, ‘Can you help me with identifying start-ups that have tools that I might have to introduce as a way to disrupt HR and the way it does business?’ ” says Wels. “What will help build better experiences, do it at a lower cost and do it in much more real-time? [The Foundry team] brings me to all kinds of fantastic start-ups to get me thinking about ways to improve the HR function.”
Structuring for Speed
Organizational structure can be one of the biggest deterrents to an agile culture. If decision-making is too slow in an overly hierarchical environment, a company’s ability to quickly take advantage of market changes suffers.
Shayne Elliott, CEO of Melbourne, Australia-based ANZ Bank, is keenly aware of this issue. To combat this, Elliott created a new “tribe structure,” which consists of numerous teams of roughly 10 employees focused on launching new products faster and gaining a competitive advantage in its payments, mortgage and business banking units.
“We’ve reorganized ourselves for speed,” says Elliott. “Part of the theory here is that smaller, self-directed, well-resourced teams will be more engaged, put forth more discretionary effort and be more aligned” with company goals.
In addition to Australia, ANZ plans to implement its tribe structure within its New Zealand and institutional divisions as well, putting senior- and middle-management jobs at risk in the process. These new teams of 10 will replace managers with coaches and product owners picked to round out teams based partly on their ability and willingness to adapt rather than just on their technical proficiency and experience.
“I’m not saying we’re ignoring technical expertise,” says Elliott. “But we’ve downplayed it on the basis that, in an agile world, success is not necessarily going to be driven by people who have done it before, because you don’t know what you’re asking them to do tomorrow.”
The A’s of Agility
The nimble, proactive and customer-focused approach taken by T-Mobile, Unilever and ANZ—and the practices highlighted in i4cp’s recent report—embody those three A’s of agility: anticipate, adapt, act. Together, they represent a formula to make organizations more receptive to change, more prepared to exploit new market dynamics and, ultimately, improve business performance.
HR can play a key role by helping to create a culture that will:
Anticipate—Ensure that change is viewed as not only expected and manageable, but an opportunity to disrupt, both within the organization and the industry. Disruption means to induce change regularly, such as by moving talent often and streamlining organizational hierarchy to be more customer-friendly. (A workforce deals with change better when it happens often.)
Adapt—Break down rigid silos and hierarchies that can inhibit teamwork, and purposefully instill a collaborative spirit in the workforce. An organization moves much more quickly when it leverages the collective wisdom of its workforce. Create a learning culture in which employees can easily and freely create and share their knowledge, and recognize or reward them for doing so.
Act—Identify specific areas that must become more agile. Restructure to minimize hierarchy and bureaucracy as well as empower individuals and diverse, self-directed teams to make decisions and get things done. Explore how to be more productive through smaller teams, which are staffed based on capabilities, and also leverage a talent ecosystem that includes gig workers and full-time equivalents. Agile teams are fueling some of the most innovative, fast-moving companies today.
The National Association of Corporate Directors recently said the No. 1 uncertainty companies are facing is the rapid speed of disruptive innovations. HR needs to think differently so that the workforce can not only be prepared for this disruption, but take advantage of it. Just as T-Mobile became “The Un-Carrier,” HR can and must become the “Un-HR” function to help the workforce become disruptors instead of fearing disruption.