What will the organisation of the future be like?
Last September, I wrote a lengthy treatise, more of an essay than a blog post, on the Future of Work. I wanted to have a (longish) summary of my ideas on the Future of Work and how to make it humane, all in one place.
My idea was to delve deeper into some of the topics touched upon in that essay in other posts. I have written extensively about the drivers and trends shaping the future of work or about the leader of the future, but I haven’t dedicated the space and time it deserves to the organisation of the future.
Until today, that is. Let’s talk about the organisation of the future.
Many years don’t have much significance in history, but many others will not be forgotten for a long time. 2020 will be one of these.
It will be the year a virus brought the world to a halt, and it will deservedly be remembered because of it. It was also the year when companies had to change the way they operated, the year in which years of digital transformation were conducted in a matter of weeks, and the year in which bosses and employees alike realised working from home isn’t that bad after all.
We still see the organisations of the present, not of the future. Still, we also see the direction in which we are travelling, and there are several inferences we can make about how the organisations of the future will look.
Companies with a purpose
Larry Fink is the Chairman and CEO of BlackRock, the largest asset manager in the world with trillions of dollars under management, so nobody can accuse him of being a tree-hugging leftie.
He is as capitalist as it gets.
It is, therefore, the more striking that he wrote a letter to CEOs, shareholders, and clients asking them to focus more on sustainable investments, or they’d risk losing their investment.
Mr Fink isn’t the only one.
As I wrote before, 181 US CEOs wrote the Statement on the Purpose of a Corporation, alleging that companies’ purpose goes beyond maximising profits for shareholders, and they have a societal purpose. They have certain obligations towards their clients, employees, suppliers, and the community where they operate.
A similar initiative, the Business for Inclusive Growth, was signed in France by other CEOs from the OECD (including Denis Machuel, CEO of Sodexo, the company I work for).
Companies don’t act in a vacuum. They are important actors in society, and if society doesn’t thrive, companies won’t either. The pandemic has given us ample examples of this: from fashion companies stopping their cloth productions for mask mass-production to car companies producing plastic face shields and other PPEs.
Younger generations are more aware and preoccupied with social and environmental issues.
If companies want to attract Gen Z and Millennial talents and consumers, they better pay more attention to social and environmental issues.
Diversity, Equity, and Inclusion aren’t only nice to have and the right way forward; they are also a business imperative. The companies ignoring this will do so at their peril. The same applies to Corporate Social Responsibility.
Many companies are acting firmly in these areas already, many more will do so in the future, and this will become the norm.
The company of the future will be a company with a purpose, a purpose that is well-aligned with the values of its employees and consumers.
Agile and flexible companies
The pandemic has made it clear that there won’t be much space in the future for rigid and slow companies.
The future is for agile, nimble, and flexible companies. The agile company of the future will have different features.
Employees want more flexibility regarding place and hours of work, and managers realised having employees working from home or other places isn’t such a bad thing. There are some fully remote companies that work very well, but personally, I think the most common model will be a hybrid one, where most people work a few days per week remotely and also go to the office regularly to meet colleagues.
Home-working was done for centuries before the industrial revolution, so it is more of our natural state than going to an office or a factory, but cramming all employees in one working space also has its advantages: it is easier to onboard employees into the company culture, it creates deeper social bonds among team members, and it fosters creativity and serendipity.
I talk from personal experience, but I can see this clearly today.
I like working from home, and in that sense, the pandemic has been a boon, but on the other hand, I enjoy going to the office and meeting my colleagues, so I do a bit of both every week.
Agile ways of working
Agile is an adjective that all companies should strive for, as it means, literally, “to be able to move quickly and easily.” In today’s ever-changing landscape, all businesses need to be quick, flexible, and nimble. They all have to be agile.
But agile is also a specific work methodology created twenty years ago to improve software, and it has then been successfully adapted to other uses and management practices.
The agile manifesto lists the values and principles that govern this methodology. It is based on quick iterations and fast go-to-market, even with imperfect products that are improved based on consumer feedback. Products or processes are developed by an interdisciplinary team, following a framework called Scrum, which works in quick sprints.
The philosophy of agile working has jumped from software development to all sorts of industries and uses.
It has become a fad on its own, and it should not be used successfully for everything, but it has its uses and benefits. I like the idea of not obsessing with processes and having the perfect product, but focusing on people, knowledge, and improving an imperfect product or service thanks to the interaction with consumers and their feedback.
Max Weber in the 19th century, with his work on bureaucracies, and Frederick Taylor, with his ideas about Scientific Management at the beginning of the 20th, extolled the virtues of the hierarchical organisation in the form of a pyramid, with the leaders thinking and making the decisions at the top, the people at the bottom executing, and a layer of supervisors and middle-managers to ensure this execution was carried out according to the plan.
This model has worked well in the world of industrial mass production, but it is now broken.
To better respond to a VUCA environment, organisations should look more like a network than a pyramid, with decision-making scattered and as close to the ground as possible.
Expecting the great leader sitting on his Global HQ far away from the field to know what is best for the business in every corner of the company is a dangerous illusion. It simply cannot work; the world is too complicated for that.
Does this mean organisations don’t need top leaders? Of course they do, but their role is not to define the strategy and plan to the detail but to set a vision, create the right culture for the organization to thrive, role-model the right behaviours and put the right teams in place. All the rest will follow.
The new organisation is based on autonomy and trust rather than control, experimentation and controlled-risk taking instead of detailed planning, and decentralised decision-making instead of top-down hierarchical orders.
All of this, and learning, of course, a lot of learning.
The Learning Organisation
The concept of a learning organisation is not new.
I remember studying it at university, and I’m not young anymore. Peter Senge popularised the idea in his book The Fifth Discipline, published in the 90s.
Since then, there have been many different theories about it, but the basic premise is that organisations must be fertile grounds for learning to be successful. In an ever-changing competitive landscape, organisations, like the people within them, need to learn, change, adapt and transform if they don’t want to be left behind.
A learning organization encourages the learning of its employees via coaching, mentoring, working on new projects and assignments, and the right learning and development resources. We all are now lifelong learners.
It’s not only individuals that have to learn; the organisation itself is also a living system, and “it” also needs to learn and adapt. The knowledge generated in the company needs to be captured and maintained, and the organisation needs to adapt to new market realities and a continually changing environment.
AI and data enabled
The organisations of tomorrow will be AI and data-enabled.
The successful organisations of today already are. If you want to have an evidence-based approach and make the right decisions in an increasingly complex and changing environment, you need data, troves of data, and the right systems to analyse it and make meaningful decisions.
As they say, data is the new oil or even the new gold.
With the rise of AI capabilities and the arrival of machine learning, we almost don’t need human intelligence anymore to analyse this data and adopt the right course of action.
AI isn’t valid (yet) for all types of situations or decisions, but as the technology improves, so will increase its uses. It is difficult to predict with any level of accuracy how AI will help organisations succeed in 2030, but there certainly will be more and more use cases for it.
I am sure new ways will be invented in the coming years, but currently, AI can be used in myriad ways to help managers do their jobs better.
AI and data are used to identify and anticipate consumer needs and make marketing and product decisions around them. It can also be used to improve business processes, better manage people through people analytics, get the help of “HR bots” to improve hiring methods and other practices, or expand into new markets.
AI will increase its capabilities very rapidly, but there will be things that humans will be better at or that we will prefer that are done by people, at least for the foreseeable future.
The organisations that can best combine AI’s possibilities with the advantages offered by a well-managed human team will reap the benefits of the future.
In the last few decades, globalisation has made a big push, and the world has become increasingly small.
Trade barriers came down, people travelled more, and corporate supply chains got more complex and interdependent across multiple countries.
In the last few years, nationalism and protectionism have risen (Brexit, Trump, and the trade war between China and US being some examples). Then Covid-19 struck, and the rest is history: border closures, planes stuck on land, trade barriers, dismantled supply chains…
Still, the world will continue being smaller and smaller; there is no going back. This process will have some hiccups, but we are going towards further integration between countries and cultures, not less.
The market, which is increasingly digital, is also increasingly global.
Successful companies will have to have a global size and reach, but they will also have to adapt to the local realities.
It all comes again to being flexible, nimble, and agile.
A more decentralized organization that allows the decisions to be made by the teams closest to the field in each country and market is the only way to achieve the right balance between global and local.
The Organisation of the Future
Companies are an integral part of our socioeconomic fabric.
They provide employment to a big part of our population, allowing employees to learn new skills, meet other people, progress in their careers and earn a salary. They also create products and services that consumers want and are ready to purchase. Corporations are a conduit of innovation, catalysts of Schumpeter’s creative destruction, channel investors’ money to the best ideas in the marketplace, and reward them for their investments.
In the gig economy, we see more freelance employees than ever, and social media have created new careers like being an “influencer.” Still, corporations aren’t going anywhere, and they will continue to be an essential part of our society. However, this society is changing very fast, and companies will have to adapt if they don’t want to be left behind.
In ten or twenty years, companies will be very different to what they are today.
Some of the changes they will endure we can foresee now; others will be utterly unpredictable as new technologies and megatrends shape our future.
Nobody knows what the organisation of the future will look like, but we can guess some of the principles guiding them: decentralisation, agility, simplicity, glocality, AI and data enabled, and flexibility.
[…] our work. Remote, hybrid, and distributed working models are here to stay and we are seeing the organisations of the future taking shape in front of our eyes. I suspect these changes will accelerate in the next few years […]