Leading in a fast-paced, digital world demands a new way of working. Your ability to respond to a rapidly changing world is what makes the difference between success or failure. The need for agility is no longer just a nice to have, leading with agility is a matter of survival. Consider the following research assessing the longevity of Fortune 500 businesses over the past 61 years.
“Comparing the 1955 Fortune 500 companies to the 2016 Fortune 500, there are only 60 companies that appear in both lists. In other words, only 12% (and fewer than 1 in 8) of the Fortune 500 companies in 1955 were still on the list 61 years later in 2016, and more than 88% of the companies from 1955 have either gone bankrupt, merged with (or were acquired by) another firm, or they still exist but have fallen from the top Fortune 500 companies (ranked by total revenues).” – Fortune 500 firms 1955 v. 2016
Markets expect companies to constantly change and adapt. The message is clear. Either you adapt or you die!
Creating a more agile organisation begins and ends with people, mindset and culture. When it comes to motivating people, it’s effective leadership that makes all the difference.
Toyota Motor Corporation is one company that over many decades has demonstrated the power of a more agile, lean and responsive organisation. Toyota achieved their success largely as a result of embedding lean principles and a focus on people.
Fujio Cho, honorary chairman of Toyota Motor Corporation, makes the point that Toyota’s approach is on “first building people, then building cars”. Agile organisations focus on “building people”, more than they focus on “how to build cars”. This has been a key pillar of Toyota’s success.
People Work for Purpose, Autonomy and Mastery
Dan Pink in his best selling book “Drive: The Surprising Truth About What Motivates Us” describes how the traditional carrot and stick model, of reward and punishment leads to poor results in today’s world of work. Pink advocates instead for a focus on purpose, autonomy and mastery, as the key to personal motivation. Purpose, autonomy and mastery are described as follows:
- Purpose: the desire to do what we do in service of something larger than ourselves.
- Autonomy: the urge to control the what, where and when of work, the desire to be self-directed.
- Mastery: the urge to get better at something that matters. Mastery is all about learning.
Dan Pink describes how intrinsic motivation arises at the intersection of purpose, autonomy and mastery, which is where performance is increased and value is created.
Connecting purpose, autonomy and mastery across an organisation is essential to create an engaged, agile and high performing organisation in the digital age.
There are a number of ways leaders can approach connecting these three components to increase the motivation of people and teams. One interesting example is from Spotify, who have embedded these three motivational factors into their culture and operating model.
Learning from Spotify
Spotify has successfully created an agile organisation in response to the fast paced and highly competitive, music streaming business. Spotify a Swedish company founded in 2008, is a music, video and podcast streaming company, that as of June 2017 has over 140 million monthly active users and over 50 million paying subscribers. In short, their results have been amazing. What makes Spotify unique is the way they’ve organised themselves, striving to maintain an agile culture as they grew.
The primary building blocks of the Spotify operating model are small, autonomous, multi-disciplinary teams called squads, consisting of no more than eight people, each focused on a long-term mission. Each squad owns a small part of the product, such as “make Spotify the best place to find music”, which they’re responsible for end-to-end, from idea to implementation. By keeping the teams small and focused the feel more like a mini start-up. Each squad is autonomous and self-organising, having the authority to decide what they will work on, how they will work, who they will work with and select their own squad leader.
Squads are then organised into tribes which cover a specific function, tribes are grouped together to form a chapter. A chapter is responsible to encourage continuous learning and development. Lastly, there are gilds which are communities of interest that cut across squads, tribes and chapters, as illustrated below.
It’s the combination of squads, tribes, chapters and gilds that makes up the Spotify operating model. The Spotify operating model helps to keep the organisation agile as it grows, encouraging rapid decision-making and new ways of working. There are three key principles that keep Spotify agile as it grows:
- Small Teams: Small teams are able to adapt quickly to a rapidly changing marketplace.
- Alignment: Each squad has a clear purpose and mission guided by the chapters and guilds that keep information flowing between the squads.
- Autonomy: Autonomous teams that are empowered to make decisions and take action.
Their operating model is focused on creating strong alignment and autonomy, this allows Spotify to grow, whilst remaining agile and responsive in a rapidly changing marketplace.
Build High Levels of Autonomy and Alignment
Spotify strives to develop high levels of alignment and autonomy across the entire organisation, this creates an environment where purpose, autonomy and mastery can flourish.
A culture of Alignment enabling Autonomy at Spotify: Illustrated by Henrik Kniberg
Alignment Creates the Foundation
The first challenge for leaders is to create strong alignment. Alignment creates the foundation for team autonomy. Without strong alignment teams cannot see the big picture and when that happens, they need to be told what needs to get done, they need to be closely monitored and supervised every step along the way. This is what happens when there is weak alignment.
Spotify believes that “alignment enables autonomy”, the greater the alignment the more autonomy you can grant the squads. At Spotify alignment is created in two ways, firstly by strengthening alignment through strong cultural norms and then by strengthening autonomy through empowered teams with a clear mission.
“A strong enough culture can get away with a volatile, informal structure.” – Spotify Agile Coach Henrik Kniberg
At Spotify each squad is organised around a specific mission, such as “make Spotify the best place to find music”. When teams are aligned around a common goal they need less co-ordination, they trust each other, they’re able to work independently and able to make decision by themselves.
Alignment is also the result of the strong and explicit Spotify culture. The Spotify cultural norms, described in their engineering culture videos (Part 1 & Part 2), keeps alignment strong. Some of their cultural norms include the following:
- Trust over control
- Focus on motivation
- Alignment enables autonomy
- Small and frequent releases
- Loosely coupled, tightly aligned squads
- Community over structure
- Fail-friendly environment
- Experiment-friendly environment
- Minimise the need for big projects
- Chaos over bureaucracy
- Continuous improvement
By making cultural norms explicit Spotify is able to promote consistent behaviour and provide teams the safety they need to act on their values.
Autonomy Motivates Action
Autonomy is about allowing teams to choose how they will work and is a critical part of the Spotify operating model.
This is not a new idea, military leaders have known importance of autonomy for a long time. George S. Patton made the point that you “don’t tell people how to do things, tell them what to do and let them surprise you with their results.”
Motivating a team is a function of leadership, not management. You cannot micromanage teams to get them to do their jobs. How can anyone who is micromanaged feel inspired and engaged with the enterprise’s purpose? Instead, leaders need to help teams align on the “why” and the “what” and allow teams the autonomy as to the “how”. It’s the leader’s job to communicate what problems need to be solved, then to get out the way and allow the team to collaborate to find the best solution.
Alignment and autonomy work hand-in-hand. The stronger the alignment, the more autonomy you can grant. With Spotify’s clear mission and their strong cultural norms, Spotify leaders are able to grant high levels of autonomy. The end result is happier people, increased innovation and creative problem solving.
The purpose of this post is not to get you to run out and implement the Spotify operating model in your organisation. Rather my goal is to encourage you to think about how you can create an environment that embraces the ideas of purpose, autonomy and mastery.
The challenge we have as leaders is to find new ways of navigating the fast paced, digital world of today. The command and control, position and authority based leadership style, which is still so ingrained in the majority of organisations, must give way to new approaches. If not many more companies will follow those who have fallen off the Fortune 500 list over the past few years.
More and more organisation are changing their approach to leadership, they’re beginning to shift their culture and operating model, seeking to build purpose, autonomy and mastery, establishing new ways of working. Spotify is not alone, companies such as Buffer, Valve, Zappos and ING bank are all on similar transformational journeys.
Still clinging to outdated models of leadership? You need to change.
- Strengthen Alignment: Alignment is created when there are explicit cultural norms and shared goals. Make time to clarify your teams purpose and goals. Next, take time to make explicit your cultural norms.
- Encourage Autonomy: What can you do to increase autonomy in your teams? As the leader spend time on clarifying your why and the what. Be clear as to the problems which need to be solved and allow your teams to come up with creative solutions.
- Commit to Mastery: Create opportunities for learning and the sharing of ideas. Drive out fear and blame, encourage experimentation and reframe failure as learning.
Competing in VUCA times requires more leadership and a lot less management. More autonomy and a less control!