Don Sull's blog

Agile organizations consistently identify and exploit opportunities ahead of rivals. An organization’s values, defined as the shared set of norms that unify a group of employees, inspire them, and define appropriate behavior, can promote agility. But not just any values will do. After more than a decade studying more and less flexible companies, I have observed a small set of values shared by the most agile ones: achievement, teamwork, creativity, ownership, and open communication. Firms use different terms to describe these values, and also include additional norms specific to their firm or idiosyncratic to their organizational history. But the core set of values is quite robust across firms that excel at agility over time.  This post will describe the core set of values, why they matter for agility, and use the Reckitt Benckiser (RB) case as an example.

1) Achievement (aka performance, results-oriented, delivery, meritocracy, winning in the market)

To out-execute competitors on a consistent basis, agile firms must inspire employees to exert  effort equivalent how hard entrepreneurs work in a start-up, and evoke this effort on an ongoing basis. A corporate culture that recognizes and celebrates achievement creates social incentives to go the extra mile to perform.  A firm that values performance, moreover, will tend to attract and retain the overachievers who can sustain extraordinary effort over time. Agile firms must also focus effort on the opportunities that matter most, and achievement demands a clear definition of objectives to measure success.  Absent a clear focus on achievement, employees tend to judge effort based on hours worked, face time, or busy-ness–all poor proxies for performance.

RB describes achievement in the following terms: “Achievement makes us who we are. We don’t just aim high, we aim to outperform. We recognise our people in this. We support them to outperform wherever they focus, be it products, profits or Corporate Responsibility.” Specific activities associated with achievement include setting goals that are ambitious, yet achievable, recognizing and rewarding the achievement of the team as a whole, and displaying a high sense of urgency.

2) Teamwork (aka team spirit, partnership, cooperation)

The most promising opportunities often fall between the cracks of organizational silos.  Employees must actively share information with one another to spot these opportunities, and coordinate their efforts to seize them. Hiring, promoting, and firing based on teamwork builds a cadre of employees and managers with a propensity to cooperate with one another.  An organization that prizes achievement above all else (and pays large bonuses for individual results) can degenerate into a place where individual gunslingers obsess about their own performance and ignore the greater good. An emphasis on teamwork can counterbalance this tendency.

RB describes “team spirit” in the following terms “We drive success by pulling together. As individuals we like to win and are high achievers. We rapidly bring our international strengths together when needed to work as one, united by common principles and attitudes. We treat each other and our differences with a high degree of respect, sharing ideas, failures and successes.” Examples of how this value translates into action include demonstrating respect for differences in style and ideas and actively listening to others.

3) Creativity (aka innovation, originality, imagination, entrepreneurship)

Competing on agility–versus resources, scale, or barriers to entry–requires an organization to remain in a state of constant entrepreneurship, regardless of its age or size. To exploit emerging opportunities, employees must pioneer novel ways of doing business and break with accepted practice in their industry. By constantly challenging the status quo, employees can unearth opportunities that conventional competitors miss, and and maintain a nagging sense of dissatisfaction that fuels action.

RB uses the term entrepreneurship, by which they mean–”We encourage bold thinking, initiative and commercial drive. We allow daring ideas to thrive. We value the passion that people bring internationally in turning ideas into great execution.” Specific actions that display entrepreneurship include taking calculated risks, challenging the status quo, and finding and leveraging new concepts.

4) Ownership (aka responsibility, initiative, commitment)

Like teamwork, ownership counterbalances the excesses of achievement, which left unchecked can breed an unhealthy individualism and short-term orientation. Ownership links employees to the fate of the firm as a whole, thereby increasing their commitment to its long-term success. Recognizing and rewarding ownership increases the odds that employees will take initiative in identifying new opportunities, mobilizing the resources to exploit them, and figuring out how to achieve their objectives.

RB defines ownership thus, “We take full responsibility for, and the initiative to do what’s needed in business and in developing and engaging our teams. We attract people with this deep sense of ownership. We are rigorous in following the few but important rules and processes we have. Mostly, however, people are given the latitude to do what they want to, within a framework for success.” Specific behaviors that manifest ownership include not waiting to be told what to do, always delivering on commitments, and taking ownership to resolve issues.

5) Open communication (aka constructive conflict, non-hierarchical, informality)

To seize opportunities, employees must make sense of messy situations, decide based on incomplete information, and make mid-course corrections as new data emerges. Teams can increase the odds of getting it right by adopting norms of communication that downplay deference to hierarchy and encourage everyone to speak their mind. A company culture where  managers remain aloof from employees, punish messengers bearing bad news, or squelch dissenting opinions will consistently reach sub-optimal interpretations, make poor decisions, and miss opportunities for mid-course correction. Hearing bad news or dissenting opinions is not pleasant, but a strongly-held value encouraging open communication increases the odds that employees discuss what matters.