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Vineet Nayar
February 10, 2016
During a consulting engagement at a $50 billion conglomerate, I spoke with a
young man who was worried about a potential project overrun. I asked if he had
hit a stumbling block. It really isn t a big deal I know we have the
in-house expertise to solve this, he said. I just need to rope in some
colleagues from another team. So what s the problem? I asked. I m waiting
for my boss to give me the go-ahead, he replied.
This company operates on a hub-and-spoke management structure, where
significant decisions are referred to one s formal boss rather than to whoever
is best suited to make the call, regardless of hierarchical positioning. The
management structure gave the company the ability to make decisions quickly in
the early days. Now, though, it is slowing the organization down, due to its
inherent inability to enable quick, cross-functional, collaborative decisions.
(In this company, like so many others, most significant value creation now
occurs through the work of cross-functional project teams.)
The management of this company has noticed this lag and asked for help
answering a question: Does it need to review its management structure to enable
better collaboration between individual teams?
In the hub-and-spoke model, each area is optimized to deliver results to and
curry favor with the higher-ups (or, in the metaphor of hub and spokes, the
center). In today s fast-paced marketplace, teams that need to wait for a
leader to weigh in have lost the game before they start. Leaders instead need
to paint a vivid horizon that inspires self-propelling teams to forge ahead
with real-time collaboration then step out of their way.
That shift implies something really important about the changing nature of
leadership. Kevin Martin, chief research officer of i4cp, says Organizations
must look at leaders through a different lens. Business skills and acumen are
now table stakes. It s the ability to influence and drive collaboration across
cultures, boundaries, and borders that has the greater variability on global
leadership effectiveness.
Obviously, the shift in leadership competence requires complementary shifts in
organizational structure, decision-making processes, and performance-management
systems. Instead of a hub-and-spoke system, picture a racing track where each
driverless team can compete successfully on the basis of four fundamentals:
Overlapping goals. Goals will have significant overlaps; each individual and
each team understands that they are pursuing one collective organizational
goal.
Role linkages. Each individual, team, and function will play a distinct role in
the race while also supporting each other s roles. Every individual has to be
clear about how the individual, team, and organizational roles are linked.
Constant collaboration. At the foundation of this model is the fact that no one
individual or team can win the race alone. They will win only if they play
their roles to perfection and help others that they re linked to.
Continuous reinvention. Teams will continuously process new data, creating a
landscape of learning and realignment across levels.
There are some early signs of a movement away from hub-and-spoke management.
One of the central tools of that system was the ubiquitous performance review.
Today, 6% of Fortune 500 companies are reported to have gotten rid of rankings,
according to management research firm CEB. These companies include big names
like Microsoft, Adobe, Gap, and Medtronic. Recently, Accenture CEO Pierre
Nanterme told The Washington Post that his company, too, is getting rid of the
annual performance review as of Fall 2016, terming the move a massive
revolution.
The million-dollar question that my clients ask me now: Is all this change
worth the risk? My response is simple: There is no alternative. You have to
make this change if you want to survive.
Vineet Nayar is the founder of the Sampark Foundation based in Delhi, and the
former CEO of HCL Technologies. He is the author of Employees First, Customers
Second. Follow Vineet at twitter.com/vineetnayar.