Stories of Change

Adapting to the 2008 financial crisis. What builds an agile organization?

Where?  After the 2008 financial crisis, organizations all over the world were impacted. A study of 16 teams in 4 organizations in the aftermath of this crisis reveals just what differentiates adaptive organizations from other peer level companies. All 4 organizations were from very different industries. 2 were from India and 2 were from the United States.

Findings:

The 2008 financial crisis was an unforeseen business circumstance that impacted a wide range of organizations all over the world. The organizational ramifications of this crisis ranged from a sudden loss of customer spend, business uncertainty and widespread nervousness among employees. What then allowed some organizations to quickly bounce back and adapt? Well it turns out, it all lies in the way the organization is designed.

In the face of a large unforeseen event like this, the environmental impacts are uneven. Some industries were hit far harder than others. Organizations that had wider environment scanning abilities were quickly able to see this. Information in more centralized organizations moved far more slowly and far less completely.

And this was very important in understanding the events as they unfolded. Organizations with distributed leadership were able to quickly re-organize themselves locally and adapt. For instance a consulting company with operations across several domains, was able to move its people and their marketing efforts to industries that were less impacted.

Quick and agile movements at a local level however require a commitment to a common charter and sufficient trust across peers and across levels for quick decisions. On the other hand, one organization that faced great challenges in adaptation was a large state-wide utility. All decisions came from the top-down, and therefore were not in sync with very rapidly changing environment.

Just as a wide environment scanning function allows a deeper understanding of change, peer to peer learning and distributed leadership was essential to being able to respond to these changes.

It then turns out that building an adaptive organization requires conscious design. It requires an organization designed to continuously sense the environment, and strong communication across the organization for information to flow. The ability to respond quickly to such change required peer to peer learning and distributed leadership—both of which thrive in an environment of trust and commitment.

These are very important learnings for organizations with aspirations of staying adaptive in the face of large environmental jolts.