Leading Outside the Lines

"...Formalist managers do not fully understand or believe in the importance and power of emotions in effecting change... They discount the degree to which human behavior is emotionally determined."

-John Katzenbach and Zia Khan

Many of you have likely read The Wisdom of Teams, another classic co-authored by Jon Katzenbach. I picked this book from among the many he’s written, because it introduced me to the concept of balance between your formal and informal organization. Katz is a culture guru and beloved mentor to many at the Katzenbach Center, a culture-focused community at Booz & Company and later PwC. The need for balance between the formal and informal was further incorporated after this book into what became known as orgDNA, which has been applied by more than 150 thousand companies over the years since the concept was first introduced in HBR. I trust that you, too, will find the ideas in the book and subsequent body of work valuable in thinking through the right places to focus to achieve lasting organizational change and evolve a more customer-driven culture.

The book lays out two equally important aspects of what makes organizations tick and shape “how things are done around here.” The formal organization of a company encompasses its management structure, decision rights, incentives, and metrics. These get a lot of attention, in particular structure, as executives fight over resources. The informal side to organizational dynamics often doesn’t get as much attention, though it is equally critical to organizational effectiveness and evolving your culture. The informal organization includes things like relationship networks, commitments, norms, and mindsets. The cultures of startups with visionary founders are often defined more by the informal than the formal. Then as companies grow, the emphasis on formal organizational levers typically takes over. At the same time, negative behaviors creep into the culture, often related to former strengths (I love the saying that “your strengths often become your weaknesses” which applies as much for organizations as it does for individuals). OrgDNA is a visual metaphor for how the formal and informal organization come together, pairing formal and informal organizational levers in a double helix.

In the book, Katz and Zia Khan show how you can tap into the full potential of your employees to accelerate your desired business outcomes. Their book is a blueprint for how to build a movement in your organization, paying more attention to the informal side of things to amplify the emotional energy that your authentic informal leaders create to encourage more of the positive behaviors critical to your culture’s evolution. They also show how being thoughtful about the best way to activate cultural behaviors can help you to unlock the “frozen middle” so that your managers are more bought into your strategy and change agenda and help spread these behaviors across the broader organization.

Evolving your culture to be more customer-driven requires careful attention to both your formal and informal organization dynamics. This in turn amplifies the ROI from your investments in data, analytics, and technology to drive continuous improvement in the customer experience.

If you’d like to read some of my own articles on how culture and customer experience come together, please check out Activating culture is Key to Making Customer Centricity Stick or The Inside-out Approach to Customer Centricity, both written with colleagues from the Katzenbach Center. You can find links to both in this collection of articles on our website.

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