We are living in interesting and hopeful times. Though most of us longed to see 2020 out, there is good reason to be optimistic in 2021.
We have seen near economic collapse in many countries, jobless rates at unheard levels, national debt climbing higher and higher. Industries that depend on tourism, large public gatherings or in person social interaction have been decimated.
In Canada (to name but one example), the national deficit will hit 1.2 trillion in 2020 – 21. This represents debt levels not seen since WW2, owing largely to pandemic aid and recovery projects to help citizens.[1]
Where is the optimism, you might ask?
In our rebuilding during a chaotic time, there is vast potential for innovation.
On a global level, those organisations that have not been able to adapt to large scale, rapid change have floundered and failed.
To give a simple example, the restaurant industry that regularly seated tables of 10 became (in a flash) the “take-out industry”. Some of this was driven by government and public health intervention, and some by the efforts of creative small business owners.
Courier services saw business boom as online shopping, grocery ordering, and food deliveries increased dramatically during nationwide lockdowns. According to the Adobe Digital Economy Index, “buy online, pick up in store” sales surged by 259% year over year.[1] Businesses in that surge innovated rapidly to reflect consumer needs.
Early thoughts on Innovation
Early models of innovation traced the route to new inventions and ideas in a linear model. Anthropologists proposed in the 1940’s to 50’s that scientific research is primary to advancement. The path was thought to be a relatively simple recipe of a “technology push” towards new inventions:
Basic science → Design and engineering → Manufacturing → Marketing → Sales[3]
This was a revolutionary thought, certainly, but it largely ignored the human element. Humans are rarely linear (in thought or action) or completely rational.
Enter: Chaos and Creative Destruction
“Big Joe” Schumpeter was an Austrian-American economist and the father of “creative destruction”, knowledge creation and innovation.
He suggested that in an organisation, the impetus for innovation might look like this:
- Introduction of a new product or service
- Introduction of a new process
- Opening of a new market
- Identification of a new market
- Creation of a new type of industrial organisation
Hand in hand with Schumpeter’s theories, Peter Drucker suggested that these new sources of opportunity, knowledge and resources might come from:
- The unexpected or incongruous
- Inadequacy in processes or resources
- Changes in industry or market structure
- Demographic changes or changes in perception, mood or meaning
- New knowledge or technology impacts
In other words, problems, strife, hardship, the unexpected and the unheard of will generally lead to new ideas, products, systems, and methods of working.
The problem lies in dealing with the human element in the midst of the chaos that is ushering in positive changes. On a personal level, many of us shy away from big leaps and do not welcome uncertainty with open arms.
Organisational Design, Psychological Safety and Humanity’s Best Qualities
Organisational Design is defined as a set of stages to resolve issues such as cultural change, determining mission and values, introducing new systems and processes, and enhancing leadership and morale. Applied with finesse and care, they are collaborative and democratic processes. They aren’t a static set of rules but a living system that respects the potential in our humanity.
When we talk of knowledge creation and innovation, we speak of change and finding a way forward through difficulty. As people working together within an organisation, we need:
- The ability to engage with and integrate new knowledge at the human level and in systems to capture and interpret knowledge (Absorptive Capacity)
- The ability to engage with a diverse set of minds and open networks (Social Capital)
- The ability to make sense of dialogues, knowledge in which we engage and our relationship to them (Human Capital)
Psychological Safety is the framework which makes this possible. Those who are not afraid to speak up have the most potential to connect with others and benefit from a free sharing of ideas. Trust, compassion, stability, and hope are crucial in developing and maintaining engagement in the workplace and the potential to grow.
Organisational Design: Taming the Chaos
At Compass Partnership, our OD practice draws upon approaches such as Appreciative Inquiry to engage people in a collaborative visioning process where the result has collective meaning. The journey of working together towards a shared vision is equally important.
By shaping the environment within the organisation, we can help to foster the positive aspects of Schumpeter’s creative destruction in uncertain times.
Employ systems thinking. If you change a business process or technology, there will be effects elsewhere in the system that need to be considered. For example, the skills and motivations of people operating those new processes.
Organisational size matters. Large organisations (i.e., those with more people) must be designed differently than smaller ones. For example, larger firms are usually more decentralised. If there are only two people in a firm, then the decision making, communications and coordination are easy. As the number of people increases, communication becomes very problematic. People generate information as they do their work, and they also require information as inputs to their work. Consider the growing need for information exchange as the size of the firm increases.
Think multi-functional. As organisations strive to build capacity and implement successful change, a multi-disciplinary OD approach involving functions such as finance, production, operations, and IT is becoming increasingly evident and useful.
Consider these different functional perspectives to aid strategic thinking:
Shape your future by putting people first. Think of their needs, especially as Gen Z are now entering the workplace. Empower them and tap into their motivational drivers by asking them what and how they would like to work.
Remind yourself that the tools and technology of this Industrial Revolution are made for people to use, by people. Embrace technology for what it can offer and equip your teams with the infrastructure and space to experiment with them. Off-shoots of ideas can create ways of working that don’t exist, so be open to new possibilities.
Develop leaders to help manage these shifts in technology and behaviour. Critical thinking skills, flexibility, and the ability to predict the impact of change are skills for now and the future.
Invest in your technical infrastructure and data analysing capabilities. All businesses must make a move to be smart, connected organisations or they will soon fall behind the competition.
As a final note, organisations will need to focus upon developing innovation cultures, in which individuals are empowered to explore new approaches, and are encouraged to generate new ideas, knowledge, and solutions, through collaborative problem solving, creativity development and innovation hubs. This is a challenge for many organisations, and that’s where transformational leadership will provide a differential.
[1] Tasker, J. P. (2020, July 08). “Ottawa to post $343B deficit as spending hits levels not seen since Second World War”, CBC News.
[2] Adobe.com, “Adobe Digital Economy Index”,
[3] Rothwell, Roy (February 1994). “Towards the Fifth‐generation Innovation Process“. International Marketing Review.