Peter Drucker famously said that “culture eats strategy for breakfast”. Should we also acknowledge that structure eats culture for brunch shortly afterwards?
I've been reading Loonshots by Safi Bahcall. It's quite good. It’s not hugely original, but it has lots of good stories and gives a new perspective on some old topics.
Understanding organisational culture is an essential part of any transformation programme. We focus on the best of what is, while looking for new levers to bring out innovative thinking in products, services and business models.
Loonshots are those radical ideas that can transform a company, an industry or the world. And most of them go nowhere. They are buried in organisational inertia, cynicism, and most often a simple failure to comprehend.
Closely linked to this, there has never been greater interest in culture as a critical competitive advantage – perhaps the competitive advantage. And, picking back up on the Peter Drucker quote, you only need to be involved in 1 or 2 innovation or transformation projects before understanding that writing a new strategy without addressing culture change is pointless.
Safi Bahcall’s new book, “Loonshots” highlights structural change as an essential factor in innovation. This is a blog topic so I'll write more on this topic in coming posts, but to kick things off, let's consider the relationship between stake and rank.
The relative importance to an individual of stake and rank are critical in determining behaviour. As teams and organisations grow, the stake that individuals have in outcomes decrease while the perks of rank increase. When the two cross, the system snaps. Incentives begin encouraging behaviour no one wants. As Bahcall notes, “those same groups—with the same people—begin rejecting Loonshots.”
Drawing on the science of phase transitions, Bahcall shows why teams, companies, or any group with a mission will suddenly change from embracing wild new ideas to rigidly rejecting them, just as flowing water will suddenly change into brittle ice. Mountains of print have been written about culture. Loonshots identifies the small shifts in structure that control this transition, the same way that temperature controls the change from water to ice.