Organizing for the Future

This article, originally published in January 2021 by McKinsey & Company, outlines nine key imperatives for organizations to thrive in a post-pandemic world. The authors, Aaron De Smet, Chris Gagnon, and Elizabeth Mygatt, argue that traditional organizational structures are no longer effective and call for a fundamental shift in how companies define themselves, operate, and grow.

Here's a breakdown of the key points with additional references:

The Need for Change

  • The Pandemic as a Catalyst: The COVID-19 pandemic accelerated the need for organizational change, highlighting the limitations of traditional models (De Smet et al., 2021).

  • Four Key Trends: Rising connectivity, lower transaction costs, unprecedented automation, and demographic shifts are reshaping the business landscape and require a more adaptable approach (De Smet et al., 2021).

The Role of HR in the Future

The article doesn't explicitly mention HR, but the outlined imperatives play a crucial role in HR functions like talent acquisition, employee engagement, and performance management.

Future-Ready Organizations: Three Key Characteristics

  1. Strong Identity:

    • Purpose: A clear and compelling purpose that resonates with employees and stakeholders (De Smet et al., 2021).

    • Value Agenda: A roadmap outlining how the organization creates value and differentiates itself (De Smet et al., 2021).

    • Culture: A unique set of behaviors and practices that drive performance (De Smet et al., 2021).

Nine Organizational Imperatives for the Future

The article details nine key areas organizations should prioritize, but for brevity, we'll focus on the first three:

  1. Take a Stance on Purpose (De Smet et al., 2021):

    • Organizations with a strong sense of purpose outperform their peers (Study on the impact of purpose-driven organizations: ).

Study on purposedriven organizations

    • Employees are more engaged and productive when their work aligns with a larger purpose (McKinsey research: McKinsey & Company, n.d.).

  1. Sharpen Your Value Agenda (De Smet et al., 2021):

    • Clearly identify how the organization creates value and differentiates itself (De Smet et al., 2021).

    • Allocate resources effectively towards core priorities (De Smet et al., 2021).

  2. Use Culture as Your 'Secret Sauce' (De Smet et al., 2021):

    • Build a strong performance culture with specific behaviors and practices (De Smet et al., 2021).

    • Culture significantly impacts performance (Companies with strong cultures achieve up to three-times higher total returns to shareholders: ).

Strong culture and shareholder returns

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Conclusion

Organizations that embrace these nine imperatives and build a strong foundation of identity, agility, and a scalable structure are positioned to thrive in the ever-evolving business landscape. By adapting to the "next normal," companies can unlock their full potential and achieve sustained success.

 

References

  • De Smet, A., Gagnon, C., & Mygatt, E. (2021, January 11). Organizing for the future: Why now? McKinsey & Company.

McKinsey & Company

  • McKinsey & Company. (n.d.). McKinsey technology trends outlook 2024. McKinsey & Company.

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How HR Can Help Build the Organization of the Future