I'm Adi Ignatius.
I'm Alison Beard, and this is the HBR IdeaCast.
Alison, there has been a lot of talk about whether our institutions are up to today's challenges.
So I'm talking about schools, I'm talking about companies, I'm talking about other organizations that really continue to be run essentially as they were 100 years ago, when our economic and social needs were very, very different.
I'm particularly interested in how companies are structured and whether they're set up to succeed in today's really fast-moving business environment.
Yeah, and I think this is a problem that we've been trying to solve for years, right?
Reorganizing to be more agile, more experimental, and more digital.
That's definitely happened.
Our guest today, Jana Werner, argues that most companies still retain an organizational structure that yeah, may have evolved, but is still too rigid.
And the authors use a metaphor that the ideal modern organization should be like an octopus with tentacles that work separately but also together with distributed intelligence, sensory awareness and adaptability.
I like that.
Octopuses, I've been told it's not octopi, seem to be having a moment, you know, in film and TV and books.
They do have big heads, but I guess the legs are the real engines powering them through the ocean.
So is this about finally finding a way for companies to reduce hierarchy once and for all and create autonomous but still connected teams like those legs?
So it might be.
It's definitely about breaking down bureaucracy and it's about an obsessive focus on what really matters, which is customer needs.
So that's the advice of Jana Werner, Executive in Residence of Enterprise Strategy at Amazon Web Services and co-author with Phil LeBrun of the new HBR article Become an Octopus Organization, as well as the new book The Octopus Organization A Guide to Thriving in a World of Continuous Transformation.
So here's my conversation with Jana.
I'd like your analysis of what's wrong with corporations today.
So let's start with that.
What is wrong with our organizations?
My co-author, Philip Rohn, and I found working in large organizations helping to advance and transform them, and now working with a lot of large companies in our day jobs currently that they essentially still are factories.
They're based on the models of Frederick Taylor and co, a bit of a rusting construct built on standardization specialization control, individual performance focus compliance, essentially predictable outcomes.
And the idea of creating efficiency was a way to operate, but these models no longer work.
They're built on a foundation of permission permission to innovate, to speak up and they're designed to de-risk and be efficient.
Yes, we are trying to evolve.
There's a lot of great new practice and practical examples out there, Silicon Valley, for example.
And some organizations have evolved like this the Apples, of course, of the world and Amazons of the world.
But many of the larger traditional organizations I work with the majority actually are finding it hard and they do it in pockets but not to the point that we would like to inspire organizations to do.
It sounds like companies think they have made progress, think they have.
You know we're adopting the Silicon Valley style, but your point is it's just sort of tacked on to these traditional structures that need a pretty dramatic change.
So your idea is to inspire companies to pursue a new approach which you call, you know Octopus, to become an octopus organization.
Talk about what is an octopus organization.
We start from the point of view that how we operate and how we engage and what companies and customers need today has changed so much.
Today's success depends much more on building genuine trust with customers, with the employees you work with, with a broader set of stakeholders as well.
Work is so much less transactional.
It's cross-disciplined.
New technology comes up.
So the idea for us is to say you need to move a bit away from command and control, because you can't command and control your way to exceptional outcomes through learning new ways of operating a new technology.
So it's about creating connection, about creating agency, more than this permission setting culture we currently have.
And then designing companies that can thrive in the current complexity.
So a bit from the metal tin man suit to a living organism.
And the octopus was one that came to mind for many reasons.
I recently interviewed the global managing partner McKinsey, who said in his conversations with CEOs all over the world I'm paraphrasing but basically no one is happy with their organizational structure.
They feel that it's too complicated.
It's too matrix.
True.
People can't figure out how to get anything done.
Now you're sort of talking about a reorganization, which is kind of daunting for companies that are already feeling that they don't have a grip on the organization.
Now
But in what way will this simplify or lubricate kind of the business of innovation within companies?
I would probably not so much call it a structure.
I would call it a mindset, a way of thinking and a way of operating, of living differently.
We've seen a lot of restructures and most of them cause more challenge, or often scarring, than they cause an actual improvement of productivity and comfort for people to work in it.
The idea is more about how can you push decisions into the organization, to people who are close to the customer, who are close to the problem.
It's about all these amazing people that we hire and then actually tell them what to do, instead of tapping into their knowledge and experience.
How can you switch them all on so they all come every day to work to say, okay.
What are the problems worth solving?
How can I solve them in ever better ways?
And how can I help advance and adapt my organization so it stays lean?
We fight against this natural buildup of bureaucracy, of layers, of extra things.
And we keep focusing on the customers, not on inward things.
And we keep thinking about how to innovate for those customers.
I think there are probably a lot of companies that think yes, we are customer-centric because we say it every day, right?
So how do you get from mouthing the words we're customer-centric to actually being that?
I love that question because I work with organizations that say we put the customer at the heart of everything we do.
But then they, for example, you look at their budget and 80 of their budget is actually spent on what we call keeping the lights on on infrastructure, on internal change.
So their money doesn't talk the way that they think they are working.
The switch is quite challenging and the organizations that do that well have their leaders engage with customers.
So, instead of thinking they have used proxies, they use proxy metrics like net promoter scores, instead of using opinions of.
I have done this job for 30 years.
I know what my customers want.
They still go out and speak to customers.
We've spoken to Indra Nooyi.
She was the former CEO of PepsiCo and is now an Amazon board member.
She used to ride Pepsi delivery trucks and go in restaurants to see what was going on.
So leaders stay close.
They do call listening.
They understand they need to dive deeper into the data they get from customers and not believe the abstract proxy metrics like net promoter scores.
They hear anecdotes and they follow those anecdotes to figure out what is not quite right and how do we serve customers better.
And they push decisions of how to serve customers and solve problems to those people in their orgs that are close to them.
Is that the key?
I mean, the key to this can't be to ride a delivery truck once in a while if you're the CEO, right?
But is it what you just said about empowering the frontline people to listen and to respond to customer needs?
Exactly.
And that means giving them the opportunity to think about how they solve problems for their customers and not pushing those decisions up the chain and enabling them, giving them the technology.
We talk a lot about AI now, instead of clamping down on it.
Giving them the technology to solve problems in new and different ways for their customers.
Giving them the innovation freedom.
Last week I visited the transformation team of a car manufacturer a struggling one and they're under so much pressure that all innovation ideas need big business cases, big proposals, massive behind-the-scenes arguing and negotiating issues That people get buy-in.
And then these innovation proposals get so big and to the board that they have to be signed off.
And when the board has signed off, of course everyone has to jump at it because the board has given attention.
So there's no more room to innovate small and do things.
And they said we used to go down to the basement, the engineers, and work on new cars.
None of this exists anymore.
And that's the opposite of what's needed.
So let's talk about the octopus metaphor.
So you know the idea of distributed intelligence, sensory awareness, adaptability.
You know what was the moment, the aha moment.
Maybe that convinced you that you know the octopus is the right metaphor, the right model for a modern business.
I saw an amazing movie called My Octopus Teacher.
Most people probably know it.
And it got me curious about the creature.
And I studied more about it.
And I learned how absurdly sophisticated their ability is to adapt through things like shapeshifting.
They can change the texture of their skin.
They have an unbelievable capacity to learn.
They can even alter their RNA.
They can create new molecules depending if they're in hot or cold water.
And they do that within a day so they can adapt to the environment.
The whole idea was can we give people a simple way of looking at it, to say this is what we're looking to do?
And most importantly, they have distributed intelligence.
My 10-year-old daughter told me they have neuroclusters in each of their arms.
So they don't just have a central brain, but they have decentralized intelligence.
So The idea is how can we give people an imagery and a metaphor to think differently about their organization?
And this creature is just that.
Yeah.
Okay.
So to stick with that.
So then you know, you have the tentacles I hope I have the right word that are working separately but obviously are also working together.
Yes.
So let's talk about that within companies.
Sure.
I've heard professors say yes yes yes, we hate silos, but silos are actually useful for getting things done.
How do you balance the fact that we need things to work independently while also contributing to this sort of fuller, wholer organization?
I think this is an ever-questioned problem, the idea of how do you balance autonomy with alignment.
The idea is to think about leaders, providing the clarity, the context of what the challenges are.
What are the problems worth solving, what are the few things that are important to enable people to then go and solve for those things.
And that creates a mix of having context, having clarity of what the few priorities are and giving people the freedom and the space to experiment in that space.
And in the companies that do this well, they actually accept that there will be a bit of duplication and there will be a bit of messiness.
But we rather accept this for the advanced gain of more innovation and more speed and more customer centricity.
But it is always a trade-off.
The silo problem for me is much more pronounced in large and traditional organizations, where leaders sit in an executive team and they're not a leadership team.
They're just a team of leaders who come together and they, for example, decide in an executive team something like we want to become more customer centric.
And then the CFO goes away and says, okay, we need to get more efficient so we can cut prices.
The CMO goes away and says, we need a new customer experience.
The CIO goes away and says, we have to change our technology like this and that.
So the people who sit together in an executive team are more connected to their silos and try and solve problems in their silos and trying to connect an outcome as a leadership team and then horizontally connect and develop these outcomes.
So at this stage, would you describe Amazon as a successful example of an octopus company?
I mean, I think of them as, since Jeff Bezos' creation, we are customer obsessed.
I think under Andy Jassy they're trying to cut out a lot of the bureaucracy, a lot of the stuff that slows them down in the middle.
Have they become what you're talking about?
Are they on the path to becoming that?
Can anybody ever become the ideal that you're talking about?
I think it's good to have an ideal.
Many companies have mixed some tentacles and still some old tin man rusty armors.
Some have more of an octopus, some have less.
And I think the more successful companies have more of these traits.
And I think Amazon has many of the qualities and in many parts of the organization acts in this way, in this metaphor.
So We have principles that we follow that lay out values.
We try to push independent product teams.
We call them two pizza teams, who are as broadly autonomous as possible and can be close to the customers, can make their own decisions like little startups.
Of course, in every organization there's a risk that the company calcifies and goes into the anti-patterns like pushing decisions up the hierarchy and making decisions too slowly, starting to become involved in their internal proxy processes rather than thinking about customers.
That risk exists.
We call this a shift from day one culture being like a startup to a day two culture, which is this more rigid culture.
It's lower organization that's not an octopus.
And we keep consciously fighting against this day.
Two culture, because it's not something you change once.
You have to continuously make sure you go back to this octopus-like way of being.
On the question of innovation, you know a lot of companies pursue a sort of dual transformation approach.
I mean, that's been true at Harvard Business Publishing as well.
You know, we published a book by Scott Anthony on this, where you know your next generation innovation right, you're inventing the future is separated from innovation at the core.
It sounds like you're suggesting a different approach to innovation.
Is that right?
Yeah, we see a lot of organizations that do innovation labs because they feel they're struggling to truly drive innovation through the DNA of the organization.
But that puts innovation to the side.
It gives the ability and the resources to few people.
And those few people are often not the broad organization that is actually close to the customers and to the problems to solve.
And that's risky because a lot of this innovation then doesn't reach the customer.
It stays proof of concepts and it's hard to bring these abstracts ivory tower and removed innovations into the organization to stick and scale.
So the recommendation we have is actually giving broad access to innovation mechanisms, ways of working and enabling organizations across the piece to innovate.
For example, Amazon Prime.
The idea was created by someone who was filling spreadsheets about delivery and about how to start thinking about connecting and bundling offerings.
The idea is push to anyone in the organization, rather than just a few who think they understand how to innovate.
Because innovation comes from experimenting, from being close to the problems, from trying things and from having ideas.
You know what are the structural cultural signals that leadership can try to create, that tells employees that innovation is genuinely that sort of daily obsessive behavior and not, as you say, a kind of isolated or special event or isolated department.
It's first of all, giving them the mechanisms.
So, for example, at Amazon, we have a method called working backwards and the broader organization gets the tools to do this and gets the opportunity to create and write ideas for innovation and share them.
We expect this in our annual performance reviews.
We look at what have you done to look to innovate, to simplify.
We share what we mean by innovation.
This is not.
You don't have to invent the x-ray and you don't have to invent a new tool for a genetic AI.
Innovation can be small I innovation.
So little things creating some efficiency, fixing small problems so that people get out of this fear that a paralyzing idea.
They have to do something big.
And we also provide the freedom to say when you come up with something, write your idea down, take it through the organization.
You don't just have to go up to your boss and ask for permission.
So the idea is give principles where people can realize this is part of my daily job.
Put it into the performance reviews.
Give them the tools.
And then celebrate when people come up with innovations.
Tell the stories, share what they have created so that others realize this is real.
We're not just pretending to say this.
We're actually wanting you to do this.
So there are innovations that are being created.
You also write about how there are these anti-patterns that need to be done away with or improved.
Talk about one or two of them, these sort of anti-patterns that are blocking this transformation that you're describing.
In a lot of companies we start to do a piece of work and we don't really think about what is the problem we're trying to solve.
We get all this money, we create a big project and then we go and we start and we try to show progress in this project.
The tendency is then to keep developing, keep working on it, because we want to, first of all, have a bit of immediate gratification that we're making progress on the project.
We want to showcase to our leaders that we're making progress.
But actually when we spoke in our interview for the book to Astro Teller, who's the CEO of Alphabet Access Moonshot Labs, he gave us the metaphor of the monkey and the pedestal.
And he said if you want to teach a monkey on a pedestal how to recite Shakespeare, where do you start?
And his view was that most organizations start building the pedestal.
So you start, try and make progress, keeps the team in the comfort zone, you can show off things.
But actually there's absolutely no point building the pedestal if you can't get the monkey to recite Shakespeare.
What's his point?
His point is get to know quickly and tackle the most difficult and challenging problems first.
And then you get to know quickly.
And when you get to know, you celebrate those teams because they have now freed up resources and time and energy from something they should no longer be working on instead of just keeping going.
These are human behavioral issues, right?
And you're not going to do away with every manager, right?
And managers have their areas of control, they have their egos, and that's the reason for some of what you talked about.
You can't just wish that away.
I mean, how do you... You need committed managers who are doing something productive, right?
So how do you balance this?
Okay, everyone is empowered to innovate and to take steps and to make the experiment.
You know, how do you balance that with the fact that organizations do tend to create structures right?
That's how things get done.
I love the idea of it, but how do you do it and how do you make it stick?
It requires discipline.
I think it was Parkinson's law who came up with this idea that our organizations and bureaucracies grow in our sleep by five to seven percent every year.
Because he found he was a naval historian and he found as the British Navy's fleet became smaller, the number of generals and people working in the British Navy became more.
So Parkinson's law tells us the organizational bureaucracy grows and grows even in our sleep.
And organizations that do this well, they take a commitment to say we have to constantly groom.
We know companies like Google.
They're leaders who put positive friction into processes that become too big.
For example, Google's hiring process became so big that more and more people were involved in hiring someone.
And at some point a senior leader put positive friction and to say you now need sign off from me personally if you want to have more than five people involved in the hiring process.
So it's like mowing the lawn.
You can't stop.
You have to continuously add positive friction where you can and continuously take out this growth of bureaucracy and leadership.
We have a beautiful term that my colleague Phil came across.
It's like the body mass index, but it's actually the bureaucracy mass index.
So you can try and measure your wait time, your time of useless activities, and try and work on your body mass index.
Okay, so if your bureaucracy mass index shows that you're too bureaucratic, what do you do?
If you identify or self-identify, we are too bureaucratic, then what's the first step?
We know that leaders rarely understand how work gets done.
So it's often not about leaders trying to drive change from the top, but empowering people to say, and having principles that you also get measured on and rewarded on to say have I invented, have I simplified?
We call this invent and simplify at Amazon.
We have a principle.
Have I consistently looked at how I can do things leaner, how I can take out this bureaucracy?
If I want to start a new project, Have the mindset of making it smaller, because people tend to take up the time and the resource with bigger spaces.
You make a project longer, it will take the time, it will require more resources.
So having a mindset of giving people less time, less resource, is a way to reduce bureaucracy growing.
Frugality is a way of bureaucracy growing less and giving people the opportunity to cut that down themselves.
And sometimes it's little things like learning how to give tools.
For example, a leader not expecting a full PowerPoint presentation about a first draft implementation of a solution, but saying I don't need you to do that.
I need you to come and show me this crappy terrible, difficult stuff you're working on, because it creates honesty, it creates less bureaucracy and it shows us in more real life what's going on and how far you're getting with your work.
But how are we going to build the world's best pedestal?
You don't.
So what a lot of companies do is experiment at the bottom with the customer.
And then if it works, there's this instinct to scale it.
And you started to talk about this before.
What's wrong with that?
Or what's the right versus wrong approach to scaling experiments that seem to be working?
We talk about risks of scaling.
We like the word spreading.
We believe that things that work well, that are developed in a certain part of the organization, if they're really that good, they naturally spread.
It means that you don't create a push top down, but people adopt and spread through the organization what works.
And that is a much more natural way of change to stick with people and for people to then also advance because they feel they own it.
Scaling is a risky concept because it runs the risk of robbing people of local ownership.
We believe scaling is something you do to offer people something that creates efficiency and speed.
Everything else is better organized and changed in a natural pool culture.
As we've been saying, organizations, they have their silos, they have their structures.
Myself included, we have kind of meeting cultures.
Nobody wants to take ownership of risky ideas.
How do you make this really happen within organizations that have all of these embedded problems?
Yeah, we talk a lot about ownership culture and the challenge that a gatekeeper culture tends to create.
And we tell the joke of the pig and the chicken.
So the pig and the chicken walk down the road and the chicken says to the pig shall we open a restaurant together?
And the pig goes, yeah, sure.
And what shall we serve?
And the chicken says, well, ham and eggs, of course.
And suddenly the pig stops in its tracks and goes.
You realize I have to be much more committed to that than you.
And sometimes it takes the audience a minute of why that is.
But basically the point we're trying to make there's a difference between those that contribute and those who are really committed and accountable.
And often in organizations, we have lots of chickens who lay their eggs.
They come to meetings.
They have opinions.
They want to be involved.
They give part sign-offs of something.
But it's really, really difficult to find someone who truly owns something end-to-end and delivering an actual outcome, something meaningful, and making the necessary decisions to achieve it.
And we say...
You need more pigs in your organizations.
Maybe don't call them pigs.
At Amazon, we call them single-threaded leaders.
I think at Apple, they're called directly responsible individuals.
But the idea is someone who really gets up and injects energy and urgency into initiatives, is passionate about something, can dive deep into issues, move forward, presses on progress every day.
And when companies tell me they struggle to assign single-threaded leaders, then I tell them either this isn't important enough or you have a prioritization issue.
So surface your chicken behavior, create non-confrontational ways to challenge this passive participation, but it overcomes a massive problem that stagnates organizations.
In many ways, you've described what I would say for years we've been writing about.
This is good leadership.
That good leadership isn't just sort of talking down, but it is empowering others.
It's empowering others to be leaders and to develop leadership capabilities.
But there must be something more than just that for this really to succeed.
And, at the end of the day, is it about the CEO or the leader of the company Truly understanding the value that you can create by unlocking some of these opportunities?
Is it ultimately top-down?
You need a CEO who says, yes, we're going to empower.
I'm going to let go.
People below me are going to let go.
We're going to let go of authority and let people more on the front lines innovate and talk openly.
What is the ideal leadership function here to making this happen?
Yeah, it's a courage to do so.
And it's very hard as a leader.
Both Phil and I, who wrote about this, have been leaders and we still find ourselves struggling sometimes to give up ownership because things aren't done the way exactly how we want them.
So it is hard to do that.
And that is one part.
But the other part that's really important is creating the clarity.
So that people can have the context of making the right decisions, of being able to understand which problems are the important problems to solve and how to go about solving them and having the freedom and the comfort to do so.
And creating that clarity is a really, really difficult task and it's an ongoing task for leaders.
We spoke to the CEO of the London Stock Exchange, Dame Julia Hoggart, and she says a third of her role is to continuously create that clarity into her team and to keep recreating it.
The other thing then, is to push decisions into the organizations and stepping away and becoming more an architect of the system.
So not so much working in the system but trying to let people know, when they have this clarity and context, take decisions and do experiments.
And I love this.
Reed Hastings.
He said he prides himself of trying not to take any decisions in an entire quarter.
And the last thing that, particularly in our role, Phil and I see, is leaders having to get more curious about technology.
Not just saying, I don't understand.
They are curious about people.
They're curious about finance, but often not so curious about technology.
And the leaders we see They do all of this well.
They become curious.
They invite us for training sessions.
They speak to tech experts and they understand in the ecosystem what's possible.
Leaders in our complex organizations have so many priorities.
How do they focus then, on what really can make a difference in terms of the kind of transformation you're describing?
It's all about creating focus.
And did you know, by the way, the term priorities only existed in singular until the 19th century?
And only then have we started to add a lot and a lot of priorities and went away from a singular priority.
If you give people time, they will fill 100% of that time.
So the idea is how can you go back to focusing, to getting brave and having less priorities.
The most impressive example was one of the first interviews my colleague Phil and I did for a book with Benedict Boehm.
He's the CEO of a sportswear company and also an extreme mountaineer.
He climbed Death Zone Mountains.
So they're above 8,000 meters where there's not enough oxygen to sustain life.
And he told us as he was driving into Taliban territory to climb his next mountain.
He told us the story that most death zone climbers take about five days to climb such 8000 meter mountains.
They take about 50 to 55 kilos of equipment.
It's a lot of equipment to carry.
So he takes a completely different approach.
Together with all his equipment, the clothes he wears and the skis he uses to get down the mountain fast, he only carries 74 kilos.
So he cuts absolutely everything that isn't a priority.
His shoelaces, he even shaves his eyebrows, cuts his hair.
He has absolute focus so that he can take only two days instead of five, go up the mountain and ski back down.
And he told us, this is the relentless focus I also bring to my business.
So the idea of letting things go, what do we really need?
What are the absolute priorities?
And getting rid of this tyranny of end.
Do smaller things.
Get rid of the zombie projects that linger around that people fell in love with.
And go with something we learned from the CEO of the Johannesburg Stock Exchange, a hell yes test.
If people don't say, hell yes, we should be doing this, then it's probably not something you should do, or maybe not yet.
All right.
So if listeners are inspired by this, if they say yeah yeah yeah, I would like my company to be more like everything you described.
What's a small, maybe low-risk action that a leader can take immediately to get there, to increase ownership at a team level or whatever it is.
What are some things they could do right now?
What they can do is start listening and asking more questions than they may be used to.
And that's a bit uncomfortable.
And then again, it's not about leaders driving change, but pick some of the anti-patterns we write about.
Look at where people feel uncomfortable, where their shoulders go heavy, where they look away, where they laugh and laugh.
Follow the compass of where things are uncomfortable or difficult.
Ask about these things and then give people the opportunity to start fixing these with your support.
What resources do you need?
What's a small thing we can try?
When we've tried it.
What interesting assumptions or beliefs that we didn't even realize we had have we actually uncovered, that are holding us back?
So it's giving the opportunity, this idea of lighting a thousand fires as a leader to people in their organization, not doing the change yourself and yourself, as a leader, becoming more curious and helping create this clarity.
All right, Jana, that is great.
Thank you very much for being on IdeaCast.
Thank you so much for having me.
That was Jana Werner, executive in residence of enterprise strategy at Amazon Web Services and co-author of the HBR article Become an Octopus Organization and of the book The Octopus Organization A Guide to Thriving in a World of Continuous Transformation.
And unlimited access to HBR online.
Just head to hbr.org slash subscribe.
And thanks to our team Senior Producer Mary Du, Audio Product Manager Ian Fox and Senior Production Specialist Rob Eckhart.
And thanks to you for listening to the HBR IdeaCast.
We'll be back with a new episode on Tuesday.
I'm Adi Ignatius.
