Matrix Management

Balancing scalability and innovation

I blogged recently about the challenge of having both leverage and agility as is often the when way you start thinking about these things, you see it everywhere.

I saw a presentation on the challenge of both innovation and scalability:

• scalability requires standardization, reliability, dependability and reducing the likelihood of failure
• innovation requires experimentation and exploration, challenging assumptions doing things fast and being prepared to fail.

I also found a great description of dealing with the challenge on the corporate website for the package goods company Mondelēz – this is what they describe as their “core belief”.

The power of big and small.

We’re a big company. But we believe, above all, in one thing – something that’s unique to us – and that’s the power of big and small. Yes, we have the scale and resources of a global powerhouse. But also the speed, creativity and agility of a fresh new start-up.

It seems that the challenge of achieving levity and agility, scalability and innovation, simultaneously is everywhere at the moment. It’s great to see a large company recognize the challenge so explicitly and give it such prominence in its strategy.

It is unsurprising really; many organizations continue to be on a journey towards higher levels of integration and centralization. We have seen an acceleration of this trend since the economic recession.

Many have seen huge advantages from integrating their supply chain, common systems, sharing best practices globally and unlocking the resources that used to be inefficiently dedicated to the old vertical silos of geography and function.

However, any organizational change creates a desire for the opposite, the more we centralize, the more we hark back to a more flexible and decentralized past.

The difficult trick of course is to centralize and pursue leverage where it adds value and, at the same time, create the space for flexibility where agility is more important. It’s more usual that the pendulum swings too far in one direction before correcting in the other.

We are working with a couple of organizations in identifying where leverage adds value and doesn’t inhibit agility too much, and vice versa.

Two of the critical battlegrounds in this discussion are:

• the innovation process
• the freedom of local markets to respond to local developments.

It seems to us that the journey towards more leverage is the dominant force at the moment. As leaders we need to make sure that don’t allow this to go too far and destroy our ability to be flexible and agile in the areas where it’s critical.

At the same time, we need not to be oversensitive to efforts to integrate that really add value at scale across the organization – lets save our energy for the battles that really need to be fought.

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