Data & Benchmarks, Employee Experience, Leadership & Management
Functional organizations are moving forward—just not as quickly as they could be. That’s because for every five employees who are regularly innovating, two are not, making them far less formidable competitors than their Accelerated counterparts.
Employees at Functional organizations are supported and aligned around a values-driven culture, and are able to move at a fast pace that keeps up with market needs. However, they are not setting the pace. For example, these organizations have 12% fewer employees that quickly adapt to changes needed for their organization’s success than Accelerated companies—but 18% more than the Friction companies.
Employees report a generally positive experience of these companies overall. However, their sentiments more commonly focus on more basic, transactional sorts of themes (i.e., pay, bonuses, time off, training) rather than the purpose-driven, relationship-based themes found at Accelerated organizations. And, cultural strengths often include mention of perks and benefits—which, while important, may be used by leaders of Functional organizations as a substitute for more frequent and authentic interactions, especially if a company is in a growth period.
One employee from a Functional organization shared, “As the company has grown over the past few years closeness [with leadership] has mostly gone away, as is natural in a growing company. There is still a sense of family for the teams on each project and amongst those that have been around the longest. The company does its best to try and maintain this feeling by having catered lunches, fun Fridays and other team building events. The fact that the company is as big as it is, is what gives it the clout to push back against the clients and offer extra perks and benefits to its employees, so it is a trade-off.”
However, it does not have to be a trade-off. As organizations succeed and grow, it’s ever-more important that leaders maintain an authentic connection to all employees. This is difficult, but not impossible. In the examples of Nvidia and Quicken Loans, this is done, in part, by staying in front of employees with a clear vision, well-articulated values, and prioritizing opportunities for direct connection with employees at all levels.
On the innovation front, at Functional organizations we find that while leaders encourage autonomy and avoid micromanaging, they are less able to foster a sense of ownership or enable employees to carry ideas to fruition. Leaders are also less likely to actively seek employees’ ideas, with just 81% of employees reporting this experience—as opposed to 91% at Accelerated companies.
The impact of these efforts on the business is notable. Functional companies see 63% less revenue growth than those in the Accelerated camp. They are also 10% less productive, 13% less agile, and employees are 8% less likely to say they want to work there for a long time.
If Olya Kenney had worked at a Stage 2 Functional company, she may have had the idea for the Empathy Generator, but the way its execution played out—if it played out at all—would have been completely different. Without sanctioned Bullet Time, she may never have had the opportunity to connect with leaders to start the buy-in process. Without the fluid connections to the legal team, she may never have gotten the insights she needed to map a strategy. And without a leadership approach that empowered her to take the reins of her project and lead it to fruition, the Empathy Generator may well have been added to an established leader’s to-do list, ultimately taking a back seat to competing, mission-critical priorities.
Organizations at the Functional stage may have the Innovation By All flight path in their sights. But in order to get there, leaders need to make sure they are actively, not passively, empowering employees at all levels to contribute and execute great new ideas. They also need to adopt the mindset that no single employee or group of employees are the most innovative. Like a flock of birds, each one is valuable to the survival of the whole as they pivot, interact, and respond to an ever-changing environment within and outside of the organization.
Finally, leaders need to embrace their role in setting an inspiring vision for all to follow, and living by a set of shared principles that serve to guide the actions of the entire company. These actions aren’t easy. They require a shift in thinking about what it means to be a leader—a willingness to trust your people and loosen the reins, even just a little bit. But as leaders of Innovation By All companies will attest, if you believe in the power of your people, the best thing you can do as a leader is to give them what they need to succeed, and then get out of their way.
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