7.
Invert the Org Chart

Place the innovation responsibility where it can thrive — with the people who are free to fail.

Organizations put structures and systems in place to manage the outcomes and outputs of their staff and teams. They document their structure in an organizational chart. While these structures bring clarity for organizations, they often trump innovation.

Early in my career, I was hired by one of the most respected advertising agencies in the city. I was thrilled to join their ranks, get the business card, and add the agency’s name to my LinkedIn profile.

This agency was very traditional in its organization structure at the time. You had the creative director (CD) at the top of the creative department, followed by the associate creative director (ACD) and director of creative services (D of CS). Next came the studio art directors, then the graphic designers and copywriters.

When a client would sign off on a creative brief, the account rep would come down to the creative department and meet with the D of CS. The director would look at the budget and the need, and then assign people and hours to the project.

The account rep would then go to the CD and ACD and present the brief. They would discuss it, and then call me and a graphic designer into the office. The account rep would present the brief again, and then the CD and ACD would provide instructions for the type of concept they wanted us to produce for the ad campaign.

Next, the designer and I would meet separately and get three concepts down on paper. We would go back to the CD and ACD to present our three ideas. If we had done a good job, they would approve one concept and then advise us how to write the copy and execute the design. We’d head back to our desks to prepare proofs of the ad concept for the client’s review.

On Friday afternoons, there would be a line of creative team members standing outside the creative director’s office. We’d have printouts of ad proofs in our hands, each with a slug at the bottom of the document with three signature lines: one for the D of CS, one for the ACD, and one for the CD. It was not until those three signatures were in place that the ad proofs could leave the agency.

This corporate structure was one of the things that gave the agency its credibility. Three very experienced advertising professionals had to sign off on every single piece, so that clients never received sloppy creative work.

Sticking to the organizational structure also meant the agency’s offering remained traditional during the years I worked there. It was the place to go for billboard, radio, TV, and print campaigns because that’s what the three people at the top of the creative department knew best, and those three people directed the concept for every piece of advertising that came through the shop.

Clients that wanted the latest digital or experiential advertising campaigns would leave or add additional agency partners to their rosters. Creative professionals who wanted to try their hands at new and emerging advertising techniques would also have to leave.

Few businesses have the luxury to focus on their strengths and ignore everything else. For many companies, losing talent and client confidence will eventually bankrupt you. When evaluating whether your company is built to evolve, be sure to look at your org chart.

Where does innovation live in your company?

Redesigning the organizational structure to meet the demands of fast-changing workforces and industries is a top concern of business leaders. Only eight percent of organizations believe their current structure is optimized, and only four percent have no plans to fix them.91

The traditional org chart has a pyramid shape, with a few leaders at the top and many worker bees at the bottom. It’s often people at the top of the chart who are expected to lead the company into new eras of innovation and success. The Proximity Paradox of the traditional org chart is that this group is in the worst position to innovate.

Senior leaders face the highest expectations for company performance, and therefore have the least freedom to take the risks and make the mistakes required for innovation. The company ultimately succeeds or fails under their guidance. Since they guide big decisions, their mistakes can be very costly and are often grounds for dismissal.

That pressure can trigger a stress response that inhibits their creativity. Psychologist Daniel Goleman, who wrote the best-selling book, Emotional Intelligence, coined the term “amygdala hijack” — a process where fear or stress triggers the amygdala neurons to block our other brain systems. These neurons tell the body to fight, flight, or freeze for self-defense.⁹² Counseling psychologist Dr. Jena Field later explored how the concept affects creativity. She says creative work requires us to take risks, and the fear of failure or embarrassment can shut down the parts of the brain needed for creativity.⁹³

The people at the bottom of the org chart are often only responsible for their tasks — not the results of the company. Failure incurs a talking to or a slap on the wrist. These are the people who have the cognitive freedom to think creatively and take risks, and yet they often are not given the opportunity to do so.

Fig 2: The traditional organizational chart, where the up arrow represents freedom to innovate and the down arrowrepresents the pressure to produce results for the company.

We need to create opportunities where it’s safe for the organization’s leaders to hand their innovation freedom to someone who doesn’t carry the same burden to produce results. The organizational chart helps us create distance between the people responsible for success and the people with the freedom to fail.

Can you defer to authority and challenge the status quo?

Society encourages the deference to authority on which organizational charts rely. Children are generally brought up to obey parents who are following the child-rearing traditions that have been passed down, consciously or unconsciously, for generations. At college, students will write the essay that will earn an A grade from the professor and get them a spot on the Dean’s List. A professional cellist will follow the cues of the conductor and perform the piece of music selected by the music director to stay in good standing with the orchestra.

In an organization, staff will produce work that fulfills the expectations of their manager and moves the company closer to the goals set out by the CEO.

Deference to authority engages your rational brain. What do I need to do to get approval from the boss? You think of all the past projects that were approved, examine what made them successful, and then apply the same formula to your current project. But this cycle fosters the homogenous thinking that breeds complacency and kills creativity.

Innovation requires someone to challenge the status quo. You need to speak up, ruffle a few feathers, and say to the boss, “Trust me on this one.” When you’re creating something new, there is always a period of thrashing, where you must temporarily defy authority and cause some discomfort to co-workers while you bring form to your idea.

It often isn’t until your invention is on the home stretch that others will see its value. And if you’re working in an organization that values performance or efficiency over innovation, you may get reprimanded before you hit that home stretch.

It’s counter to human nature to push back against authority, and the people who seem to have a knack for rebelling typically aren’t embraced in the average workplace.

To make the window for innovation even narrower, people higher up the org chart often feel they should have answers for their direct reports — not more problems to solve. Saying, “I don’t know what we should do” when a challenge arises suggests a lack of confidence and acumen. Like we discussed in Chapter Two, managers may naturally fall back to their old solutions when their reports come looking for guidance on new problems.

Without staff who regularly challenge the status quo and put their necks on the line, and without bosses who can say, “I don’t have the answer; what do you think we should do?”, innovation will continue to start and end with the senior leadership team.

A good org chart needs to put the innovative people within your company on equal footing with the authority figures. If leadership appears to hold all the power and call all the shots, even the most creative thinkers will fall into line.

Rethink your organizational chart in a way that allows for creativity. Ultimately, innovation should drive what gets done — not the other way around.

The organizational chart that makes the world’s most advanced textiles

W.L. Gore & Associates (or Gore, for short) is a multinational manufacturer headquartered in Delaware. It has about 9,500 staff spread across more than twenty-five countries around the world. Its most well-known product is Gore-Tex. This is a lightweight, waterproof fabric used in clothing (for people like hikers, astronauts, and soldiers) and medical implants (for things like heart patches and synthetic blood vessels), as well as in a wide range of industrial and electronics products.94

Innovation is key to the company’s success. It has helped it to survive and thrive in a dynamic industry that is subject to IT developments, globalization, intense competition, and the inevitable ups and downs of economic cycles.

One way that Gore & Associates promotes innovation is via its unique organizational structure, which can be traced back to the company’s founder, the late Bill Gore. Terri Kelly, President and CEO of W.L. Gore & Associates, said that he “hated policy manuals and bureaucratic ways of telling the organization what to do.”⁹⁵ Those types of traditional organizational structures were even more common in the early days of the company’s existence in the 1960s than they are today, so Bill Gore was certainly a visionary in his outlook.

Bill Gore was in his mid-forties when he founded the company in 1958 using his life savings. Previously, he had worked at another large multinational (DuPont) for his entire career. There he had seen firsthand how innovation can be stifled in a large, bureaucratic organization. He knew that innovation was going to be crucial to his new, technology-driven venture. He wanted to create a company with no fixed hierarchical structure, where all staff would be free to be creative and talk to anyone else.

Bill Gore created a “lattice” organizational structure for his new venture, where all staff were connected to each other. There were no layers of management like you’d find in a traditional structure. He wanted to empower his self-managed teams to make decisions, solve problems, and come up with innovative ideas.

He explained the structure and how it facilitates innovative actions:

A lattice organization is one that involves direct transactions, self-commitment, [and] natural leadership, and lacks assigned or assumed authority . . . Every successful organization has a lattice organization that underlies the facade of authoritarian hierarchy. It is through these lattice organizations that things get done, and most of us delight in going around the formal procedures and doing things the straightforward and easy way.⁹⁶

This approach is relatively easy to implement in a small organization, but harder to maintain as it grows. However, the Gore company has managed to largely maintain it as the organization has grown, and for good reason. It has reaped substantial benefits along the way.

Over time, the founding structure has evolved to now include some elements of a traditional organizational structure, such as product-focused business units with their own leaders. But the underlying philosophy of having flat (or minimal) layers of management is still alive today at Gore plants all over the world.

You won’t find job titles like supervisors, managers, and vice presidents at Gore. Self-managed teams remain the fundamental building blocks of the organization’s structure. These teams negotiate the job roles of their members as is necessary for the project they’re working on.

Staff are rewarded with ten percent “dabble time,” where they can explore new project ideas that they are passionate about. They are empowered to experiment and not punished for failing in their attempts to develop innovative ideas.

Ideas are peer reviewed and team leaders emerge from this experimentation process. Those who can create a vision for their innovative idea and inspire others to follow them get the opportunity to create a new team and develop their product idea. The company views this as natural leadership, rather than the traditional organizational structure approach of appointing bosses.

In this way, Gore’s organizational structure is continuously evolving over time to focus on new ideas. Staff also get to work on projects that interest them. This increases their level of commitment to the innovation projects and the success of the organization.

The teams evaluate the dabble time ideas using three criteria:

• Real: Is the opportunity real? In other words, would there be a market for it?
• Win: Could Gore win in that market?
• Worth: Is the idea so unique and valuable that the company could make money from it? Does the idea have the potential to create a sustainable competitive advantage for Gore?

The company believes strongly in the power of small teams. Authority is delegated to these teams. They discourage plants of more than 250 workers.⁹⁷ Bill Gore once famously remarked: “Once a unit reaches a certain size, ‘we decided’ becomes ‘they decided.’” The company also believes that larger plants have the potential to inhibit staff communication.

Existing team members are actively involved in the interviewing and recruitment process for new staff. When hired, each new staff member is assigned a mentor (called a sponsor) to help him or her develop and succeed at the company.

Individuals and teams can communicate directly with anyone in the organization to get what they need to be successful. The Gore company encourages cross-functional collaboration by having R&D specialists, staff, engineers, salespeople, chemists, and machinists working in the same plant. This goes against the traditional approach of having specialist plants and offices for different functions to create efficiencies. The company believes that the collaborative benefits of their structural approach far outweighs the costs.

Staff at Gore (who are called “associates” to reflect both the company’s name and its philosophy) are compensated according to their peer-reviewed contributions to their team. They are also provided with shares in the company, so that they have buy-in to its successes and failures. Team members are accountable to their team, rather than to bosses.

Gore is an extremely innovative company, as demonstrated by the more than 2,000 worldwide patents it has been granted in its near sixty-year history. Its patents span a wide range of fields, including electronics, medical devices, and polymer processing. Its current annual revenue exceeds US$3 billion.⁹⁸

Its record of successfully introducing new products into diverse markets speaks for itself. The company has no fear of attacking new markets. One well-known example is the plastic coating it developed to create Elixir acoustic guitar strings. These strings last three to five times longer than normal guitar strings and quickly became the market leader in an industry that hadn’t had a technical breakthrough in decades. Another is Glide dental floss, which allows people to floss smaller gaps between their teeth more easily.⁹⁹ These were entirely new markets for the company that its innovative products helped it conquer.

And not only is the company financially successful, it’s frequently cited in various surveys as being one of the best and most innovative companies to work for at its various locations all around the world.

Success stories like these are a testament to the company’s organizational structure. Innovative ideas have continued to emerge as it has grown from a small fledgling operation in Delaware into a multinational conglomerate. That’s because it has retained the underlying philosophy of its original structure.

It hasn’t morphed into the traditional management pyramid that characterizes the organizational structure of many larger organizations. That structure stifles creativity. The company is organized to promote innovation. It isn’t relying on centralized managers to make its key decisions. Instead, authority in its flat organizational structure is pushed out to operating teams that are empowered and motivated to succeed. And that’s how innovative ideas flourish within Gore.

The current CEO of Gore is Terri Kelly. She began her career with the company as a process engineer in 1983. In the company’s typical style, she was appointed CEO following a peer-driven selection process. She explains what it’s like to lead a non-hierarchical organizational structure.

I think, as it looks in practice, it’s pretty dynamic, where we organize more around opportunity. It’s pretty fluid, versus a static organization. I think the leadership moves based on what problem is being solved. So, I think in traditional companies, it’s a pretty fixed hierarchy of who the leaders are and who they report to, where it’s maybe a little bit more difficult to see that in our organization because we purposely try to make it more dynamic.

She also explains how the company’s innovation culture is maintained:

We have what we call rainmakers and implementers. Rainmakers come up with wild ideas, implementers make them real. The two drive each other crazy. If you’re not careful, control will gravitate to the implementers. So, we try to protect the rainmakers. That means we have to be comfortable with more chaos. Our organization is used to dealing with chaos; we have a high tolerance for it. We like to respond to crises. When the ship is under attack, the level of ownership is high, culturally.100

Strategies for creating distance from org chart responsibilities

If the Gore story makes you say, “I wish we could do that,” then it’s time to reassign innovation responsibilities within your company. Let innovation drive your structure and what gets done — not the other way around. Here are two ways you can do that.

Invert the innovation responsibility

Encourage innovation from the ground up in your organization. Create an environment where people feel comfortable putting ideas forward, providing different perspectives, and challenging the status quo. Staff who are closest to the action will have the easiest time seeing new problems to solve or opportunities to seize.

Here are a few things to consider when flipping the org chart and adopting a Gore-style approach to innovation.

1. Add innovation to your frontline workers’ job descriptions. Update the job descriptions for current employees, explain the new expectations, and create a monthly forum where staff can meet off-site to discuss new ideas.
2. Set a framework for evaluating new ideas. Look to the company’s vision statement or strategic plan when selecting criteria, rather than appointing a senior leader to arbitrarily evaluate ideas. Successful ideas should align with the company’s financial, cultural, and social responsibility goals.
3. Give successful ideas a budget and a team. Decide on the amount of money and employee hours you are willing to invest in developing the best ideas. If your frontline workers are currently at max capacity, it may mean hiring additional staff to free up the dabble time staff need to execute their ideas.
4. Make sure senior leaders buy in. If your frontline workers (who are in the best position to innovate) have found an idea that meets the selection criteria, and they are willing to invest time in it, leadership’s job is to now mentor and support the group of employees tasked with bringing the idea to life — not to stonewall the idea or remold it.

Fig. 3: The traditional organization with the responsibility for creativity flipped, where the up arrow represents freedom to innovate and the down arrow represents the pressure to produce results for the company.

Make note of the ideas with which you disagree

Take a moment to reflect back on ideas that your team has presented to you in the last six months. You may not be able to remember all of them, but when you’ve got a few minutes, jot down as many as you can. Indicate which of the ideas were brought to life. Note the percentage that you approved and the percentage that you didn’t. Of the ideas you approved, how many fit with your existing ideals and values? How many did you approve even though you did not agree with them?

Typically, through this exercise, managers notice that they only approve ideas that line up with their own beliefs. If they do not see the relevance of the idea or agree with it, they do not give it the green light.

If you’re that kind of manager, we encourage you to challenge your assumptions. The next time the team brings forward ideas for consideration, approve one that does not line up with your existing beliefs. Force yourself to argue why the idea they proposed could work, and then pitch the idea back to the team to ensure you currently understand their thinking.

Even if the idea fails down the line, you’ll signal to your team that you are open to divergent thinking and are willing to see beyond your own biases. You may also find those biases loosen up over time.

Be honest and open about your own innovation bias

None of us want to admit that we are resistant to change and new ideas — we feel it is a weakness.

If you can be open with yourself and your team about where your innovation biases lie, you’ll become more open to accepting new ideas. Try this: reveal your biases to your team. Invite team members to challenge your biases when they crop up at work. If you own the fact that you prefer the color blue, and someone pitches red, you can talk about it. You may eventually see the merits of red.

Challenge org chart assumptions

Sometimes we don’t need to make any changes to our org chart or how our teams interact. Sometimes all we need to do is refuse to accept cop-outs for ourselves, our leaders, and our subordinates.

If you talk to a random employee at a random organization, there is a good chance they’ll say that it’s not their place to come up with new ideas or to challenge the status quo. If you talk to that employee’s CEO, they’ll call bullshit. They’ll tell you they would love it if a frontline employee came forward with an innovative, new idea.

As frontline employees, sometimes all we need to do is take a risk, champion an idea, go right to the top, and pitch the hell out of our concept. We need to be direct in our communication and go directly to the chief decision-maker.

Clear middle-management roadblocks

If you report to middle-management, there is a good chance you have a hard time pushing creative or innovative ideas past organizational roadblocks. Middle managers face pressure from both sides: the bottom of the organization and the top of the organization.

As a frontline employee, recognize this pressure when you approach a mid-level manager with a new idea. Before proposing an idea, identify ways that your manager might feel a sense of ownership over it. Egos can be fragile; there is a good chance your mid-level manager does not feel like they are being creative or innovative enough themselves. An idea from a subordinate can feel a bit threatening. Be conscious of this dynamic — find a way that you and your manager can jointly own the idea or partner on bringing it to life. You might find the roadblocks disappear.