The Key to Adaptable Companies Is Relentlessly Developing People

There are organizations that are great at what they do, that are relentless at it. But it turns out
there are very few that are great and relentless at people development. When it comes to
preparing organizations for a complex, high-speed future, many people who work in those
organizations, or in management science, talk about the imperative for “continuous
improvement” in operations. But it is one thing to be relentless about continuously improving
the processes by which work gets done; it is quite another – and every bit as necessary – to be
relentless about continuously improving the people who do the work.

This organizational relentlessness takes a very special, even unique kind of organization – but it
does exist. In the course of research for their recent book, Harvard scholars Robert Kegan and
Lisa Lahey (and three other researchers including myself) studied three highly successful
companies – Bridgewater (hedge funds), Decurion (movie theaters, real estate, and senior
living), and Next Jump (e-commerce). What is unique about these companies is that they have
built their cultures to support the development of all of their people, every day. We call them
Deliberately Developmental Organizations or DDOs.

This kind of “everyone culture” is as much about realizing organizational potential as it is about
realizing human potential. It describes a new model for the way each can contribute to the other
– how organizations and their people can become dramatically greater resources to support each
other’s flourishing.

Now, you might say that hedge fund managers, movie theater operators, and software engineers
would probably not be your first guess as to who might be interested in self-reflection and
working on developing oneself, in order to create such a culture. But at Bridgewater, Decurion,
and Next Jump, just about everyone we talked to told us a version of the same thing: “Every day
I get up and I am absolutely clear what I am working on – myself.” These are not psychotherapists
or priests. They are not New Age professionals working at the Esalen Institute. They are investors,
theater managers, techies – and very good ones, by the way, constantly sought after by the
leading, conventional competitors in their sector.

The idea that adults can grow and develop is hardwired into the DNA of a DDO. Of course, each
of these companies tries to hire the most talented people it can, but the moment it does, it seeks
to place them in an environment where every job is a kind of tow rope that will pull them – if
they will hold on tightly – into the challenge of developing themselves. “I heard all this stuff about
personal development,” a senior executive at Decurion told us, “and I was very impressed. I just
didn’t realize they meant me, too!” A well-known investment banker said: “I knew Bridgewater
hired me because of my track record . . . I had developed a pretty good playbook. I assumed I
could just spray-paint my playbook with the Bridgewater colors and all would be well. Man, was
I wrong!”

Better Me + Better You = Better Us

Next Jump wants the company to grow (“better us”), but its culture continuously says, “The way
we’re going to be a better company is by you working on yourself, and helping others work to on
themselves.” But the culture is not just about saying it; it must go beyond words to actions and
structures. Every Next Jumper’s compensation is tied closely and equally to performance in
revenue (what you contribute to the business) and culture (what you contribute to Better Me
and Better You). At Next Jump you can be a revenue-generating god and still be penalized in
compensation if you’re not working on personal growth. The highest bonus and salary increases
go to those who improve the culture.

Ray Dalio, founder of Bridgewater, identifies the “master dynamic” in human beings as the quest
to evolve. Christopher Forman, head of Decurion, talks about human “flourishing.” Charlie Kim,
founder of Next Jump, talks about becoming a better version of ourselves. Personal evolution,
human flourishing, becoming a better person – these are at the center of the culture of each
organization. The three companies had never heard of each other, and yet their cultures have
strong underlying similarities. It is no accident that at the root of these similarities we find a
fascination with, and devotion to, the possibility of ongoing personal growth. It is also no
accident, we have come to believe, that these three DDOs are highly successful across every
conventional measure of business success, too.

One crucial measure of this success is adaptability. Looking into the future, we can see a number
of pathways for companies to achieve business success, via strategy, technology, operations, etc.
But before companies set out, they should ask themselves a key developmental question: “For
my particular business, at this moment in history, will the challenges we face be largely technical
ones, or largely adaptive ones?” This important distinction comes from our Harvard
colleague Ronald Heifetz: technical challenges require new skill sets, like new apps or files for an
operating system.

In contrast, adaptive challenges require changes not only in skill sets but also in mind-sets:
changes at the level of the operating system itself. And, in an increasingly VUCA business and
economic environment – volatile, uncertain, complex, and ambiguous – companies’ challenges
are becoming ever more predominantly adaptive.

What does this have to do with people development? It turns out that relentless focus on people,
on developing everyone in the organization, leads to an organizational culture designed for
adaptive change. In this sense, culture is strategy. Heifetz says (and we agree) that the most
common mistake organizations and their leaders make is to try to meet adaptive challenges with
technical means. That often happens because companies discount the importance of developing
their people. They need to create the culture of a DDO, a jet engine culture for meeting adaptive
challenges when most organizations are still flying a prop plane.

chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram