WHAT DOES IT TAKE FOR A LARGE, established business to be as responsive to changing market conditions as the startups in its industry are? That question is a vital one for leaders seeking to move nimbly to address new customer demands and competitive shifts.
The answer often lies in a single word: empowerment. Startups typically empower their teams to make quick decisions, take risks, and explore novel ideas. These nimble teams operate with a level of autonomy that enables them to rapidly sense and seize opportunities that arise from changes in technologies, competition, and customer needs. In doing so, they iteratively move toward achieving their strategic objectives.
But for large organizations, adopting these practices isn't quite as simple. With scale and complexity come layers of decision-making, risk aversion, and the need for operational efficiency and strategic alignment across diverse business units. So while greater empowerment is necessary to drive organizational agility, it also needs to be rooted in a level of coordination that keeps the organization moving cohesively toward its strategic objectives.
This is the challenge I'd like to address in this article: How can large organizations foster empowerment in a way that maintains organizational coherence and strategic alignment? I have studied this question for the past five years and found that what's most required are four decision rights guardrails that define constraints around an organization's purpose, data, policies, and allocation of resources. Like the barriers on a highway, these guardrails provide a zone within which employees can act autonomously, enabling their organizations to operate faster, reduce risk, and keep teams headed in the right direction.
Ultimately, my research suggests that these guardrails give large, established organizations the potential to be just as agile - if not more so than their startup counterparts.
This story is from the Fall 2024 edition of MIT Sloan Management Review.
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This story is from the Fall 2024 edition of MIT Sloan Management Review.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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