The Key to Adaptable Companies Is Relentlessly Developing People

BY Andy Fleming – HARVARD BUSINESS REPORT

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.

This article is adapted from An Everyone Culture: Becoming a Deliberately Developmental Organization by Robert Kegan and Lisa Laskow Lahey.


Andy Fleming is the CEO of Way to Grow INC, and coauthor of An Everyone Culture: Becoming a Deliberately Developmental Organization by Robert Kegan and Lisa Laskow Lahey.