Times Have Changed
In the 20th century, markets and technology developed at a slower pace. Organizations ran like oil tankers: ships with a few captains who made big changes every five years and slowly waited for the shift to trickle down.
In the 21st century, the uncertainty and complexity of the market makes top-down hierarchies a liability, not an asset. Organizations need to sense change and respond to customer and consumer needs faster. This cannot be done with a few senior leaders making centralized decisions, especially when they are often the furthest removed from the consumer. Companies like GE, Google, Amazon, and Tesla act like a fleet of sailboats, with each boat able to make the decisions needed to move swiftly towards the collective goal.
How we Adapt
At PepsiCo, we’re moving towards empowering teams, distributing authority, removing unnecessary bottlenecks, and clearly defining necessary approval processes. We believe teams can be trusted to make good decisions because those closest to the problems are often best positioned to solve them.
Responsive Ways of Working sets the guardrails to help us do this safely. Teams define and communicate a purpose, set decision rights, and work in public to build a safe foundation necessary to distribute authority. When we practice Responsive Ways of Working, the relationship between everyone at PepsiCo becomes grounded in mutual understanding about where we’re going, and what is expected of each person to get us there. Clearly defining a team’s purpose, mission, strategy, roles, and decision rights (see team charter) reduces senior approvals, so that teams can go faster, with more alignment.