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The King is dead; long live the king.

My good friend and business partner, Chris Grams, writes that “formality in business is dying.” He isn’t referring to fashion or manners. Chris is referring to formal business practices such as the heavy emphasis on structure: the arranging of elements rather than content.Amen, brother. And not a moment too soon.

Peter Drucker, the man who invented management, warned us that business structure must be aligned to business strategy or the business is “doomed to failure.” Essentially a company’s structure is a strategic configuration that will support or hinder the execution of its strategy.

It’s only fair to note that the 20th century’s industrialized business models largely depended on structure to succeed. Industrialization as strategy demands a “machine” model—to use the language of the brilliant business thinker Henry Mintzberg—where employees are little more than cogs to move things along in a predictable and measurable manner.

According to Mintzberg, there are six valid organizational configurations, but for now I’ll focus on just two:

Standardization of work: typical for machine organizations
Mutual adjustment: typical for innovative organizations

Most business leaders today are caught in a paradox: their success to date has generally been the result of building machine organizations where work standardization made sense and drove success— for both the organization and the individual.

But the competitive world has changed. Now these same leaders are challenged with building innovative organizations. While machine organizations succeed by using rigid structure and “standardization of work,” innovative organizations require a different configuration. Mintzberg suggests “mutual adjustment” or, as he puts it, something more akin to “two people having a conversation.”

So how might that look? Well, what do we know about conversations?

1. Conversations are cultural events. They happen where people who trust one another find areas of common interest.

2. It is impossible to command that a conversation take place. All participants have to want to be there. People choose to engage in a conversation.

3. Conversations are fragile. They have to be nurtured and protected. Manipulation, dishonesty, asserting power or assuming control shut down conversations. And once people feel misused or bullied in a conversation, they will stop participating. The chances of re-engaging are exponentially diminished as this behavior is repeated over time.

If innovation is strategic to your organization, then you must understand how to build an innovative organization. What worked building machine organizations does not work when building innovative organizations. When creativity matters, culture trumps structure. Formality is the enemy. Community is the answer. Those who start the conversation first have a true competitive advantage.

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