How to Adapt an Organization Without Uprooting its DNA
Successful business founders make decisions about job titles and organizational charts, when and how to grow, and which capabilities and technologies are important. In doing so, they establish the decision-making principles that will define their company for a long time to come, even after they are gone.
Researchers often use language borrowed from biology to describe how these decisions, and the rhetoric used to justify them, become an “imprinted” part of the firm’s “DNA”. These decisions are at the core of any start-up and they will guide its progress. Their importance cannot be taken lightly.
However, adapting to change while maintaining internal coherence over a long period is a difficult feat for any organization. Strict adherence and blind devotion to the original principles can become problematic once competitive conditions change over time. If the founder’s principles are followed for too long and the firm gets into trouble, new managers are brought in to make dramatic changes – often by canceling prior decision-making principles. Such changes might refocus strategy, but they can also destabilize workflow and demotivate employees.
On the other hand, if decision-making principles are properly managed, they can facilitate change without breaking important motivational and emotional links with the past. Some firms have adapted to changing times without betraying their “DNA”, and by studying them, we can get invaluable insight into how they managed to turn challenges into growth opportunities.
With Paresha Sinha and Jenny Gibbs from the University of Waikato, we studied one such success story: New Zealand’s Gallagher Group. We discovered that across the 80-year history of the company, managers at Gallagher applied their founder’s decision-making principles in ways that helped them adapt and become a global leader. They did this by reprioritizing principles, emphasizing those that were most relevant while suspending others, and modifying where principles apply, defining them more narrowly or more broadly as needed.
Gallagher started as a farm equipment provider in 1938 and today is a global leader in security fencing and farming equipment. The firm provides security technology for the U.S. Navy, Buckingham Palace, and for prisons and airports around the globe. Founded by Sir. William Gallagher Sr., his decisions imprinted four decision-making principles that were widely adopted, shared, and taken-for-granted. These principles were (1) “pursue engineering ingenuity”, (2) “engage with partners”, (3) “take necessary risks” and (4) “learn from failure”.
These principles are, to some extent, the “DNA” of the Gallagher Group because they explain what the firm stands for and shape managers’ decisions. They have not been fixed, however, which helps explain why Gallagher was able to adapt and grow.
An example of how principles were reprioritized involves “engage with partners” and “pursue engineering ingenuity.” Among Gallagher’s four core principals, “pursue engineering ingenuity” dominated the first 23 years of the company (1938-1960), but when opportunities appeared abroad, managers started emphasizing the importance of engaging in partnerships and talked less about engineering ingenuity. By reminding employees and other stakeholders that engaging with partners is a long-held principle, managers redirected employees toward a new opportunity without disrupting the firm’s identity. By reprioritizing some principle over others, Gallagher was able to adapt while maximizing buy-in from managers, employees, and other stakeholders.
Principles can also be expanded or narrowed. In the late 1990s, Gallagher managers realized that some of their fencing solutions had applications beyond farming, but they needed new software and electronics capabilities. They dropped the word “engineering” from their rhetoric and emphasized “pursuing ingenuity” to connect their engineering-based past with novel opportunities in related sectors. Wal-Mart’s managers are doing this now by defining how principals such as “serve customers” and “everyday low prices” also apply in the online context.
So what can the Gallagher Group and its evolution teach those who want to give start-ups a chance to grow, evolve and adapt without betraying their core identity, their “DNA”?
It shows founders that decision-making principles should be simple enough to be easily understood, and broad enough to be modified as needed. The strategic decisions they make, the way they justify them, will take a life of their own, but they will have more flexibility if they adopt multiple principles that can be reprioritized if need be.
It show managers that by reaffirming long-help principles – even long-forgotten ones – and articulating them in a way that addresses current opportunities and challenges, they will be able to leverage the motivation people feel from being part of an organization with clear principles while maintaining strategic and organizational flexibility as times change.
Didn’t famed naturalist Charles Darwin once say that it is not the strongest that survives, but the most adaptable to change?
Peter Jaskiewicz is Professor, University Research Chair in Enduring Entrepreneurship, at the Telfer School of Management at the University of Ottawa. James Combs works at the University of Central Florida College of Business and is a visiting professor at the Telfer School of Management at the University of Ottawa.