Survey: Engage with frontline workers or risk losing them

Almost half of frontline workers in the UK are thinking of leaving their jobs because they feel disconnected from their employer.

Research by Workplace from Meta found that 49% of workers in frontline roles are planning to move jobs in 2022 or beyond, and 47% would move for “better perks and growth”.

Its survey revealed a major perception gap between C-suite executives and those working in frontline roles: 53% of workers would move for a better salary, for example, but only 25% of C-suite respondents said they were increasing investment in wages, while 12% plan to decrease salary investment.

Similarly, almost nine in 10 C-suite professionals said they valued frontline workers more than they did at the start of the pandemic, yet 52% of those workers feel they are seen as less important than their counterparts working in company headquarters.

Frontline workers also believe that colleagues working in HQ get better perks and benefits (according to 53%), or better tools to help them manage their work (49%).

In terms of support that would help to retain frontline workers, C-suite should be looking at providing tools and improving processes to help them improve their mental health, according to Workplace.

More than three-quarters of frontline workers (77%) said they experienced or felt at risk of burnout over the 12-month period from September 2020 to September 2021, yet only 41% of C-suite leaders said supporting frontline workers’ mental health would be one of their top priorities this year.

More than half (56%) of frontline workers said they would move to another role if it provided access to better tools and technology, and 84% felt tools should be of an equal standard whether working in an office or on the front line.

With this in mind, Workplace has announced it will integrate with WhatsApp, which is also owned by Meta, so organisations can share important updates and increase interaction between frontline workers and their office counterparts.

Christine Trodella, global director at Workplace from Meta, called the trend the “great frontline resignation”, and urged managers to take action to reconnect with their frontline teams.

She said: “While it’s clear from this year’s report that business leaders recognise the fundamental role frontline workers play in their organisations, actions speak louder than words.

“Now is the time for leadership to listen, learn, and more importantly, take action to build a workforce that is inclusive of the workers who brought them through the pandemic.”

Ujjwal Singh, Workplace’s head of product, said integration with WhatsApp, which should emerge this year, would address the “clear disconnect between frontline and HQ workers”.

“Our integration with WhatsApp is designed to help fix that: Helping bring frontline employees closer to their organisations and ensuring the information they need to do their jobs is at their fingertips,” he said.


Technological Change Is Blurring the Boundaries of the Firm

The Covid-19 pandemic has profoundly shifted the way workers interact with their firms. In the US, the amount of time Americans spent working from home jumped from 5% to 60% in the spring of 2020. While some workers are starting to return to the office, the new equilibrium is unclear. Most firms will adopt a hybrid model, but exactly what this looks like—and what it takes to succeed—remains murky.

Even before the pandemic, the traditional worker-firm relationship was morphing. The gig economy, born during the 2007–09 financial crisis, allowed workers to take on multiple piecemeal jobs to make ends meet. It surged in prominence over the last decade, as platforms such as Uber, Upwork, and Airtasker shot onto the scene.

Together, the rise of work-from-home and the gig economy have loosened the boundaries of the firm, making the ideas of a workplace and a worker more fluid. But we’ve seen something like this model before. In the 17th and early 18th centuries, much of the manufacturing in Western Europe relied on the domestic piece-rate (or “putting-out”) system. Merchants supplied raw materials to workers, who would manufacture wares in their homes or small shared workshops in return for a payment per item produced.

This system faded with industrialization. The greater use of capital equipment for production brought workers together physically under the factory system, while a deepening division of labor, the growing scale and complexity of firms, and mounting demands for worker protections led to formalized employment.

Today, advances in communication technology and the emergence of new digital platforms are allowing firms to shift an increasing share of work outside of their traditional boundaries, reducing costs and improving flexibility.

From the perspective of workers, however, these changes are a mixed blessing. The domestic piece-rate system smoothed workers’ incomes across the agricultural cycle, making it a win-win for workers and firms—at least for a time. But is the emerging modern equivalent as mutually advantageous? The answer is more complex.

First, consider gig work, also known as contingent labor (including temporary workers, contractors, and freelancers). In the US, 9% of workers earning less than $50,000 a year are contingent, compared with just 1% of workers earning more than $150,000. While some workers take on contingent roles out of choice, they tend to be the select few in higher-skilled, higher-paid roles. The majority are lower-skilled workers who take these roles out of necessity when permanent roles are not available. And these lower-earning contingent workers experience a meaningful gap in job satisfaction when compared with permanent employees with a similar income.

Digging further into job satisfaction, we found that contingent workers are relatively more satisfied with their flexibility, but relatively less satisfied with their job stability and relationships with colleagues. When we consider the six archetypes of workers, gig work may therefore appeal to Explorers, but it’s unlikely to be attractive to Operators, who make up the largest share of workers in most markets.

For firms, the appeal of contingent work varies based on the type of work. Higher-skill contingent workers are valuable when the firm needs access to specific expertise, and it’s either too difficult to entice someone into a permanent role, or they are only needed for a specific project. Firms tend to rely on lower-skill contingent workers when there’s a desire to shift to a more variable cost base, for greater responsiveness to volatile demand.

But loyalty and commitment flow both ways. The hidden cost of this strategy may be a workforce, particularly a front line, that is less inspired and less willing to invest in delighting customers or going above and beyond in their duties.

Next, consider the long-term outlook for remote work. The pandemic demonstrated that many workers can perform far more of their duties remotely than anticipated. To explore the maximum potential for continued remote work, we examined around 2,000 underlying activities across approximately 900 occupations and identified the share of tasks that could be performed from home, given the current state of technology.

Our findings conform closely to the story of the pandemic: White-collar workers in knowledge and administrative jobs, alongside teachers, performed most of their responsibilities from home. And those in manual and service jobs, alongside healthcare workers, either continued going in as essential workers or found themselves out of work. 

The long-term sustainability of remote education for school-aged children remains up for debate, as many parents struggle to juggle child supervision with work, and concerns around the possible negative impacts of remote learning persist. But for knowledge and administrative roles, remote work has a high likelihood of sticking beyond the pandemic.

Together, these categories represent about 30% to 40% of all workers in developed economies, but only about 10% to 20% of workers in developing markets. And developing economies face several factors that likely reduce the number of remote workers even further, including slower, less reliable, and less ubiquitous Internet, as well as the challenges of multigenerational living arrangements and more children per family.

Even if the lion’s share of white-collar work can be done remotely, that doesn’t necessarily mean it should be. There are two factors to consider: the impact of remote work on productivity, and the desires of the workers themselves.

Whether remote work is as productive as in-person work remains to be seen. A study of 10,000 workers at an Asian technology company from April 2019 to August 2020 found that workers were putting in more hours from home, but there was no detectable increase in output. Why? Researchers found the amount of time spent in meetings increased, perhaps due to the complexities of remote coordination and supervision. Meanwhile, the time available for uninterrupted individual work fell. Data from the US Survey of Working Arrangements and Attitudes shows that 50% of workers felt their overall productivity had increased while working from home, but 71% attributed most of the gains to time saved from not commuting.

The impact of working from home on productivity also seems to vary from activity to activity. Research from prior to the pandemic suggests that activities requiring a high degree of collaboration or significant interdependence tend to be more productive when performed in person. The challenge is that these activities represent a growing share of white-collar workers’ jobs.

Given this lack of clarity, leading companies are following different paths in terms of their remote work models. On the one hand, JP Morgan and Goldman Sachs called most of their US workers back to offices over the summer. Netflix’s co-CEO Reed Hastings has spoken out against long-term remote work. On the other hand, Dropbox and Twitter are shifting to a model of default remote work, while the list of firms offering hybrid models ranges from Apple and Google to Siemens and Prudential.

Firms also need to consider what their workers want. With no daily commute, remote work saves employees time and money. And according to the UK Time Use survey, commuting is one of the ways people least enjoy spending their time, scoring lower than domestic chores—in fact, only job hunting scored lower. Working from home also allows employees to have more time with their families and greater flexibility in how they spend their day. But there are significant downsides as well: Workers can feel cut off from their workplace social life, lack apprenticeship, and struggle to manage the boundary between work and personal time.

The net balance of these implications varies across the population. In the US, 37% of remote workers want to continue working entirely from home, indicating robust demand for remote jobs going forward. However, 43% prefer some kind of hybrid model, while 20% want to work remotely rarely or never again.

Considering demographic factors, including age and household situation, doesn’t meaningfully resolve this disagreement. Instead, these preferences primarily seem to be the result of individuals’ varying attitudes toward work. More camaraderie-oriented worker archetypes, including Operators and Givers, are more likely to want to return to the office. More autonomy-oriented archetypes, including Artisans and Pioneers, are more likely to thrive in remote work conditions.

It’s worth noting that US workers tend to be more inclined toward remote working than their counterparts in most other countries. For example, only 15% of workers in China and 16% of workers in France would like to work entirely from home postpandemic.

In addition, attitudes toward working from home have shifted—and likely will continue to shift—over time. There’s evidence that some workers are beginning to tire of the remote model: The number of workers who say they prefer to not work remotely at all postpandemic has been rising steadily, from 16% in January 2021 to 25% in October 2021, according to the US Survey of Working Arrangements and Attitudes. The sustained sense of isolation and lack of meaningful connection with colleagues may be increasingly weighing on workers.

Our survey shows that 47% of workers globally view many of their colleagues as friends. In China, where remote work models dissipated quickly once the pandemic was under control, this figure was even higher, at 59%. This level of connection and trust is a critical ingredient for effectively operating complex businesses. The big question is whether companies can maintain connection and trust without the physical connection that offices provide.

Shared office space helps firms feel more like a community and less like an impersonal marketplace. When working remotely, it’s particularly difficult to reproduce the informal and unplanned interpersonal interactions of everyday office life. For many firms, the success of remote work during the pandemic has come at the cost of the cultural capital and goodwill that colleagues have built up over the years. Over time, especially as new recruits join, maintaining culture and connection may become increasingly difficult—although there is plenty of room for experimentation in this space.

As the rise of contingent and remote work loosens the boundaries of the firm, there’s a risk that workers come to view their relationship with their organizations in a purely transactional light. As a result, the bonds of trust that form the connective tissue of the firm are in jeopardy of fraying.

None of this is to say that it’s impossible to maintain a strong and cohesive organization while increasingly relying on contingent and remote work. But examples of sustained success at scale are few and far between. Firms will need to harness significant innovation and creativity—and those that can crack the code stand to gain a significant competitive advantage.


Build trust in diversity, equity, and inclusion commitments

Since the spring of 2020, many organizations have made public commitments to address societal disparity and injustice, and established or expanded diversity, equity, and inclusion (DEI) initiatives for their current and future workforce. After more than a year of accelerated efforts, the questions arise: Do workers trust their organizations’ commitment and efforts thus far? And how might this change going forward?

Trust can be a critical factor in the relationship between a worker’s performance and operational success. Prior research indicates that if employees cannot trust their employers to fulfill the commitments they have made, their levels of engagement could decrease, and they might become more likely to withhold their best efforts. Alternatively, if employees trust their employer’s commitments, their engagement level can increase up to 20%, and the likelihood they will leave their organization decreases by 87%. Additionally, amid the “Great Resignation,” there have been notable shifts in workers’ feelings about the role of work in their lives and increasing expectations that employers share and reflect their workers’ values, including commitments to DEI.

To understand whether organizational DEI commitments and efforts are improving workers’ trust in their organizations, we surveyed 1,543 workers, mainly respondents who identified as Black, Hispanic/Latinx, Asian, female, and LGBTQIA+. This research looks at these questions from the worker’s perspective, providing insights into how much workers currently trust their organizations’ DEI efforts—their commitment, objectives, and progress—and examines the implications for organizations as they plan their DEI strategies.

What we’ve found in our research is encouraging. Workers, including those who, as part of our survey demographic questions, self-identified as members of diverse populations, currently trust their employers’ DEI efforts. But our research also shows that it would be a mistake to take this trust for granted, and that organizations may already be at risk of drifting off course from the commitments they made. Understanding these twin risks—of failing to meet DEI commitments and the damage this can cause to worker trust—and developing strategies to combat them can help organizations create long-lasting, successful DEI programs, contributing to trust within their workforce.

What we mean by “trust” and “diversity, equity, and inclusion”

Trust is the foundation of a meaningful relationship between an organization and its stakeholders, at both the individual and organizational levels.

An organization’s actions—performed with a high degree of competence and the right intent—can earn trust with stakeholder groups. Competence refers to your ability to follow through on what you say you will do and live up to your promise. Intent refers to the reason behind your actions, including fairness, transparency, and impact. Research shows that competence and intent feed into each other, helping to build and then maintain trust. 

For our survey respondents, we provided the following working definitions of diversity, equity, and inclusion:

Diversity: The characteristics with which we are born and gain through experience, both seen and unseen, that make us different and similar

Equity: The outcome of diversity, inclusion, and anti-oppression actions wherein all people have fair access, opportunity, resources, and power to thrive, with consideration for and elimination of historical and systemic barriers and privileges that cause oppression

Inclusion: The actions taken to understand, embrace, and leverage the unique strengths and facets of identity for all individuals so that all feel welcomed, valued, and supportedShow more

About our survey and methodology

To understand the level of trust workers have in their organizations’ recent DEI initiatives, Deloitte surveyed more than 1,500 workers across US regions, industry sectors, age groups, and functional roles, in August and September 2021. The survey consciously targeted larger samples of diverse respondents to capture their perspectives on the evolution of these types of programs and the impact on their work lives and relationships with their employers. Findings from the survey were analyzed along with other similar DEI employee studies as well as with the perspectives of subject matter specialists in human capital, culture, and purpose-related disciplines.

The respondents to our survey notably have one thing in common: All are from organizations that are trying to improve their DEI or have a formal DEI program in place. Ninety-two percent of overall respondents agree or strongly agree that their employers have taken significant steps to improve their DEI efforts since spring 2020. It’s important to note that many respondents come from organizations where DEI has been a priority for some time: Nearly two-thirds shared that their employers focused on DEI before spring 2020, reminding us that many organizations had begun to think about DEI before it became a highly publicized social imperative.

The consequences of not following through

While many organizations appear to be making strides in assuring workers of their sincere intent and their capability to deliver on their commitments, history suggests continued trust is not guaranteed. The work should be ongoing to maintain trust levels. Organizations that allow “commitment drift”—defined by Elizabeth Doty and Maryam Kouchaki as “perceived systematic breakdowns in keeping an organization’s most important commitments to its stakeholders”—are likely to erode stakeholder trust and eventually the benefits that trust creates.

Falling prey to the pressure of short-term business imperatives can cause leaders to back out of even the most well-intentioned commitments. Organizations that have already enacted DEI commitments (and those that are preparing to) should view their DEI program as part of their long-term strategy. This can help them to avoid diminishing or squandering their hard-earned trust by not completely institutionalizing DEI or making it a foundational element of the organization’s purpose and strategy.

Results from our research indicate the potential for regression is real. More than 40% of respondents in upper management roles (board members, C-suite/executive, and VP or director) say their organizations are too focused on DEI. Furthermore, more than 60% of this upper management group believe that their organizations’ commitment to DEI will likely subside as different competitive threats emerge. This is reflected in worker perception: Nearly 40% of total respondents—including 41% of ethnically or racially diverse respondents and 50% of LGBTQIA+ respondents—also believe that this commitment drift is likely to happen. 

Another challenge organizations can face in maintaining DEI progress and trust is losing leaders and staff who promote, drive, or enforce accountability for DEI efforts. Chief diversity officers, in particular, have been actively recruited, tenures have in some cases been quite short. That has been largely attributed to burnout due to high expectations with inadequate resources, and a disconnect between DEI efforts, business objectives, and support from other executives. A short tenure of a chief diversity officer can signal to workers that their organization is either not prioritizing DEI or not sufficiently supporting it.

Losing the trust workers have in organizational DEI programs can have bottom-line consequences for organizations. If these sentiments become reality, the damage to employer brands could be a turn too far on the vice grip on organizations in an already-tight talent market.

These results can serve as a warning about the potential damage to organizations’ employer brands in a challenging talent market. When workers don’t trust organizational commitments to DEI, they are more likely to consider quitting and not referring others, and prospective hires are more likely to not apply for open roles.

Beyond the workforce, breaches in DEI-related trust can trigger actions that impact relationships with other stakeholders and firm performance. For example, consumers often make decisions about whether to purchase a product based on their perceptions of employee treatment and DEI commitments. One recent study notes that 28% of respondents would stop doing business with a company that treats its employees poorly, and 25% would stop if the company didn’t commit to DEI. Investors are also are paying attention to organizational corporate social responsibility programs, which often include DEI. A growing body of research acknowledges that investment risk is lower for organizations that adhere to ethical principles.

Adopt a holistic, collaborative approach that will stand the test of time

Leaders responsible for building a DEI strategy and delivering on its commitments know the work and resources that have gone into the journey so far, and they’ve shown they can build considerable trust with their workers. But how can organizations maintain that trust―not dropping the ball, reducing attention to DEI efforts in the face of other emerging issues, or extending their promises past the point that they can deliver? 

We asked respondents to offer ideas on how their organizations can build trusted DEI programs over time, and who within the organization should be accountable for different elements of a successful program. Their perspectives and recommendations include the below points. 

Increase and maintain worker trust by demonstrating competence and intent 

We gave respondents a blank slate to tell us what their organizations could do to directly increase their employees’ trust in their organization’s commitment to meaningful DEI outcomes. We found that more than 20% of those surveyed believe their organization is on the right path and mainly needs to keep pushing on current efforts, and 70% of respondents identify several different opportunities for their companies and leaders to consider. We then categorized the suggestions under the broader elements of trust: competence and intent. 


Nearly half of workers who participated in our research want to see their organizations take more focused action to build greater trust in organizational DEI efforts. Some of the most frequent recommendations on competence were:

  • Solicit input and involvement from all employees throughout program phases and cycles   
  • Set clear, well-researched goals, especially those that address challenges faced by diverse groups within the organization 
  • Commit funding for expertise, personnel, and programs that demonstrate and reflect the strategic importance of this work
  • Increase accountability and demonstrate this by regularly communicating evidence of progress
  • Stay committed in the long term to hiring, training, and promoting from diverse groups, including for leadership roles

Nearly a quarter of respondents in our survey are looking for organizations and their leaders to demonstrate a genuine commitment to DEI initiatives. Some of the most frequent recommendations were:

  • Be honest and sincere about what you are doing and why
  • Always be transparent when communicating motivations, progress, momentum, and even mistakes
  • Support and model DEI goals and outcomes at the leadership level
  • Create a psychologically safe environment in which people can speak freely about their experiences and thoughts 
  • Maintain focus on DEI even as other business imperatives arise, and show that you are doing so 

Consider everyone’s role in moving from vision to results 

Whether they are executive leaders, HR managers, functional or line managers, or staff, everyone has a role to play in supporting their organization’s DEI programs. Even the board plays a role—more than 90% of respondents agree. Our respondents categorized the different roles that leaders and workers have in DEI effort deployment. Some of these roles are particularly crucial in certain stages, whether it’s sponsoring and setting the vision, providing expertise to further success, driving accountability for results, or participating and engaging with DEI initiatives. We see opportunities for people in these roles, during these key stages, to augment worker trust. We also think it’s important to note that each of these leaders or groups need not attempt to drive progress in a vacuum—nor should they. DEI programs with goals and metrics that are shared across business leaders and departments, outside the potential silos of the HR or DEI units, are often more successful.

Collaborate at every stage

Embrace a journey without a finish line 

Our research indicates there is trust today among the workforce in their organizations’ DEI commitments, and that is encouraging. Yet, there is no finish line to DEI: There’s always room to grow and improve. Companies can continue to learn from their experiences, successes, and failures as they seek to make their workplaces more inclusive and equitable for all. They have it within their power to demonstrate that they are genuinely committed to and will make ongoing progress against their organizations’ current and future DEI vision and goals. 

Delivering on DEI commitments and fueling worker trust can help demonstrate that an organization’s values align with those of its stakeholders. Organizations that collaborate with their workers on DEI initiatives continue to fuel their DEI journey, which can help them avoid lapsing into commitment drift or other challenges. It is typically through collaboration and trust that an organization and its workers will achieve the purpose and goals of the business, generating value for all stakeholders.


The Working Future: More Human, Not Less

In 1964, the RAND Corporation predicted that we would be breeding intelligent apes to perform manual labor by 2020. In 1959, the US postmaster general predicted that today’s mail would be sent by rockets (email turned out to be a more cost-effective option). In 1930, John Maynard Keynes predicted that continued economic growth over the course of the coming century would reduce the workweek to 15 hours. Nikola Tesla echoed this sentiment in 1935, when he predicted that robots would replace most human labor in the next hundred years.

These and many other predictions about the future of work have not played out exactly as forecast. Yet even amid the hype about life-changing disruptions to how we work, most of us can sense that real shifts are underway.

The pandemic has undoubtedly triggered lasting changes when it comes to work. Many were part of a forced experiment in remote working that has shifted perceptions about such arrangements. Others found themselves in jobs that required them to personally confront the virus on a daily basis just to keep society running. All of us had cause to reflect on what we want our work to look like and what role we want it to play in our lives. According to a Bain & Company survey conducted by Dynata, 58% of workers across 10 major economies feel the pandemic has forced them to rethink the balance between their work and their personal lives.

But profound changes were starting to surface even before the pandemic. Concerns about the impacts of automation have surged as machine learning and related technologies have matured. The growth of gig work, supported by new digital platforms, has thrown the longevity of the traditional employment model into question. Flexible work arrangements have moved into the mainstream. Demands for firms to define a clear social purpose have prompted business leaders to embark on soul-searching journeys.

The relationship between workers and firms is changing radically, forcing leaders to rethink their approach to talent. And there’s never been a more critical time to do so: Talent is rapidly becoming the firm’s most precious resource. In prior research, we have explored the dawn of a new era of business, one in which outrunning extinction demands not just scale, but also speed and customer intimacy. We call those who achieve this balance “scale insurgents.” This era of scale insurgency leaves behind the shareholder primacy era, which elevated capital as the paramount resource for business leaders to secure, steward, and reward. Now, amid decelerating labor force growth, superabundant capital, and the growing importance of intangible assets like intellectual property and customer networks, the balance of power is shifting from capital to labor.

Much of the prevailing thinking about the relationship between workers and firms was forged in a very different world than the one we live in today, where workers were viewed simply as factors of production in the machine of enterprise. Today’s firm requires a new mental model, one that rehumanizes the way we think about work. More than simply inputs, workers are the atomic building blocks of the modern firm. Yet our understanding of workers—their hopes and desires, their untapped potential, their emotional state—is often superficial.

The pandemic has also brought one reality into stark relief: The war for talent is not just about cultivating a pipeline of future company executives. Between February 2020 and February 2021, more than a quarter of American workers, most of them in frontline roles, changed employers in the most rapid reshuffling on record. While much of this churn was involuntary, recent surging attrition rates suggest that many workers are using the pandemic-induced job disruption as an opportunity to reevaluate what they want from their work. As a result, many companies are struggling to fill shortages in key frontline roles, threatening their ability to return to full capacity when the crisis subsides.

Business leaders are aware that they need to change the way they think about their workforce to stay ahead of the whirlwind of technological and sociological changes. Yet they struggle to determine which actions will make a real difference.

A year of in-depth research has helped us define the broader implications of the future of work and the steps firms need to take now to get ahead in the shifting war for talent. This report is based on a Bain/Dynata survey of 20,000 workers, as well as in-depth interviews with more than 100 people from varying walks of life. We looked at 10 countries—the United States, Germany, France, Italy, Japan, China, India, Brazil, Indonesia, and Nigeria—that represent around 65% of global GDP and offer a broad perspective from different cultures around the world. Our research builds on hundreds of conversations we’ve had with executives since the beginning of the pandemic through our CEO Forums. It also incorporates input from a wide array of topic experts and a diverse range of literature, across economics, sociology, anthropology, psychology, and history.

What does all of this mean for business leaders trying to stay ahead in increasingly competitive markets? First, winning firms will pivot from being talent takers to talent makers. This requires scaling investments in learning, thinking laterally about career journeys, and cultivating a growth mindset in their organization. Second, leaders will stop managing workers like machines, instead supporting them to build personal capacity and create a career that matches their individual idea of a meaningful life. As part of this, leaders will reorganize workflows to help individuals best utilize their uniquely human advantages. Finally, winning firms will build an organization that offers a sense of belonging and opportunity for its many unique workers while remaining united through a shared vision and communal values.



As the old joke runs, “it’s difficult to make predictions, especially about the future.” That said, the ability to help clients anticipate the future, embrace new opportunities, and transform their operations has always been a central part of Arthur D. Little’s consulting philosophy.

It’s fitting then that, as we celebrate our 135th anniversary, we should reflect on where the business world is today and identify some important priorities for the future.


The last few years have seen some of the biggest global shocks since the crash of 2008 ­ even, arguably, since the Second World War. It has been a time in which previous long-held certainties and assumptions about the world have been shaken and, in some cases, shattered. For decades, people have taken for granted that the quality of life will inexorably keep improving, driven by economic, technological, and social development.

But for the first time, this assumption is no longer certain. Millennials (people born in the 1980s and 1990s) own only a fraction of the wealth that Boomers (those born in the 1960s and 1970s) earned at the age of 35, and most people below this age believe they will be worse off than their parents.

Globalization has been a huge driver of growth and development and was previously seen as a force for good by both governments and society at large. Yet, it is now under attack from several quarters. In developed economies, globalization is regarded by some as a cause of inequality, concentrating wealth in the hands of a minority elite and giving rise to a handful of hugely powerful global companies -­ for example, in 2019, only seven countries in the world had a GDP bigger than Apple’s market capitalization of $2 trillion.

In the West, especially, increasing international labor mobility on top of industrial decline has fueled the rise of populism and protectionism. Geopolitical changes ­ notably the growing power and influence of China, and the apparent reluctance of the US to continue its leading role on the world stage ­are upsetting the established world order. Popular confidence in the ability of cooperative international organizations, such as the UN, WTO, and WHO, to make a difference has eroded. The assumption in the West that all nations of the world will continue in a natural progression towards liberal democracy is no longer self-evident.

And the COVID-19 pandemic has acutely highlighted the vulnerability of global supply chains, leading to unexpected shortages of energy and other resources.

Perhaps most importantly, climate change and sustainability, for too long the “elephant in the room”, are finally being acknowledged as an urgent challenge as the reality of previous predictions starts to bite. For the first time, issues around environmental and social impacts and resource usage are taking center stage.

Confronted with all these issues, it is easy to descend into pessimism about the future. However, there are still many reasons for positivity. History has often shown how challenging times can ultimately lead to new and unforeseen opportunities and benefits, even if the transition process can be painful. More than ever before, in today’s world, technology and business have huge potential to help realize the opportunities and benefits resulting from the disruptions ahead.


The notion that companies have responsibilities beyond delivering goods and generating profits goes back to the earliest days of the industrial revolution. For example, the Quaker chocolate factory owner George Cadbury built the village of Bourneville to improve the social welfare of his workers in the early 1880s, around the time that Arthur Dehon Little founded ADL. Fast-forward to the 21st century, and companies are only just starting to consider social and environmental responsibilities central to their business, rather than something to be managed as a consequence of it.

There are several drivers for this change, all of which we expect to endure over the coming years1. Firstly, positive government support for a sustainable infrastructure is increasing, e.g., the USD 2 trillion infrastructure plan, the EU Green Deal Recovery Plan, and China’s latest Five Year Plan. Secondly, the availability of green investment funding has greatly accelerated. For example, BlackRock, the world’s biggest fund manager with USD 7 trillion in assets, stated in early 2020 that it intended to “place sustainability at the center of its investment approach”. There is huge pressure from stakeholders for financial institutions to improve their environmental and social governance (ESG) capabilities. Thirdly, technological advances in areas such as solar, EV/batteries, waste recycling, air/water treatment, and hydrogen have reduced costs and enabled deployment at scale, making business cases more viable.

Behind all this is a growing public and consumer awareness of the urgency of new action on sustainability and social responsibility, with younger generations, especially, leading the call for change.

Looking ahead, businesses will increasingly need to place ESG issues at the heart of their strategies. This means not only avoiding any adverse impacts of business operations along the entire supply chain but also innovating to seek out new opportunities and business models. There is much scope for innovation and growth across every aspect of ESG, from climate change mitigation and adaptation through to the circular economy, resource efficiency, material substitution, traceability, and the customer interface, to name just a few. Indeed, it is technology, above all else, that holds the greatest prospect of meeting the huge challenges of sustainability while avoiding widespread economic and social hardship.

To be sustainable in the longer term, companies need to adopt a mindset that aims to do good for people and society at large while still benefiting shareholders, customers, and employees. Those businesses that are ahead of the game on fundamentally realigning around ESG ­ rather than treating it as a peripheral function ­ are likely to reap the benefits in the years ahead.


If we accept that the world is an increasingly uncertain and unpredictable place ­ and, given the pandemic, climate change, and current geopolitics, it would be hard to argue otherwise ­ it follows that businesses need to get better at being resilient to ensure they survive and prosper in the coming years.

Resilience is all about being able to adapt quickly to disruptions while maintaining operations and preserving value, and this ability is going to be increasingly important for companies. There’s more to it than this, though. In the longer term, resilience is about being able to continuously grow and prosper in an uncertain and disruptive environment.

The initial crisis resulting from the pandemic brought into sharp focus the shortcomings of companies’ current risk and business continuity management approaches. As executives struggled to respond in those first chaotic weeks, it became clear that adequate data and intelligence were lacking, and that crisis management processes were too slow to cope with the pace of unfolding events.

Going forward, companies need to move from an essentially static, backward-looking risk management approach that over-simplifies complexity, to one which is dynamic, responsive, and forward-looking. In such an approach, customized key risk indicators are calibrated to provide an early “red flag” prior to risks occurring, and risk control priorities are constantly retuned based on monitoring intelligence. Such approaches are already being turned from theory into reality through the power of new machine learning (ML) and artificial intelligence (AI) tools, which can constantly crunch the necessary data to generate insights and support real-time decision-making3. Companies will need to adopt these more responsive and less rigid risk management approaches to improve their resilience in the face of the uncertainties that lie ahead of us.

Another key aspect of resilience is “anti-fragility”, a term coined by Nassim Taleb to describe things that not only gain from chaos but may need it to survive and flourish. Businesses in the coming years will increasingly need to adopt the characteristics of anti-fragility to thrive. So what does this mean in practice?

First, companies will need to be very clear about their sense of purpose and their raison d’etre. In an environment of rapid change and disruption, being defined by the products you make or the services you provide is no longer possible, because next year or even next week they may no longer be required. By the same token, products or services disregarded as niche and unimportant today can suddenly grow explosively. Having a clear sense of purpose ­ while accepting uncertainty and complexity ­ frees up the strategy to move beyond existing core products and services, and provides customers and employees with an enduring reason to stay connected with the company. This is important for both now and the future, particularly in the context of “doing more good” in the world.

Second, companies will need to further develop their capabilities in routinely identifying possibilities for disruption and innovating to find new ways of creating customer value. This requires more than just setting up an internal radical innovation team or a start-up incubator. It means establishing a full end-to-end growth capability to develop, commercialize and integrate new businesses that are genuine step-outs from the core, building on excellent foresight and customer intelligence to bring to life the sense of purpose. What’s more, it requires companies to be “ambidextrous” in their organizational approach, being efficient and productive in operating scaled-up businesses at the same time as being agile and creative. This isn’t easy, but the examples of today’s tech giants show that it can be done.


Looking ahead, it will also be increasingly important for companies to excel at developing and nurturing an extensive and complex ecosystem of partners and collaborators. Effective partner ecosystems drive innovation through overcoming the stifling effect of the body corporate and bringing together “non-obvious” cross-industry partners. They enable flexibility and improve agility to respond to disruptions. And thanks to effective digital tools for communication and collaboration, developing complex partner networks that operate over global distances is now relatively easy. The company of tomorrow may go even further to be defined only by its capabilities and brand presence ­ decoupling these from its business functions which are run entirely by the partner network.

There are some other reasons partnerships will be increasingly important. Picking up on trends such as the backlash against globalization, post-pandemic problems with global supply chains, growing protectionism, and the prospect of widespread shortages of resources such as food and energy, it is easy to envisage a bleak future in which national self-interest takes precedence over international partnership and cooperation. This will be extremely damaging for everyone in the long term.

With their international expertise and dependence on partnerships for success, global companies have the potential to play a vital role in mitigating the worst effects of national and regional protectionism. They can maintain global collaborations, spread technological innovations, and help to maintain the supply of goods and services demanded by customers. In so doing, they can also help to strengthen international ties and rebuild mutual trust from the ground upwards.

However, to do this, big business must itself rebuild trust from the public at large, some of whom consider it to be one of the causes of the social and environmental problems we see today. In the years ahead, businesses will need to do much more to address these concerns. Local and community support and engagement will be increasingly important in key areas such as food, health, energy, and services. Companies with a significant impact on the daily lives of consumers ­ for example, the digital giants ­ will need to do much more to recognize and respond to societal concerns. Ultimately, the reputation of big businesses will depend on the sincerity and effectiveness of their ESG initiatives, and how well these are communicated and understood.


With all this in mind, what should companies focus on to get ready for the future over the next five to 10 years? We can summarize some key imperatives:

  • Placing ESG at the core of the business, regaining and building public trust
  • Developing a capability for forward-looking, dynamic risk management to improving resilience
  • Clarifying and communicating a clear and enduring sense of purpose
  • Strengthening the ability for step-out innovation and new business creation
  • Embracing uncertainty in approaches to strategic planning, rather than oversimplifying
  • Becoming ambidextrous by pursuing efficiency and productivity alongside agility and creativity
  • Nurturing increasingly extensive global partner networks
  • Focusing on local support and community engagement, as well as maintaining global collaborations

Today, the future seems more uncertain and unpredictable than ever. To be successful in this future, businesses need to embrace this uncertainty, driven by a genuine and compelling sense of purpose. We have big challenges ahead, but irrespective of the politics, it is ultimately technology, and the existence of robust businesses to deploy it, that will be the key to safeguarding our future.


Want to Learn How Things Really Work at Your New Job? Talk to the People at the Bottom

What are typical work hours here?

Do teammates do things together outside work?

If I have an idea for changing something, what’s the best way to raise it?

Those are questions a new member of any organizational team might have.

How they get those questions answered has been a topic of interest to Dale T. Miller, Stanford Graduate School of Business professor of organizational behavior; Jennifer Dannalsopen in new window, who received her PhD from Stanford GSB in 2018 and is now an assistant professor at the Tuck School of Business at Dartmouth; and Emily Reit, a current Stanford GSB doctoral student.

“A common assumption is that people just copy the behavior of the highest-ranking leaders in a group, rather than paying attention to anyone else,” Dannals says. “That’s always rubbed me the wrong way, partly because I hadn’t done that as a PhD student within the academic hierarchy. I believed lower-ranked people matter more in our perceptions of social norms.”

“Clearly, leaders have many avenues of influence,” Miller says. “But in this case, we thought lower-ranking people might have an advantage.”

Dannals, Miller, and Reit developed a series of studiesopen in new window to understand where people in a group look for information on behavioral norms. Their research, which informs our understanding of broader organizational culture, is important because firms use culture to motivate employees and align them with strategy. Moreover, culture can be tied both to positive behavior and to the not-so-positive variety, such as unethical actions.

“The social norms we considered here are like the building blocks or ‘micro-processes’ of organizational culture,” Dannals says.

As hypothesized, the researchers found that individuals — at both higher and lower ranks — seek information from lower-level peers, because they see these individuals as more attentive to social norms.

Who’s Your Reference Group?
The researchers studied processes around group social norms from multiple angles.

Importantly, they first had to create definitions of social groups and rank. Here, they decided to focus on a given individual’s “reference group,” or the people they saw as roughly similar to themselves within the broader group.

“When I talk about this research, people often imagine a 200-person corporation, with assistants and custodial staff as the lowest level,” Dannals says. “But it’s about the people more at your general level. So if you’re in top management of a business, your reference group would be the rest of the top team. If you’re on the custodial staff, then it’s the rest of that staff. Not the entire corporate hierarchy.”

Dannals herself, as a new professor, says her reference group would most likely be other assistant professors or non-tenured faculty within her area.

The researchers also had to think about how people gain norm-related information. For example, they considered that people new to an organization or group might approach others explicitly for advice on behavioral norms, or they may rely primarily on observations of their coworkers. “Either way, they’re trying to get a sense of what’s appropriate,” Dannals says.

Looking to Lower-Level Peers
However we define our reference groups and seek information within them, the researchers hypothesized that we look to lowest-level peers for behavioral cues — even when we ourselves are higher-ranking.

That’s largely because lower-level people are “subject to situational pressures in a way that higher-ranking members aren’t,” Dannals says. “Higher-level people may be able to get away with doing whatever, so they may pay less attention to norms.”

The team used multiple related studies to get at whether and why group members go to lower-level peers to get enlightened about cultural norms. In one, the researchers asked employees from a mid-sized West Coast advertising firm whom they’d recommend in their reference group for information about social norms. A second study asked participants to imagine themselves as high-ranking lab members and then requested they choose an advisor from individuals at higher and lower ranks, with the belief they’d actually be working with that person. A third placed participants in the role of a new marketing team member and asked which colleagues they would trust most for advice on organizational culture, and why.

The Challenge of Cultural Change
The findings converged around several key insights.

First, people do generally seek information on behavioral norms from lower-ranked peers within their reference group, as predicted. Moreover, individuals do this primarily because they perceive lower-level people as more attentive to social norms than others might be, rather than because they see themselves as more similar to these information sources or think lower-level people will be more honest.

It’s important to note that while the current research highlights lower-level group members as go-to information sources, it doesn’t necessarily mean they are the most accurate sources. “We’ve only looked at who people in general think has the best information about social norms,” Dannals says. “We’re going to follow up this research with a project assessing who actually has the best perception; that can be a trickier question to answer.”

The results have multiple implications. For one, as Dannals notes, “It’s encouraging to know that people at lower ranks can have more of an impact on organizational culture in some cases than leadership; it suggests the power of a grassroots approach.”

At the same time, however, that the keenest insight about an organization’s culture is seen as residing mostly in lower-level people may suggest a challenge for leadership. “It’s going to be difficult for leaders to change cultures — even toxic ones — alone,” Dannals says. “That’s because their behaviors or statements will be measured against those of lower-ranking people, who might be thinking that it’s cheap talk. In general, the behavior of lower-level people in organizations may be stickier than leaders might want.”

In line with this, Miller encourages leaders to look at lower-ranked colleagues’ behaviors to identify and modify group norms: “They may be overweighting the behavior of fellow leaders. Getting lower-level people on board may buy them more influence than they realize.”

Still, that’s not to say all culture-related power rests in the lower ranks.

“This is one organizational lever that can be pulled to change culture,” Dannals says. “Others are things like whom you hire, fire, reward, and promote. Those send big messages, so you need to think about all the weights on the scale and how they come together to affect culture.”


Drinking from the Firehose of COVID-Inspired Innovation

COVID-19, says Steve Davis, has provided “a petri dish for the real-time study of social innovation.”

Pandemic Lessons
Read more interviews with Stanford GSB faculty from the Fall 2021 issue of Stanford Business magazine.

As the co-chair of the World Health Organization’s Digital Health Technical Advisory Group, he’s witnessed a surge of digital tools for testing and tracing, an experience he likens to “drinking from a firehose of innovation.” Metaphors aside, the challenge, Davis says, is to build a better system for making sure great ideas really work, scale, and reach the people who need them.

You seem to be coming through the pandemic with your sense of optimism intact.
There are a lot of challenges for sure, and I don’t mean to be Pollyannaish or naïve. But three things give me a lot of hope. One is the way the innovation community has shown up over the past 18 months. That gives me hope because I think so much of the history of the world has been created out of necessity, with turbulence forcing innovation, invention, and adjustment. COVID-19 appears to be following this path.

The second is collaboration. Multisector partnerships are so critical. We’ve got to bring the private, public, and social sectors together more frequently and more effectively in order to battle climate change, address inequity, and create better health conditions. We saw a lot of that happen in the last year and a half. Now the question will be what sticks, and how we leverage those opportunities.

And then the final thing — it sounds so trite as a professor to say this — is the talent and optimism in many of the young people that I work with. There are so many next-generation leaders that look a lot different than leaders in my generation: much more diverse, much more global, much more reflective of the world we live in. I feel like there’s a lot of opportunity and I don’t think we’re going to go backward.

Do you think the innovation kickstarted by the pandemic is more than a blip?
Yeah, I do. It’s been an extraordinary experience to be on the receiving end of so many incredibly great ideas. A bunch of interesting tools around testing and treatment were quite successful and will be built into the health systems of the future. People were forced to do telehealth for a year and now they’re saying, “Why do I need to go into my doctor’s office?” The world of online education — we just accelerated its uptake by a decade. We had all these new data visualization, aggregation, and analysis capabilities — everybody in the world pretty much knew what it meant to flatten the curve. I think that these innovations are changing our collective mindsets about what’s possible in our lives beyond the pandemic.

With such an urgent need for solutions, how do you make sure the good ones help as many people as possible?
A pandemic can be a horrible time to be piloting and testing brand new ideas. In such a crisis, you’ve got to go in and get the thing that works quickly, even if it’s not perfect. The perfect was frequently the enemy of the good in a lot of these areas. A real problem was that there was all this innovation and there were all these communities in need, but there wasn’t a very good mechanism to match them. We’ve got some hard work to do now to respond to that, to build a better global health architecture, financing, and policy framework ahead of the next pandemic.

A pandemic can be a horrible time to be piloting and testing brand new ideas. In such a crisis, you’ve got to go in and get the thing that works quickly, even if it’s not perfect.
One of the complicated conversations we are having is how do we manage this really dynamic world of digital health — remote technologies, AI, self-reporting tools, and telemedicine. We don’t have a regulatory mechanism to decide which tools are good and which aren’t. And I don’t think we really want digital tools to be overly regulated because they’re so dynamic. Maybe it’s better to create a more distributed mechanism with the corporate and innovation community driving it. But we have to be careful that the inmates aren’t in control of the asylum.

Is the importance of multisector collaboration compatible with the need for better regulation?
The lack of good regulation has actually hindered innovation in this instance, because so many people had great ideas, but there wasn’t the proper policy framework for equitable access, so they often didn’t get deployed. They didn’t know who to go to, and they didn’t know if it was going to be approved. That’s why sometimes the typical Silicon Valley view is that regulation is a hindrance to innovation. But in this case, I would argue the opposite: The lack of regulation and proper public sector engagement actually hindered innovation.


Improve Business Performance Through the Employee Experience

To create a best-in-class workplace, leaders need to consistently deliver on the fundamental, unchanging elements of a great employee experience.

At the same time, leaders must ask smart questions in response to pressing demands (such as COVID-19) and strategically adapt their employee experience to accommodate those challenges.

This delicate balance is particularly crucial as workplaces begin to rebound from the pandemic and set goals for 2021. While the foundational elements of the employee life cycle are constant, leaders must review how they’re engaging employees at each of those stages. For instance, how well are your digital onboarding experiences helping employees build thriving internal relationships?

That is, to build a productive, growth-oriented, future-ready workplace, leaders must evaluate and refine their employee experience to ensure it energizes workers and accelerates performance.

Here are five crucial areas to focus on during 2021 to keep your employee experience at the top of its game:

  1. Hiring — where leaders search for top talent has changed.
    COVID-19 dramatically changed recruiting and hiring. Countless roles shifted from on-site to remote and the entire candidate process went virtual.

Changes like these have created opportunities for leaders. For example, without restrictions on work location, companies can search nationwide — even globally — for ideal candidates. But hiring changes have also placed new demands on leaders. Perhaps most significant, boundary-less candidate pools increase the competition for talent. Because top talent can be choosier than ever about their employer, leaders must provide a compelling, desirable employee experience.

This requires a clear and future-oriented talent acquisition strategy. To start, leaders should consider the following questions:

How has your talent acquisition process changed in response to the move to virtual recruiting? How can you capitalize on the efficiencies of virtual recruiting? As in-person interviews reemerge, how will you determine which roles necessitate that type of final interview?
How are you evaluating and categorizing 2021 job openings as fully remote, hybrid, or on-site? How has remote work changed your candidate pools? How can your organization capitalize on expanded candidate pools to recruit more diverse talent?
Do you have an influential, appealing employment brand, purpose and culture? How well are you communicating your EVP to potential hires and integrating it in your talent acquisition process?
How are you capturing and documenting the skills, knowledge and experiences of your current workforce? How are you using that knowledge to actively fill openings or prepare associates to take on new responsibilities or different roles?

  1. Onboarding — first impressions are still critical.
    Creating an Exceptional Onboarding Journey for Your New Employees
    Creating an Exceptional Onboarding Journey for Your New Employees
    Learn to create an onboarding experience that puts new employees on the path to long-term success at your organization.
    COVID-19 flipped onboarding on its head. Many new hires don’t have the luxury of meeting their new colleagues in person — or building relationships through hallway conversations and lunch outings.

This demands leaders’ attention because onboarding new employees is the first, and most critical, opportunity to introduce employees to the work culture and lay a foundation for engagement. Successful onboarding experiences create positive memories — and they shape employee expectations about what your organization values and how your brand meets customers’ needs.

As onboarding experiences continually evolve in 2021 — for example, with improved digital training sessions — leaders must optimize their approach to ensure new hires can form meaningful connections. Here are critical questions your organization should address:

Can you create both an in-person and virtual onboarding experience? If so, how will you ensure both experiences are equally engaging and create connections to the organization for new hires?
Is your employee onboarding process creating a network that new hires will not only learn from in the short term but also be able to leverage six months or even a year into the future?
Are you continuing to listen and evolve? A crucial element of an agile onboarding program is frequent and specific feedback from managers and employees who work closely with new hires. Are you collecting and addressing feedback from these sources?

  1. Performance — driving your new expectations.
    Business disruption and market uncertainty abound in today’s work environment given the pandemic. In turn, many employees are suffering from unclear role expectations and reduced accountability. Communication and collaboration became increasingly difficult when over 60% of the workforce transitioned to remote work. And as some employees return to the office while others remain at home, hybrid remote teams will present new challenges in terms of how we work together.

These hurdles are significant because clear expectations, ongoing collaboration and consistent accountability are paramount to high job performance. More than ever, managers should empower employees to reset performance goals and priorities — as opposed to relaxing expectations and accountability in 2021. Managers should also expect employees to create agile goals because adjustments will be necessary as needs and priorities shift throughout the year.

Most important, reclaiming performance management will require ceaseless manager support and coaching. When performance management is adaptive and designed for continual improvement, it is difficult to disrupt.

With this in mind, leaders should ask the following questions to recalibrate their performance strategy:

How will your performance expectations and metrics change? Have business needs or job responsibilities changed? Are certain metrics less relevant or outside of employees’ control? Should you place more emphasis on short-term performance goals until your business has stabilized?
How can your performance management program become agile enough to navigate current disruptions and future uncertainty? Do your managers review goals and progress at least quarterly with each team member? Are they trained to have frequent and individualized coaching conversations with employees?
Are your managers prepared to lead remote teams to exceptional performance?

  1. Development — how will you paint a picture of growth for your employees?
    Even before the pandemic, employee development was an underserved employee need. It has become even more difficult as business needs and ways of working changed because of COVID-19.

For instance, many employees are unsure how to acquire new skills with fewer opportunities to ask their coworkers and managers in-the-moment questions. Others might be wondering how they can advance their careers when their leaders don’t actually witness them at work.

Employees need to know they have a bright future with your company and a long-term plan for achieving their growth goals.

Leaders should refine their employee development strategy with the following questions in mind:

Does each of your employees have an individual development plan and career path?
What roles and responsibilities have changed due to the pandemic? How do we upskill our workforce to meet our new needs? Are there new opportunities for employees to assume new stretch responsibilities or assist overburdened leaders?
How do we create networking and mentoring opportunities for remote employees who may be “out-of-sight, out-of-mind”?

  1. Employee Wellbeing — a new requirement of the modern workforce.
    Wellbeing must become a top priority of the employee experience because the pandemic has caused record levels of stress and worry. For example, social connections are more difficult to maintain — and remote workers are facing a new type of burnout.

More than ever, leading an engaged and productive workforce demands an increased emphasis on holistic employee wellbeing, with leaders who are committed to supporting all five elements of wellbeing.

Leaders should consider the following questions to help their employees thrive at work:

Are managers taught to focus on the whole person when they engage, manage and develop their team members?
How are we helping employees fight their COVID-19 fatigue and find work-life balance? What are we doing to prevent and fix work burnout?
What are we doing to create a culture of wellbeing? How are we addressing the five essential elements of wellbeing?
Change is endemic in today’s workplaces. But some things are constant — including employees’ fundamental need for an authentic, meaningful employee experience.

The good news is that leaders can provide compelling, engaging employee experiences — at every stage of the employee life cycle — by following a research-based, proven approach. And when they do, they can fuel individual, team and organizational performance.

Create experiences that drive performance:
How do your employees experience their workplace? Discover what’s working and what’s not with Gallup Access.
Design an employee experience that supports your company culture. Learn how.
Use Gallup’s employee experience framework.


The Power of Collective Intelligence

When we think about organisations – groups of people all moving towards a single goal – usually we think about a hierarchy. Hierarchies are our most common organisational experience, from our families with parents in charge, to schools with teachers as the boss of the room, and into the workplace, reporting to a manager (who reports to their manager, and so on). But recently the world has begun to experiment on a grand scale with alternatives to hierarchy, like agile and holacracy.

My colleagues Phanish Puranam and Henning Piezunka have done research into these self-organised teams or flat management structures. For example, GitHub replaced the conventional corporate hierarchy with self-organised teams, i.e. teams that are formed through individuals selecting what to work on, with whom, how and when. Another example is how companies, like Valve, take steps to lessen hierarchy, e.g. abolishing job titles or embracing flat management structures.

Our position isn’t that hierarchies are bad and non-hierarchical structures are right for every organisation, but rather to ask, what can we learn from them. One of the most interesting cases is that of an ant colony. Although ants have very little intelligence, without any central decision maker they can accomplish amazing, complex tasks like self-assigning new jobs or moving the colony far away to a better spot. As part of a paper looking at the work of entomologists Moffett and Garnier, my co-author, Kathleen M. Eisenhardt and I wondered if there are some applicable lessons for humans.

Simple rules and problem solving

Ant colonies contain valuable clues for designing non-hierarchical human organisations. We considered three characteristics: simplicity, modularity and scale.

Simplicity: Are simple rules the answer for coordinating large groups – even through bad times?
Simple rules are fast, flexible rules of thumb. Developed based on experience, they provide some guidance on what to do, but leave room for adaptation (in a pandemic, for instance). Ideally, they offer the optimal balance between improvisation (too little structure) and bureaucracy (too much). In our research, simple rules appeared to be vastly more effective than more familiar routines and processes in conditions of change and uncertainty. When we peek behind the curtain at successful companies like Pixar or Netflix, we find simple rules.

Modularity: Does a lack of hierarchy work very well with modular problem solving at scale?
For ant colonies, breaking down a problem into smaller chunks allows them to build much larger nests. For us humans, modular problem solving is critical when we face complexity, an increasingly common feature of our era. Modularity also allows more freedom and independence, and can be particularly effective for product platforms like iTunes and marketplaces like Airbnb. But they can be equally important for more traditional organisations trying to get work done.

Scale: Are human organisations robust enough to handle extreme modularity?
When one ant can’t complete a task, there is another at the ready to take its place. Now, our examples aren’t exactly like that, but when Jeff Bezos sent an email to every employee instructing that all Amazon activities now take place via APIs – without exception – he signalled a radical form of organisational modularity that has helped Amazon to scale in ways that remind us of an ant colony.

Naturally, there are important differences between us and ants. Learning for ants is encoded in pheromones and they lack the sophisticated learning processes and problem-solving approaches that humans can leverage. Ant colonies are expert in modular problem solving, but not hybrid problem-solving approaches that fit novel complex problems.

In an upcoming paper, Robert Bremner and Eisenhardt compare innovation at two civilian drone makers. One organised its innovation around a user community while the other did so around a firm-based hierarchical form. The community model initially did well for unexpected innovation as broad exploration and low-cost randomness paid off. But its performance dropped off once innovations became complex and novel (i.e. uncertain) like integrating cutting-edge technologies into a polished consumer drone for a growth market. Keeping an organisation flat at first is exciting, but when a market becomes more developed or complex, traditional structures may be more successful. Unlike ant colonies, human organisations need to have room for different kinds of growth.

Ant colonies never transform into something else. If and when rules are updated in a colony, it’s in a slow fashion. Of course, people can learn new rules quickly and transform their organisations. Think Netflix; its leaders went from mailing DVDs to completely upending the rules of television by producing and streaming shows like Bridgerton.

Collective intelligence

For strategy scholars, perhaps the most intriguing insight from ant colonies is that they facilitate the emergence of collective intelligence from the self-directed actions of many. Further, if benefits emerge from the self-direction of ants, then how much more profound are the benefits of self-direction for humans with our deeper individuality and creativity?

Valve, a gaming firm without managers or titles, uses this as a motivating principle. When writing my book, The Innovator’s Method, I learned that the view inside Valve is this: If a company “spent the last decade going out of its way to recruit the most intelligent, innovative, talented people on Earth; telling them to sit at a desk and do what they’re told obliterates 99 percent of their value”.

Perhaps the most valuable feature of non-hierarchical experiments like user communities, marketplaces and holacracy is collective intelligence. What if the purpose of organisations is to tap into the collective intelligence of many self-directed actors, rather than to coordinate action, specify contracts or herd resources? By framing the answer as collective intelligence, we can consider that organisations exist to potentially activate something greater than, different from and potentially more valuable than the sum of its parts. Activating collective intelligence may be the next frontier of organisations.

Nathan Furr is an Associate Professor of Strategy at INSEAD. He is a programme director of Leading Digital Transformation and Innovation, Innovation in the Age of Disruption and Building Digital Partnerships and Ecosystems, Executive Education programmes at INSEAD. He is also the author of three best-selling books published by Harvard Press: The Innovator’s Method, Leading Transformation and Innovation Capital.


Getting proactive about reactance

1960s with Jack Brehm, who developed it when he was a professor at Duke University. Brehm said that humans are negatively aroused when they perceive a threat to their freedom. What constitutes a threat to freedom? That’s your call. If you think a mask mandate restricts your freedom, Brehm’s theory suggests that reactance will not only increase your desire not to wear a mask but may also prompt you to refuse to wear a mask, even to the point that you get yourself dragged off a plane.

I ran across reactance in a recently published book, The Human Element: Overcoming the Resistance That Awaits New Ideas, by Loran Nordgren, an organizational psychologist and professor at the Kellogg School of Management, and David Schonthal, a clinical professor at Kellogg and director of its venture accelerator program. Nordgren and Schonthal seek to add what they call friction theory to the discipline of change management, arguing that corporate change initiatives often fail because leaders focus their attention on attracting people to their cause, while neglecting four frictions that work against change: inertia, effort, emotion, and yes, reactance.

Corporate change initiatives often fail because leaders focus their attention on attracting people to their cause, while neglecting the frictions that work against change.

A lot of leaders become leaders because of their charisma and their ability to sell a vision,” Schonthal explained to me during a video interview with both authors. “But you have to balance the ability to sell a vision with a willingness to clear away some of the friction and actually help employees get started on the path to that vision.”

“Leaders aren’t thinking about the barriers to action,” Nordgren added. “Shifting your focus to friction requires moving away from the idea and thinking about the audience. Taking that perspective requires empathy, it requires understanding the context, and it requires more effort and attention.”

The efforts involved in negotiating the return to offices are germane to the way in which friction in general and reactance in particular can torpedo change. “The mistake that a lot of companies are making is thinking that they can simply pay people a little more—for parking or Ubers or lunches—to make the idea of coming into the office more attractive,” Schonthal said. “I don’t think they appreciate that this isn’t an incentive issue. It’s a reactance issue. They’ve given people the autonomy to work at home, and now they are going to take it away. The companies that are winning people over are the ones that are having conversations about preserving some degree of autonomy.”

As the return-to-work conundrum suggests, reactance isn’t triggered by change per se. It is triggered when change bumps up against established norms, beliefs, or expectations, as is often the case with corporate change initiatives—which may help explain why failure rates for such programs are usually pegged at around 70%. “If people have a structured belief and you try to change that belief, that is a moment when people are very inclined to feel reactance. The stronger that belief, the stronger the pushback,” Nordgren said.

The natural inclination in such cases is to respond to reactance by making a more strident case for change and bolstering it with plenty of evidence. The problem with this approach, as seen time and again in the last couple of years, is that it raises the pressure to change, which in turn, creates a reactance flywheel. “To me, this is one of the most important ideas around reactance,” Nordgren explained. “If you believe in climate change and you’re dealing with someone who does not, or if you believe in vaccines and you’re dealing with someone who does not, the more evidence you throw at them, the more they fight against it. They see it as a hard sell, and it makes them more resolute in their beliefs, not less.”

So how should leaders manage reactance? Nordgren and Schonthal suggested several tactics.

Ask, don’t tell. “Executives often feel an obligation to lead change rather than engaging in conversations about it,” said Schonthal. “Sometimes just being open to talking with the people you’re trying to change can go a long way to disarming their reaction to being changed.”

“This is a fundamental principle of behavior change,” added Nordgren. “People are more profoundly persuaded by ideas that they generate themselves than by ideas that are given to them. It’s what makes the Socratic method so powerful. Socrates used questions to get his pupils to arrive at an unavoidable truth, but they made the journey—they arrived at the position.”

Start with yes. “Another bad habit leaders sometimes have is starting conversations at the point of conflict,” said Nordgren. “So, maybe you and I agree that we need to cut costs, but we disagree about where those costs should be cut. I should start at the area of alignment—we both agree that cost-cutting is vital.”

By asking “yes” questions, leaders can use areas of agreement to defuse reactance. “If I’m trying to convince the members of my department to hire a neuroscientist and I know they are likely to disagree, I’m going to ask questions that elicit a shared understanding, like ‘I’ve been thinking about who would make a good hire, and it seems that someone who can keep the department on the cutting edge and help differentiate it would be valuable. Do you agree?’” explained Nordgren. “The more I can get them to say ‘yes,’ the more they will feel that this is our idea.”

Offer people the chance to codesign the change. “If you’re trying to do something that is transformational inside an organization, include the people who are going to be affected by that transformation in its design,” Schonthal said. “When you engage them in design, not only do they have the benefit of warming up to the idea of change, but they also can see their fingerprints on the outcome.”

“This doesn’t mean everyone needs to have equal control or that they’re involved in each and every stage, but the more that people can be given voice in the process, the better,” added Nordgren. “Leaders might groan at this because it adds steps and time, but if they don’t give people a role in designing a change, they are raising the chances that the change never takes place.”