Building a Thriving Organization

There's a need for change ahead. Are you and your organization ready?

Welcome to Leading Matters. A weekly newsletter to help you build a more innovative, engaging, and agile organization.

It’s hard to ignore Nvidia’s time in the spotlight.

Long noted for its innovation in graphics processing, Nvidia’s growth recently exploded to 265% quarter-over-quarter since it became foundational in fulfilling the insatiable need for AI compute processing.

The company has long benefited from a strong market position, a diversified product portfolio, and the tailwinds of the ever-growing demand accelerated graphics processors. Its financial model is just as impressive, featuring gross margins that make many software companies envious.  

Nvidia is a standout in the processor market, a market with a low tolerance for missteps. Companies face heavy capital requirements, exacting product specifications that push the laws of physics, multi-year product cycles, and long-term technology innovation that push five-year plus product roadmaps. Mistakes mean losing for years, if not decades.

With those demands, you might expect NVIDIA to be run in highly structured way, wedded to a high degree of long-term planning and rigidity.

But in fact, the opposite is true.

In a recent interview, NVIDIA’s founder and CEO, Jason Huang, noted one thing that’s core to the company’s success. "We don't do a periodic planning system," he said.  

Haung continues, "The reason for that is because the world is a living, breathing thing. So, we just plan continuously; there is no five-year plan, there is no one-year plan, there is no plan — there is just what we are doing."

Huang is known for running a flat organizational structure and over 40 direct reports. He does it because he appreciates what many other organizations face today: Markets are too dynamic, trends appear too fast, and competition is too unpredictable to rely on long, discrete, static planning cycles and deep hierarchies.

Nearly every leader faces the tension between paying attention to what is required for execution today, and planning for what’s needed in an uncertain future. That trade-off is between getting incrementally better and more efficient at what they do to be successful now, or investing in new, radically transformative and uncertain innovation to be successful through the next waves of change.

Betting on the right side of that balance means years of market leadership ahead. Taking the wrong bet puts in in the face of future existential threats.

And CEO’s have taken notice. In a recent survey by PWC, 45% of CEOs said they don’t believe their companies will be economically viable a decade from now if they continue their current path.[1]

One of the biggest challenges is that it’s not just change, but the speed, the direction and the magnitude of change have increasingly become variables.

In that same survey, nearly 70% of CEOs felt that generative AI would increase the competitive intensity of their market.

So how does leadership thrive wen facing the scale, pace, and variability of change?

When I researched for my last book, Transformative, I started by focusing how great leaders create new market opportunities by finding, building, and scaling markets they can win.

One of the great surprises in doing that research was to discover how much emphasis those transformative leaders placed on aligning their organization for their mission and created the factors for success within their teams.

Their impact was so great that I dedicated the last third of the book to helping leaders understand how to retool their organization for success.  

To me, it was the most important thing I could transmit to readers. Why? Because those leaders developed organizations that could thrive in, and even create, very dynamic market environments, and win.

Among their top leadership tools, three things stood out:

1.     Fostering Engagement. They clearly defined their mission and intentionality in a way that provided the vision and team engagement and made a significant difference in fostering creative and involved teams.

2.     Leveraging Culture. Thy understood how to leverage the power of organizational culture to lead, innovate, and create organizational agility.

3.     Building Agility. They built organizations that continuously identified and responded to changing circumstances and advanced by identifying and overcoming challenges.

These are three key indicators of how organizations can be successful. If that’s the case, what is the scorecard for most companies? The data is not promising:

Engagement: Employee engagement, an indicator of employee involvement and enthusiasm has been dropping, with only 33% of employees in the US saying they are engaged in their work, down from 36% in 2020. To frame that, the best companies have average employee engagement of about 70%.[2]

Culture: One thing employees and leaders mostly agree on is the value of culture. In a Deloitte survey, 82% of employees said culture can be a strong competitive advantage. However, only 12% of leaders believe their culture is where it should be.[3]

Agility: One of the best indicators of agility is companies’ ability to remain as leaders in their market. By that metric, company agility continues to fall. The number of companies that leave the Fortune 500 is just over 14 every year. At that rate, half of current Fortune 500 companies will be off the list by 2040.

To survive, even to thrive, organizations need to make a shift in a much more dynamic, living, breathing world.

To help you, this newsletter, Leading Matters, will focus on four key areas to help you manage yourself, your team, and your organization. They are:

1.     Building a more thoughtful leadership practice for yourself and your team that will increase innovation and agility.

2.     Understanding how to harness the power of organizational culture to improve execution and engagement in a way that improves performance and differentiation.

3.     Creating an organization that can better spot emerging trends, embrace change, and adapt.

4.     Exploring and understanding new frontier technologies and trends and learning how to leverage them to your advantage.

I plan to post every week, utilizing research that helps you explore leading topics to build the right leadership style, team, and organization to succeed in the face of change.  

Because leading matters, now, more than ever.

Every week, I’ll end with a short set of questions for you to consider and even take to your team.

Some things to consider:

What aspects of your organization's structure hinder or facilitate agility and innovation?

Reflect on the tension between short-term execution and long-term planning in your leadership approach. How would you better strike a balance between them?

Considering the statistics about CEOs' concerns regarding future viability and competition, how do you envision your organization's future trajectory?

Until next time, lead with purpose.

About Leading Matters:

PS While I am trying to make Leading Matters is the trusted source for aspiring and seasoned leaders alike, if it’s not your thing, please feel free to unsubscribe.

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[1] https://www.pwc.com/gx/en/issues/c-suite-insights/ceo-survey.html

[2] https://www.gallup.com/394373/indicator-employee-engagement.aspx

[3] https://www2.deloitte.com/us/en/insights/focus/human-capital-trends/2016/impact-of-culture-on-business-strategy.html