How to build an organisation that can keep adapting

What’s in this podcast?

• Why leadership needs to move from solving problems to enabling others to solve them
• Why trust is fundamental to an organisation’s ability to respond to change
• How data and transparency help people recognise and act on the signals around them.

 

Episode timings

00:00 — Introduction

04:01 — From industrial hierarchies to knowledge-based organisations

12:55 — What makes a knowledge-based organisation effective

21:45 — Adapting to gradual and sudden change

27:31 — Trust, execution and organisational transparency

34:25 — How AI will reshape organisations

40:13 — The enduring foundations of adaptability

 

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The following interview transcription has been edited for length and clarity.

 

00:00 — Introduction

 

Jason Foster:

Hi everyone, welcome back to the show. Today, I’m delighted to have Andros Payne with me. Andros is an organisational design and transformation leader. He’s also the founder and managing partner of Humatica.

We’re talking about how you create an organisation that can adapt when the world keeps changing, which is probably a familiar position for many people, leaders and individuals.

Andros, it’s an absolute pleasure to have you on the show. Thank you for being here.

 

Andros Payne:

Thank you very much, Jason. It’s a pleasure to be here and to have this opportunity to talk with the audience.

 

Jason Foster:

I’m looking forward to it. Let’s talk about you and your route into organisational design and transformation because, from talking off-air, I know it’s an interesting path. Why don’t you introduce yourself to our wonderful audience?

 

Andros Payne:

Thanks, Jason. I’ll keep it brief. I started Humatica over 20 years ago to focus on organisational transformation because the world continues to move at a faster pace, and this obviously has implications for organisations and the way they work.

I often get asked what I’m doing in organisations and HR because my background is in engineering. I’m both a mechanical engineer and an electrical engineer.

 

Jason Foster:

You went from things to people.

 

Andros Payne:

That’s it. Having studied both those disciplines, subjects such as system response, signal processing and control theory actually apply to knowledge-based organisations and the way they work in dynamic markets. These frameworks have been around for over 200 years.

It’s actually very logical, if you’ve worked with many firms during your career and have that kind of academic background, that we’re doing what we’ve been doing for the past 20-plus years with Humatica.

 

Jason Foster:

Interesting. Shine some light on organisational design from your perspective. What are design, effectiveness and efficiency at a general category level?

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04:01 — From industrial hierarchies to knowledge-based organisations

 

Andros Payne:

It’s actually quite misunderstood, Jason. There’s no single definition for these things, and I think that’s one of the factors that makes it very challenging for leaders. Generally, they’ll define organisational design and organisational change according to how they’ve experienced them in the past.

However, this has taken on a new meaning because of all the changes taking place in organisations’ environments. Historically, the industrial age involved about 250 years of very successful productivity development and brought all kinds of products and services into our daily lives.

But organisations in the context of an industrial firm making products look very different from today’s knowledge-based organisations. Fundamental changes are taking place in the way structures, leadership processes and interactions between people need to adapt.

 

Jason Foster:

It’s probably a conversation for another time, but it also strikes me that we’ve designed education to suit the way organisations used to be designed.

Many organisations are structured in a way that suited those times, but times have changed. That isn’t only because of constant disruption and significant macroeconomic events, but also because of the way people now like to interact and how we get the most out of them. The nature of organisations and how they’re set up has changed.

 

Andros Payne:

That’s 100% correct. I would say academic institutions are lagging in this regard.

If we look back at how organisations were successfully set up in the past, it’s actually contrary to how a successful organisation needs to be set up now and in the future.

Throughout the industrial age, owners basically had some control over a physical asset, such as a factory or rail network, and almost all workers performed some type of repetitive task on that capital asset platform. Relatively few people connected the dots regarding ways of working, how to build the firm or how to innovate. Percentage-wise, it was a small number.

For example, an R&D organisation would develop a new molecule, which would then be mass-produced by thousands of people performing repetitive tasks. It was rinse and repeat, and that was a very successful model throughout the industrial age.

However, we weren’t asking most employees to connect the dots independently on areas for improvement or ways to solve problems in their particular area. Very hierarchical structures were established on these capital asset platforms.

If a problem arose, it was escalated to someone with the experience gained from working on that platform for many years. That person solved the problem and sent the solution back down the hierarchy: “Here’s how we need to change the routing of a train on our network when there’s a problem in one area.”

Those highly hierarchical organisational structures were established for good reason on capital asset platforms.

What we’ve seen, driven primarily by the long-term collapse in the cost of information, meaning the cost per bit, has steadily eroded the need for this hierarchical structure in several ways. We’re now asking a much higher percentage of employees to participate actively in identifying and resolving problems, rather than constantly escalating them through a hierarchical network, which is far too slow.

 

Jason Foster:

You position that change as being caused by the reduction in the cost of sharing and accessing information. Is that the driver, or has it been an enabler of the change?

 

Andros Payne:

Fundamentally, it has been both a driver and an enabler because we’re able to exchange information. This goes all the way back to the telegraph. If you look at the impact these information technology innovations have had on organisational structures and setups, they have systematically reduced hierarchies.

They’ve enabled increasing specialisation among organisations. Think about the value chain since the arrival of the internet. The internet, fibre-optic communications and wireless communications have enabled the complete outsourcing of critical functions, such as customer service, to halfway around the globe while still providing a seamless end-to-end customer journey.

You can take certain parts of the value chain and put them somewhere else on the planet. That’s only possible through a complete collapse in the cost of information.

When we say that, many people respond, “Wait a minute, my IT budget hasn’t gone down at all. It’s gone way up.” But do the simple maths and look at the cost per bit you’re storing, transmitting or processing. That is following Moore’s law, which represents a logarithmic decline. It has steadily affected how we organise companies.

 

Jason Foster:

Historically, organisations were designed around a hierarchical structure, and that lasted for a couple of hundred years. There were wars and other events during that time, but organisations experienced relative stability, certainly in terms of the pace of change.

Now, we talk about an increased pace of change and disruption that happens more quickly, regularly and deeply. What happens to organisations when disruption is continuous rather than an occasional situation?

 

Andros Payne:

Interestingly, Jason, I think people believe there’s more change because we now have more employees in developed Western economies being brought into the process of recognising and resolving issues themselves. Previously, that might have been reserved for an R&D unit.

 

Jason Foster:

So it was hidden before.

 

Andros Payne:

Yes. Throughout the industrial age, almost all employees performed some type of repetitive physical task. They needed to execute it repeatedly and consistently without making mistakes, and they weren’t asked to solve issues as their raison d’être.

As we outsource or automate repetitive activities in developed Western economies, the work that remains is knowledge work. At all levels, not only the most senior level, people participate continuously in connecting the dots and working with others. They use their knowledge to make the right choices and implement them before competitors can do the same.

It creates much more stress for individual knowledge workers because they must participate in that constant process, but it can also be extremely fulfilling.

 

Jason Foster:

That’s the key thing. What makes people good at that? If there’s a greater desire or obligation to deal with change, what characteristics are needed?

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12:55 — What makes a knowledge-based organisation effective

 

Andros Payne:

On the one hand, there are characteristics of the individuals. Individual knowledge workers need to bring some type of functional expertise that they may have gathered through academic training. If you’re trained as a microbiologist, for example, you understand how to recognise patterns in that area of expertise.

But it’s much more than that. It’s your ability to connect and effect change at an overall organisational level that gives one company a competitive advantage over another.

You need to combine the specific knowledge of one individual with the knowledge of others in areas such as marketing or finance to bring a product to market that serves a need, makes a contribution and generates a profit.

It isn’t only functional expertise that’s required, but also the softer skills needed to integrate that expertise with the expertise of others in the organisation. People need to connect the dots collaboratively and collectively, then deliver a benefit by either working more efficiently or bringing something new to market before their competitors.

 

Jason Foster:

Is there something that makes organisations more effective at doing that, regardless of whether they’re experiencing stability, disruption or constant change?

As you’ve described, most organisations now involve more knowledge work, collaboration, independent R&D, innovation, problem-solving and problem identification. Are people any good at it, and what makes some more effective than others?

 

Andros Payne:

If you boil it down, Jason, there are three key factors that enable an organisation to be highly effective.

First, there needs to be a clear vision. Knowledge workers, including Millennials and younger generations, are in it for the experience. The experience is important, as is being part of something bigger that’s unique and interesting. An inspiring vision is absolutely critical because the journey is just as important as reaching the end goal.

Having that inspiring vision is difficult for many firms because they’re caught in the day-to-day grind, but it’s critical.

The second factor is creating a trusted platform through which talented people can self-select and move forward. This is where talent management processes come into play. The platform should rigorously select the right people for a team, group, organisation or company.

As we discussed before, those people need not only functional capabilities but also the ability to interact with others across their organisational network.

Talent management processes also need to provide an objective approach to developing each knowledge worker. How do we give people objective feedback on the multidimensional skills they need to succeed within a networked knowledge organisation?

It’s important to put that platform in place and communicate it clearly so everyone understands and can trust it. It also gives people the freedom to excel if they make the right choices, or not to excel if they make other choices.

The final factor is leadership, but its role is very different from the role we described in an industrial-age organisation. It isn’t about solving problems; it’s about enabling others to solve problems. That’s a significant difference. It’s much more about coaching and avoiding the micromanagement of knowledge workers.

In successful knowledge-based organisations, the key responsibility for leaders is to enforce the right behaviours and take concrete action when dysfunctional behaviours arise. By dysfunctional behaviours, I mean those that inhibit a group’s ability to combine its knowledge, make the right decisions and execute them.

It isn’t about implementing best practice everywhere because there are hundreds of ways for knowledge workers to excel. It’s about taking concrete action when dysfunctional behaviour puts collaborative work in jeopardy.

The leader therefore has a different role: they’re a coach, but also a sheriff who takes action when dysfunctional behaviours arise.

That isn’t trivial in knowledge-based organisations because the most valuable knowledge workers, such as the star designer, salesperson or programmer, can sometimes be the most disruptive individuals. They may believe that, in the worst case, they’re untouchable. That can be very disruptive to the overall effectiveness of the team or group.

So, the three areas are having a clear vision, establishing an institution for outstanding talent management that people can trust, and providing leadership that helps, develops and coaches people while taking concrete action on dysfunctional areas.

 

Jason Foster:

It’s such a shift from what might have come before. We started this conversation by discussing how organisations were designed around hierarchy, structure and very specific job responsibilities, where people didn’t step outside their box.

This is a very different way of managing and setting up an organisation. The operating model changes, and it introduces elements of risk, freedom, flexibility and variety that don’t exist in the traditional model.

 

Andros Payne:

I completely agree, Jason. We have 200 years of successful leadership from the industrial age, but the leadership required in an information-based organisation is very different.

Many problems arise when leaders take those industrial-age leadership principles and apply them within a knowledge-based organisation. They aren’t comfortable with the autonomy knowledgeable people need, so they try to control them and solve the problems themselves. Therein lies much of the anguish within organisations today.

 

Jason Foster:

In my experience, it creates a lot of tension and affects the overall culture and success of a business. There’s a disconnect between the management style and what the organisation requires.

 

Andros Payne:

I agree 100%. In an information-age, knowledge-based organisation, a problem in just one part of the business spreads.

Every individual in a knowledge-based organisation has the ability to broadcast, both publicly and privately. That’s why the sheriff must take action. It isn’t adequate to say, “This is contained within this group,” because everybody in the company is watching what happens there, and that defines the culture.

 

Jason Foster:

Can the pace of change outstrip an organisation’s ability to redesign itself and its operating model around this way of working?

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21:45 — Adapting to gradual and sudden change

 

Andros Payne:

Absolutely. There are phases, especially in technology development, when technology takes a leap forward. Those have been times of great insecurity and questioning within organisations.

There’s a fantastic book called Future Shock, written in 1970 by Alvin Toffler. He describes the shock the world was feeling at a time when the semiconductor was really coming of age and computers were just on the horizon. He characterised future shock as change happening so rapidly that people didn’t have time to adapt adequately. That created a lot of fear in organisations.

I think that’s a real consideration today because we’ve progressed since then to become a much more information-based society. The free flow of information within organisations is critical to their competitive success in dynamic markets. If we have a lot of fear, it doesn’t help people exchange information.

 

Jason Foster:

It isn’t a good emotion from which to build anything.

 

Andros Payne:

It really isn’t, especially in knowledge-based organisations where you rely on voluntary interaction between people and the free flow of information. That allows them to combine their knowledge collectively, make the right choices and implement them before a competitor.

 

Jason Foster:

It strikes me that there are different types of change. You have change you can prepare for. A transformation programme is a good example: you’re preparing for a change, so you can line everything up, communicate, bring people with you and put in the work to make sure everyone knows what’s happening.

The industrial age eventually came to a halt, but people could see that coming. They wrote books about the changes ahead.

Then you have another dynamic: change that suddenly hits or sideswipes you. COVID, a war in Ukraine or the closure of the Strait of Hormuz can send shock waves that you can’t specifically prepare for because you don’t know they’re coming.

You need to be an organisation that can cope with the change those events create and adapt quickly as they happen. Are planned change and sudden change different? Do you need different capabilities to handle the known, planned change versus the sideswipes you weren’t expecting?

 

Andros Payne:

There truly are different types of change. I’m going to return to systems analysis because systems also have to adapt to change.

Think about an aeroplane flying. It could suddenly hit unexpected turbulence, or the crew might know they’re going to fly into a headwind because they can anticipate it.

There are gradual changes affecting organisations. In those situations, you rely on frontline employees to notice small signals about how customer needs might be changing, perhaps because they’ve lost a third tender for a particular type of work.

That information first needs to be identified and transmitted to the rest of the organisation. It must then be combined with the knowledge of people working in areas such as product development or product marketing so they can determine how to respond.

Those are small signals in the market and normally indicate slower change. Is the organisation capable of the communication, competencies and pattern recognition needed to connect the dots on those slow, low-frequency changes and make the right choices? It’s easier to execute a response when you have that kind of time.

Some of the other examples you mentioned are what we call impulse changes in engineering. They happen suddenly. In those situations, it’s even more important to have cultural processes within the company that enable people to pick up information, connect the dots on the right choices and implement those choices very quickly. That enables the organisation to avoid the risks or gain the benefits of abrupt change.

Fundamentally, both slow and rapid change rely on deep trust within the organisation. If there’s friction between people, a lack of trust in leadership or conflict between departments, such as sales not speaking to marketing, it breaks down and slows the entire process of responding to either fast-moving or slow-moving change.

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27:31 — Trust, execution and organisational transparency

 

Jason Foster:

That point about trust is so important. It underpins most interactions in business.

 

Andros Payne:

It really does. As a firm, we conducted a fascinating study to examine the highest-performing organisations in terms of their ability to execute. This was reflected in their profitability because a firm that can respond quickly to changes in its market should be more profitable.

The single behaviour most closely correlated with that financial result was that managers were perceived to do what they said they would do. In a knowledge-based organisation, that’s fundamental to building trust.

If I see a manager say one thing but behave contradictorily elsewhere, or even hear about it, I’ll conclude that it’s all talk and there’s nothing behind it. They aren’t walking the talk.

It comes back to trust. In knowledge-based organisations, the signals leaders send through their behaviour and speech are critical to building that trust.

 

Jason Foster:

You raised that in the context of how we deal with fast and slow change, and you also made a good point about the ability to execute.

First, you have to spot the signals and create a culture in which people are willing and able to spot them and know they need to act. That comes back to the work we do around data and insights and the ability to identify a problem.

You mentioned changes in customer behaviour and habits. You only know that’s happening if you’re tracking, monitoring, measuring, understanding and proactively looking, or if you have an organisation capable of finding those things.

The first step is identifying the issue. However, the organisation’s ability, desire and alignment to do something about it is where the rubber hits the road.

I’ve seen many organisations identify problems and do nothing about them because they don’t have the mechanism, culture or leadership needed to choose which changes to react to, which changes to pursue proactively, or how to execute after deciding to act.

 

Andros Payne:

The execution piece also goes back to trust. Key pattern recognition normally happens at more senior levels of an organisation, and that might indicate that a strategy change is needed.

When people on the front line hear about it, do they understand it? Do they trust that the leadership has connected the dots on something important, and do they execute it?

 

Jason Foster:

Has the leadership understood the problem in the right way, chosen the right issues to fix and then provided the budgets and people needed to make it happen?

 

Andros Payne:

Exactly. Returning to your point about information technology, this has become absolutely critical. I’m sure we’ll talk more about AI, but simply having data organised so that knowledge workers can utilise and leverage it to recognise patterns is fundamental.

We see many firms with data scattered across different systems. They essentially disable their knowledge organisation because they haven’t invested in the infrastructure.

 

Jason Foster:

What’s interesting, and I’m not sure I’d previously connected the dots in quite this way, is that functionally you need to put data in the same place, give people the right tools, clean it up and make sure it’s good quality and tells the right story.

But you also need a culture of transparency. You talked earlier about the breakdown of the traditional hierarchical model from the industrial age. Knowledge workers require transparency so that they can spot issues.

If you’re still a hierarchical organisation but have people moving towards knowledge work, you’re stuck between a rock and a hard place. You want people to identify problems and execute solutions, but you have a transparency issue. You’re inadvertently hiding the substance that allows people to innovate.

 

Andros Payne:

You’re spot on. That’s what makes it so difficult to tune a knowledge organisation for high effectiveness because you truly are only as good as your weakest link.

It could be structural: the way you’re structured might prevent knowledgeable people from combining their knowledge, making the right choices and executing them before a competitor.

It could be the incentive system. You might not have the data and tools needed to enable them to act. There could be political problems between different groups within the organisation. All these things stand in the way of knowledgeable people executing.

 

Jason Foster:

Ironically, creating transparency in that environment often raises challenges because people discover things they weren’t expecting.

What they thought was high performance might be strong revenue but low margin. Something people thought was performing badly might actually be a critical part of the value chain, without which other parts wouldn’t work.

Transparency shines a light on parts of the organisation that people may not be ready to see and, frankly, may not want exposed. That creates new challenges.

You need a culture of transparency and a willingness to accept that transparency will expose both the best and worst aspects of you as an individual and of your organisation. That exposure is positive because you can then do something about it, but it requires a different mindset, mentality, cultural norm and set of behaviours to gain value from transparency.

 

Andros Payne:

I completely agree. It becomes even more difficult during periods of great technological change because people say, “I can’t train a model or an agent to do my job because then I won’t have a job.”

We’re in that conundrum right now. There’s tremendous backlash against AI in the US and a lot of fear about what’s happening. AI is going to come, but that fear isn’t conducive to creating a highly effective organisation.

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34:25 — How AI will reshape organisations

 

Jason Foster:

Given that you’ve taken us there, I noticed when you first mentioned AI. We made it 29 minutes into a podcast in 2026 before mentioning it, which is quite impressive.

One thing I was thinking about earlier was the traditional model of defined roles and responsibilities and the specific, hierarchical nature of how business was done.

To get the most from agentic AI, automate work, build models and link those models so they perform tasks that humans currently do, you need to understand your organisation’s roles, responsibilities, processes and data sets.

Do we almost need to return to some traditional ways of working when a model, AI system or agentic AI picks up work? We need to document what it should do, ensure it behaves well, stop it from stepping outside what we’ve asked it to do, connect it to other agents and have a button that tells it to stop.

Is this a strange kind of disruption that either inadvertently or forcibly takes us back some steps?

 

Andros Payne:

Interestingly, Jason, I think you’re right. If you think about an unskilled worker who needs to be trained and coached very closely, that’s how people are talking about agentic AI today.

It’s a great tool, but we need to train it. It needs to become much more reliable, and we need to manage the risks. In a way, you’re absolutely right that we’re having to return to some old skills, although in a different context. IT specialists will be working on training our new co-workers.

It’s a fundamental change. There’s a lot of hyperbole around AI and organisations right now, but as a mechanical and electrical engineer, with the benefit of that academic training and experience in the high-tech industry, I don’t think it’s an understatement to say that this will bring very fundamental change to organisations.

I’m confident about that because, over the past 40 years, essentially since the invention of the semiconductor, there has been steady progress in making data available, storing it, transmitting it and analysing it.

With so much more data available for analysis, knowledge workers became more valuable. People who understood patterns in specific areas could use the deluge of data to connect the dots and identify patterns that had value for a firm, department or group.

Knowledge workers were at a real premium for the past 35 or 40 years. We couldn’t find enough young knowledge workers.

Now, we have all this data stored and all those technologies in place. Large investments have been made in infrastructure such as fibre-optic and wireless networks. That was part of the internet revolution: creating a standard protocol.

What has now emerged with AI is the automation and commoditisation of pattern recognition across all that data.

As we can already see, this is shifting the economic burden towards new knowledge workers and recent university graduates. That’s the first place where the initial AI systems, which still have development needs, will have an impact: within the IT industry and entry-level positions.

But it won’t stop there. Pattern recognition has been a bottleneck throughout the information age, and that’s what AI will directly automate and commoditise. I think this will have massive implications for organisations, how they’re structured and the role of leadership.

 

Jason Foster:

Let’s not try to solve that entire question in this episode because there’s a whole debate about how you blend these agents with humans and the role humans will or won’t continue to play within organisations.

But it echoes the earlier part of our conversation about what makes an organisation effective in its ability to adapt continuously.

We’re now in a period when organisations need to adapt to this new thing that’s arriving. AI is here to stay, and it will change, improve, flex and adjust. There will be more controls, governance and regulation, which may inhibit it.

We’re currently in the moment of change. Then there’s planning for a future in which, whatever it looks like, this becomes the normal way to run an organisation.

However, life will continue. Hopefully there won’t be more pandemics, but there will still be wars, energy crises, new competitors and changes in customer behaviour.

That brings us back to the underlying characteristics of an organisation, including trust, collaboration and high empathy. Do you think those fundamentals will stay the same? Or do the core characteristics of an organisation need to adjust alongside this technology?

Have those characteristics always been necessary for dealing with change, meaning that more change will simply require more of them?

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40:13 — The enduring foundations of adaptability

 

Andros Payne:

My personal opinion is that those basics will remain the same. However, the nature of the workforce will probably change significantly, which will accentuate the changes we’ve already discussed from the information age.

The leader has become more of a coach, and we’re going to go much further in that process. AI is a very significant inflexion point that will accelerate and dramatically broaden those changes.

 

Jason Foster:

That feels like a good place to finish today’s episode because there’s almost a cliffhanger: what happens next?

Perhaps we should talk again in two or three years and see how much has changed. Actually, maybe we should talk again in a week.

 

Andros Payne:

It might be sooner, Jason. It’s changing fast.

 

Jason Foster:

It might all be done by then.

Thank you. It’s been fascinating talking to you. Your interesting background, coming through engineering and applying some of that thinking to change and people, is fascinating.

It’s been great talking about the adaptability and change you’ve seen, what makes good organisations and how they stay effective during periods of flux. Thank you for joining me on the show.

 

Andros Payne:

Thank you, Jason. It’s been a pleasure.