A path to regenerative organizational transformation

Do you want to work for a company that's both profitable and resilient? One that gives back to society and the planet through positive contributions? By now, many of us do, but since we’re small pieces of the puzzle, this aspiration is hard to achieve or influence on an individual level. This article argues from a systemic point of view what a workable approach could look like to equip the reader with a step-by-step guide and concrete vision of how to effectively push for change towards forming a more regenerative organization, thereby creating net-positive impacts on the environment, society, and economy in which it operates. 

In today's rapidly evolving business landscape, traditional models of organizational transformation often fall short in addressing the relentless pace of change in a multitude of dimensions. Companies must navigate a complex array of challenges, from technological advancements and market shifts to unexpected global events and the urgent need to mitigate their negative impact on the planet. To thrive long term in this dynamic environment, a novel and continuous approach is needed — one that transcends conventional strategies and reimagines how organizations can adapt swiftly, build resilience, and sustain robust operations over time to progressively eliminate the causes of future problems. 

This shift is essential in industries such as energy, mobility, agriculture, where current practices often overuse resources and contribute to ecological damage but holds true for other industries as well. By viewing these challenges as opportunities for innovation — such as transitioning to renewable energy, restructuring transportation systems, and adopting sustainable agricultural practices — organizations position themselves for long-term success. 

The following outlines a viable three-step approach that empowers businesses to not only cope with change but to leverage it as a catalyst for growth, sustainability, and positive impact on people and the planet.

Regenerative businesses

Regeneration in business contexts views companies as interconnected parts within larger ecosystems encompassing people, places, and other organizations. This perspective invites businesses to operate in ways that not only sustain but actively enhance their surrounding environments. Rather than focusing solely on monetary profit maximization, a regenerative approach encourages businesses to consider long-term environmental, social, and economic health. By doing so, companies contribute to the welfare of communities and ecosystems in ways that restore natural resources and create mutual benefits.

Agile has become accepted as a good practice beyond the IT organization. Companies have been turning to Thoughtworks for support when facing challenges that go beyond the way of working in software development teams but also in addressing the structural context projects are executed in to ensure value creation. Agile methodologies, with their emphasis on responsiveness and value creation, naturally complement regenerative principles. 

Agile’s iterative approach encourages continuous learning and adaptation, allowing businesses to respond to emerging needs within their ecosystems in real time. Moreover, agile practices promote collaboration across teams and stakeholders, allowing for efficient gathering of data from throughout the organization and ecosystem for example in order to comply with sustainability regulations and address eco-conscious consumer demands. It supports a business culture that nurtures flexibility and resilience.

Diagram 1: Organizational structures from heirarchial to networked from an interview with Prof. Kotter.

In the initial phases it lends itself to explore “hybrid-systems” where cross-functional non-hierarchical teams apply agile self-organizing approaches, for example at first in part-time roles. People work in those ways when engaged in strategic areas exploring opportunities (hypothesis / bets), but for other purposes they continue to report into the traditional hierarchy. (For a thorough discussion of value driven portfolio management highlighting the importance of strategic bets in the realm of the IT organization take a look at my colleague Sriram Narayan’s article here, also a whitepaper is available for download here.)

According to Harvard Professor John P. Kotter, combining the hierarchical structure (visualized on the left side of Diagram 1) with a more agile network-like structure (visualized on the right side of diagram 1) “is a key to success in the 21st century”. The former is needed to efficiently operate in established clear and complicated environments and follow business-as-usual routine. It is complemented by the latter, which is needed to operate in complex and chaotic environments in exploring and building out strategic initiatives. Kotter highlights how the self-organizing network-like structure of the organization was successfully established by some pioneering companies. They excel at sharing a vision that ensures higher employee participation and motivation despite existing constraints. According to him the hierarchically structured part of the organization strengthens qualities like reliability and efficiency while the ‘second system organization’ builds out speed and agility. As a result, an organization can transform without costly hiring of new staff, the operative business remains unchanged and longstanding goals are met. Strategic initiatives are driven by people who are ready to take ownership for a good cause and enjoy the challenge in co-developing the criteria for progress and success worth celebrating with lightweight governance processes in place for reporting back to top management on a regular basis to demonstrate proven potential.

In the second step organizational transformation is attained by cutting vertical “value slices” defining strategic areas in the organization by forming a dedicated, long-lasting team (or a context-bound group of teams). They should be equipped with all capabilities needed to reach the designated goal including existing systems and continuously build, measure, learn and adapt their solution and thus innovate in response to internal dynamics and external requirements. As a result they develop solutions (external or internal products or services) that quickly adapt and thrive in the face of change or disruptions, for instance when evaluating and operating renewable and regenerative efforts. 

Why is it called a vertical “value slice”? All changes are implemented at first in just one strategic area of an internal or external product or service where the impact (expecting positive results) and feasibility (expecting it to be doable) analysis shows that such a transformation towards end-to-end ownership could yield particularly significant outcomes. Changes of roles and responsibilities and changes of team setup should at first be confined to that “slice”.

Limiting the change to one product or service limits the number of people that are impacted. This allows the allocation of the right people to the effort, which is a prerequisite for success. It allows higher management to focus support and helps to uncover learning needs before adjusting or scaling in other parts of the organization.  This way of reorganizing creates hands-on experience about what it takes to get autonomous teams aligned to tangible, sustainable value. It provides a showcase of the positive impact that can be achieved widely. Thus, by balancing structured oversight with decentralized decision-making, organizations become more agile and responsive, and gain the ability to align their operations with sustainability goals and knowledge of how to achieve them.

The chosen thin slice area should be freed from most bottlenecks/dependencies slowing efforts down, it should be extracted and refactored from existing solutions. Teams not involved should feel no (or very minimal) burden by the urgency in delivery of the strategic area. Some technical and business flow dependencies will remain. 

According to Thoughtworks' client TBC Bank where this approach was chosen for a pilot area (not directly aiming at increasing sustainability) the client reported back that “only six months after the transformation, we overachieved all objectives set for the Subscription team, which also belongs to the teams with the highest employee satisfaction within TBC. So the end-to-end Product Ownership model has proven to be a powerful framework, enabling us to manage our products more effectively and with greater dedication.”

Based on learnings gained and from using the shared vocabulary about the products and services, the next “vertical slices” for change should be selected and additional teams be empowered for more autonomy and accountability.

As my colleague Benjamin Cremer states in this article “the more the discrete product areas are set-up as autonomous teams, the more the people in those teams can focus on the full customer experience instead of optimizing locally in their capability or system layer. The resulting organization structure resembles stacks of succulent, end-to-end value slices.” 

By selecting a strategically important area, the case is not only about learning, but also creates tangible value, at best positively impacting all three, people, planet, profit. Businesses thus cultivate resilience and more effectively contribute positively to the broader ecosystem.

Diagram 3. The evolution of decentralized decision making from "Regenerative Leadership" by Giles Hutchins and Laura Storm.

The third stage, as described for instance in their book ‘Regenerative Leadership’ by Giles Hutchins and Laura Storm, emphasizes decentralized decision-making and the rise of autonomous teams, replacing traditional hierarchical structures entirely. Similar to mimicking strategies used by living organisms, business divisions form symbiotic relationships with the communities and environments they are a part of, ensuring long-term sustainability and collective well-being. This approach accepts some trade-offs, such as reduced efficiency or overlapping efforts, in favor of adaptability and resilience, validated in a quote on Martin Fowler’s blog stating that “in today’s business climate, market responsiveness (time-efficiency) is more important than cost-efficiency (especially when it comes to capital expenditure items such as software development)”. 

This view of an organization aligns with the principles according to which Donella Meadows, a pioneer in the understanding of complex systems, defines a system: “an interconnected set of elements that is coherently organized in a way that achieves something. A system must consist of three kinds of things: elements, interconnections and a function or purpose” (Meadows, Thinking in Systems, 2008). A snowflake's nature to restructure its crystal formation in response to changes in temperature and humidity provides a good example. Meadows explains the key dynamic as the ability of systems to “structure themselves, create new structures, and learn, diversify, and complexify along predefined and relatively simple organizing rules.” 

A critical feature of this is self-organization. For organizations, once a solution or "thin slice" has been tested, it is essential to integrate it into the broader system, scaling it not through mere replication but with appropriate adjustments in variation and scope. In pioneering these systemic changes internally and externally, organizations evaluate and establish guardrails to guide their evolution. These boundaries enable the system to adapt creatively, resiliently, and effectively to the demands of an ever-changing environment similar to a snowflake’s nature to restructure itself.

How to get started

Possessing intricate knowledge of a problem ie. an opportunity, you could be the person starting with a small initiative and obtain permission to investigate and prove a compelling business case by setting up a test run with a small cross-functional team working part-time next to your normal role in the business to see whether your hypothesis holds true.

In line with the approach described above and according to Maja Göpel in her book “We Can Do Better: a departure into the world of tomorrow” it would be essential to

1. Understand the core of the problem (it’s elements and interconnections in the system)

2. Map out a clear goal including how success is measured and progress is evaluated

3. Focus on the most promising initiative out of your portfolio of possible initiatives

4. Allow the “thin slice” team to learn and exemplify and spread change into other parts of the organization

At Thoughtworks, we are committed to helping our clients implement governance frameworks to sustainably bridge the gap between digital strategy and execution, laying the ground for a holistic digital transformation capable of fulfilling demands of clear, complicated and complex (and at times chaotic) surroundings.

We advocate for taking a holistic approach in line with points above. The goal is to understand the current state of the organization and consequently identify what changes need to happen across three horizons — structural, operational and technical (point 1). Once completed, it’s advisable to take an incremental approach to implementing the necessary changes and be deliberate in selecting particular guardrails that will help manage the specific challenges (2–4). 

Let us facilitate the application of agile software development principles to strategic decision-making and organizational transformation by instituting proven lightweight governance frameworks. These frameworks provide essential guidance while empowering teams to act autonomously, fostering a culture of innovation and rapid adaptation. By balancing structured oversight with decentralized decision-making, organizations become more agile and responsive, and may align their operations more effortlessly with sustainability goals. This approach not only enhances business resilience but holds the potential to generate positive outcomes for people and the planet. Through the implementation of iterative processes, continuous feedback loops, and flexible yet clear governance processes, organizations create environments where practices thrive sustainably and where strategic decisions are informed by real-time insights and collective intelligence.

For continued reading, check out my colleague Paul Weise’s article highlighting four ways value slices can be helpful in addressing common change management challenges.