Let a Thousand Nerds Blossom!

Posted by Frank Thun in Lean&Agile, Management, Self-Management, Work Design

Granted, liberating companies is the way to go in this Digital Age. For-profit, for innovation, for resilience, for the liberation of people – whatever – pick your motive. But how to pull off the Liberation? I think you need to weave your revolutionary tapestry of actions using 6 steps.

Step 1: Plan & Adjust

The target is to build a high-performance organization, one that lets people engage and brings out their talents for the benefit of the organization and themselves.

The first step is to plan out this journey. I suggest planning on three levels: Mindsets, Habits, and Practices.

You start with describing the Mindset the organization should show, according to the situation the business is in and where it (probably) needs to go. Next, you break these high-level mindsets down into a list of principles. A principle is a basic idea or rule that explains or controls how something happens or works. While coming up with principles, you will need to address each of the ten habits of liberated organizations and determine where your organization will take a stand, as explained in The 10 Habits of Liberated Organizations.

The third step is a bit easier, as it is more analytical: Choose the first set of liberated Management Practices that are by the principles. By practicing these new ways of engaging people, the organization and will work itself into a new mindset.

A word of caution: Do not copy any existing approach: Creating a learning organization requires building an agile mindset which can only be learned step by step. If you choose to copy an approach, chances are you, and your organization won’t be ready enough to sustain it.

By embracing new, agile, liberated management practices the final goal is not the practice. These will change and morph. All practices are just a way to create an agile mindset. Gaining a Growth Mindset is what a Learning organization is all about.

The important thing is:

Plan for the Mindset and the Principles you think your organization needs to embrace
Then, choose the first set of Liberated Management Practices that support those Principles and Mindset
Try out and implement those Liberated Management Practices.

Do not approach the new mindset directly, like a traditional change management effort would.

Instead, approach it from an oblique angle: An organization will work itself into a new mindset over time

Step 2: What to Liberate (next)?

Start with what you have and let it grow. The “Capability Maturity Matrix for Liberated Organizations” might provide you with some orientation.

Pick any of these dimensions or combinations as your next target. Then, pick some concrete Agile Practices to make the make the transformation tangible.

Step 3: Decide on the Angle of Attack

Now that you know what to liberate, determine how to do that. Typically, in best piece by piece”elephant-eating” manner, some parts or practices of organizations go first, while others continue to operate as before.

You may choose to approach the liberation from multiple angles. For example by selecting a unit that advances in their management practices, while the whole organization is just trying out – for instance -new ways of meeting or delegating. Or you might set up a community of interest who act as change agents in whatever parts of the organizations they happen to be, and let them conduct experiments of their own choosing. Every approach is valid, every combination can be helpful, according to local circumstances. To know more, have a look at Joost Minaars Post on Corporate Rebels.

But do yourself a favor and choose units or practices that face off to customers. These might be external or internal customers, it doesn’t matter. By making the Liberation outward looking you will achieve:

Much more significant business impacts, as most value is created on the interface with customers
much more sticky results, as chances are that the customer will like what the new way to collaborate
that the Liberation initiative has a lower chance to bog down and degenerate into just another corporate meta-exercise: Well meant, but not crucial. The Management fad du jour that may be ignored.

Step 4: Establish a clear Schwerpunkt

Now that you know what and where to attack, muster your forces and concentrate them with explicit focal attention on the point of decision. In other words, don’t do a bit of all, instead do a few things that really matter, decisively.

What is decisive in a Liberation? Well, as in any other Revolution it is getting to the Tipping point: Making people stand up for the new status and sweep away the status quo. Create a momentum that makes the Liberation self-sustaining. Luckily, Malcolm Gladwell as some advice for this.

Here is some guideline how to set a Schwerpunkt in an organizational transformation:

Set the Schwerpunkt where decisive results can be expected. The stronger the business need or historical trend or chance, the better.
Do not try to energize any groups with more than 150 people. The more anonymous the team gets – and it empirically research that people can not make that more than 150 somewhat meaningful relations – the more energy will dissipate into the realm of corporate entropy. Keep the target population small, and the social dynamic will drive the change effort forward.
Gather and keep a close circle of change agents nearby you. Focus your attention (and time!) on these promoters. Most valuable are people that are adept at connecting people with one another (“Connectors”), people that facilitate solutions (“Mavens”) and people adapt in convincing others (“Salesman”)
Do whatever you choose to liberate in a high-quality fashion that captures hearts and minds of people. If working in the new liberated way creates new perspectives and experiences people will wake up, be energized and become promoters of the liberation effort themselves

Seeing the liberation as an exercise to create a “tipping point” is important. Other, more traditional change management practices won’t help much. After all, it’s a social movement that needs to strive towards these new ways to run a company. There are no things like command, control or cozying up to please the boss. Agile practices will always fail if it fails to capture hearts and minds of people. Agile is, at its core, a mindset

Step 5: Coordinate your Forces

These days KANBAN is used to track all kind of things in the Lean or Agile Community. So why not using it to coordinate the evolution of Management practices. I developed such a board for a typical, traditionally run company.

Only Management practices are shown on this board. This includes Leadership practices and some HR practices (Development, Hiring) as well as some systems which main intent is to coordinate work (mostly Workflow Systems)
Each Card on the board shows one managerial practice. There can be some overlap between practices, as the components of the realm of management are not as simple to define. It is rather impossible to have practices defined in a mutually exclusive or a collectively exhaustive manner. Do not crazy in over defining. Embrace ambiguity instead.
Each column indicates which state a management practice is in. On this board, it’s either part of the organizational DNA or a new initiative which is somewhere on the horizon or something in the implementation

A Company Board of Managerial Practices

Have a look at an example. Maybe the kind of organizational DNA that this (actual) company has sounds similar to your (traditional) organization.

As I worked to fill the board, I struggled to come up with new management initiatives that are currently being tried in this sample organization. It is actually quite shocking that nothing much is going on regarding new or revised management practices. Isn’t the digital revolution out there? Isn’t it time to raise hell and get the f..ck going with changing management and leadership practices? So why are so few things to be listed in the two leftmost columns?

I think the reason is that this company, and others, are first of all way to static in general (a result of the formalistic hierarchy) and second, companies tend to work on the wrong things. Lots of people still believe that digitalization is about fancy new IT Systems, so they are working on those, with lots of people and lots of time. I think there are two reasons for this:

To mistake Digitalization for IT is an easily understandable misperception. The deeper workings of Digitalization,i.e., experimenting, accelerating, making sense out of data, allowing failure, let a thousand Nerds blossom, sense-making which re-engages workers to the cause of the customer
By spending all this money on Systems and Business Processes, no one is really threatened. The Internal hierarchy stays all the same. Noone needs to shift her or his mind to the digital age. Noone needs to change behaviors. Spending money is easy. Shifting Worldviews and Habits are hard.

But you know what? Revolutions are tough. And the Revolution is here and real. Now. So better get going.

Liberation Board

Here is what a Liberation Board for a progressive company could look like. This company does the hard but vital stuff and changes its managerial practices and (thereby) mindsets. This board is not based on a waterfall view of transformation (e.g., Plan, Implement, Operate), but on an evolutionary view of the company and its managerial practices: Practices are experimented with, modified until shelved or proven and then scaled.

By viewing managerial practices as evolutionary results that may stay, change or die according to the needs of an organization, the organization is transforming on its deepest level. The level that governs the relations between all people in the organization and its customers, too.

Any evolutionary learning model can be used for this. Kata‘s, the Deming PDCA Cycle or the OODA Loop. Personally, I favor that the OODA loop. The ODODA loop has been invented by John Boyd, a trainer of elite fighter pilots in the US Top Gun Program. And that alone makes it makes it my favorite. Deming (PDCA) and Taichii Ohno (Kata) were engineers. Nothing against engineers, but to pull off a corporate revolution, I am going with the fighter pilot.

To learn more about the OODA loops origin, check out Taylor Pearsons Post.

Picturing the transformation on a Kanban Board has many advantages:

It visualizes status and progress
It communicates who is working on what
People can choose to volunteer to experiment or scale with this or that initiative. They do not necessarily need to be assigned
It helps to keep the number of changes (the WIP “Work in progress” under control)

Last, not least it spells out the organizational DNA explicitly. Of course, this requires a lot of openness, which is tough, as it lays open the hard assumptions that managers have about people: Tell me how you manage people, and I tell you what your attitude you have about them.

If a company is just beginning its journey towards liberation, there will be the natural and tactful tendency to sugarcoat things. After all, some kind of consensus needs to be built about the transformation of the company to a liberated model or organizing. You got to start somewhere, over time trust and openness, even when it comes to talking about weaknesses and vulnerabilities, will increase.

Step 6: Set-up Overwatch

The Liberation effort needs to be organized with a team driving it, and informed and active agents in the organization.

Prepare

The first step is to prepare the cut-over, by deciding on the rationale and the scope of the overall liberation effort. Steps 1 to 6 of this post provide a good guideline for this.

Orient

Second, all colleagues need to be involved. They need to understand that they, from now on and more and more, are invited to work in a different, more liberated manner. To list the current management practices is a good starting point.

Next, make clear what the limits are. Some practices like negotiating salaries or significant investment decisions might not be on the list of practices to liberate. Designate the practices that may be liberated if people choose to do so.

Not only the choice which practices to liberate is up to the colleagues. They need to have a say if a unit wants to transform certain or any management practices at all. Pushing down management practices on people is likely to be counterproductive: Enforced liberation is tyranny. People need to actively opt for liberated practices.

Start

After co-workers have understood the intention of the Liberation effort and their unusual strong say in this effort, compared with all other conventional corporate change initiatives, it is time to try out different liberated management practices. By doing this, people and the organizational units work themselves into new behaviors and mindsets. As a result of this, people start to experiment with more advanced practices and pull those inside the organization, too. A positive feedback loop will drive the revolution forward.

To have a dedicated transit team, that supports the rest of the organization in this, is very useful here. On the tool side, the Liberation KANBAN Board can be helpful in planning, monitoring and coordinating the effort.

Scale

To scale liberated management practices is unlike traditional scaling methods. Traditionally a standard is set for, let’s say the way a store operates or an IT system works. This standard “Template” of processes and systems is then trained and imposed on an increasing number of stores or business units. There is not much of a say that the targets of “Roll-outs” have.

To become a more liberated company by imposing things won’t work. Scaling liberated practices means to offer colleagues to come forward and drive things. It is an offer, that can be turned down. Naturally, there will be some units or groups of people who actively pull in new practices. If those are better than the old management practices, the chances are that more reluctant units will follow. This process might take months or even years, depending on the size of the company.

Develop

The final stage is not a static one. It is one where the company keeps on adapting to changing customer needs and the business environment. It is forever evolving through implicit or explicit experimentation (using, for example, the OODA Loop). It is forever seeking to learn and improve.

Let Thousands Nerds Blossom

The last sentence sounds like an incredibly high aspiration. But I am not saying that the company will forever optimize itself and find a new optimal state with every challenge thrown at it. That would be unrealistic since social forms of collaboration have a certain degree of stickiness, too. They won’t always be optimal. In many cases, they will just muddle through, just like hierarchies do.

But with the right degree of stewardship, a servant leader, a Gardner- like attitude to leadership, a lot of trust, that lets everyone open up and speak up, liberated companies will be much better positioned to deliver better business results in an ever-changing world.

After all, evolution is all about survival of the fittest. Dinosaurs had there time until some nimbler competitors took over. In a digital, knowledge-driven economy we need liberated organizations that let “A thousand Nerds blossom”.

This is what I think. What do you think?

Sources

Gladwell, Malcom “Tipping Point“, 2001
Claudia Schroeder and Bernd Oesterreich, “Das kollegiale geführte Unternehmen“, 2017 (English Version not yet available)
Corporate Rebels Blog Post: “The Million Dollar question every Company needs to answer“, 2018
Pearson, Taylor “The ultimate guide to the OODA Loop“, Blog Post on TaylorPearson.me.

The 10 Habits of Liberated Organizations

Posted by Frank Thun in Culture, Lean&Agile, Management, Self-Management

I must confess. I am a Nerd. A special type of Nerd. I am a Nerd in Organizations. I am captivated by the way organizations work, by the ways humans arrange themselves to collaborate with one another.

Like every Nerd, I think that my thing, “Organizing”, is the most important thing in the world. Let me explain why.

Like so many boys I liked adventures. While playing, listening, reading, or just imagining there were so many adventures to be found, everywhere. The biggest ones to me were the stories of conquest and mortal peril: The Legions of Caesar, Pirates, Prussia, the Byzantine Empire, Genghis Khans Hordes, Japanese Senguko Jidai or the two world wars – all stories. Or the epic business stories of the East India Companies, Apple, Elon Musk, Richard Branson, etc.

That fascination stayed with me until now. It just metamorphosed from a boyish adoration of heroes to a quest to understand the inner workings of the organizations. After all, most great people could not achieve anything without great organization and management.

That’s why I want to share with you what I call the “10 Habits of Organization”. It took me 48 years, a couple of hundred books and a lot of reflection to identify them.

A word about naming: Please not that I alternatively rfer to the “10 Habits” as “10 Wonders”, too.

I. The Habit of True North

Some think the power of a unifying vision lies in being a great motivator. I disagree. The motivational aspect of share vision is not what is really important in an organizational context. For organizations, the coordinating aspect of a vision has far greater usefulness.

Motivation is a fickle thing, as humans are fickle. Most of us can’t be Mother Theresa all the time. But if we fall on hard times and got to make difficult choices, a vision will help. Moreover, the vision will help us to predict how others in the organization will act.

There is the illusion that a monolithic vision of a company will suffice: The one sentence like Facebooks “connect the world” or Googles “organizing worlds information”. But it is much more important to break down the vision so that every unit has a purpose so that an organization becomes a purpose-driven organization:

The Habit of True North: A hierarchy of purpose helps to replace a hierarchy of coercion.

Yet most organizations neglect visions and thereby relegate themselves to “just another place to earn money.” A pity, as it prevents people from bringing out the best version of themselves.

Working on a vision is hard, and it needs to start at the top. It takes a disciplined visionary at the helm of the organization – a combination seldom found.

II. The Habit of Caring

The deeper we dig in us, the more we know that everything that matters is what we do for others. This is no sentimental sentence of a Gutmensch (do-gooder), this is an empirical fact according to worlds longest running study performed at Harvard University.

The Habit of Caring: Give people something to care of, and they will care.

Give everyone a clear line of sight to the customer – no matter if external or internal customers. Give each individual the chance to make someone else happy.

III. The Habit of Teams

Psychology and Neuronal science have shown again and again how fallible the individual human mind is. Every one of us is so blinded by his senses, prejudges, moods, attitudes and the very mechanics of his brain. There is no way around that, no matter how hard we try.

But if we engage in open, mindful exchange with others and allow us and others to reflect, the team can produce results that far and reliably outstrip the results that anyone alone can do.

We are, especially in the western world, so enamored with the narratives of the lonesome hero, that we tend to trust individuals more to do great things than we trust teams -despite all empirical evidence.

The Habit of Teams: Truely united teams are the nucleus of high performance

The conventional management hierarchy fails to produce high performing teams. It does so systematically, as autocratic structures foster fear and dependence – which are poisonous to a teams performance.

But wait: More Teams means more meetings, right? Most of us hate meetings: A waste of time. But we might fail to realize that all that tedious meetings are just a symptom of the failure to lay the foundations of successful teamwork. Some of those foundations are trust, deep relationships, shared missions and a structured meeting format which allows everyone to participate and open up – not just the talkative ones.

Indeed, good teams will have fewer meetings, as they do not require them: They achieve their coordination by more personal, shorter and more meaningful exchange.

IV. The Habit of People

Since the eradication of slavery, the right of every adult to make her or his own decisions is right, front and center of our global culture. We trust individuals to make the right decisions every time, no matter if the individual takes up sky-diving or purchases a house for hundred thousand dollars, or opt for a facial tattoo. Go ahead, you are the master of your own fate!

But since the abolishment of the medieval menial service of farm hands, achieved in the industrial revolution, there remain basically two areas where humans are not trusted to make the right decisions. In the education system, and in companies people are subordinated to other persons. In exchange for regular pay, employees forego their right to make their own decisions.

This is, of course, an advance from slavery and menial labor, but still, people are not welcomed as adults in a company. With the signature of their work contracts, people enter organizations as kids, not as adults. Bosses can order people around like they are kids. And as kids employees try to please their parents, even if it means bending the truth.

Having a good “parent” in business is fantastic, but much rarer than in families. After all, the connecting tie is not one of blood but one based on an economic relationship between superior and subordinate. Cold hearted exploitation is often the result.

The Habit of People: Treat people like adults, and they will start to make adult decisions.

It’s not easy, but even in hierarchical organizations there are techniques to do that, see, e.g. 4 Steps to Release the Full Potential of Organizations.

V. The Habit of Freedom

Rules and Policies stifle innovation. They restrict the freedom to act so much, that organizations may fall into sclerosis by entangling everyone in the organization in a byzantine web of bureaucracy.

It is as simple as that: Most company rules punish everyone for the misbehavior of the few. The more rules there are, the more loopholes there are, the more apparatchiks will prosper, and the less entrepreneurial an organization will be- but an Enterprise without Entrepreneurs in it should be a contradiction in terms.

The Habit of Freedom: If you want your company to fly, don’t lock everyone up in secure boxes.

Do not make a mistake to equate a company with a minimal number of rules to an Anarchy: As long as there is discipline, grown trust and shared values, the organization will be functional and innovative. Not just functional, as most hierarchies are.

VI. The Habit of Seeing

Take a step back and look at an organization. What do you see?

An Organization Chart showing a lot of boxes
People working in predefined jobs, doing their duty
Offices where people labor on their assigned tasks

This is all good and well for the industrial age, where work can be neatly parceled out to employees by all-knowing superiors. Efficiency dictated that the amount of information available to an employee is determined by what the employee needs to fulfill a job. To give more information was simply uneconomical.

The Habit of Seeing: Everything there is to know beats all you need to know.

Nowadays, in complex, ever-changing environments it’s more and more unclear what an employee needs to know to do a job. Even more important, research has shown time and again that good teamwork can only happen in an environment of mutual trust. Transparency, the pervasive availability of information to anyone, is creating trust, it is enabling decentralization of control and is enabling learning.

VII. The Habit of Learning

Learning is the only sustainable competitive advantage there is. By now, this piece of wisdom might feel rather stale. So many companies have tried to become a “learning” organization – and so many failed.

Robert Kegan, a Harvard psychologist, and organizational researcher argues that much of these failures can be attributed to our lack of understanding of learning:

Learning happens not before or after the action, but primarily during the action
If we put feedback loops into every day to day activities, in an environment built on trust and openness, people will learn
Managers have to master pedagogy (techniques how to teach) and have a curriculum (whats useful to learn) in mind

The Habit of Learning: Saturate an organization with opportunities to learn and it will learn

People will not learn because they should. Some will want to learn. Other simply can’t avoid learning if nested in an organization where learning opportunity is abundant and embedded in every activity that they do.

VIII. The Habit of Gardening

During the last 100 or years, most managers have been thinking about themselves as problem solvers, with a heavy streak of day to day, “street-wise” (pragmatic), troubleshooting.

In a fast-moving, knowledge-driven economy, this self-view is fundamentally outdated. Now, decisions need to be made at the location of highest competence. They need to be made fast, on the spot. Therefore, a manager becomes both the designer of an organization and its caretaker and is less involved in the day to day actions.

In the words of Tim Brown, the CEO of IDEO (which arguably is worlds most innovative organization): A Manager needs to become a Gardner.

The Habit of Gardening: Tend to an organization: Seed, water and protect it- and it will blossom.

Well, that’s a huge shift. From an all-knowing, often micro-managing decision maker to a Gardner that steps aside and lets ideas, people and finally business performance blossom. Many Managers won’t be able to do this shift, despite all evidence that the age of the servant leader has begun.

But do not mistake this for a green utopia. A Gardner arranges his garden for a purpose, and he cuts back rigorously if need be.

IX. The Habit of Exploration

In today’s knowledge-driven economy, there is so much knowledge inside co-workers and so much data to be analyzed. Basically, making ever new hypothesis, trying out things, reflecting, revising the hypothesis and experimenting, again and again, becomes a core individual working technique rather than a high profile exercise of research teams.

Today, we are all explorers who try new things and are rewarded by our efforts. Just look at the way you are working on your smartphone. Chances are that the more you invest in getting to know its capabilities, the more personal utility you derive from the device. The quickest way to learn is to watch others and imitate their way of doing, for example, calling a taxi via uber or solving a tricky excel problem by finding a youtube tutorial.

Like it or not, we are all already explorers in today’s vast worlds of knowledge.

The Habit of Exploration: In a knowledge economy, everyone is an explorer.

The more everyone is stepping out of his daily work, explores, and brings home new nuggets of knowledge that are put to work in the local context, the better business performance will be.

X. The Habit of Practice

The new, modern organization is a journey, not a destination. The speed of the journey will be determined by the quality of the practice. Willy-nilly adoption of this or that practice won’t achieve anything. What is called for is:

Deliberate practice
Encouragement to experiment & tolerance for failure
Iterative ways of working in small increments, in forever self-correcting feedback loops

The Habit of Practice: Organization is a journey that will go nowhere without value driven discipline.

Moreover, an Engineer-like (or should I rather say “Gardner-like”?) self-restraint in doing one thing after another without losing sight of the big picture. There is no point in expecting everyone to perform at stellar champions league level all of a sudden. It takes practice, blood, sweat, and tears to built great organizations.

But the discipline does not lie in slavishly following a method. The discipline must be in following the agile mindset and the values described in the 10 Habits.

How to start

Seldom an organization will be able to follow all Habits of Organization. I suggest starting with aquiring at least one habit, as the benefits are immediate. Just pick one, any of the ten will do.

Experience shows that work on the other habits will follow in due course: Go forward and allow – for example – more transparency and trust will likely increase, enabling more delegation and more autonomy.

I will elaborate how to start liberating in a later post. For now, have a look at 4 Steps to Release the Full Potential of Organizations.

A Wonder to Awe the World

There are few things that are more worth aspring to then to liberate people. Still, the way we organize work today is build on – often mindless- subordination. This is one of the last left-over of the feudal and industrial age.

I think it’s time to move past that, by using the tail-wind of the digital age: The Economic results of Liberated Organizations are simply superior.

It all comes down to this: It makes a huge difference weather you just show up at work or you really engage in it.

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This is what I think. What do you think?

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Special thanks to Sketch Note Artist Yasmin Cordes of Sketchworks. I met Yvonne last year at Re:Publica in Berlin and she ventured her help in visualizing the concept. A pleasure to work with you, Yvonne!

The Liberated Organizations Canvas – A workshop tool to sketch directions for aspiring builders of wonderful Organizations

Sources:

4 Steps to Release the Full Potential of Organizations
Corporate Rebels
Kegan, Robert et al., “An Everyone Culture“, 2016
Graphics by Yvonne Cordes, Sketchworks

Management Debt and Organizational Entropy

Posted by Frank Thun in Culture, Lean&Agile, Management, Self-Management, Work Design

Do you know the fundamental value proposition of Organizational Research? This value proposition is the very reason why theoretical and empirical research in this field is done at all, why a record number of business books are published today, why magazines like Harvard Business Review exist:

A simple as it is, this statement stayed with me for all these years. How many organizations have you seen, that are “historically grown” or outright dysfunctional instead of being planned? How many managers did you ever meet who where just administering their areas, without ever conjuring up the willpower or taking the risk to better things, to even try to sketch out a better state for their organization? Chances are, you met a lot of those.

“A planned state of an organization is more effective than an unplanned one”: This statement is a call to action, that sends you on a never-ending mission to think ahead and try things. For me, it’s a call to have a mission, to be one step ahead. To continually hone your organization.

Granted, it’s not as bold as Facebooks Mark Zuckerberg “Move fast and break things” motto. It’s more down to earth. Coming from Jürgen Hauschildt, who has been a renowned professor within the German-speaking countries, it carries special weight for me. Mr. Hauschildt specialized in “Innovation Management,” wrote a highly successful book on that subject which is with its 6th edition still in distribution today. Mr. Hauschildt was a significant proponent of empirical organizational research. He accepted no truth, just because it was theoretically plausible, everything had to be tested with hypothesis, experiments, tests and statistical analysis until proven.

Of course, that’s just basic science. But as most business books, especially the successful ones, reflect opinions and narratives, but not empirical, data-driven scientific analysis, Mr. Hauschildt’s style of work is needed today as ever.

Yet, most managers fail to take a scientific perspective of an organization. Managers are pragmatists. They do not have time to be scientists.

For Managers “betterment-now” beats “optimum-never”.

That’s all right and fair. Here is the problem with this: Most Managers do not have a holistic view or understanding of their job. They think of betterment as to solve an immediate issue – but lacking a holistic perspective, sometimes even on their part of the organization- they tend to come up with solutions that may have severe tradeoffs in areas where they are blindsided.

The Blind Sides of Managment

When about Organizations, we tend to think about the, what Harvard Professor Robert Kegan calls, the Exterior of an Organization. But there is more to an organization which needs to be planned:

Quadrant 1: Exterior view of Organizations

This is what springs to mind when thinking about organizations. These are all the usual stuff we think of as managers and organizers. They are tangible, written or at least practiced rules and processes.

Quadrant 2: Exterior view of Individuals in an Organization

These are the responsibilities, roles, problems, and tasks that individuals in organizations are faced with. It is the individuals understanding of his role in an organization, her day to day job.

The individual’s view of a job is determined by Quadrant 1: All rules and processes defined have repercussions on individuals day to day work. Every intrusion that restricts the local autonomy to act impacts the way people view their job. Every purchasing guideline, every management approval, every assignment, every project, every HR regulation.

Quadrant 3: Interior view of Organizations

These are the nontangible, harder to see aspects of an organization. This Quadrant is usually described as the organizational culture, i.e., “the way we do things here.”

Organizational Culture is notoriously hard to change. According to Peter Drucker, “Culture eats Strategy for Breakfast.”

(credits for this picture goes to Torben Rick)

Yet with everything, a manager organizes and regulates, culture is changed. At the same time, Culture restricts what regulation from Quadrant 1 is being made and determines what regulation will be successful.

Quadrant 4: The “Psychology” Quadrant

The Interior view of Individuals, that’s the trickiest quadrant of them all. It’s the things that like beliefs, values, fears, and vulnerabilities that are hidden in everyone. It’s psychology, it’s neuronal science, i.e., the way the brain works.

Everything an individual does, in any quadrant of the organization, is governed by Quadrant 4. Yet managers often neglect the impacts of their actions on the psychology of people.

Historically Managers are Administrators, not Psychologists.

Why do Managers need to learn about their blind spots?

Management’s goal is to achieve optimal outcomes “in the transformation of resources into utility,” a definition used by Management thinker Fredmund Malik.

For knowledge work, that “transformation of resources into utility” can only be optimized, if managers are able to plan ahead for the next state of an organization – not on just Quadrant 1, but on all four quadrants. The individual’s state of mind might not have been critical in a command and control coal shoveling steel mill, but it sure is of central importance in today’s knowledge economy.

All the hard facts, the rules, and regulations set in Quadrant 1 determine all other Quadrants, but most the Individual, Micro level of an organization.

Of course, all Quadrants are somewhat interdependent. Still, Quadrant 1 is much more easily changed by a rational process, as everything in it can be much better controlled and measured. The Organizational level sets the frame for each individual, where else the individual is much less powerful to change the collective, notably the lower she is on the corporate ladder.

Blindsided managers let their organizations incur Managerial Debt by choosing ways of working that appear to work on an exterior level, but destroy the interior side of the organization (by undermining trust, disengaging people, treating them like children etc.):

Managerial Debt accrues over time: Disengagement of workers will cause products, service and finally profits to degrade over time.
Like accrued interests, bad managerial solutions will cause new bad managerial solutions to spring up over time
Unaddressed management debt increases organizational entropy overtime: Energy that is lost to the void: Filling out reports that no one needs. Doing Approvals that no one approving understands. Never working on fundamental issues but only on patching up the mistakes of the flawed organizational system

Managers need to become Engineers of all Dimensions of Human Work Environments

In this VUCA (volatile, uncertain, complex, ambiguous), knowledge-driven and the ever more digital world, Managers need to become just that: Engineers of human work environments.

Robert Kegan, calls this mission to built a “Deliberately Developmental Organization,” a Learning Organization. Shockingly, a learning organization needs the manager to become a teacher or Unversity decan who does two things:

Set a curriculum of what is to be learned
Engage in Pedagogy (the science of learning) to optimize the rate of learning

Now Managers need to get a better understanding of psychology and pedagogy, too. An even major challenge. But a challenge that can not be ignored in our times. Times, where the Agile Mindset and Agile Management Practices appear to be the way forward for organizations.

That’s a challenge that Jürgen Hauschildt, would have eagerly taken up.

That’s what I think. What do you think?

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Sources:

Kegan, Robert, and Lahey, Lisa Laskow et al. “An Everyone Culture: Becoming a Deliberately Developmental Organization,” 2016
Hauschildt, Jürgen, “Innovationsmanagement” 6th Edition 2011
Technical Debt, a concept accredited to Ward Cunnigham
Robert Kegans view of the Organization has been influenced by Ken Wilber’s Integral Theory

Going Native: The Best Way to Link Traditional Companies and Start-ups

Posted by Frank Thun in Culture, Lean&Agile, Management, Startup, Technology

From a corporate perspective, the Startup world is chaotic, hard to understand, seemingly irrational and even irresponsible. Similar feelings come into play if just a unit inside a Company adopts Agile working principles, for example, an IT Unit adopting SCRUM as its project method.

It is here that the paradigm of Control & Predict meets the paradigm of Autonomy & Evolutionary Purpose. There are bound to be misunderstandings, crisis, conflicts, drama, and frustration in this interface between the traditional corporate world and the Start-up World.

Yet many Companies are rather inept dealing with this interface. A typical reaction is to assign a single point of contact (SPOC) by each supporting unit, such as IT, Logistics, Purchasing, Accounting or Legal to take care of any issue raised by the Startup. The well-meant message to the Startup is: “Do not worry. We will take care of your issues”. And so the trouble starts – boys and girls working for the startup usually:

Don’t know which question to ask. There are there for a mission, but the intricacies of e.g., corporate IT, Legal finesse or accounting laws are not their area of expertise nor their primary concerns. All their focus is to get a product with a viable business proposition off the ground
Don’t know how to formulate question, so that the experts in the supporting unit can understand it
Are not sure who should ask a question. In such a fluid way of working as a Start-up environment demands, responsibility can hardly be pinpointed to single person
Have other concerns. Yes, there might be this or that – for example – legal quirk with this or that decision, but this is often a secondary concern. Too many decisions need to be taken at a moments notice
Change their questions fast. Even if a question is formulated, with all the experimentation going on, there is no guarantee that the question will not be outdated tomorrow
Need answers real fast. A hierarchy, where there is an awareness that answers are nothing else than commitments, and commitments costs resources, needs a lot of time to come up with an answer. After all, the hierarchy is built for reliability and efficiency – not for speed and effectiveness

Giving these problems, the single point of contact model is doomed to fail.

Going Native

So what is the alternative to the SPOC model? It is not waiting for issues to be raised by someone in the Startup but integrating some co-workers deep in the Startup. Thereby those co-workers, which might be described as liaison officers, agents or advisors, stay in the full context of the Start-up and are able:

to scout for issues with all their knowledge
to solve issues by directly addressing real or potential issues with their support unit
to work relive the tensions between the Supporting Unit and the Start-up

Costs

The support unit has to dedicate the liaisons, which can be hard given that the liaisons will be the more effective, the more knowledgeable, the higher their social skills and the better their existing network is.

The Start-up has to accept an increase in their number of co-workers. If multiple supporting units do send liaisons, the number of persons to be integrated can be quite large. But Start-ups need to be close-knit teams where communication is plenty and relations are close and meaningful.

Therefore the liaisons should be integrated not into any single team of the start-up. In the open space facilities so typical of start-ups, the liaisons should have their own table. But they have the permission to change their desk to this or that team table from time to time, just like the situation demands it.

It is the liaison’s job to make themselves useful to the start-up, to seek meaningful work where the start-up team might not be able to identify it and be instrumental in solving it.

Conclusion: Time to move, HQ!

I think that going native is a very good option – after all, the agile way start-ups are working, with lots of experimentation and engagement, lights a way for the corporate world to change.

It is the corporate units that got to integrate into the new world of working- not vice versa.

“Going Native” allows this. It is challenging for the leadership of the support unit to be faced with this new way of working, that provides so much autonomy and decision making authority to the liaisons. But this is exactly what needs to be learned to survive in the digital age.

This is what I think. What do you think?

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Sources:

Kotter, John “Accelerate” 2014 – gives a good hunch what it takes to lead a conventional, command and control organization (first “operating system”) and simultaneously a second agile one (second operating system)

Special thanks to Holger Balderhaar for making me rethink my position on Kotter’s 2nd Operating system.

76 Agile Workouts & A Fish

Posted by Frank Thun in Lean&Agile, Management, Self-Management, Work Design

The number of Agile organizational practices can leave you bedazzled: What is this practice for? When to apply it? What is the primary target of the practice? Here is a map that should provide some orientation.

Why use Agile Practices?

Agile practices work like your personal fitness work-outs: They change the organization over time if deliberately practiced. They increase organizational fitness over time. In other words: They increase the maturity level of an organization over time.

Thereby, they are offering a bottom-up avenue to organizational change: Pragmatic change which can be initiated by everyone in the organization, not just high ranking managers. There are only really two ways how an individual without management power can change an organization:

By changing her personal attitude, work style and behaviors or
by proposing, trying out and adopting new practices how to collaborate with others.

Sources of Agile Work-outs

A lot of people have recognized the value of Agile Work-outs, for example:

Jurgen Appelo wrote a book about it (Managing for Happiness), resolutely markets them on Management30.com, and has just successfully concluded a crowdfunding campaign for an app centered on explaining Agile Work-outs (Agility Scales).
Harvard professor Robert Kegan writes about them from an organizational learning perspective in his 2016 book “An Everyone Culture.”
Hedgefund Manager Ray Dalio seeks to evangelize the world by showing off the agile practices of his company Bridgewater ( see The World’s Leading Hedgefund is Relying on Key Principles of Self-Managed Organizations)

And there are many more sources of Agile Methods. Just take the king of all Agile project methods, SCRUM, which contains dozens of practices which can be used even outside the context of projects and in an organizational context instead. Like the “Daily Stand-up Meeting” with its three round-robin questions to every team member:”What did you do? What will you do? What are your problems?”.

It is possible to extract practices of Self-Managed Organizations such as Holacracy or Sociocracy, too. Just like SCRUM, these are systems of management which rely on some practices and principles. Why not reusing some of these practices in different contexts?

A Map of Agile Work-outs

The number Agile Work-outs can leave you bedazzled (some online source can be found in Resources). Here is my attempt to bring some order into this chaos by ordering them by three criteria:

Maturity Level of an Organization: In the last post I came up with a “Capability Maturity Matrix for Liberated Organizations,” a simple 4 level ranking that provides orientation about the maturity level, that the work-out should be best used in. Basically, the higher the maturity level, the more decentralized decision making is.
Severity: A somewhat subjective measure of risk and the number of requirements this work-out has. Severity has some correlation to the potential benefit this workout might have, but benefits really depend a lot on situative factors, where else increased severity represents the chance that the work-out will fail and backfire.
Category: These are loosely based on criteria used to describe classical management theories, such as those of Peter Drucker or Fredmund Malik.

As Agile Workouts come from many sources, in many flavors, and in plenty of variations there are no standardized names. As I drill down the Agile Workouts by category, you will find a short description in the tables below. For more detailed references, please check out the “Resources” page.

Agile Workouts for Control

Hundred years ago, the Art of Organizing had been described by Max Weber as seeking an optimal balance between specialization and coordination: The more you specialize, the more the need for and the costs of coordination increases.

In more liberated, self-managed companies, the need for coordination remains, but coordination is achieved by other means. While Coordination is decentralized, the most potent form of coordination, control, remains necessary.

Control is achieved by a multitude of factors, as for example managerial oversight, social control by co-workers which crowds-out managerial control, target agreements, and Meeting routines. And control can be enhanced explicitly by adopting one of the Agile work-outs listed in the table below.

I won’t explain every single Agile Work-out. But I hope you get a hunch what the work-out is about from reading the short description in the table. To find out more, you have to refer to the listed source.

Instead, I will just mention my favored Work-put in each category. In the Control-Category, I really like Self-service targets, as it invites people to reflect, think about what they can achieve on their own, and creates more commitment than goals set by superiors.

Agile Workouts for Feedback

To paraphrase Harvard Professor and developmental psychologist Robert Kegan: “A learning organization is an organization saturated with learning.” Every feedback given is a learning opportunity.

Giving positive feedback might happen too seldom, but is easy to do. Providing feedback that criticizes is much harder and requires a relationship built on trust.

My favorite of this category is Moving Motivators. A Card based, simple game where everyone ranks value and simultaneously explains her reasoning. In a second round, everyone explains how a particular change would impact her values. This is a great way to get to know one another, discuss a proposed initiative. It will pay dividends to every team over a long time.

Agile Workouts for Learning

Learning is, arguably, the most central thing in an Agile Organization or a Start-up. Naturally, there are lots of Workouts centered on Learning.

My favorite is Pairing and Job Shadowing. Two people working on a single task or job can give surprising insights, productivity improvements and creates ideas on a personal level. Its apparent inefficiency is what makes it so compelling. Pairing is the crucial ingredient to agile software development approaches as eXtreme Programming, but it works fine outside software development, too.

Agile Workouts for Organizing

Organizing means structuring work. And if there are less and fewer ways a manager can do that competently, there need to be agile exercises that help structure work on the meta level.

Here I choose Mirroring. Just identifying a customer for an organizational entity, creating a clear line of sight from the coworkers to the customer creates the impetus to want to work for the benefit of the customer in every co-worker. Humans really want to do good for others. Often the way we organize is an obstruction to that.

Agile Workouts for Meetings

Where is the place where collective intelligence happens? It is the Meeting. Isn’t it shocking how little thought is given to organizations about how meetings are run?

I have an emotional attachment to “Benefits & Concerns,” as I have practiced that since I joined Capgemini Ernst & Young in 2001. I still use it. Nowadays, my favorite is Liberating Structures, which provides Meeting structures that couldn’t be more elaborate and simple.

Agile Workouts for Transparency

Transparency acts as a fertilizer to innovation: The more, the merrier.

I admit I am a transparency freak. I like them all! But if I need to choose, I go for KANBAN for its universal usefulness and supplement it with Trello, an App for any distributed teams and/or Jira, for bigger teams.

Agile Workouts for Decision Making

Who calls the shots? With increasing maturity of the organization, decision making is more and more decentralized. These Work-outs highlight how.

My favorite is the Delegation Board.

But what I really want to try someday is the real fancy stuff”Believability weighted decision making.”

Agile Workouts for Human Resources

There are no norms for classifying Agile Workouts from other Organizational practices. Out of the plethora of HR practices, I found this bunch especially interesting.

I really admire doing things in HR based on data, just as described in Lazlo Bocks, who is the HR director of Google, book. Therefore my favorite work-out is Candidate Testing by giving out small and tests that are relevant to the position, that the applicant is supposed to solve. This allows so much more profound insights than any number of interviews by any number of people. It is indeed astonishing how much we oversee by talking to people and how much we reveal if we see a person working to solve a problem.

Agile Workouts for Projects

Well, there are a lot of project methods and methods for projects out there. I won’t include them here, except the two significant Methodologies of SCRUM and conventional Waterfall projects. Both methods contain innumerable amounts of work-outs themselves. But this Blog is focused on the organizational side of Agile.

I think there are enough sites covering agile or any other type of project management – and too few sites covering management structures and routine that allow such excellent Methods like SCRUM to shine. SCRUM runs optimally is embedded in a maturity level 3 organization. The trouble is, so many companies on level 1 and 2 try SCRUM and find it hard to digest.

I like to highlight Value Poker here, as it is an excellent way for people to engage and delivers – empirically – the 2nd best accuracy of all estimating methods, behind the much more resource, time and effort intensive Delphi Method.

And what about the fish?

Ok, you have been served the 76 Agile Work-outs. Now you want the fish, don’t you?

As so often, headlines can be sooooo overpromising and underdelivering. So here is my slightly fishy disclaimer:

Work-outs should be deliberately practiced and repeated. Do not expect one hit wonders. You need to practice, with deliberation and over time
Do not command a team to use a work-out. Propose it, try it, invite feedback and adapt.
Some work-outs work better in conjunction with others
Do not do too many workouts. You want your organization to work and not become a circus, I guess. Unless your organization is a circus. Hm.
You want to know why a particular Work-out is attributed to a particular Maturity level or severity? There is about zero academic rigidity beyond my personal judgment. So take it with a pinch of salt.

Finally, take your time to choose work-outs from higher maturity levels if your organization is still at a low level. Think of your role like being a Gardner of the organization: Give things – like e.g. trust – time to grow.

This is what I think. What do you think?

Note: I have excluded Innovation Techniques(e.g. 6 Hats, Design Thinking) and Coaching Techniques from this post. Sometimes it’s hard to distinguish what is an agile management workout, and what is an innovation or coaching techniques, tough.

Sources can be found on the Sources and (revamped) Resources page.

4 Steps to Release the Full Potential of Organizations

Posted by Frank Thun in Lean&Agile, Management, Self-Management

What would you say is the most crucial challenge that a manager faces these days? I would argue it is to release the true potential of workers. That’s what every Manager should be really concerned about, because everything else, be it arcane strategy or mundane day to day actions, follows from that.

Engaging workers, and releasing their creative energies needs more Self-Management. If you doubt that, just read the last couple of posts. Hell, even the late Peter Drucker, king of all management thinkers, recognizes this need. He states that:

Drucker cites 6 factors that determine Knowledge Workers productivity:

A broad definition of the Task, as the question: “What is the task?” is much harder to define than in the realm of manual work. It’s really outside the ability of the manager to determine that, i.e., the manager needs to rely on the worker to find it out himself
Autonomy of the individual to do what she deems best
Continous innovation, with learning on individual, team and organizational level
Learning: Reflection and iteration
Quality, not just quantity
Treat a person as an asset and recognize the intrinsic motivation

With surprising egalitarian swagger he concludes:

Now, that’s your case for self-management right here – for those not wanting to read the last posts. Now on to the model.

Big Bang vs. Gradual Adoption of Self-Management?

In the last post, I summed up the dilemma faced by anyone wanting to “max-out” the contribution of Knowledge workers as follows:

The good news is: I think there is a middle way.

Charting out the Middle Way

But first, let’s explore the criteria that a way to move organizations towards self-management can be measured against. I came up with 6 criteria and applied them versus the two approaches mentioned above.

1. Acceptability

The very starting position of any move towards Self-Management is that the approach to adopt Self-Management is acceptable to the ones in charge, owners, and managers. It is easy to agree on the overall target, i.e., better results through innovation driven by an engaged workforce of knowledge workers. But going all out for Holacracy is thousands of steps too far for 99% of owners and managers. Taking baby steps and try this or that agile work-out is, on the other hand, natural to accept.

2. Forcefulness

Even if the way to adopt more self-management is acceptable, the approach needs to be forceful enough not to peter out like so many other well-meaning corporate initiatives. Adopting Holacracy is as forceful as it can get, with all managers devolving their powers for good and basically ceasing to exist as managers. Doing agile exercises, while having really low really low barriers of entry into organizations, is as weak as it can get. Daily needs are sure to override, or worse hollow out the optional, “nice to have,” work-out.

3. Realistic

The third condition is realism: Is it realistic to get more self-managed by adopting one of the three approaches? The Big Bang approach is the real thing. It can’t get any more practical than that. Agile Baby steps, however, are used to let some fresh air into organizations. To loosen the mental concrete and valuable for people to get to know each other better. But fundamental change? Maybe over very long periods, but are they enough to diminish the hierarchy significantly? I do not think so.

4. Measurable

Fourth, the approach needs to be measurable to be sure that progress is achieved. Both approaches are entirely quantifiable, for example by keeping track of the number of vigorous work-outs or processes in planning, tested and adopted per team or on an organizational level, on a KANBAN Board.

5. Manageable

The resulting transparency is a prerequisite for the transformation to be manageable. Clearly, Management stays in control of in the “Baby steps” approach. But by adopting Self-Management by a big bang, no single person is entirely in control. There is a leap of faith to be made. A chasm which is hard to cross for all: Owners, managers, and workers.

6. Cost-effective

The sixth condition is cost-effectiveness. Given the incumbent profit oriented hierarchy, no initiative whatsoever will be launched, without an expected payoff. Here is a major short-coming of nearly all self-managed approaches. While the link is made between employee engagement, more productive Knowledge work, Innovation and Self-management, the profit motive is somewhat hidden. Far more prominent are explanations about human health, human stages of development, happiness, and self-fulfillment. I think that these high minded aspirations fail to bring the typical, rational and cynical executive to sign up for self-management.

7. Outward-looking

That the seventh condition, an outward-looking focus on the customer, is neglected in most Self-Management Models is hard to understand. Yes, there is some lip service to customer centricity in those models, but 98% of the models are about explaining the inner workings of organizations. In these digital, customer-driven times, this is a critical neglect which can only be understood by looking at the origins of self-management, a theory called Sociocracy, Sociocracy was invented in the 1920’s by Kees Boeke, a Dutch educator, as a way to humanize and democratize command and control organizations. It was directed to fight the misuse of power, but not to deliver the speed and learning that succeeding in the digital revolution needs.

In summary:

With the Baby steps method of doing agile work-outs, nothing much will be achieved.
Going for a big bang of Self-Management (by Holacracy, Liberation or “Collegial enterprises” or whatever model) faces such high barriers of entry into the market, that it won’t happen except in the rarest of cases

Both approaches are so extraordinarily light or so extremely heavy-handed that I think there must be a third way: A gradual move towards Self-Management…

that makes it easier to convince owners and senior executives to sign-up for
that utilizes the current, profit-oriented way of thinking to get human development inside organizations going
that puts the customer in the center of almost all that a company is doing. To link Self-Management to the digital age, to the lean start-up and all its learnings

So how could this roadmap look like?

A Roadmap for the Gradual Adoption of Self-Management

In my discussions with clients and colleagues, I find it useful to think of organizations as being in a particular stage of maturity. The best-known model for describing organizational maturity is the Capability Maturity Model (CMM) which explains how advanced an organization is based on 5 Maturity Levels. Each Level is, of course, a simplification of reality, as the level of maturity might vary by individual, department or process. But it is a useful model to identify problems, potentials and get the discussion going.

So in the spirit of the capability maturity model, here is the sketch of a model for self-managed organizations in four maturity levels.

The rows criteria are aligned to the view that Corporate Rebels, a Dutch-based missionary consulting start-up spreading the word of self-management, has. I just added the second criteria “From Internal Focus to Customer Centricity,” which I think has to be a vital characteristic of any responsive, agile organization.

Let’s continue to explore what the different maturity levels are like.

I. Hierarchical (Status-quo)

I do not really need to describe the workings of the hierarchy in a company, do I? Every one of us knows how to work in those environments. Do not get me wrong: It’s not that bad. Work can be productive and usually is. Even some element of fun can be found here and there, and there are various forms of social engagement.

The fundamental issues with the hierarchy can be reduced to seven main points. These, I think, are so fundamental that I put them in a graphic.

That said, the hierarchy has its place: Execution in predictable environments. It still is a useful human invention. Even with the movement to self-managed organizations hierarchy won’t go away. There will always be hierarchies of knowledge, informal and formal leader-follower arrangements. It will still be there, on a back-seat, but it will no longer be the dominating driver of future organizations.

II. Empowered

Empowered organizations are created by delegating more and more responsibility to workers. Organizations move from a command and control to a mission control style of leadership. There is more thought spend on purpose, strategy, customers, agile teams, participation, learning, values and ideally on data-driven decisions.

This is typical for today’s mainstream, knowledge driven company. Time is spent doing agile team work-outs, SCRUM projects, Lego building exercises for a change of perspectives in a design thinking workshop, setting up Kanban boards and product logs. All under the confines of the hierarchy.

This is all well and fine. Getting more “Startupy” is nice. Here come the downsides:

A. Empowered or Agile practices don’t align well with the hierarchy

Agile relies on autonomous groups making their own decisions. It relies on a safe environment to participate and contribute. It relies on Managers stepping aside and getting into a coaching role, refraining from direct interferences, and learning to rely on giving subtle nudges instead.

Alas, experience has shown that the workings of the hierarchy systematically undermine any vigorous exercise over time:

Managers fail to step aside and intervene, thereby destroying the sense of responsibility the autonomous team had. Destroying the very core of Agile.
Managers are often awful coaches: People will not open up to someone who has vast power over them, who fails to ask open questions and tends to tell and not listen. They will rather stick to their role as a courtier trying to please the manager
The velocity of teams, i.e., the ability to deliver quantitative results fast, will, over time, become all that is important. Quality is only an after-thought. The hierarchy re-establishes itself with its long-held norm: Valuing efficiency higher than effectiveness

B. Empowered or Agile Practices are just a “bolt on” to the organization

Agile Exercises are viewed as features. They do not change anything about values, behaviors and worst of all the hardest of all facts, the organizational hierarchy. To flatten the hierarchy by removing some layers, by increasing the span of control of each manager, to decrease the total number of managers and management layers, is almost always neglected.

C. The dominant Parent-Child relation between Manager and subordinate is maintained

Over time, Empowerment is felt by employees as just a bluff. A maneuver of managers to deceive Employees. The fundamental contradiction in terms is: “You are empowered because I say so.” This empowerment is entirely arbitrary and can be revoked at any time.

In fact, Managers adopt the role of a well-meaning parent to a child. And we know how fraught with problems this relationship can be.

Conclusion: Empowerment is useful if done right

Still, empowerment is helpful if the tough questions are tackled at this stage of organizational maturity, too:

Flatten the hierarchy, increase leadership spans, reduce the number of managers
Reduce the Rules, the number of “strict,” disenfranchising processes that a company has
Change the organization structure to give each unit a clear line of sight to the customer. for internal units that means to mirror their organizations to the internal customer’s organizations to create direct accountability

Very few companies do Empowerment right. They just talk about values, dabble in an occasional agile work-out and provide some well-meaning leadership exercises. They should get real and face the hard facts, too. Without addressing them, they are just rearranging the deck chairs on the Titanic.

III. Self-Organized

The Self -Organized Stage is reached when organizations did work on the hard facts listed above. They flattened the hierarchy, they reduced the management tax ( see Big Tax Cut! Flatten the Management Hierarchy).

Out of necessity, fewer managers means more self-organization. The team takes over much of the work. They might be “seeded,” i.e., set-up by managers, but how they work is up to them. Even what teams are working on is decided by the teams themselves as they begin to “pull-in” work instead of having work “pushed” to them by managers. People and teams learn to actually look for the work that is to be done because they care about their part of the company.

More and more critical decisions are delegated to teams of non-management individuals. In fact, more and more people become “defacto” managers, in all but name.

In such an environment, the fundamental relation between manager and subordinate shifts towards an “Elder- Citizen” Relationship. The Elder is treated with respect, and her advice is appreciated, but the Citizen is much more free to pursue her own path.

In this stage, it becomes crucial to think in Memes, i.e., coherent sets of cultural ideas that organizations introduce, maintain, adapt or discontinued. This is the stage where culture needs to grow to such an aligning force that a reorganization acts in unison without required much direction from the – still existing, but reduced, hierarchy.

Haphazard introduction of Agile exercises won’t be enough to reach this state. Senior management needs to have a plan where the organizations should grow into and what are the steps to get there.

Crossing the Chasm

So far so good. The Hierarchy has relented its iron grip and thinned out its ranks and layers. Stage III “Self- Organized” is a status that is seen by innovation leaders such as the iconic IDEO, AirBnB or Netflix. There the hierarchy is still there, but managers stick to the sidelines of the organization, i.e., they adapt their leadership role to that of an Explorer, Gardner, and Coach.

To go further into self-governance means to be crossing a chasm: It means to get rid of the organization entirely. This is a leap of faith that few owners are willing to make. Here is a list of those how did.

Is it worthwhile to do this step? Empirically, no one knows. But it is doable and realistic. There are a lot of successful Stage III, self-organized companies. But there are a lot of successful stage IV, self-governed enterprises too. In fact, a lot of self-organization seems to be the sweet spot that today’s companies aim for, without crossing the chasm and abandoning the hierarchy.

Source: What kind of Organization do modern Companies aspire to be?

So why crossing the chasm to self-governed organizations?

For some owners, this is a crusade for humanitarian values.
For others, its a way of relinquishing control and earn a smart passive income.
Others do not trust the stability of a self-managed company, as the hierarchy is still around and may reassert itself at any moment, especially in the event of an exchange of senior management. There are numerous examples for that, one of prominent one the rise and fall of the Bell Labs. At these labs, lots of the inventions for the digital age (Computing, Networking, Internet, Mobile Phone) have been made in self-organized environments. Before the hierarchy took over and stalled innovation. It is today a subsidiary of Nokia.

IV. Self-Governed

There are three hard criteria that indicate that a company is no longer self-organized but is now self-governed:

There is no management hierarchy
Hiring and Firing are done by teams
Salaries are negotiated by teams

Sounds like anarchist chaos? Let’s address the main questions on self-governance in an FAQ:

A. How can the organization ever act in unison, quickly and decisively?

The Coordination misperception: Someone needs to see the big picture and act. Given all what is known about human biases, don’t you think that this someone should rather be a group and not an individual?

Coordination is Self- Governed Organizations is achieved through a hierarchy of teams – instead of a hierarchy of individuals. The top-level team directs the organization, not unlike a board of directors does. In other words:

The Hierarchy of Individuals is replaced by a Hierarchy of Teams

Holacracy, Sociocracy and many of the forms of Liberated Companies are following this pattern. Obviously, hierarchy is important. There needs to be a single voice giving a clear direction. It just doesn’t need to be an individual.

B. How gets anything controversial ever being decided in this workers paradise?

Oh yes, the consensus misperception. Just because teams are in charge, doesn’t mean that everything has to be debated without end in order to achieve the often elusive consensus.

There are other decisions mechanisms available: Take a vote. Determine an individual decision maker for a specific action. Have discussions in such a scripted way as to hear everyone out, not waste too much time on talking and come up with better, more reflected decisions than ever before. Curious? Read the last post: Delegation on Steroids.

C. Will people not just slack off, enjoy their pay cheques and do what they want?

Ah, the Slave Driver misperception: In order to make people work, show them a carrot while holding a stick in the other hand. While it is true that carrot and stick works in lower levels of the Maslow pyramid, Knowledge workers are very likely to have their basic material needs satisfied. Carrots and sticks have a limited use, here.

But it’s not that carrot and sticks are no longer in use in self-governed organizations. It is only that this power is no longer wielded by individual managers. Teams set salary, hire and fire and give directions to lower level teams.

Still, work is not assigned to employees. Employees volunteer for work, they “pull the work into their area of responsibility. That process of “pulling in the work” is facilitated by social cohesion, a commonly shared mission and last not least social pressure multiplied by transparency over everything that gets done and not done.

Imagine someone slacking off in a vastly transparent work environment, thereby burdening the team with his presence. Chances are the Slacker won’t be a Slacker for long – at last not in the Self-Governed organization.

It much harder to hide a lack of engagement to co-workers than it is to hide it from managers.

Conclusion

All indications are that we need more self-management in this VUCA world, where innovation is the key to delight customers.

I think we can get there by addressing the hard questions in our efforts to empower an organization. We do not all of a sudden need to become Missionaries, Communists or Anarchists to benefit more from self-management. As a manager, you just need to do your work thoroughly, as you really should and work on the hard questions of empowering: Flatten the management hierarchy.

To compete with world leaders such as Netflix, Airbnb and the creative parts of Amazon, a company needs to move to the sweet spot of innovation. It needs to move to Maturity Level 3 and become Self-Organized.

Maturity Level 4 is not for the faint-hearted and its results are by no means certain. But it is a viable alternative and is likely to be much more stable than Maturity Level 3, where the Hierarchy always looms in the shadow and threatens this sensible “Sociotope” that Self-Management has created and that lets innovation blossom.

This is what I think. What do you think?

Sources:

Drucker, Peter “The Effective Executive,” 2006
Drucker, Peter “Management Challenges for the 21st Century”, 2001
Oesterreich, Bernd “Das Kollegiale geführte Unternehmen,” 2017
Denning, Steven “Radical Management,” 2011
Ries, Eric “The Lean Start-up,” 2011
Pontrefact, Dan “Flat Army,” 2013
Featured image by Stefan Wagner “Project Sociotope,” 2011, andsychrony.net

Last not least, here is a different layout of the Capability Maturity Model of Self Management.

Silicon Valley Clowns and their Fanboys

Posted by Frank Thun in Background, Culture, Management, Self-Management, Technology

After absorbing the N’th podcast/video/article of some random guy who used to work in Silicon Valley bragging about disruption and boldness, I couldn’t stand the platitudes anymore. I couldn’t help but be making a checklist on how to recognize a Silicon Valley Clown:

I guess you can add to this list.

What really annoys me about this kind of talking are three points:

A. Just because you have worked in the Valley doesn’t prove anything

Remember: Most Start-ups fail and there is not always learning involved. Not seldom, it is just silly. In our days there is a lot of money around that wants to be spent in hope for the next unicorn.

And if you worked for some poster company (Apple, Google, Amazon, Facebook, Tesla, etc.): Congrats, you have been a corporate robot, like so many of us. Does this make you an expert on innovation? I do not think so.

B. Snake oil traders selling to the Hinterland

It’s all Sales. Skim through the table above and look for a pattern: Name dropping, impressive insider wording, the time spent traveling and networking. There is just one job where you can do these things consistently: Sales.

There is nothing wrong with being a Salesperson. The danger is that that kind of persons usually become the trusted advisor to CEO’s, in roles like Chief Digital Officer, Chief Innovation Manager, etc. So you got a Sales guy trying to orchestrate all the aspects of a thing as complex as digitalization AND a resource-rich but fundamentally disoriented CEO listening to him.

Good luck with that!

C. Focussing on the Obvious while remaining Oblivious to Deep Challenges

Everyone knows that digitalization will fundamentally transform businesses. It is just that the term “fundamentally transform” is often interpreted in a very narrow sense -like this:

Building up new streams of revenue by investing in start-ups
Old Business Models die, new ones that involve more Technology and Data come up
All this happens real fast in an uncertain environment, so I better get my organization agile

That’s a consensus view, right? The trouble is, the transformation is much deeper than this.

With an ever-accelerating rate of change, the race to build up new start-ups faster than the old business dies is doomed from the start: If maturing start-ups experience the same organizational sclerosis than traditional companies, these “throwaway companies” cost too much investment for a shorter and shorter pay-back period
Digital Technology and high rate of changes make every front-line worker to a Knowledge Worker. Hand on Heart: The overwhelming number of companies and managers never did a good job managing knowledge workers
All this agile and lean entrepreneurial stuff will not work, without trust, transparency and finally the acceptance of vulnerability of humans. Without that – my dear Cowboy CDO/CEO- people will never open up. Without open communication, groups of people can never be innovative, and the pace of learning will be dismal

Face the deep challenges… or else

So the deep challenges are

Building companies that last and avoid instititional sclerosis

Learning to see everyone as Knowledge Worker

Step away from the Cowboy Style of Leadership and becoming a Servant Leader

That’s why I believe organizations need to move towards more Self-Management. To rely on the fickle whims of an autocrat, which any manager with the hire and firepower is, is fundamentally not good enough to let people open up and be innovative.

So the hierarchy has got to retreat. It does not need to disappear, it just needs to fade more into the background. There needs to be more checks and balances on hierarchical power.

Is that the silver bullet, the hierarchy needs to take a back seat? As always, it’s just one element.

But it might just be the one that requires the most time and is the hardest to pull off, as it requires such a broad mind shift in managers and people. A mind shift that goes against the command and control we all learned in school and experience in the business.

On the other hand: Ugh, that’s tough. Maybe you should just continue wasting your time with your Silicon Valley Clown, you (CEO) fanboy.

___

Sources:

Here are some legacy posts which you might find helpful:

What kind of Organization do modern Companies aspire to be? – how companies like Amazon or Netflix do it

The Startup Way by Eric Ries – Book review – how not to do it

The World’s Leading Hedgefund is Relying on Key Principles of Self-Managed Organizations – how an arch-capitalist is embracing vulnerability

Adopting Self-Management: Big Bang or Baby Steps?

Posted by Frank Thun in Management, Self-Management, Work Design

As I waded deeper into the sea of knowledge of Self-Management, I recognized a clash of opinions on how to adopt it. On the one side are the purists, who claim that only a big bang will do. Otherwise, the hierarchy will pervade and undermine Self-Managed Structures over time, thereby reestablishing itself and making a mockery of the whole exercise.

On the other site are the pragmatists, who do agree that such a Self-Management revolution would be great, but is utterly unrealistic. Instead, they want to work from inside the (hierarchical) system and try to get the hierarchy to release its grip more and more. The way to do this is to do Agile Work-outs, single, more or less stand-alone exercises, like improved Delegation, running SCRUM projects, reshuffling office spaces, etc.

Baby steps: Agile Work-outs

Agile work-outs are small, practical ways of collaborating in teams. Here is a list of examples.

More info on agile exercises can be found on Management3.0 or Liberating Structures.

Small steps can have significant impacts. If done deliberately and repeatedly over time, these small steps may shape behaviors. These behaviors become a part of a person, they become a habit. That’s basic coaching theory. So why not use this reputable mechanic to shape organizations as well? Surely, what works with individuals and groups will be working with organizations, too.

Maybe not. Organizations are different, because they contain so many individual players, that they become impersonal. Organizations have what academics call “emergent” properties: They have characteristics and show behaviors that can not be observed in its individual components, i.e., persons. Even teams have emergent properties, but in big organizations, these are much stronger: In groups, you get visual, verbal and lots of other cues about the effect that a particular decision has directly from your teammates. In organizations, these feedback mechanisms might be weak or nonexisting. How knows what the guys in the next building are even doing?

It takes a lot of effort, often nothing less than a major crisis, to get an organization to change. Chances are, that agile work-outs…

will be co-opted by the hierarchy and management – and result in nothing but lip-service. A lay theatrical performance
are done in a random, nonsensical manner – and thereby just add to Corporate Gimmickery Score
will be of limited use, if the organization is operating on a “need to know basis” and fails to provide workers with any transparency about any context
will be of limited use, if there is no mission that provides “true north” to let employees know what they should contribute to, and – shock – why they should engage at all
will be useless, if there is no safe place to express criticism or – god beware – feelings

Without a focal point of action, a clear “Schwerpunkt,” agile work-outs may just be a new corporate fad. People will likely grow disillusioned, tired and plain weary of them.

Big Bang: Revolutionary Designs

If hierarchical organizations are so resilient to change, you can’t change them by evolution. Nothing short of a revolution will suffice: Down with the hierarchy! Down with the caste of managers! Down to the tyranny that makes adults live become kids once they enter the office door!

That is the view of a lot of seasoned and experienced veterans of the self-management movement, for example, Brian Robertson or Koldo Saratxaga. Adopting self-management is painful and the hierarchy will re-establish itself if the transfer of power to workers is not done permanently, decisively, by the owner.

A successful rebellion needs a plan. Holacracy provides such a plan. It gives an “operating system” that replaces the workings of the hierarchy and determines where workers got to settle into. Another script for the start of the rebellion is provided by the Spanish consultancy K2K Emoncionado.

Apart from the pains that such a radical step causes, the primary challenge is: How on earth should any sizeable number of owners ever summon this much of egalitarian resolve to abdicate their powers to workers? Yes, there are more and more cases of owners doing that. Corporate Rebels has and is reporting on these cases.

Do not get me wrong: I absolutely think there is a huge economic and humanitarian case to resolutely go for self-management. But I fear that by waiting for more enlightened and bold owners to turn over control, the Rebellion won’t scale. Self-Management will remain a curious sideshow on a stage dominated by sclerotic companies dedicated to the status quo and to exploitation.

Conclusion

I can see the logic in the Baby-Step and in the Big-Bang Approach. But I do think that neither the Pragmatists nor the Purists do offer a viable route for established organizations to move towards self-management:

The Baby steps theory will properly not get anywhere in any reasonable amount of time. It will likely fade over time as just another set of corporate gimmicks which have been tried and forgotten
The Big Bang Approach will remain Niche: No matter how high the demand, the supply side of the market for enlightened owners is very slim. There are only very few people willing to go all-out for Self-Management. Most will need more convincing. They need a way to figure out Self-Management in controlled pilots and experiments

Is there a middle way?

A way to scale the Rebellion much faster? Exponentially, maybe? 10X?

What do you think?

___

This Post has been originally posted on 27th of December on Corporate Rebels. There is an interesting discussion there in the comment section, with Brian J. Roberts, the founder of Holacracy, weighing in

What can be done to maximize the use of Collective Intelligence?

Posted by Frank Thun in Lean&Agile, Management, Self-Management, Technology

There is precisely one place where collective intelligence happens. Just one. Do you know where this is?

It’s where people meet. It is the – so often dreaded – Meeting. It is so apparent: People come together to share their views. By definition: A Meeting is the very embodiment of collective intelligence. Yet companies squander the chance to harness the collective intelligence of its people carelessly.

Meetings are right, square and center in the heart of every endeavor of companies. One would think, there would be a lot of tuning of meetings to get the best out of them. A lot of analysis, structure, and discipline to get the best out of meetings. Yet most people are unstructured:

Most meetings run without an agenda
If there is an agenda, it is often ignored
The discussion itself is unstructured and free for all
Seldom, there is disciplined facilitator keeping the discussion from not veering off into fringe topics
Minutes of the Meetings are – if send at all and promptly – often ignored, except by the most structured kind of people

It that too dark a picture? I don’t think so. I have seen many organizations and most meetings were that badly unstructured. Even on board level, where Agendas and Minutes are the norms, the meetings themselves where often unstructured, agenda and Minutes of former Meetings basically ignored.

To explore typical meeting types and their impact on collective intelligence let us go through 5 types of meetings where issues are discussed, and actions are taken. I am not talking here about an educational meeting, that is a separate topic (albeit somewhat related).

A. The Unstructured Meeting – aka: Let the Extroverted Courtier win!

The unstructured meeting is terrible in so many ways. People seem to be there at just the hunch of a direction spelled out in the meeting title, the discussions veer off topic, Minutes are not kept, etc. But the real killer is: People may be invited to join the meeting, but they are not enticed to engage.

It is not only that people fail to prepare for meetings. Worse even if they could contribute ad hoc, just the extroverted ones will. Unstructured Meetings are usually dominated by the Highest Paid Person In the ROom (Hippo) and his extroverted henchmen, who try to please her or him.

B. The Structured Meeting – is so often a formalized recipe for boredom

A Structured Meeting is way better: There is an Agenda, a presentation of the issue to be discussed before the discussion, a systematic capturing of actions items and responsibility written down in a protocol.

But these kinds of Meetings are often a drag. They are formal and rational, which is fine. Yet they fail to invite people to engage emotionally. Noone is ever asked to contribute and to engage. You can get through these meetings without ever saying a word. Again, the pleasing henchman and the HIPPO dominate the meeting. People may contribute, but they will anticipate the way of least resistance, especially if only marginally impacted at all.

The structured, formalized meeting usually is a real drag. Its rational, but it is often boring.

C. The Modern Meeting: Asking for Feedback to get Thoughts going

The modern meeting is often facilitated. As skilled internal facilitators are usually rare inside organizations, consultants often drive those kinds of meetings. It is even more scripted than the structured meeting. Therefore facilitation is of the essence.

First, people are invited to say what is on their mind, a round robin where everyone, in turn, shares what is on his or her mind. The agenda is adopted, or agenda points are added. This “Check-In” into meetings is more important than just updating the agenda. It allows people to focus their mental energy on the meeting and gives them a point to share feelings right at the start of the meeting.

Giving each participant a voice at the beginning of the meetings allows people to connect with each other – an investment into the Meeting that will be repaid with a higher engagement level of each participant. All participants are able to gauge the emotional stance of others and cater to this in their interactions with each other.

Meetings are not existing in a vacuum. They are set in the context that each individual participant is at the particular point of time the meeting starts. An opening question like “Whats on your mind” during the check-in to each participant is easy to do and effective.

Such is the check-out, where people are again asked individually to share their feedback, their benefits, and concerns regarding the results of the meeting. There are multiple forms of this feedback possible, from just asking for one point of benefits and one main concern to writing post it and putting them on a Whiteboard or “Happiness door.”

D. The Connecting Meeting: Where passivity is not an option

Asking for feedback in Meetings during Check-in and Check-outs is not good enough to fully engage people. After all, it is the central part of the meeting, where some people engage, and most people stay disengaged. But, to harness collective intelligence, a company absolutely needs the engagement of everyone involved:

What the point of having all those experts, with all those diverse observations backgrounds if only a few actually engage and dominate the solution?

In a connecting meeting, people are drawn out of their habitual passivity. For this the connected Meeting follows an even more formal script than the previous meetings:

The agenda is not pre-determined. It is built right at the start of the meeting, after the check-in. Thereby, people are able to influence the purpose of the meeting in line with their actually needs – not just the need of the one person who wrote the agenda or had the time and discipline to add agenda items. One of the beauties of building the agenda after the check-in is that people’s actual needs and feelings, thereby giving a place to compassion and caring. Feelings come into play from the start.
After check-in and the presentation of the issue, people contribute their observations on the issue, one after the other. Passivity is not an option – everyone needs to speak up
Only after everyone has contributed, the facilitator starts the discussion. The discussion itself should be time-boxed. The initiator of an agenda item then has the opportunity to wrap-up or amend the proposal. Everyone’s opinion on the amended motion should be gathered during another round-robin.
After that, the proposal is decided upon by whatever decision mechanism is in place: Hierarchy, Consensus, Voting, etc. For an overview of decisions, mechanisms check out this post: Delegation on Steroids

What the connecting meeting achieves is to engage the left and right side of the brain more:

More of the left side, rational thinking is applied by everyone contributing
More imaginative, feeling left side thinking is coming into play, as better connect to one another and feel valued

The script for the connected meeting is a core element of Holacracy (see Holacracy, Liberation and Management 3.0), but it works outside the Holacracy context, i.e., in an ordinary hierarchical company too. The difference is that with hierarchical power still in play people will be defensive with their contributions and with sharing their feelings, as the HIPPO needs to be pleased in this or that manner.

E. The Challenging Meeting: Where Feedback is intense and in real time

Bridgewater is a Hedge Fund that made more money than any other Hedgefund ever in existence. As said in the previous post (The World’s Leading Hedgefund is Relying on Key Principles of Self-Managed Organizations), it can’t get any more capitalistic than that.

Under Bridgewaters Founder and CEO Ray Dalio, they basically digitalized the feedback process: Feedback is given via an application (the “Dot-Collector” in real-time, during the meeting and everyone’s rates. Then Everyone rates the issue and personal contributions to the meeting qualitatively and quantitatively. In this example, the lady and the guy in the rows assess their CEO’s performance in the meeting

It takes quite some guts to give such a negative feedback to your almighty CEO. An excellent structured Meeting is one thing, a culture of radical transparency and truth is quite another. Don’t expect that this can work in a conventional hierarchy, without a more profound and sustained drive towards liberating your company.

Already during the meeting, everyone can see on a screen how his contribution to the meeting is ranked.

The beauty of this system is that it draws out people. It forces them to contribute – even those introverts. People over-“contributing,” in other word spending too much time talking, do get the feedback immediately and can adjust their behavior.

The rankings of the discussed alternatives can be voted upon on via the app. The vote can be binding or just have informational character, and the real choice is to be made by an individual decision maker. Multiple decision rules can be applied, as needed and agreed on before the meeting.

Ray Dalio prefers a decision rule called “Believability weighted decision making.” Within this model, not everyone’s vote has the same impact. The most weight is given to those persons with the best track record, the most demonstrated experience in the matter discussed. Weights have to be assigned at the start of the meeting.

Over time, a lot of data on the contribution of each individual over any number of meetings is captured. This might just be the best 360 Degree Feedback there is, as everyone rates everyone at any time during meetings. This way, behaviors good and bad can be spotted and be improved. People are able to use this data to develop themselves and others, and therefore organizations develop to higher levels of consciousness.

Conclusion: We just started exploring collective Intelligence

What do you think of the Challenging Meeting that Bridgewater has pioneered? A nightmare of transparency. The death of all introverts? An overstructured Utopia?

Maybe.

But one thing is clear: We absolutely need a better way to maximize the collective intelligence of people. Not just of overpaid and elitist hedge fund managers, but of all people, may that be room cleaning teams, nurses, workers in a distribution center or rubbish collectors. Using everyone’s knowledge, observations and intellectual capacities in a group will deliver

better results,
more accountability,
and more engagement.

It will beat the thoughts of a responsible manager who thinks he has figured out the “one best way” every time.

Connecting and Challenging meetings do provide feedback that penetrates beyond behaviors and into assumptions and mindsets.

It will let people connect to each other, connect to their work, connect to the organization. It will bridge the divide so many feel between making sense of their lives and the need to work for money.

This is what I think. What do you think?

___

Sources:

Dalio, Ray “Principles – Life and Work,” 2017
Robertson, Brian “Holacracy,” 2016
Dalio. Ray, TED Speech, 2017

The World’s Leading Hedgefund is Relying on Key Principles of Self-Managed Organizations

Posted by Frank Thun in Lean&Agile, Management, Self-Management

Sometimes I wonder how I ended up with such an interest in Self-Managing Organisations.

I spend the last 20 years in a career in global management consulting, starting up two start-ups, and working as a Chief Operating Officer for a fashion company. My interest in organization and management theory has always been keen, but I felt my know-how was getting a bit rusty.

Then, late 2015, I finally got the chance to update my thinking. I started with wanting to understand Digitalization better, and over time I realized that it’s not about business models, fancy applications, disruptive technologies, Design Thinking, Agile Practices or Lean style experiments. That is all good and well. But beneath that, there is a common denominator: Knowledge Work.

Oh yeah, good old Knowledge Work. That’s what I considered my specialty over the years, anyway. But the more I read, the more I doubted that I am really as learned on the subject of managing Knowledge Workers as I thought. After all, I had a career. I needed to solve issues, fit into companies and social cliques. There was only so much time for going into depth.

Now, the more I learned about Knowledge Work, the more I understood that it’s really Autonomy and Purpose which drives performance:

The Autonomy for people to do things they really care about in a way they think best
The Purpose of an organization which provides true north and alignment of all these vastly autonomous knowledge workers

In ended up with the question: Which form of organization is the one allowing utmost Autonomy and utmost Purpose? It is the Self-Managed Organization.

Becoming an advocate for self-managed Organizations befuddled me. After all, Self- managed organizations smell like communist habitats, like idealistic greens communes where nothing is ever decided, and endless discussions are the norm.

But I learned: Digitalisation needs Self-Management.

Moreover:

All Knowledge-based Work Needs Self-Management

Don’t take it from me. Take it from the greatest Capitalist of all Capitalists: Ray Dalio has arguably been the worlds most successful Hedgefund Manager for the last 4 decades. He is worth 15 Billion and managing a 150 Billion Euro fund called Bridgewater.

40 years ago Ray wanted to make money. He had a knack for the stock-market but he, like so many others, couldn’t consistently beat the market. So he studied harder and harder as an individual, only to understand, that an individual’s perception of the world is so prone to bias, so limited in its perception of the world. Time is too limited, senses are too weak, memory is too limited, and the workings of the mind are too fallible.

As a Hedgefund Manager, the key to better performance is making better decisions. But if an individual is so limited in its decision-making ability, why not tap the resources of other minds? The formula to do that is, Ray found out, is to create a working environment where people can speak their mind freely, honestly and where everyone has access to best and complete information as possible. It is a work environment built, as Ray Dalio puts it, on “Radical Truth” and “Radical Transparency”. On these two principles, he founds his central idea for Bridgewater, the “Idea Meritocracy”: A workplace where everyone can be at his best, where the best ideas prevail, not just the ones of the superiors:

But Bridgewater is not a self-managed organization per se. There are lots of components which are clearly hierarchical. But its very essence, the way decisions are made, is clearly liberated from all Hierarchy.

Just take a breath and let it sink in: The worlds leading, 150 Billion$ Fund is running on key principles of Self -Management! It can’t get any more capitalistic than a hedge fund. For Ray Dalio, it has started out as a journey for more Profit, but it is now a journey to make people whole, to treat them as adults.

Profits were key. People were an after-thought.

Now, People are key. Profits will follow.

Because it makes business sense & because it provides fulfillment – not just for Ray.

There is a lot of original, quirky and interesting stuff in his 2017 book “Principles”. I will explore that in another post. Here is a teaser:

What do you think of Self-managed Organizations? Do you have a story of revelation that determined your thinking about management and organizations you like to share?

Sources:

Dalio, Ray “Principles: Life and Work” 2017
The featured image pictures Bridgewaters Headquarter in Westport, Connecticut
Just skim through the blog posts on managementDigital.net starting October 2015. Can you spot the “journey of revelation”?