New Work and Agile always seem to imply that you need to mellow. It pitches the evil organizational hierarchy against the inventive, social human individual. Like it’s a matter of picking a position on a scale between despotic hierarchy and an egalitarian self-managed organization.
Given the abundance of oppresive hierarchies and bad bosses – attested by the fact that only about 12-15% of people declare themselves truely engaged at work the give people more say in organisations is very understandable. But it is wrong in a critical aspect.
Agile and New Work seems to imply to transfer power from managers to the people, through more participation, empowerment, more transparency and devolution of decision making to individuals and groups. Like power is a zero-sum game: Either managers have it or coworkers have it.
Here comes the snag:
Power is not a zero-sum game. Just transferring it from managers to people might make coworkers more powerful, to ease the weight of oppression from their shoulders, but might not change anything about the power of the organization. #liberatedcompany
More self-management is certainly better for the creativity, engagement, learning, experimentation and growth of people but it has its own defects: Indecisiveness, political behaviors, lack of strategic behavior of the overall organization, diffusion of organizational focus.
A simple transfer of power from the hierarchy to the people doesn’t help much. It just trades one set of limitations for another. Granted, these are other limitations, which might be helpful for some organizations, seeking, for example more creativity and willing to sacrifice focus. However, organizations can do better, much better.
What if it is possible to increase the power of an organization while simultaneously increasing the power of the people? Welcome to the Liberated Company. #liberatedcompany
Let me explain. The power of an organization is the higher, the more it is able to focus all its resources, behaviors, processes, systems on its targets and re-focus them with lightning speed to market or strategic needs. This is a bit like having a Steven Jobs at the helm, who used Apples resources by laser focus and strategic foresight. However, a powerful organization is more than about having a powerful leader, it’s about having extremely powerful bureaucratic processes at work, in all or most parts of the organization: Logistics, HR, Sales, Purchasing, Manufacturing, Finance etc.
The other, largely independent dimension is the power of the people. It is the higher, the more people are able to express themselves, are able and willing to speak up freely, are able to experiment and pick their work according to their intrinsic drives.
Where most people go wrong is to think that powerful organizations invariably suppress people. While there are despotic organizations, where fear is the dominant feeling inundating the organization, there are other organizations that have extremely able, powerful organizations and at the same time are a place where people can freely flourish, in all the many ways they chose to.
Healthy companies only exist in a narrow corridor, that allow for both, a powerful organization and powerful co-workers at any level.
Extremely powerful organizations are always struggling to keep in the narrow corridor. If they increase the power of the organization too much, for example by tolerating despotic managers or overbearing bureaucracies, people will retreat into their inner self’s and go into survival mode. Any increase in organizational power needs to be flanked by an increase in power by the people. Two examples might help to understand this concept.
Take the introduction of new work processes. It is no secret that work processes, however brilliantly designed, are likely to fail if people at work level do not feel the need for them. To push processes on people will just lead to people circumventing them. People don’t like change – they dislike being changed.
Or think about a company deciding to pivot to a new strategic direction. Many companies arrange “change programs to roll-out a new strategy to get buy in of people”. Like a recruiting officer skimming the streets of London to enroll new army recruits in the Victorian Age. Companies engaging with people after all important decisions have been made, will likely end up with outward compliance and inward apathy or resignation.
The fact is: Organizations can only be truly powerful, if they have both: Powerful, bureaucratic institutions delivering great services to customers and employees efficiently AND powerful coworkers, who have a real say in the company, are highly motivated to speak up and communicate their true attentions. #liberatedcompany
On the other hands, if organizations increase the power of people too much, neglecting the focusing capabilities of the organizational bureaucracy, they end up with a social collective of people that engage in all kinds of political behaviors, which are not necessarily helpful for a company’s mission.
It is a matter of balance. The corridor in the middle is where what I call Liberated Companies exist. Hugely successful companies like Haier, world’s leading manufacturer of household appliances, Bridgewater, world’s most succcessful hedgefund or Buurtzorg, a trailblazing care company – just to name a few.
Liberated Companies manage to turn on the power of their central institutions while simultaneously enable coworkers to flourish. #liberatedcompany
Because they ignore power. Take the Agile Manifesto:
Individuals and interactions > processes and tools
Working software > comprehensive documentation
Customer collaboration > contract negotiation
Responding to change > following a plan
There is nothing in there about power.
Or take the main underlying of one of the main expressions of Agile, Scrum. It’s main six underlying principles are iteration, self-management, empirics, collaboration, value, and time boxing. Only one of these, self-management, is about power but merely on team level. It ignores the power dynamics that teams are subjected to in organizations. Yes, there are approaches to scale Agile to multiteam level, namely LeSS, SaFEE and Nexus, but these approaches are nothing more than prescriptions for multi-project management.
It speaks volumes that Scrum, which for many is the epitome of Agile, strangely ignores the first line of the Agile Manifesto.
How on earth can one put individuals and interactions over processes and tools and at the same time slavishly obey SCRUM processes?
A silly, obvious contradiction. But that is the state of Agile. It becomes more and more captured by the powers in charge as just another set of management processes which are to be adhered to. Most companies “upgrade” their project management processes from waterfall to agile by replacing one set of processes and measurements with another. Still, the operating system that these processes are running on remains the same, the organizational hierarchy.
In a conventional organizational hierarchy Agile is an impossibility at any level above the team:
Processes > Interactions:
Control > Results
Adherence to your manager > Collaboration
Execution of a plan > Sensing & Evolving
A hierarchy expects adherence and submission. It is basically built on control. Individuals and interactions are secondary concerns.
There is just no way you can scale Agile in purely hierarchical organizations. Instead we need an update not of this or that process, but on the underlying operating system that agile runs on, the hierarchy.
As Nobel prize winner Elinor Ostrom and many others have shown, there are many more alternative models of governing. These are not even new, we just got to rediscover them. We are better equipped in bringing to live these new, progressive organizations than ever before in history: Digital Technologies and the transparency they offer, enable forms of human collaboration, that are much closer to the needs of organizations, people and technological progress itself.
We are more than ever before in human history able, ready and in need of new ways of collaborating with one another.
If you like to learn more, sign-up for “Liberated Companies”. You will receive regular updates my upcoming book about configuring progressive organizations.
Which companies are at the forefront of organisational design AND economic results? The case can be made that this list will include these three companies: Bridgewater, Buurtzorg and Haier.
Bridgewater, argueably the worlds most successful hedgefund over the last decades with 125 Billion Dollars of Assets under management
Buurtzorg, a Dutch Health Care Company which grew from zero to 14500 co-oworkes within twelve years
Haier, the worlds dominant manufacturer of white goods (e.g. washing machines), which gained prominence by buying GE Appliances in 2017 – and by its CEO smashing sub-standard washing machines with a sledge hammer
These three companies are all leaders within their markets. They are quite different from one another, but all of them share one common focus: Work Designs. They use a configuration of work designs that contributes to their mission. Not only that, they experimented with work designs over years to come up with ever better versions of themselves. By zooming in on these progressive organisations it becomes blindingly obvious, that their success is rooted in their obsession over work designs.
Bridgewater, Buurtzorg, Haier – companies that know that their success is rooted in their obsession to design ever better ways for people to work together.
The concept of work designs and configuring companies has been introduced preciously in my blog, especially in the last post. Starting with this post, I like to analyse the configuration of these three leading companies, one company at a time. Let’s start in this post with Bridgewater.
The configuration of Bridgewater
Bridgewater is all about learning. For a global hedge fund, it is all-important to get the big decisions right, the ones involving billions of dollars. Consequently, Ray Dalio, the founder and guiding spirit of the company, has configured it with work designs that strive to get one thing right: making big decisions. Learning is the sustainable advantage that Bridgewater seeks in order to make ever better decisions.
Bridgewater can be characterized as a hierarchical organization that relies not on orders but on mission command. Through its management practices Bridgewater strives to develop people from a socialized mindset (“team players”) to a self-authoring mindset. It wants people to become more autonomous, independent problem solvers. A framework of adult development, proposed by Harvard researcher Robert Kegan, whom we met before, underlies Bridgewater’s choice of work designs. In his 2018 book, Ray Dalio describes his organization as “a machine to produce good decisions through the optimal use of the collective power of self-authoring minds”.Let us look at how Bridgewater achieves this, category by category.
The structure of the above map is explained in in the last post.
Bridgewater has not abandoned the traditional hierarchical structure. It focuses much more on learning and reflective practices, while expecting managers to empower employees so that people take charge of their own development. Managers are to refrain from ordering and requesting obedience. They should use mission command instead. Personal development at Bridgewater is decentralized: everyone is a coach and a mentor, as well as being coached and mentored.
This is the area where Bridgewater is very special and very focused. Most decisions are still made by individuals and hierarchical superiors, but the most important decisions are made using a unique process called “believability-weighted decision making”. In a very structured meeting format, decisions are made by voting on alternatives. The number of votes that everyone gets depends on their track record of making good decisions. More experienced, more competent, more knowledgeable people with better track records get more votes than novices without much experience in the subject that is to be decided upon. Hierarchical rank does not matter – but competence in the subject to be discussed does.
The thinking behind believability-weighted decision making is that voting is good, as it allows an organization to use collective intelligence, but it is better still if the voting is done by competent people ‒ an idea that is as reasonable as it is fraught with difficulty and danger. Who determines the competence levels, the individual believability of people? At Bridgewater that competence level can be set by a superior, it can be voted upon by a group, it can be established by data analysis (for example on the basis of CVs or psychometric testing), or a combination of these three methods.
Believability-weighted decision making is an attempt to make high-stakes decision making in companies more effective. In democracies, anyone proposing this kind of decision making would be rightly accused of Orwellian elitism. Every national assembly, even the founding fathers of American democracy, has struggled with this issue: “Surely, we can’t give equal voting rights to the plebs, the uneducated masses! We aristocrats/bishops/merchants/educated people need to lead.” In a company setting, the jury is still out on the believability-weighted decision-making idea. Ray Dalio is sure that this kind of decision making is a huge part of the reason why Bridgewater is – by some measures ‒ the most successful hedge fund in the world.
More conventional, participative decision making, delegation of decisions, the advice processand other decision practices are also used. Routine decisions, those that can be safely trusted to a number-crunching machine, are routinely engineered into algorithms. Especially in the financial sector, machines are making many decisions on their own or are an integral part of a combined machine‒human decision process. While other companies approach decision making by machines haphazardly, as mere minor features of this or that process, Bridgewater has elevated algorithmic decision making into a work design.
Bridgewater is strong on meeting structures. It recognizes that everyone must be heard. It employs a time limit of a maximum of two minutes of uninterrupted talk in small meetings. And it expects people to make themselves heard, too: staying silent is not an option. Even in large-scale meetings, people are obliged to give feedback about their feelings and the performance of other meeting participants, using an online app that displays the feedback in real time on screens, while the meeting is still in progress. People are supposed to be open-minded and assertive. Meeting structures drive these two behaviors to the fore.
Bridgewater employs most of the usual practices of a hierarchical organization: target setting, budgets, dashboards, standard operating procedures, job descriptions and reports. The most significant practice to align and control the work of people at Bridgewater is mission command, although Ray Dalio doesn’t call it that. The nature of mission command fits the overarching target of creating and utilizing self-authoring minds perfectly, as it is squarely based on the independent problem solver. On top of mission command, people are also expected to pick challenges themselves. The self-authoring mind writes their own destiny in service of the mission that a superior or the company has defined.
Bridgewater uses toolscaping intensively to supply its people with integrated tools to manage the business. Far beyond the usual communication and business process supporting systems, it goes so far as to provide apps for interpersonal conflict moderation and interpersonal transparency, and cloud systems to stream videos of meetings. It appears that founder and CEO Ray Dalio takes a personal interest in an ever-expanding, ever more integrated tool set.
Bridgewater emphasizes three kind of people practices: testing, coaching and feedback. Testing is pervasive. New hires remain in a special “onboarding” status for as long as reviews are not good enough for them to be allowed to move into the line organization. Dalio writes that a 30 percent attrition rate is acceptable, and onboarding may take up to 18 months. Even people inside the organization are re-evaluated regularly by co-workers at all levels and through the use of psychometric testing. Dalio speaks of “oiling the machine”, a questionable and telling metaphor for his utilitarian outlook on people.
Performance management is centered on coaching. Being a manager at Bridgewater means being a coach; without outstanding listening skills and questioning techniques no one at Bridgewater should be able to climb the ranks, or indeed, retain their job for long.
Videotaping.Every meeting is videotaped and accessible for everyone.
Issue filter. Everything people feel about the company and job is supposed to be captured in a system for all to see.
Baseball cards. Every person is described with a small number of key personal attributes determined by psychometric testing and co-worker feedback.
Open reports. Every report is available to everyone. Classified reports do exist but are a rare exception.
Daily updates. Every day, everyone in the organization posts their answers to three questions: What did I do yesterday? What is to be done today? What are my reflections, the thing or feeling that is most in my mind? These posts can be seen by everyone in the organization.
Bridgewater is definitely operating on a “all there is to know” basis ‒ and not on a conventional “need to know” basis. Its overarching target is to supply all the information that “self-authoring” minds at all levels can process, learn and use to provide feedback or come up with better decisions. This degree of openness is radical and can easily appear dystopian. Is a place of work where the light of transparency is everywhere and there are few dark corners to hide and rest still a place for humans? Is this degree of transparency making people show compliant behavior on the outside while keeping their true views to themselves? Many people are quite skeptical about Bridgewater’s configuration of work designs, while others, like philanthropist Bill Gates, appear to be supportive of Dalio’s practices. 
Little can be obtained from the sources about any special work designs for projects. However, it seems fair to speculate that Dalio’s outlook on projects is bound to be determined by the three cornerstones on which he built Bridgewater: elaborate decision making; learning; and feedback and radical transparency. This means Bridgewater would be expected to use more mature work designs for its projects, like agile methods, but I found nothing to substantiate this claim.
Dalio’s core idea for his company is learning. He wants Bridgewater to be a meritocracy of ideas, a place where the best ideas are produced and where people that consistently produce these great ideas rise to the top. He even provides a formula for this: “Idea Meritocracy = Radical Truth + Radical Transparency + Believability-weighted decision making”. The target is to create a culture of learning, where failure is allowed, and the resulting pain is distilled by (brutally honest) reflection into learning. Everyone is expected to teach everyone all the time in a work environment saturated with learning opportunities.
Reflection in an environment of “radical truthfulness” means ignoring social impulses to dampen one’s critique to the point of being perceived as unkind and rude. Dalio calls this way of giving feedback “tough love”. As well as reflective microstructures, peer feedback, skip-level feedback and talking partners, two more radical practices stand out from the host of opportunities for self-reflection at Bridgewater: the dot collector and the pain button (see Chapter 8).
Bridgewater clearly puts the collective interest of the company ahead of the individual interest of comfort and self-preservation. Bridgewater is a very challenging workplace where you need to display an uncompromising willingness to learn. There is nowhere to hide from personal injury of the ego in a place of radical openness and radical transparency. Unlike other elitist organizations, no one is able to rest on their laurels. Its central ideas are:
An idea of technology that sees technology and people as co-workers.
An idea of performance centered on making ever better decisions.
An idea of ruling based on a hierarchy which nurtures people to become self-authoring.
An idea of work based on never-ending, relentless growth in a machine of learning.
An idea of life based on mental awareness.
You might feel fascination or abhorrence at these radical practices. But one thing is for certain: they are a great experiment.
Bridgewater uses a staggering number of work designs: Seventy five. A typical, run-of the mill company uses just about a third of these, usually about 25 to 30. This proliferation of work designs is typical for progressive companies. It seems counter-intuitive, but Bridgewater is regulating the work between people heavily in order to make it easy for them to speak their mind freely.
The paradox of progressive organisations: In order to liberate people you need to regulate a psychologically safe work space into being.
It is a complex story, but basically if you want people within a hierarchy (which Bridgewater is) to speak up, you got to restrict the arbitrary power that managers have over people. The way to do that is by using mandatory work designs.
In the next post, I will contrast Bridgewater configuration of work designs with the one of a more traditional organisation, before proceeding with analysing Buurtzorg and Haier. I like to end with a teaser: Here is a chart comparing the average liberation level of Bridgewaters work designs to the ones of a traditional, purely hierarchical company.
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It is strange. On the one hand most companies seem to be all alike and not so much different from one another at all: Hierarchical beasts that employ the classical work designs of Feedback, Delegation, Status Meetings, Protocols, Policies, Orders, Rewards, Appraisals etc. to get things done.
On the other hand there are more progressive companies like Google, Buurtzorg, Amazon, Haier, Netflix or Bridgewater that utilize some “leading edge” work design such as OKR’s, Self-Managed Teams, 6 Page memos, Culture Books, Promises Beyond Ableness, Mission Command, Consent Decision Making etc. They often appear to be using quirky ways to get things done differently.
Many people are fascinated by this or that “Work-hack”. Some even try it on their own Organization. Well, I guess by now most people have been subjected to daily stand-up meetings, KANBAN Boards and more engaging workshop formats with lots of breakout groups working in parallel – just to name a few of the better known practises.
What if we could explain companies by the way people are working with another? Introducing the Liberated Company Map.
During the last couple of years I have assembled a library of Work Designs of both traditional and more progressive organizations. All these Agile Work-hacks, New Work or Self-Managed Practices were too intolerably disordered for my limited teutonic mind. So here is my roster for ordering them. It consists of three criteria.
First, all work designs have a primary function, a target that they are used for. I have clustered these targets into nine functions of management in a 3*3 matrix. That order is inspired largely by Henry Fayols classic six functions of management.
Please note that “Management Practices” are a subset of work designs – more on that in later posts, I do not want to get bogged down in theoretical discussions here.
Second, work designs are ordered by the size of the power differential that exists between people. By doing this, I am assuming that the amount of discretionary power that bosses have over employees has a critical influence on a persons behavior. People in more hierarchical, authoritarian companies will weigh every word and deed to not upset superiors, wherelse people in more self-managed organizations will find it easier to disagree and speak up. There is much more psychological safety in more self-managed organizations, and that causes work designs that foster on intrinsic motivation and social team dynamics to work much better than they would work in an enviromment of conformity and fear. I clustered the size of the power differential in four levels.
With increasing liberation level, the power shifts away from a manager towards employees and groups. This way of ordering companies is based on a scale proposed by Renis Likert, an American business professor, and is similar to other popular ordering systems, like Laloux’s Teal Model.
Last, I use the severity of a work design as an ordering criteria. The “severity” is the risk of a major backlash occuring if things go wrong with the use of a work design. For example, there is usually no harm in using pratices like “Daily Standups” or “Kanban Boards” but immense harm is done by using “Elected Superiors” or “Self-Service Remuneration” out of place, i.e. without a suitable company environment and other supporting work designs being in place.
Putting it all together, here is the map. It uses the 3*3 Layout of the nine management practice categories, subdivides each of the nine quadrant’s into four sub-quadrants by liberation level, and orders the list of practices in these sub-quadrants by severity. I call this the Liberated Company Map.
It’s a big map: You need to zoom in to see the details; you won’t know some practices and you might disagree with some of the mapping. I can offer you some help right now: If you want to dig into the practices, here is a complete list. Howeever, there is more to it, more to the art of configuring companies with work designs. But I leave that for the next posts.
I like to close with a preview. Any company can be mapped on the Liberated Company Map: Amazon, Google, Haier, Netflix, Buurtzorg or Siemens and Ford – any company. So here is a mapping of Bridgewater, a company of about 3500 employees and the worlds successful Hedgefund, known for its radically progressive organizational design.
All the management pratices not used by Bridgewater are left out in this graphic.
In the next posts, I will go through configurations of progressive companies and explain how they work. Companies on the very edge of organizational design, such as Buurtzorg, Haier and Bridgewater – but also more traditional companies.
I have just finished a manuscript for a book called “Liberated Companies: A Map and a Compass to Better Organisations in the Digital Age” that explains the topic in about 300 pages and 45 graphics and tables. If you are interested in learning more, sign up to my blog.
And spread the word, if you like what you see.
Featured Picture by aitoff, https://pixabay.com/users/aitoff-388338/
I was wrong. Two years have passed since then. Time, I almost exclusively dedicated to learn and practice the art of mastering more self-managed organizations. My advice for those seeking to improve companies or teams is to read Brian Robertson’s “Holacracy”, just after you read Frederick Laloux’s “Reinventing Organizations” or listened to his excellent new video series. Mr. Laloux’s work fills you motivation and Robertson’s work will give you as close a view on the future of management as you will ever get.
The crucial thing which I got wrong in 2017 is that implementing Holacracy is not the thing. It is understanding Holacracy that is crucial for a move towards more self-management. Implementing Holacracy without having gone through a journey towards more self-managed for a couple of years before that, will properly get your company, team and yourself into deep trouble. It is simply too radical for most people in an organization to understand. Still, there is no better way to understanding a possible vision for the destination of the journey to “Management in the Digital Age” than Holacracy. The one approach on par with Holacracy is Sociocracy3.0, an updated and now very accessible version of another, similar “Self-management” Operating system. But beside it, I see no equals, no better way to understand Self-Management thoroughly.
Management 3.0 is certainly much more easily digestible with its colorful Mindsettlers app and has its merits to get more agile, liberated ways of management going, but it is ultimately less useful as a vision. It is something that you can use to start your journey but will not sustain you for long, as it lacks consistency and perspective.
Liberated Management Practices, is a term I use (inspired by Issac Geetz and Brian Carney’s book Freedom.Inc), to describe all the various management practices of progressive, more self-managed companies. They are not part of a system at all. Instead, they are just a diverse bunch of practices used at Buurtzorg, Gore, Patagonia, Haier, Bridgewater, and many more progressive companies. They lack order and consistency.
A way to picture all the ways to manage companies these days looks like this.
During 2018 I become unsure if “management” is still a thing. I was suspicious of the word “leadership” before – after all, there are far more people wanting to lead than to those who want to follow.
The aspect of management which become suspect to me is the notion that people must be managed. Things surely need to be organized in order to reach anything meaningful but do people need to be managed? Isn’t it enough to build an environment where people can prosper and organize themselves as deem best to reach the target of the company? Is the provision of an organizational environment still management or should it better be called work design?
Now, on the 1st of January 2019, I tend towards ditching the term “management” and talk about “work-design” more. Words matter and people often have either a negative connotation of management or an attitude towards management that leads to overbearing behavior.
In the digital age is might often be wiser to think of yourself as a work-designer than a manager.
That way you might keep yourself from interfering too much.
New Years Day is a great time to reflect on the past year. As most of my time in 2018 has been devoted to reading and writing about “organizing companies in the digital age”, I decided to update my list of favorite books on this big topic. The ones that most influenced my thinking can be found on top of the list
Grey Background: Essential Reads
Yellow Highlight: New Entries in 2018
Green Highlight: Books which I came to value more in 2018 – they took time to take root in my thoughts
Red Highlights: Books which I came to value less in 2018 – these are still very good books, though
Books that Describe the Workings of the Individual Mind
This Category is about Mindfulness, Vulnerability, Bias, Mental Focus and all those things that make up the intrinsic motivation of people. What has proved to be quite consequential in my daily work is “Deep Work” by Cal Newport. I think that the ability to deeply focus is not only a personal working technique – it is a quintessential design criterion of an organization seeking to maximize improve knowledge work.
Books about Teams
Oh my, how many years did I delay reading the works of Robert J. Hackman. His work has been cited so often and everywhere, that I thought I already knew everything Mr. Hackman had to teach. How mistaken have I been! “Leading Teams” by Robert J. Hackman is a must read. As is Amy Edmondson’s “Teaming”, which is delivering important underpinnings to ones understanding of teams from the realm of psychology.
“SCRUM” by Jeff Sutherland is still a great book, but I became a lot more skeptical about the rigidity of the method and the dogmatic way SCRUM it is used. SCRUM is so often executed with no understanding to its inner working, that it lends itself pretty well to being corrupted with the conventional, corrosive workings of excessive power differentials between people. OftenSCRUM becomes a method of exploitative productivity rather than customer value and excellence.
Books about Organization
Henry Mintzberg fortified his position on the top spot in my mind in this category with his extremely wise book “Simply Managing”. I don’t think that anyone will come close to that. But be warned: Simply Managing does not, despite the title, supply any recipe for management. Rather, you will end up not knowing what to do now in face of all the complexity.
The same feeling will haunt you after you have finished Philp Rosenzweig’s “The Halo Effect”: Crushing complexity and no easy solutions. Do not despair – hope is just two columns to the right: Liberated Companies.
Books about Digitalization
So many things are written about Digitalization, yet so little new is added. Over the last year, I came to value the challenges posed by the intersection of technological challenges (Companies IT-infrastructure and IT-Architectures) and the way that people are organized more and more: The collaboration of Man and Machine. I came to value these seemingly so techie topics of “DevOps” and “Continous Delivery” even more. Although the understanding of those topics requires quite a bit of insight on the work of software engineers, I believe more and more that there is no alternative for managers than to understand tech.
Digitalization without understanding Technology from a genuine Technology perspective is crucial – a User/ Strategist/Entrepreneur perspective alone is not enough.
Managers, Organizers, Work designer – however, you might call them to need to immerse themselves in the realm of technology or be left out.
Sorry about that, you techno-agnostic writers on digitalization or you organizational psychologists. It far from “nerdy” to know what “DevOps” is. I am convinced that understanding concepts like DevOps is a necessity is a technology to lead companies in a technology-saturated world.
Books about Liberated Companies
What Laloux manages to deliver on examples and theories, Peter Block underpins with spiritual insight in “Stewardship“. The discovery of the word “spiritual” was central for me in 2018, as all more advanced organizations need people to hold open space where performance can prosper, where people can self-direct themselves more. And the conviction that “holding open a space for self-management” is worthwhile doesn’t come out of the blue. It is, strangely enough, a spiritual process.
Now, “spiritual” is not a word often used in management literature. Yet a state of mind naturally precedes any action. A wonderful example which is focused on ACTION but is essentially a spiritual journey is delivered by David Marquet’s “Turn the Ship Around“. A book about a nuclear attack submarine and its crew – a setting like in a Tom Clancy thriller.
If you want something futuristic to read, read Yangfeng Cao’s “The Haier Model”: Haier’s organizational model is probably the most sophisticated company on earth.
Books About Work Designs
The skeleton of today’s companies is the hierarchy and the process. With self-management on the rise, the hierarchy will be replaced with work-designs that ensure checks and balances that allow people to govern themselves. Some of these work designs can be gleaned from the books on Liberated Companies or Teams. Deeper insights into microstructures that make up work can be found in books like “Liberating Structures” from Keith McCandless et al. It is full of practical recipes, too.
Books about Strategy
A company is a purposeful system and cannot be seen disconnected from its purpose. That is why understanding strategy is important for anyone in charge of organizing. A strategy is nothing else than the way for a company to work towards its purpose. Therefore, read Henry Mintzberg’s “Strategy Safari” if you want to manage purposefully – and you want to show those consultants of McKinsey’s and Boston Consulting Group how outdated their analytical way of approaching strategy really is.
Books about Data Science
In a VUCA World, it is indispensable to get a grip on understanding and using uncertainty to the advantage of a company. Running experiments will never suffice is not supported by the capability to understand such thing as volatility, variance, covariance and the difference between causation and correlation.
Nissam Taleb’s “The Black Swan” focusses one’s views on the things that really matter, i.e. when events occur that may be very unlikely but have so much impact, that all other event’s do to really matter.
On the other hand, the small events matter, too, especially in those shorter time frames that most companies use to focus on. Nate Silver’s “The Signal and The Noise” is still my favorite classic for this field. It has very practical implications for the set-up of teams, technology, and processes.
Books about the Digital Age
I read Kevin Kelly’s “What Technology Wants” for a second time in 2018 because I was looking for an answer to the question “What does Technology want from Companies?”. A strange question at first glance, but I suspect that the impact that technology, the cooperation of Men and Machine, has on human collaboration is still undervalued.
In the Digital Age companies must not only solve the problem of human engagement – they must solve the problem of human-machine engagement, too
A special mention goes to “White Working Class” from Joan Williams for explaining the downsides of globalization and digitalization: The divide of society into many have-nots and the few prosperous. This economic and cultural divide cannot be solved by Silicon Valley’s Elitism.
Biographies – Long, Deep Reads
Last not least I have added my three favorite biographies that shaped by view on many of the topics of work design:
“Seize the Fire” by Adam Nicholson – how Lord Nelson, 1st Sealord of the British Admiralty made the Navy. Fundamentally, a book about intrinsic motivation.
“The One Best Way” by Robert Kanigel – a biography of the “worlds first business consultant” Frederick Taylor. He came up with “Scientific Management”, which still dominates companies today. A voluminous book about a thinking process which went on around 1900 and is to thank and to blame for today’s, often inhuman and underperforming state of companies
“The Undoing Project” by star-author Michael Lewis – a biography of the collaboration between Amos Tversky and Daniel Kahnemann, two of the most important organizational psychologists. The essence, as I see it, is: We can’t trust our brain and judgment alone. Human judgement benefits from checks and balances that companies may weave into their work designs.
That’s my year 2018 in books. Let me know what you read and have been fascinated by! I sincerely like to hear from you.
Have a Liberating 2019!
Next post will be continuing the long series on “Effective Teams” – to be found in your mailbox at the end of January.
Welcome to part 7 of the series on high-performance teams. A series which strives to make the works of Richard J. Hackman, a or maybe the leading researcher on team performance, more accessible.
We are leaving the realm of the first 5 factors which are more like the physical parameters of the team. And we are entering the realm of the intangible, the spirit of the team. Team spirit won’t be a physical part of the teams’ work, yet without great team spirit the work might never be done and the work itself might be arduous. The team might never fulfill its meaning, without a team spirit that suits its ambitions.
Condition VI: The Feeling That My Works Does Matter
Let’s take stock. What do we have for our high performing team by now? First, a compelling direction to orient the team. Second, a true team task that makes sense to use a team at all. Third, a small sized team so that people can bond with one another. Fourth, clear boundaries that guide efforts. Also, fifth, a good composition of skills to get the work done. That is all good and fair for the team. However, what is in for me, the individual team member? What is my role in this so carefully staged exercise? Why should the teams’ work be important to me?
Each team member needs something to tie her own motivation to within a team.
What that thing is that amalgamates the individual, and the team effort varies from person to person. It can be an extrinsic motivation, like not being fired, money or sometimes status from just being on a team. The problem with extrinsic factors that tie a person towards a team effort is often that the level of engagement will be limited. It is the nature of complex situations, the types of problems teams need to solve, and of knowledge work in general that the relationship between personal in- and outputs and the performance of the team is hard to observe. To rely on extrinsic motivation exclusively will often result in people just putting in token efforts.
For more profound levels of engagement, intrinsic motivations must be tapped and tied to the team’s efforts. There is a specific model that is describing how intrinsic motivation works in a business setting: Job Characteristics Theory. This theory is a cornerstone of the field of organizational behavior and work design. What this model is basically saying is that intrinsic motivation in a work setting rests on four fundamentals ways how people like to work:
Skill variety: People do not like doing boring things all over and again. By doing things that utilize multiple skills, work is less repetitive and more motivating ()
Task identity: People want to achieve something visible like a thing produced or service done for a customer
Task significance: People love to impact other’s lives positively by doing something that they feel increases a customer or a coworker’s well-being
Autonomy: People like to do things the way they want
Feedback: People like to know how good they are at work. Detailed information on the way they performed. Not to be controlled, but to improve and to feel good about their efforts more often by doing so
These motivators are deeply ingrained in our cognitive DNA. We long for job variation and dread repetition. We want to do the work on our own terms and not being coerced into behaviors that do not make sense to us. We like to see, touch and in any other way ever feel what we endeavored to create. We love that even more if the results of our work matter to other persons, and we are getting better in the things we are doing all the time. If people experience all those five factors while working they feel that what they are doing has a positive psychological impact on their lives: Work has meaning for them – they feel the impact of their work.
It is the “striving” that is intrinsic to every one of us: The longing for mastery, autonomy, and purpose, that we have explored in the other posts of this blog. By being part of a team people do not put aside these longings. They are as strong as ever.
Non Conformity and Anti-Learning Stances
However, people differ. Some people value connectedness to others less, some more. Some people revel in autonomy others are frightened by too much of it. The disposition towards Feedback, to get to know “how good one is ones work” varies strongly, too. Some people like to get feedback to learn and improve, while others revel in groupthink, hubris and a state of failure denial. Systematic anti-learning stances are not uncommon in individuals, groups or organizations. Furthermore, autonomy, “doing things the way they want” might help intrinsic motivation but might hurt performance, as results might be more varied or less than optimal.
But the existence of anti-learning stances or the non-conforming autonomous individual going ways that lead astray from team performance do not invalidate the model. The five pillars of the job characteristics model still provide the critical ingredients to intrinsic performance and therefore give the highest chance of job- or team performance. Indeed, the risks of things going astray for the team can be mitigated. A great way to do this is to set norms.
Condition VII: Social Norming that Fosters Performance
Certain behaviors of teams and team members are more beneficial for performance than others. Norms specify those coveted behaviors. Regulating behaviors is, more often than not, a deeply unpopular or even impossible act. If people can, they will ignore any inconvenient norm. The trouble is: Norming of behaviors is unavoidable. Every team will inexorably end up with a set of norms that regulate acceptable and non-acceptable behavior as there is a natural tendency of people to adapt their behaviors to fit themselves into a group.
Instead of ending up with some random behavior, i.e., norms that just so “happened” to the group, it is better to establish norms inside the team that has proven to be beneficial to performance. Norming may be unnatural, but it certainly is useful.
There are three reasons why performance norms are important. They encourage the team to engage with the outside, they embed the team safely inside the organization, and they foster mutual dependability.
1. Outward Looking Norms: Engaging With The World
These norms are meant to encourage the team to engage with the outside. They regulate how the team is engaging with the world (i.e., the customer, the organization or anyone else not in the team). Typical questions are
How does the team get feedback from customers? In what form and frequency
How are the stakeholders involved in the project? Who is on the steering board
How does the team engage outside experts? In what roles and intensity?
Left to its own devices, without any conscious norming, teams are likely to under-engage with the outside world. Engaging with the outside world is stressful. It means customers are giving inconvenient or non-conclusive feedback, stakeholders hedging their bets in the game of organizational politics, experts providing advice that hard to understand or to adapt to the local situation. But it is needed for success. More than that, the team’s very reason for existence is the deliver results to the outside world. Therefore, norms that encourage the team to engage with the outside world are right front and center of effective teams. These norms describe the performance ethics of the team: The lust for high achievement.
Performance norms are at the heart of the Agile Movement, the SCRUM project method or the LEAN Start-up Movement. The customer with all its idiosyncrasies and ever-changing requirements are right in the center of all these hugely successful methods. Take SCRUM: It demands a product owner, arguably the most central role in the whole method, to fully immerse into the needs of the customer. It postulates working at short intervals to keep the feedback from the customer coming in, continually honing the team’s directions and ways of delivering value.
SCRUM enshrines performance ethics in a set of practical, dogmatic rules.
2. Organizational Conformity Norms: Avoiding Attacks By The Immunity System
The second reason why performance norms are crucial is the survival of the team in the organization. Performance norms specify which behaviors are acceptable and which behaviors are unacceptable to the overall organization the team works in. Every organization has its established norms, and a team just can’t pretend that those do not exist. A short list of “Do’s and Don’ts” suffices. The target of such a list is defensive. It is to prevent the immune system of the organization to attack the project. Every project brings change, and the impetus to changes invariably drives resistance. By specifying behaviors that are helpful to get the teams work effort accepted by the organization, much is done to remove the organization from the list of impediments to a team’s success.
3. Mutual Dependability Norms: Learning To Rely On One Another
Every team effort is laden with moral hazards and frustration Slacking-off, free-riding, and a sense of being impotent to influence results are all contributing to project debt. These hazards are immanent to a team, and there is no way to get around them. However, establishing team norms that foster mutual dependability help to pay off the debt.
There are a number of ways to do that:
Clarify roles and responsibilities of team members: Role descriptions and discussions about roles in each phase of the team effort help team members to understand what is expected of them and others
Feedback culture: Giving each other feedback on behavior or decisions fosters understanding inside the team and creates a bond between each member
Drumbeats: Regular meetings, like SCRUM’s daily Stand-up, the sprint review or the retrospective, fosters mutual accountability. This is true for every regular meeting, as long as people are not just called to or incentivized to speak of but have an obligation to speak up. A meeting format that enforces the active participation of everyone is vital.
In general, the strengthening of conscientious behavior of team members is essential. Conscientiousness is being careful and vigilant. It implies a desire to do a task well, and to take obligations to others seriously. In psychology, conscientiousness is viewed as a personality trait and is therefore mostly unchangeable for the individual. However, in a team context, it can be built into the team’s procedures, by adopting, for example, the routines mentioned above. Over time, people implicitly accept conscientiousness as a norm for the team, even if some members are not at all conscientious but the opposite: Laid-back, less goal-oriented and less driven by success.
Mutual accountability has a lot to do with respecting the other team members. Not everyone wants to treat the office as a social club, and not everyone wants to work in an environment that is all about performance. Still, it is generally not a good idea to include only conscientious people in a team, as those people tend to be less creative, less adaptable and more driven by the urge to conform to expectations and rules. Again, the combination of personality types creates the diversity that positively impacts team performance.
Mutual accountability has a lot do to with respecting the other team member – but respect isn’t a privilege: Respect earned by working with one another and delivering results.
Why Other Norms Are NOT as Important
If performance norms are not deliberately set, other norms will form over time, by the norms brought into the team by the history and experiences of its members. These norms are more about the relationship between the team members than about outward focus. Norms will emerge that center on harmony, as harmony is in the direct interest of the group and every member. Furthermore, difficult decisions in the team’s future won’t be anticipated or actively avoided, to keep harmony. This gives rise to norms of reactivity, to just deal with whatever comes the team’s way at the time the challenge arises. The team under-invests and will pay a high price later in the team effort. Typically, these questions that should better be solved at the start of the project, are about
which persons with which skills and capacity to include in the team,
which elements are in or out of the scope of the project,
a projects time frame and budget.
As every experienced project manager knows, to avoid conflicts early means to face much more significant problems later on.
Every team will create additional norms over time, like certain meeting etiquettes, email and responsiveness ethics or office hours. Research has proven that any of these secondary norms, as Richard J. Hackman calls them, are by themselves not significant for the performance of the team. Other norms are inevitable in the forming of the team, but any secondary norm that is acceptable to the team is as good as another – as long as the performance norm remain intact.
Performance norms connect the compelling direction of the team to an ethic of risk-taking and performance. Consultant and Author Jon Katzenbach calls performance norms „the all-important connection between risk-taking and team performance”.
As boring as the word “norm” is: Norms foster in every team member a lust for performance.
Who would have thought that Norms have something to do with lust?
I am still busy writing on my book about “Liberated Companies” and I won’t bother you with another post in this year.
The term “performance norms “or “performance ethics” is a central, recurring, element of Jon Katzenbach’s 1993 classic book, „The Wisdom of Teams“
Hackman calls the three norms (Outward Looking norms, Organizational conformity norms, and Mutual Dependability norms) “primary norms”, and all other norms, that have proven to be not very significant to a team’s success “secondary norms”. Actually, Hackman stated just two primary norms, outward looking and “behavioral boundaries within which the team operates”. I took the liberty to split the latter norm into to “organizational conformity” and “mutual dependability” for the sake of greater clarity. This split although aligns well with Googles project Aristotle, where “mutual dependability” has been one of the 5 factor of team success and Jon Katzenbach, “Wisdom of Teams” 1993, for whom Mutual Accountability is key to team’s success.
This is part 6 of a series exploring what makes an effective team. Read this if you are interested in great teamwork and high-performance teams in businesses.
The higher team diversity, the greater the chance of solving complex problems
Diversity that is most useful for a team comes in two shapes: A. Diversity of Skills and B. Diversity of Personality
Team’s made up of “the best and brightest” are often bested by teams made up less skilled, but more diverse individuals
More homogenous teams are better suited for repetitive tasks
Diversity is an investment: You might get novel solutions, but you have to invest first and provide time for the team to form
Keep a team stable. Period.
The diversity of people and the stability of membership are crucial for a team. Each person brings into the team a set of skills, intrinsic drive, and beliefs. What matters is the way those individual assets can be employed for the team.
Let’s talk about diversity first. Diversity breeds innovation. The more diverse people are, the more original and innovative the solutions that the team can come up with. Diversity is a crucial driver of innovation.Get together a crazy bunch of highly skilled people with wildly divergent world-views and backgrounds and the team will likely deliver highly innovative results. The only thing that stands in the way is the integrative ability of the team to get from immense social stress to the right level of social bonds that allows a joint team effort.
We tend to glorify innovation, but innovation is finding small creative solutions in daily work, too. Any effective team is a team in search of big and small solutions, every day. Diverse teams find it easier to come up with novel solutions.
There are lots of things that make people different, but the two elements with the most impact on team performance are skills and personality. A team needs to have all the required skills available to do a job. The more complex and unpredictable the environment is, the more diverse skills are required. It might turn out that some of those skills are not actually needed. However, complex situations are hard to predict. Who would have thought that calligraphy would be a useful skill for Steve Jobs while designing the User Interface for Apple IOS Operating system? So, it is not only important to have the right kind of skills inside a team, it is beneficial to have more diverse skills available than one would think are needed, too.
Then there is personality, which is much harder to measure. Combining different personality types, like introverted thinkers and extroverted achievers, optimistic and cautious people, inventors and perfectionists is important. A practical way to think about different team roles has been described by Meredith Belbin in 1981, the “Belbin Team Inventory.”While such and other psychological tests are useful for choosing the right people for jobs, not many companies use them, or they fail to apply the insights gained from such an analysis in a carefully crafted decision process.
Philipp Tetlock, a British researcher 2016 writes in his 2016 book “Superforecasting”, that diverse groups of problem solvers consistently outperform individuals as well as groups composed of the best and the brightest. That’s not to say that skill is irrelevant, but a better-rounded set of skills is more useful than more of the same. One rocket scientist in a team of ten production engineers makes a HUGE difference, but ten rocket scientists and no production engineer leaves the team with no idea how to manufacture that good dam rocket.
Philipp Tetlock, a British researcher 2016 writes in his 2016 book “Superforecasting”, that diverse groups of problem solvers consistently outperform individuals as well as groups composed of the best and the brightest. That’s not to say that skill is irrelevant, but a better-rounded set of skills is more useful than more of the same. One rocket scientist in a team of ten production engineers makes a HUGE difference, but ten rocket scientists and no production engineer leaves the team with no idea how to manufacture that good dam rocket.
Still, diversity has its drawbacks. The more diverse a team is, the less cohesive it is. But it is cohesiveness, which makes the team stable. It is tough to align a bunch of very different persons into a productive way of working. The more diverse the team, the more time is needed for people to bond with one another, and the higher the potential for conflict. Diverse teams are great for innovation, but homogenous teams are great for stability.
There is a trade-off between innovation and the stability of a team.
The integrative ability of a team is limited. It is time-consuming and emotionally stressful to integrate new team members or part with existing ones. A team needs stability. A team that is changing every day or week, where team members keep dropping in or out is no team. There is no time to bond with another, and there can be no shared feeling of commitment, there can be no “us.” Again, this sounds rather obvious. There is a tendency in business to ignore stability. There are always unforeseen things happening, and there are always other priorities emerging, so often there is no other way then exchanging team members, at least for some periods of time. Just a day of the week, maybe, how bad can that be?
Pretty bad. A team which is continually changing might have no chance to perform. People might never get sufficiently close for effective teamwork. Even worse, if people keep on dropping in and out, people learn that it makes no sense to build up good working relations. People might be gone tomorrow.
A lack of stability hurts the performance of a team tremendously. People need time to get to know each other, and they need to have the time to familiarize themselves with the collective work. Only then the group will build a shared mental model of the way work is done. The academic evidence comes to a universal verdict: The longer a team is stable, with no team members entering or leaving, the better the team’s performance.In a study of research teams, Mr. Hackman has found that exchanging one or two team members in a team of 5 to 7 team members doesn’t hurt performance only if it happens every two to three years. If a team member is to be added, exchanged or dismissed at all this should be done in the early phases of a team’s life cycle, for example with an eye on increasing the skills available to the team.
Yet it is hard to keep a team stable in a dynamic business environment. Certain things can be done to increase the resilience of a team against excessive fluctuation:
• Get the team composition right from the start. Invest extra time and care to recruit the right people, free them up, and back-fill vacated lines positions. Compromises made early, during the forming of a team, will come back to haunt you manifold later. It is easier to start a team if you allow for some compromises, but it is hard to deliver the results that make the team a resounding success
• Set the team’s task broadly. A broadly defined task is likely to be more stable if business priorities keep changing. Thereby, while priorities for the team might change in detail over time, the overall direction of the team will still be stable. A team faced with a broadly defined direction in a dynamic business will likely configure itself to use frequent iterations of work, reflection and adjust to evolve their work to the changing priorities. That’s a core idea of the Agile movement.
• Go for more homogenous teams at the costs of diverse teams. The team will properly not come up with a lot of innovation, but it is inherently more stable. It starts up with much less motivation and coordination debt. Diverse teams find it easier to come up with novel solutions. Homogenous teams find it easier to apply already known solutions. If my house is on fire in Bordesholm, my hometown in the north of Hamburg, I want those local volunteer fire-fighters rushing in, who know themselves since elementary school. I am not interested in novel solutions to fight the fire. I am interested in getting it out, fast and reliably.
Sometimes – and I guess not to infrequently- innovativeness might not be what is called for. It might be more important to get a job done
• Finally, consider doing less things with teams. Teams start with debt. It takes time to recuperate this debt. If the payoff period is likely to be not long enough to achieve break-even prior this or that change ripping the team apart, it is better to work on things in a manager led, workgroup setting. Only the most important things should be done in a team, as these tend to be more immune from ever-shifting priorities
The Integrative Ability of Organizations
But wait, there is another thing you might want to try. What about if forming and reforming, norming and re-norming teams is a natural part of an organization? What about if the integrative capabilities of groups are so high, that they allow for much more instability without hurting performance too much? Think for example of consulting teams, especially highly specialized ones. Those kinds of teams need to reform and re-norm all of the time, with each new engagement and each new client. While research has shown that even their performance would benefit from more stability of the team itself, good consulting organizations have usually achieved a high integrative capability. In fact, integrative capacity needs to be part of their very business model. However, consulting companies are project-based organizations. So, their model of operating won’t help other types of organizations.
Now imagine an organization that comes with a high degree of integrative capacity, so that effective teams bond fast. Where people are used to work in effective, high performing team environments. They know what is expected of them and the forming, storming, and norming phases are mastered rapidly. Indeed, some norms for teamwork comes inbuilt in each coworker because it is wired into the DNA of the organization itself. Such organizations are those that rely more on self-managing teams than the traditional hierarchy.
This is part 5 of a series exploring what makes an effective team. Read this if you are interested in great teamwork and like to explore different types of teams.
Condition 4: Clear Boundaries
Effective teams are groups of people that act towards a particular direction. Although everyone is different, people inside a team align actions with one another. A crude but essential way of achieving alignment is setting clear boundaries.
By setting boundaries, two things are achieved: First, the freedom to act is clearly defined. The team can do everything that is within the limits of the team. Second, everything that is set out of bounds is simplifying the mission: It is one less thing to take care of – which is very welcome as long as the boundary does not overly restrict the team’s ability to deliver. Cleary stated limits create certainty for the team. They are giving the team something to work with. They lessen the risk of the team running into major, unyielding, yet unstated boundaries later.
Boundary conditions are everything that is framing the team’s mission: Resources, scope, and deadlines are the three classical boundary conditions given to a team. However, it is although its decision-making power and the very definition who is on the team and who is not, and what is means to be on the team.
Who is on the team?
To merely assign team members is not enough. There are two things to consider. First, what does it mean to be on the team? Which rights and obligations come with team membership? A decision on team membership is a decision to include a person – but it is a decision to exclude a person, too. There should be no in between, and there should be no half-baked assignments, no “extended teams”- just universal clarity. Extended teams are a backdoor to increase team size and dilute responsibility, often for the sake of political convenience. There are always persons outside the team who need to contribute, but usually, that contribution can be limited to consulting with the team, delivering some tasks, contributing to workshops, reviewing and testing.
Second, in high-performance teams being on the team does mean to spend a lot of the time on it, the more, the merrier: Everything being equal, a full-time dedicated team will always outperform the part-time team in efficiency, speed, quality, and any other target dimension. This is not to say that the team needs to be together all the time. It may be necessary to split up the work or explore different paths, while all the time working on the team’s task.
These two demands, clearness who is on the team and who is not, and full-time dedication are so immensely essential and easy to understand yet appear so often utterly unrealistic in most companies. All the right people are already over-assigned. Restricting the number of assignments is often hard to do, as there is always some constituency to please by demonstrating action. This is all too understandable. Well then, go ahead and over-commit your team to multiple endeavors simultaneously. Just do not expect high performance.
Again, this sounds a bit passive-aggressive. I do not mean to. The fact that people are overcommitted again illustrates the underlying theme in this series of posts: Organizations do not care about individual or team effectiveness too much. They are willing to sacrifice performance for other priorities, like stability and predictability. Sometimes, they even choose to sacrifice performance to uphold the appearance of busyness. Where results are hard to link to individuals, hierarchies tend to reward people who appear to be busy. It takes much discipline for a company not to overload its co-workers with work. More on that in part III.
What is the authority level of the team?
What is the team allowed to decide on its own? What is the team’s freedom to act? Hackman describes four levels of authority:
Level 1: Authority to execute the task
Level 2: Authority to monitor and manage work processes and progress
Level 3: Authority to design the team and its organizational context
Level 3: Authority to set overall directions
Based on these authorization level 4 types of team’s can be identified.
Type I: The Workgroup that is executing the team task
At the first, fundamental level, the team needs to be authorized to execute the team task. That may sound very basic, but in more political companies even this authorization level is sometimes not given to a team.
One of my very first projects, as a young consultant, was of this kind. Our team was supposed to fix the multi-billion investment management process in the Volkswagen Group across all its brands, VW, Audi, Skoda, Seat. For this, we were supposed to be using a brand new shiny new software package from a south German company called SAP, which offered work-flow functionality to fully digitalize the very communication intensive review and approval process of investment projects. Albeit the very same corporate grandees that initiated this project didn’t want any change in the way work is done to not upset the powerful brands. To implement standard software without changing historically grown processes is a blatant contradiction. Still, our mission was: Implement but do not change anything. While informing a senior partner in our company on our straits, he just smiled thinly and said: “Oh well, they are playing their old game: Go wash me, but do not get me wet.”
Every boundary set on the way the team task is to be executed closes down an avenue to a solution – possibly up to the point that the job is no longer feasible – or becomes bereft of economic sense. An example for this is the demand often faced by teams to keep within just one silo of the organization: You can do everything here, but do not change process X or System Y, that is a given. It is the nature of really important changes to have an impact on multiple organizational silos. Most modifications done to just one part of an organization quite often result in a local optimum – and global dysfunction. They might make sense for a unit, but not for the company a whole.Such boundaries can turn an otherwise pretty sensible team mission to one might make limited or no sense at all.
Type II: The Self-Managing Team that is Monitoring and managing its work process and progress
Once that first, existential hurdle is cleared, and the team is all set to execute the task the next question is: Who is to monitor and manage the work process and progress, i.e., to lead the team? Usually, a manager (or project manager) is assigned to do this, no questions asked. The alternative that a team can monitor and manage its own work is not even considered. Yet this amount of freedom to organize in a way it deems best is precisely what a high-performance team needs. Mr. Hackman and all the researchers specialized in the science of high-performance teams have delivered an abundance of evidence about that.
Managers are not irrelevant in ta Self-Managing team. They still set the overall direction, convene the team and provide the working environment, including setting the boundary conditions. However, they refrain from intervening in the way the team does the work. If managers intervene, for example by coming up with meticulously detailed work break down structures, teams just won’t perform on a high level. Such manager-led teams are workgroups: Collections of individuals to whom work is assigned by a manager. A workgroup might be good enough to do a job, but it is unlikely to achieve high-performance levels. If the work process is managed by a single person, the team cannot build its emergent properties, not integrate in a way to deliver results that are more than the sum of its parts. In such a one-sided power structure, the openness and integration needed for a genuine team effort are unlikely to occur.
Beware about the overbearing manager (especially in projects)
Wait a minute! I just said that the manager led teams are a killer to a team’s performance. I even said that those are workgroups and not teams at all!
This is true. Workgroups are the way most company units or departments are organized. A loosely bound collection of individuals coordinated by a manager. Their performance will never be as high as a team, but their results are predictable and controllable. Work-groups are the norm, and Self-managed teams are exotic. Performance aspirations of line units might not justify a team effort, but within more significant projects, performance aspirations are usually higher. A good case for a high-performing, self-managed team. So how often are project teams self-managed?
Conventional project teams are headed by a project manager. Although Agile Methods like SCRUM discourage the use of project managers, most companies hold on to the notion of project managers. A manager leads a business unit. A project manager leads a project. Someone needs to be in control. It just makes so much sense to them.
Here comes the snag: Effective teams are NEVER manager-led workgroups. They are at least Self-Managing teams, where every team member can engage more wholly. Science has proven that classical, manager-led teams that come with micromanaging, intrusive, administrative procedures, overbearing interventions into the team space do not lead to exceptional performance.
The trouble is that most project managers approach projects with the same mindset as line managers. To be in control is their core concern. The question of control is at the heart of the world’s leading project management methods like PRINCE2 or PMBOK. To reliably come up with projects that deliver on time, in quality and to budget. Control is what is expected by them by the line organization. Get out there, take charge of a project and deliver according to the plan.
The problem with big project management frameworks is not that they do not solicit good advice. The problem is rather that they give too many methods, tools, and advice. If you learn the whole curriculum, you are likely to end up with a zoo of intrusive management interventions that patronize team members and undermine their initiative. There is a commercial incentive to blow up what it takes to manage projects successfully. Project managers tend to think they need to apply all those methods. I am not saying that learning about project management is a bad idea. However, I am saying that a core condition of effective teams, the freedom to determine its path on its own, is often threatened by overbearing project managers. Those types are keen to show what they have learned and are eager to display to the rest of the organization that they are in control.
That sounds like a fundamental attack on the time-treasured ancient art of project management. Old style project management may lead to great charts, great reporting and the illusion of control, but seldom to a great performance.
What’s the alternative to run successful projects? The standard answer nowadays is Agile and Scrum. The trouble is, Agile and Scrum can just be as overbearingly intrusive to teams as classic project management methods can be. The underlying solution lies, according to a host of research on high-performance teams, in managers not intervening too much: Hands-off – Eyes on. The actual project method, waterfall style or SCRUM, is of secondary importance.
Great team performance needs managers who enable teams to do their best. For that, they need to devolve control to the team and give people the freedom to act. According to Hackman and other researchers, a manager should design the team and its organizational context, but not interfere and intrude into the group dynamics of a team. A useful manager is an environment builder and coach, not an overbearing patron or a dictator. Alas, the sheer size of world-leading project manager standards leads people to believe that the more interventions, the merrier. The contrary is true.
Type III: The Self-Designing Team that is designing itself and its environment
Time to go even further. A team can also be trusted with designing itself and its work environment. For example, and contrary to popular belief, it is not a law of nature that managers need to “staff” teams. People can assign themselves to teams and teams can decide on shedding team members themselves. They can produce their own boundary conditions, setting targeted costs, marshaling resources, and to determine the scope of the project without managerial oversight.
Teams can be “self-designing.” In such a context, a manager points a team at a direction and let the team figure out everything on their own.
Wait a minute! That sounds like a free for all. A chaotic commune. Anarchy. Sure, if you make a team Self-Designing, without doing anything about the other 11 conditions for effective teams, you are bound to get into trouble. Those things only work if one takes a holistic approach to work design. What’s more, this holistic approach needs to extend not only to the management of teams but to the management of the company as a whole. Precisely what this blog is about.
Type IV: The Self-Governing teams that set its own directions
The fourth level is to authorize the team to set its overall direction. Such a “Self-governing,” free-ranging team is subject to the same team dynamics described in this part of the post but needs an entirely different organizational context to operate in than a traditional hierarchical organization provides. Such a team is found in Self-managed organizations that replace hierarchies of authorities with hierarchies of purpose – a phenomenon that is explored in this blog, e.g. Holacracy, Liberation and Management 3.0.
How common are these four types of teams?
What is the empirical frequency of the four different team authorization levels in today’s companies? I have found no studies about this, but here is my hunch:
The overwhelming majority of teams are managerial led, co-working groups, let’s say 85% in a line organization and 70% in a project context
Self-Managing teams are about 13% in a line organization and 25% in a project context. These are those teams, where a manager is shrewd enough to take on an enabling role to the team and keeps his interventions to a minimum. Such a team might call itself “Self-managed,” but it is.
Self-Designing Teams make up the larger share of the remaining 2% in line and 5 % in project contexts. Using such a high authorization level on teams would seriously undermine the appearance of being in control and decisive that a manager needs to uphold, so this is seldom done. It is most common in informal groups, like for example communities of interest.
Very few teams are Self-governing. Self-governing teams are only possible in a self-managing organization, and those are very few. They are in the vanguard of today’s organizational thinking.
Managers relinquishing control is a rare phenomenon. Yet it is what is required for great team performance. However, without a manager being in full control, how can a team stay on track? How can low performance be sanctioned? Please hold on to these questions until we make through all 12 conditions of effective teams, as all of those deliver important pieces to the answer.
That’s it for today. In the next post, in two weeks, I will show why diverse teams are sometimes a good idea, but not always.
Audible…no: I hope you enjoyed this post. Let me know what you think!
There is just one team. Not an extended Team, too.
Full time dedication of people to a team is king. Period
Authorize the team to organize on its own. There simply is no other way to high performing teams.
Good Managers refrain from intervening in the way the team does the work. People call that Self Management.
Effective teams are NEVER manager-led workgroups.
Agile and Scrum can just be as overbearingly intrusive to teams as classic project management methods can be
This is part 4 of a series exploring what makes an effective team. If you want to know how to shape the task given to a team and the optimal size of a team, this post is for you.
Condition 2: A True Team Task
A true team task is one that cannot be reached by working individually. A task that needs the close cooperation of every person in a team if it is to be successfully mastered. Creating a new system for customer service, expanding to vastly different geographies, coming up with new products and services are all things that surpass the abilities of what workgroups can successfully deliver. It is not that work-groups can’t deliver those things, but results will likely be less than optimal. The typical rate of project failure in today’s businesses is often portrayed to be as high as 70%.
A true team task is often not defined by its nature, but by the performance aspiration.
Let’s take the practical example of implementing a big, enterprise-wide IT application. To implement such a complex system is entirely feasible by working in a workgroup fashion. An experienced project manager is dividing up the work into chunks assigned to team leads, as team leads divide up the work further. While there is some level of cooperation required between team members, this can be organized, for example through the approval of blueprints and in integration tests. Cooperation is limited. Work is parceled out to individuals by managers. Managers rely on project plans that break down all the things to do into detailed tasks and who should do them by when. This proven way of working that will produce results if competent professionals drive it.
So, is implementing a big, enterprise-wide IT application not “a true team task”? There are two answers to it.
No, it’s not. It does not really require close cooperation between its members. Instead, such a project is relying on a proven, scripted way of working that allows all individual efforts to be summed up into the final product, the IT system.
Yes, it is, if the performance aspiration is high enough. For example, if the ambition is to do that in say two years, a manager led workgroup can do that in the mode described above. However, if the team is supposed to do that within one year, a genuine team effort is what it takes. To cut a year in throughput times needs people to rise above their competent selves and come up with something together that is collectively greater than themselves. Most of us tend to agree with this instinctively. We know that if we want to achieve something extraordinary, we need some team magic. Moreover, our intuitive understanding is supported by scientific evidence, like the one from Mr. Hackman: A true team can achieve magic.
But unfounded ambitions, won’t do any good, too
The problem is that companies often set extraordinary high-performance targets, because ambitions at the start are high, or they need to overcome the hurdles of budget approval and low bids are what is asked for. However, usually, the way a project is executed reveals a lack of understanding of the art of building high-performance teams. I have seen this dynamic playing out multiple times in my career in business. While I know that a project could be done in a fraction of time and costs, I did not advise some customer to put in the low numbers. I knew that some clients we not ready for a high-performance approach. Sometimes, most often really, companies as a whole are not prepared to embrace a genuine team approach, as described in the twelve conditions of effective teams. Organizations which embraced my advice may have ended up with long, tedious, but ultimately successful projects. Organizations which rejected that advice and went for ambitious performance targets while relying on traditional workgroup ways of working ended up with significant time and quality problems, budget fiascos, vastly increased employee and management turn-over.
Besides the occasional major project, true team tasks are essential for day to day operations of teams too. If the performance aspiration of maintenance, customer service, or sales teams is extraordinarily high, the chances are that a high-performance approach is called for and one should have a look at the 12 conditions. If the sum of all individual contributions is not enough to reach the overall target, a true team approach is called for.
Teams are needed if it gets real complex
All this might be understood as a call for overly ambitious targets. Indeed, there is a blurred line here: It is tough to judge whether the combination of skills and minds in a team will make the goal possible or the target is just wishful thinking. Even for those well-meaning, competent managers who know and do everything in their power to provide the 12 conditions of effective teams, an over aspiring, unrealistic or outright silly target might doom the exercise right from the start. As a rule of thumb, it is useful to understand the level of collaboration between team members that is really needed. The less the need to discuss with one another, the less the need for a high-performance team, the less critical the twelve conditions are.
It takes much collaboration between individuals to deliver good results in complex environments or systems. Complex systems are those where cause and effect can neither be predicted with certainty nor is the relationship between a cause and an effect stable. A machine, for example, is not a complex system. It is just a complicated system, but not a complex one, as its parts are known and behave predictably. All social systems involve humans, and therefore are rather complex than complicated systems, as humans act inconsistently from time to time. Therefore, all teams are complex, and companies tend to be very complex.
Groups of individuals can reliably master less complex tasks without much need of collaboration between them. Take for example service teams in call centers. The core of the work is done by individual agents on the phone, during the conversation on the phone. Co-workers can be useful to reflect with before and after the customer call, but all work is centered on the individual without the need for much collaboration.
The thing is: The more complex the task, the more it becomes a “true team task,” the more collaboration is needed and, in turn, the more critical it is to consider the 12 conditions in the work design of a team.
Most companies have configured themselves to be less complex
Indeed, in most organizations, most performance contexts may not lend themselves well for a true team task. Only if the performance ambition is high enough and the nature of the task requires intense communication between team members, a team effort is called for. Many businesses use the term “team” in an inflationary member and think of all groups of people as teams. So, they invest in nice team building events sponsored by HR budgets and helped by a host of business trainers. This is as inefficient as it can get: To spend money or time on team building while the need for collaboration is really not that important at all is to create waste. It usually suffices to give such a work-group a good understanding of expected behaviors, control the application of those behaviors and let them do their work.
The point is: On a case by case basis, the work group is a better choice to organize work inside traditional organizations. But on the whole, if the whole organizational design of the company would not have been set-up to contain complexity and promote predictability, the team would be better choice. Most companies have configured themselves to be less complex, to suppress the complexity of the market. Designs that allow the complexity of the market inside the company usually involve a bit more structures that promote self-management within a company. But I am getting ahead of myself here.
Condition 3: Team Size 5
Defining a true team task is tricky. It’s time for some refreshing simplicity: The optimal team size is five people. Do not build any teams much bigger or smaller than that. The standard variation around the optimal team size of five is two. So, any team size of 5 +/- 2 is the optimal team size. Beyond that size, split teams. Beneath that size, is just the pair. For two people working together, the laws of teams are not as relevant as the laws of psychology and good communication.
Even the science on team size is rather simple. With every member added to the group the number of relations which each individual needs to build and maintain increases linearly. In a team of three, a team member needs to develop and maintain two links to the other team members, in a team of four three links, in a team of 5 four links.
However, in order to effectively operate within a social group, it is not sufficient to build and maintain links with all other team members, it is vital to theorize about the ties that others have with one another, too. If you know that Joe and Sue do not get along well in a particular aspect, it may be better to circumvent that problem before it arises. Effective social groups do not only care for the relationships that they have individually, and they care about the links that others have between them. They care for the collective. They care for the team.
The trouble is that the total number of links in a team does not increase linearly. It grows exponentially. The total number of links between team members = N * (N-1)/2, whereby N again stands for the number of people in a team.:
A team of three everyone has a total of three links.
A team of four has six links.
A team of five has ten links, and in a team of seven has 21 links.
This number rises exponentially. In a team of 20 persons, every team member would have to build and maintain 190 connections. Why the jump from seven to eight team members might not seem like a big deal, the total number of links in the collective increases from twenty-one to twenty-eight. While the number of links per person is just increasing by one (from 7 to 8)- that is 14% – the number of total links in the system is increasing by seven (from 21 to 28), 33%. Increase the team size by three from seven to ten, and this ratio goes up from a 42% increase in the number of links per person to 214% for the total number of links in the group.
This a mathematical way of saying: Size matters. The negative performance impacts of increasing group size are hard-wired into teams. With rising team size people can relate to one another less and less. To invest more in coordinating the team helps a bit but can never offset the negative impact on performance fully. Jeff Bezos is known to have coined the phrase “two-pizza teams” as a rule of thumb for determining team size at Amazon: A team that cannot be fed by two large pizza’s needs to be split.
If intense collaboration is what is needed, low team size is the way to go.
If intense collaboration is not required, don’t go for the team approach at all and organize the group as a work team instead.
It might not always be easy to cut down on team size, as this or that skill or organization needs to be represented. In this case, consider two things: Either split the team in two and manage those separately or come up with a better definition of the team boundaries, especially who is on the team and who is not.
That’s it for today. In the next post, in two weeks, I will get to discuss a very exciting subject: Do teams need a manager?
Audible…no: I hope you enjoyed this post. Let me know what you think!
Most tasks can be made a great one for a team if you just level up the performance aspiration
HOWEVER, do not level up the ambition, without having laid some solid groundwork inside the organization for those conditions that make teams great
Most companies have configured themselves to be less complex, to suppress the complexity of the market. Therefore the workgroup is often a better choice