Are you tired of hearing about Agile, New Work, Lean, and Design Thinking?
Did you already experience how the marvelous values inherent to those approaches have been hijacked and corrupted into just another wave of corporate gimmickry?
Do you wonder how your company or team will ever be able to solve its problems more creatively and spirited?
Companies need an update. The way we run most companies today is detrimental on so many levels. It’s neither well-performing nor allowing technology and humans to flourish. Yet there are progressive organizations that show that through distributing power more evenly, we can make the workplace much better than ever before. This book shows how.
The Need
How to enable people to prosper alongside technology is all-important for any modern organization. The more technology inundates our lives, the more humans must be at the center of organizational design. They are the only ones that can make sense of its vast and ever-increasing possibilities. In current companies, people are rarely able to flourish. There is no sidestepping the issue that arbitrary power undermines people’s initiative, performance, and personal development. In the digital age, we need to find new mechanisms for sharing power to make everyone in an organization more powerful – without distributing power so much that companies become indecisive and unfocused.
This book offers a practical method for running companies ‒ using progressive work designs ‒ that is much better attuned to the digital age as well as to human needs. #liberatedcompanies
Liberated Companies is a business book for people at all levels who are looking for better ways of working yet find it hard to determine what precisely these better ways are. Much has been said and written about digitalization, the agile company, New Work, and the need for more self-management, yet almost everyone struggles to make sense of it all. So many good ideas, so much corporate gimmickry. Most people are uncertain about what’s really important and what really works.
Liberated Companies is a book about management in the age of digitalization. It provides orientation to master the ever-increasing complexity of the business world by showing that human collaboration is more actively malleable than we are accustomed to think or believe. By using and evolving work design configurations, ways of collaborating with one another, we can work ourselves and our organizations into new behaviors and mindsets. The book can be a travel companion on that journey. It provides a map and a compass for those seeking to navigate their company or their team to better human and economic outcomes for everyone in business and society.
The USP
This book helps readers to:
Design their organizations, companies, and teams much more actively than ever before.
Know what makes really matters for them and their organizations and what can be safely ignored.
Map and navigate their organizations’ journey through the digital age.
Lead their organizations with purpose, efficiency, and humanity
Appreciate, realize, and support everyone’s human potential much better.
Manage in a way much more attuned to the needs of technology and of people.
Because the book:
Makes the fallacies of hierarchical, empowered and self-managed models of working clear
Maps the complex territory of organizations in a unique representation of management practice, the “Liberated Company Map.”
Distinguishes, based on the situation of a company, those work designs that are most applicable for it out of a library of about 200 work designs
Provides a compass to the organizational journey, the “11 Principles of Liberated Companies.”
Delivers great examples by describing the configurations of work designs of one traditional and three leading progressive companies.
The Author
Frank Thun has helped organizations around the globe to digitalize their operations as a Project manager, CIO, COO, and Coach. He studied Economics at the Universities of Kiel, Germany, and Glasgow, Scotland, and holds a Masters Degree in Economics. He worked for start-ups and companies like Daimler, Volkswagen, Capgemini Ernst & Young, General Electrics, Nokia Networks, Bayer, Philips, Schneider Electric and Invensys.
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I spend my lifetime looking for better ways to run teams and organizations. This is my attempt for a comprehensive answer. I hope you will find it useful.
“Liberated Companies- How to Create Vibrant Organizations in the Digital Age“, 380 pages, will be available in hardcover and e-book worldwide in the second half of November.
Sign-up to www.liberated.company to stay in touch AND spread the word – every tweet and post helps.
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
strive to put themselves on the trajectory of technology
use more self-managed and networked structures
are build around a central theme
evolve their work designs to create ever better versions of itself
manage to turn on the power of their central business functions while enabling people to flourish
A liberated company is conscious of its own work designs, the implications that these have on human behavior, human growth, and economic results. #liberatedcompany
Interested? If you like to learn more, sign-up for “Liberated Company”. You will receive regular updates my upcoming book about configuring progressive organizations.
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.
No, that does NOT mean that all companies need to become self-managed. Neither does it mean that middle management needs to be eliminated.
To liberate companies we need to (i) update the mechanisms to distribute power between people in (ii) a manner that is much more complex than just exchanging hierarchy for self-management.
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”.[1]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. [2]
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.
Conclusion
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.
Hope you enjoyed the post. Sign up the the emailing list of the upcoming book “Liberated Companies” if you like what you see.
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.
Agile, The Lean Start-up and Management3.0 are focused on the team level within more open hierarchical companies. The three main methods to scale Agile to the company level, SAFe, LeSS, and Nexus, ended up to be more classical portfolio management methods than anything that amounts to a management system.
Management as we know it — a lax way to describe all the paternalizing ways of organizing the work of individuals — is focused, well, on the individual level. It pays just lip service to teams. Its twin sister “Leadership as we know it”, is more aspirational in its whish to empower people and set good examples, but is ultimately stuck with inwards reflection on one’s own “leadership abilities and styles” or Michel Porter like strategizing and business model-talk.
That’s why Holacracy and Sociocracy 3.0 are so important: Only they light the way to run companies and teams that are truly self-managed. Oh, why do I think self-management is important?
Digital Technology will only spread and inundate Organizations if they become networks of people who are free to be critical and creative, with no hierarchy of submission standing in the way. To adopt digital technology ever better is what will give any company an edge. Therefore, it is a question of performance that leads to self-management.
In the age of the Extinction Crisis, we will need to see fundamental changes in the way we run companies, too. Letting people work in an environment based on exploitation is doing immense damage to peoples psychology and societies fabric. It is no good way of enlarging anyone’s concerns for the limits of the planet. Therefore, it is a question of survival that leads to self-management.
Holacracy is a great vision to aspire to, as is Sociocracy 3.0. They are well-rounded systems that finally do away with the industrial age’s exploitative hierarchy. They will allow companies and people to flourish more, by replacing coercion with motivation and exploitation with consideration.
The time is ripe for such systems. But companies are overwhelmingly not ripe for the big leap to self-management. Still, every company needs to start on its journey to the digital, green age. If only we could identify a great transformation path to more self-managed, liberated companies! All the Liberated Management Practices that Frederick Laloux propagates, that are the hype in New Work and Agile conferences, are great — but where are the map and the compass which could provide orientation?
I have a suggestion to make. But not now. In the next post.
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
Legend:
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!
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Next post will be continuing the long series on “Effective Teams” – to be found in your mailbox at the end of January.
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.[1]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.
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Audible…no: I hope you enjoyed this post. Let me know what you think!
Key points
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
The twelve conditions for effective teams, including condition one, a compelling direction
Sources and Footnotes
[1]For more on local optima and how to find out the things that really need to be changed in businesses check out Goldratt, Eliyahu (1994) ‘The Theory of Constraints‘
Part 3 of a series that explores the effectiveness of individuals, teams, and organizations
The factors that drive team performance are very well researched. This post is based on Richard J. Hackman’s research on team performance. Mr. Hackman has been a Harvard professor who specialized in organizational psychology.[1]He is recognized today as the most authoritative voice on the topic of team performance. He devoted his academic life to the research of teams. In his 2002 book “Leading Teams” he came up with a list of five conditions that foster team performance. I took the liberty of re-ordering and often re-naming these factors for better understandability.[2]
This re-ordered model of team performance is based on a total of twelve conditions. Nine conditions internal to a team, and three conditions external to it. This effectiveness model aims to be collectively exhaustive and mutually exclusive.
All the twelve factors listed do matter, for any team. There is no weighting given with this model. Weightings depend on the specific performance context the team is in at a certain point in time.
The twelve factors are no menu card. You can’t choose to run a team by, say “a compelling direction “and “small size” only while neglecting the other factors and still expect high performance. In general, all 12 conditions must be there for a team to achieve great things. They are reinforcing one another.
Meaning and Spirit – the Internal Conditions of Effective Teams
The internal conditions are those that held within the team. Some of those might be set externally at the start of the team effort, but once the team effort starts they are the essence of what this team is all about. They become internalized into the fabric of the team.
There are two categories of internal conditions: Meaning and Spirit. The five conditions subsumed under Meaning describe what the team is all about: The direction of the teams work, the tasks that they are doing, team size, the scope of the effort and its composition and stability. Meaningful work engages people. Meaning does describe why something is to done and what people do. It’s a reason to climb up to a summit and a clear view of the mountain. To be clear on the meaning to a team is a good start to pay off the motivational debt of teams.
The Spirit of a team is describing how the team approaches their work: The impact people they feel their work has, their level of aspiration to do great things, the way they think about their ability to speak up, and the level of transparency and trust.
Let’s start with exploring the five factors that make up teams Meaning first.
Condition 1: A Compelling Direction
A compelling direction has several functions in a team setting:
Harnessing the team to the targets of the organization
A source of motivation
Provide direction for decisions to be made
Align the actions of all team members towards the common goal
Setting a compelling direction is more than goal setting. To set goals is a classic, often useful management practice. Goal setting is the art of laying out clear goals, for example by using the SMART criteria that decrees that targets should be Specific, Measurable, Attainable, Relevant and Time-based. Setting a goal implies setting an end-point, a definite location that to achieve.
However, the higher the performance aspiration of a team, the less traditional goal setting will suffice. First, in complex environments where solutions cannot be known at the start of the effort, being too SMART in goal setting, will be limiting for the team. If the problem is complex, it is not wise to be too specific. Goals need to be described on a high level and vague level. Being too specific will determine outcomes in ways that are hard to anticipate before the team gets its hands dirty on the complex matter itself. Second, for a team, it is often crucial to figure things out for themselves. It is tough for any team member to latch her intrinsic drive on to the team’s mission if too much is already defined. By supplying overly detailed goal criteria, the freedom of the team to do what it deems to be best is limited.
It is a better idea to get a team to work itself into the subject matter – to advance in a given general direction. It will find out new things and will over time and decide then what to go for and where to end up. For teams, a direction works better than specific goals.
Let me give you a prime example of how to set directions, but not goals.
Mission Type Tactics
Providing a direction is nothing else than giving a mission. This style of command is known as “Mission Type Command” in military command theory. Its origin is the German “Auftragstaktik” is attributed to the Chief of Staff of the Prussian Army Erich von Moltke. Auftragstaktik and has been a core element of German military thinking, and modern military tactics, ever since.[3]
In mission-type tactics, a subordinate commander is assigned a mission, the resources available to attain it, and a time frame. The subordinate leader then implements the order independently. The subordinate leader is given, to a large extent, the planning initiative and freedom in the execution. Thus, a high degree of flexibility at the operational and tactical levels of command is achieved. Mission-type orders free the more senior leadership from tactical details.[4]
The opposite of Mission type tactic is the Command tactic. People using command tactics give exact orders, SMART orders. Maybe too SMART. To manage teams effectively, managers need to learn a new trick and refrain from providing precise orders. Instead, they need to be vaguer. They need to point in a direction. Now, this might seem like an ideal excuse to give sloppy orders: “I do not need to be exact in what I am ordering you – go find it out yourself.” Sloppy orders would leave the team wondering what to do, wasting time and possibly never get anywhere.
To specify missions and not end up issuing sloppy orders is hard. Giving an excellent mission to the team requires much thoughtfulness on the part of the one defining the mission. Here is some guidance:
Describe the mission as an intent, not end-point[5]
Give boundary conditions, that act as guard rails
Refrain from determining the ways of getting towards the intent
Mastering the art of mission command might be one of the most crucial things that distinguish an ordinary boss from a great leader, both of military as of business organizations. It takes much humility to accept a variation in methods and a variation in outcomes.[6] It takes the willingness to accept the risk that one’s intent is misinterpreted. It takes willpower to refrain from being too explicit and not declare once own perception to be the truth. There is a lot of doubt and uncertainty involved in trusting other people to do your bidding to their best of abilities.
These are all reasons why mission-type tactics are seldom used in traditional businesses. Mission type tactics are best used in environments of uncertainty, complex situations where swift action based on local knowledge on the spot of the action is crucial. Alas, traditional businesses and management practices are aiming at eliminating uncertainty, to fence it in, to produce predictable, constant outputs. Things that worked fine in the industrial revolution, but that are deeply problematic for many challenges posed by the digital age.
There is another snatch: Mission-type tactics alone do not work well if used in a traditional business environment. To understand a direction, the intent and not the end-point, in spirit and not only to the letter, the team needs to have a splendid view of the organizations need, with all its various constituents who are invested in or impacted by the team’s efforts. Even more than a genuine understanding of the situation, the team needs to have a view on the dynamics of the situation: Is the stated intent really what a constituent wants? The more complex and dynamic the situation is, the more the team needs to develop, maintain and test a hypothesis how the intent of the organization might be changing over the course of the team effort. This level of visibility needs much more close bonds between people and a level of transparency that is hard to find in most companies. It requires a supportive organizational environment geared towards shaping intense personal relationships and a culture of organizational transparency.
Who set’s the Teams Direction?
The first thing is to be clear about is who is setting the overall direction of the team. This is usually not the teams’ job, but the person or group that want something to be done. The need to get something done is, of course, the very reason why a team exists. A team is a tool at the hands of someone or a group to get something done.
There is just one exception to that rule: In a self-governing team, a form of organization used in highly innovative or egalitarian organizations, which are not bound to conventional hierarchy, a team may choose its own direction. An example is a community of interest, which can work even in hierarchical business, where co-workers are forming teams on their own initiative and waiting for followers to “vote with their feet” and self-assigning them to a cause. While this form of a team is still somewhat exotic in a business environment, its results are often attractive. Organizations employing those teams at scale are Google, Netflix, IDEO, Haier, Procter & Gamble, Unilever, Microsoft, and many others. For the overwhelming majority of businesses, most goals need to be set by the hierarchy in a way to serve its needs.
A Mission does not need to be Inspiring
While it is difficult to set a good mission, it is still not enough. The mission needs to be compelling, too. Nowadays we tend to understand the word “compelling” synonymous with adjectives like inspiring, purposeful, or motivating. However, compelling can as well be connected with attributes like coercive, forceful, or void of alternatives. A compelling direction may not at all be a positive one. Take for example the need to close some operations and lay-off people. This can be a compelling target, too, because management has decreed this, and might frame it as a cut necessary for the survival of the whole organization. Most of the time, we tend to think of teams and business of being a growth story, forward-thinking, providing opportunities and winning. This is quite silly, as leading organizations and teams means not only to be starting things but to be ending things, too. An inspiring mission is excellent and much preferable – but a sincere one will do just fine.
But if the direction of a team is not inspiring, how can a team member ever give her or his best? She might be compelled or even coerced to do things, but surely her intrinsic motivation will take a hit and limit her performance, right? Perfectly right, an uninspiring (but still compelling) direction results in intrinsic motivation taking a hit at the start of the project. However, it is just the start of the project. This debt can be recouped. People are terrific to find their sense of purpose once the team progresses. One of the most potent biases there is, the confirmation bias, lets people reinterpret their world in a way to see their actions and the actions of others in a more positive light over time. Individual autonomy enables people to find their purpose even within a compelling but uninspiring setting. This personal purpose might not be felt at the start, but a good team context might enable every team member to find her or his purpose while working towards the goal of the project.
The quest to come up with an inspiring, instead of just a compelling direction is morally laudable, and it is beneficial for team performance. However, it is not needed to achieve high performance in teams. Think of it this way: What is an inspiring target for one person, might have little attraction for another. What can be inspiring on a high level, might be lost entirely in the daily struggle to get things done. Motivation is a very individual thing. To come up with an inspiring direction that motivates everyone, independently of personal idiosyncrasies, is hard. Not every company is there to save the world. There is a job to be done, and it needs to be done for a compelling reason. That’s good enough. Inspiration is laudable, but it also is optional, often unrealistic and therefore usually ends up existing in shallow corporate slogans only.
To seek congruence between the direction of a team and the motivation of individuals often means to fight a losing battle. Instead, come up with a sincere direction, and let the group dynamics their individual motivational dispositions to the overall direction over time, while working towards the target. A sincere direction is often more practical and meaningful than sending people on an inspired mission invented by someone else or during a group “visioning workshop.”
Warning: Directions release Energies
The more compelling the direction of the team is for its members the more energy will be released. Surely, releasing energy is a good thing to get things done, but releasing energy is dangerous. Usually, if given a choice between an under-energized and an over-energized team, most managers and organizations would choose an over-energized “squad”. The over-energized team might break things, in its push to get things done, but it gets things moving. But there are problems.
If the organization is not mobilized to a sufficient level for the change that the team is supposed to bring into life and the team is not able to pace its enthusiasm to what the organization can absorb, clashes will occur. These clashes might destroy the team’s energy level and burn significant relational capital that the team needs to succeed. A team’s effort is a lot about pacing. A team leads a change effort inside a company. Therefore, it needs to be visible to the other co-workers and not disappear out of sight of the rest organization. Enthusiasm is a virtue but might lead to frustration. A measured pace is often preferable over short-term euphoria. After all, most really significant changes are rather marathons than sprints.
Next post will take a look at Condition II: “A True Team Task”. I hope you enjoyed this post. Let me know what you think!
Key points
Effective teams require 12 Conditions: 9 internal and three external to a team
Two types of internal Conditions can be identified: Meaning & Spirit
The first condition is: A Compelling Direction
Mastering the art of mission command might be one of the most crucial things that distinguish an ordinary boss from a great leader
Mission-type tactics alone do not work well if used in a traditional business environment
To seek congruence between the direction of a team and the motivation of individuals often means to fight a losing battle
[2]According to Prof. Hackman there are 5 factors that driving team performance: 1. A Real Team 2. A Compelling Direction 3. An Enabling structure 4. A Supportive Context and 5. Coaching. All these factors and not more are represented in the model I give here. Just that I extended those factors to 12, as I think there is too much of importance hidden underneath some factors, especially in factor 3 “enabling structure”.
[3]Mission type tactics has been at the heart of German military doctrine ever since the three successful campaigns for German unification against Denmark, Austria and France at the end of the 19thCentury. A large part of the successes of the World War I’s “Sturmtruppen” (Small team tactics) or World War II’s “Blitzkrieg”, can be attributed to the vast discretion given to commanders at the front. For more an Moltkes command style see Barry, Quintin (2015) ‘Moltke and his Generals – a Study in Leadership’.
[4]Paraphrased from https://en.wikipedia.org/wiki/Mission-type_tactics
[5]In western military this is known as “Commanders Intent”. It is the second item on any mission briefing, just behind a description of the situation.
[6]Does anyone remember the “Fuzzy” Movement in the 2000’s? A hype term borrowed from electronics (“fuzzy logic”) that has been used in business to praise the virtues of vagueness and heuristics.
There are lots of reasons to hate teams. Teamwork diminishes authority, often involves endless and ultimately indecisive discussions, foul compromises and can be generally unrewarding.
There are lots of reasons to love teams. Working closely with another, with a near intuitive understanding, learning all the time and achieving more than one ever would have thought possible.
Today the hymn of the great team performance is sung all over the realm of business. Agile, Lean and nearly all progressive organizations rely on the team as the primary unit of work. In business, many people haven’t had that many great team experiences. Why is that?
I think there are two reasons. First, a group of people is not necessarily a team. Teams are a bunch of persons working together closely to achieve a goal that would have been out of reach for anyone acting individually. The dividing line between a group and a team is the amount of interrelatedness of team members. It alienates people if a manager say’s “you are a team,” while you know that one of the last things you want is to be associated with those slackers, psychopath, suckers, pretenders.[1]In day to day conversations, little difference is being made between a team and a group. If you and your co-workers are just a bunch of ladies and guys toiling on their daily tasks without too much need to communicate at all, the chances are that you are in a workgroup but not a team. In this setting, managers tend to appeal to the spirit of the team if she has no clue whom to make responsible for something.
Second, teams can make you feel powerless. In the quest to achieve something, it’s just much more complicated if you need to get along with other people instead of being able to deliver this thing on your own.
Now, in this post, I will not research what makes a great team experience. I am a North German. As such, I am culturally primed to be too serious to write about such trivial matters as pleasurable experiences. I will instead spell out what makes a team perform at a high level. I walk you through the conditions, and I think the chances are, that you will feel that a team where these are given, would be a good one to work in.
However, before that, I would like to get the basics of the economics of the team straight, because teams are not universally good. Sometimes, the better choice is to do work in a workgroup, than in a more tightly interconnected team.
The Benefits and Costs of Teams
If you want something done, you got to do it yourself. That might be the credo of an incompetent manager – but it is often true, too. A look at the empirical evidence of individual vs. team performance confirms this: Teams are often worse performers than individuals.
Here is an example. A study at Yale University looked at the time “A” grade students invested in their studies.[2]All the students were top, “A” grade, performers, but some managed to get to an “A” Grade by investing less time. The most efficient students spent just 10% of the time that the worst performing student did. A 1:10 performance ratio between lowest and highest performance student.
Now have a look at the performance of teams. In studies that looked at thousands of projects, the ratio of performance between the best and the worst performing teams was as high as 200: 1.[3]Imagine that: There are project teams so bad, that they accomplish what another team does in a week in 200 weeks! Apparently, there are factors at work that complicates teamwork a lot, compared to work that is done individually. Lousy team experiences can get people to back off from teams for good – and it is hard to blame them. How frustrating it must be to see all this waste if one works in a tedious, four yearlong project: 199 weeks sacrificed to entropy for could have been achieved in just one week.
Then again, the top teams are outperforming other teams by a factor of 200. What a bliss it must be to work in such a team! Effective teams manage to outperform less-effective teams by 1:200 – effective individuals manage to outperform others by 1:10. Apparently, there are many things to get right – and many things to get wrong – in teams. A team is a sensitive thing indeed. The following graphic illustrates the difference in performance spread.[4]
If the conditions for successful teamwork are given, a team is likely to outperform a group of individual actors.[5]Not by small increments, but by order of magnitude. Furthermore, the chances are that in complex and innovative situations, only a team-based organization will be able to deliver the intended outcome at all. The unique way a team is able to utilize the skills and minds of people, allowing each to exploit personal strength and grow in the process, can bring many superior results.
Still, a poorly organized team might be a nightmare. The point is: Companies that are not able to provide a suitable environment conducive to teams should stay away from the team. Instead, they should organize work groups, where managers define, assign and follow-up work tasks. That can be a much safer and efficient alternative.
Team Debt
Let’s take a look at the reasons for a team’s underperformance first. A way to understand the looming underperformance of teams is to think of a team’s potential performance in an equation:
Team Performance = Potential Performance – Coordination Loss – Motivation Loss[6]
The potential performance of a team is its theoretical peak performance. It might vary from team to team, from mission to mission, from the composition of the team with various team members, but there is always a theoretical maximum performance level. We might not know it, but it is there and likely to be reached if the 12 conditions are fully satisfied.
However, potential performance doesn’t translate into real team performance. Every team is automatically incurring two hits to its effectiveness. These hits are incurred right at the start of the project, and they are universal and unavoidable.
First, there is the cost of coordination that is needed to align people again and again on a target and ensure that work is done in a coordinated manner. Team meetings, Team processes, Reports – you know the drill. This alignment is meta-work, it takes time, that is not spent on working directly on the task at hand.
Second, a team task is very often less critical to a person than a task directly assigned to a person individually. A team task is somewhat out of the control of a person. Others need to collaborate. This is somewhat frustrating, as it prevents motivated persons from charging headlong into solving the task. On the other side of the motivational scale, a team opens up the opportunity to relax and take it easy. If the task is out of reach of what I can accomplish by myself, I might as well wait for the others to do something. This phenomenon is called “free-riding” in economics and “social loafing” in social psychology.
So, there is a universal and unavoidable penalty for each team effort. This penalty is in effect a debt that each team starts with. The good news is that this team debt can be repaid. Over the lifecycle of the team, the team may learn how to coordinate effectively, even intuitively.
Allow me a personal story about coordination debt, here. As I was 18 years old, I once had the opportunity to play a game of soccer against a German premier league team.[7]Being young and full of self-confidence, I respected this team much but still thought that in a one on one situation I can hold my own. It happened to be that I was playing against the at this time striker of the Polish National Team, Jan Furtok. I was right: I never lost a one on one situation against Jan Furtok in 90 Minutes – because there were none. He just didn’t need to go into these situations, as he knew exactly where to be at what point in time. Before I could do anything, he already passed the ball and moved on. He and his co-players had an instinct understanding where the other would be and where he would play the ball. Their coordination was so brilliant; they did not have to use much of their abundant personal skill. Not against us village boys. My team had so much of a coordination debt that all skill didn’t even play a role.
To repay coordination debt takes practice and reflection. The same is true for motivational debt. It can be repaid over time by opening up the new sources of motivation that the team offers: Relatedness to other persons. To not let down the team, to be loyal to it, to care for one another becomes a natural motivator the more people can bond with one another over time. With increased bonds, comes visibility and social control, which in makes coordinating the team easier: Coordination debt is repaid until coordination between people happens seemingly intuitively.
Coordination and motivation debt can be recouped over time. As the team gains in maturity, coordination efforts decrease, and the motivation dynamics of groups take over. This ripening of the team is accelerated by orchestrating the process of team building. Every team needs to go through a sequence of 4 phases that Bruce Tuckman, a scholar of organizational psychology has described as storming, forming, norming, and performing.[8]The better this process is managed, the sooner the team debt can be repaid. The team debt acts like a negative up-front investment that can be recouped in a classical “hockey stick” curve like manner.[9]
Does Team performance matter?
Excellent performance is not always what a company needs. What is needed in most situations is a team performance that is good enough to reach a certain level and do so consistently. A job well done by a team might not require a high level of performance. Often teams can get away with less.
This may sound unconventional and dispiriting, but this mode of operation is actually the norm. Most units or departments exist to do a particular, usually well-defined job, consistently every day. More is not required. Beside human laziness and ineptitude, there is an excellent rationale for this lack of performance aspiration for a team. First, as shown above, high-performance teams start with significant debt. The organization might be inept to provide an environment where a team can ever exceed the performance level that a much less risky workgroup can deliver. Second, teams are pretty sensitive things. They might produce great outcomes but tend to do so inconsistently. High-performance teams are much harder to manage than teams or workgroups that aim at lower, but still useful enough levels of performance. Going for high performance is risky – good enough performance can be bought for less.
The Reasons why Teams may outperform Work-groups
However, what are the reasons why a team can perform better than a working group? After all, individuals are what teams are made off – why is a team allowing individuals to surpass themselves if only they act in unison? Here are the main reasons:
Growth and Learning are enhanced in teams. We learn by social interchange and feedback. The much tighter social collective context of a team enhances growth and learning for everyone in it, compared to the looser coupled workgroup. This is not to say that individuals do not learn in work-groups. In good teams, they just have more opportunities, nudges, motivation and need to learn – and grow as a person.
Social bonds increase motivation. People are social animals. Tight social bonds are one of the primary things that motivate us. Some studies show that the quality of relationships to others is the deciding factor regarding one’s quality of life and happiness. In the world longest running research on happiness, which has been running since 1938 and is still ongoing, the most significant decisive influence factor for the overwhelming majority of persons is the quality of relationships – by far.[10] The fact is, humans are hard-wired to care for others.
Coordination is achieved much more smoothly the closer people bond with one another. If people look out for one another, with the team task in mind, the mind and senses of everyone in the collective, the team, are coordinating their work implicitly. Until there is no need for a single mastermind, the manager of a group, to be the one sole, principal caretaker for the whole group. Coordination in a team happens more and more in a distributed and implicit manner, instead of being centralized and outsourced to a manager.
The human mind is very susceptible to biases. The team can be a corrective. If the team engages in active discussion, allows for people to speak their mind, integrating a multidate of perspectives, the tricks our mind plays on us can be mitigated. By discussing with others and receiving feedback, we can be pushed out of intuitive thinking – i.e., rushing to conclusions- into, rational thought.[11] This mitigation is empirically much more effective by interpersonal interchange, then by staying within the limitations of one’s mind.
The importance of the last point is hard to overstate. Teams improve even a sociopath nerd that possess a cold, analytical outlook of the world and does not have too much interest in others. His cognitive biases, his memory biases, and latent social biases are all decreased by social interchange. This way, a team helps to surpass our biological, neuronal limitations.
That’s right: The team helps to overcome our evolutional, cognitive impediments. The better the team, the more a team is set-up to un-bias the individual. The history of group dynamics (or group processes)[2] has a consistent, underlying premise: ‘the whole is greater than the sum of its parts.’ This is a large part of what collective intelligence is all about.
However, still, the fact of the matter is: Each team starts with a sizeable debt. Unchecked, this debt will accumulate, and a team’s performance might stay below the level of a workgroup. In this case, the team as a method of organizing is not optimal.
However, if we can devise a way to rapidly pay off team debt, reliably again and again for each new or changed team, then the team might become a very superior tool to achieve organizational performance. Indeed, the team as a way organizing can get much more attractive than the department, i.e., a manager led workgroup, as the principal basic unit by which work is done. Such an organization would be one of a lot of networked teams with few central controls. However, before we get there (in Part II), let’s check out the 12 conditions of team performance in detail.
Oh, and one more thing: Individual performance matters.
Before we start looking at the 12 conditions of team performance, here is a reminder. The six internal conditions for individual effectiveness remain valid (for those check out You call yourself a Great Manager? Let Me Hear Your Theory of Performance!). To have the right skills, the right cognitive abilities, the urge to archive mastery, the autonomy to act, the deeply felt meaningful purpose and to be genuinely accountable for results still matter very much for effectiveness. The strength, weaknesses, needs, and idiosyncrasies of people don’t go away once they enter a team.
Effective teams build upon the conditions six for effective individuals. The 12 conditions of effective teams are all but tuned to provide a social environment for individual performance to prosper.
Yes, by leaving one’s confines of individuality and exposing oneself to others motivation takes a hit and coordination is tedious. Until one realizes that mastery is enhanced by collaborating, while one’s needed level of autonomy is not infringed upon and that the purpose of serving the group is one that can latch on to with one’s personal purpose.
Key Points
Team debt is universal and unavoidable
Companies that are not able to provide a suitable environment conducive to teams should stay away from organizing work in teams – they should stick to the workgroup instead
If a way can be found to rapidly and reliably pay off team debt, the team can be the nucleus of all work design, replacing the traditional department/workgroup
Next post will be about the first half of the 12 conditions for team effectiveness. I hope you enjoyed this post. Let me know what you think!
Sources & Footnotes
[1]The academic term is “underbounded” team. See Alderfer, Clayton (2005) “The Five Laws of Group and Intergroup Dynamics”.
[2]Sutherland, Jeff (2015) “Scrum”, p.42 based on a study by Joel Spoelsky on computer programmeUniversityle university class, see also https://www.joelonsoftware.com/2005/07/25/hitting-the-high-notes/
[3]IBM studies on project performance, cited by Sutherland, Jeff (2015) “Scrum” p.43
[4]Values are illustrative only, they can’t be generalized. Values are based on the exemplary studies cited by Sutherland, Jeff in “Scrum”, see above.
[6]Hackman, ibid. Hackman based this formula on psychologist Ivan Steiner, who described the term “process loss “ in his work.
[7]Hamburger Sport Verein (HSV), a member the German Bundesliga.
[8]Known as “Tuckman’s stages of group development”. See Tuckman, Bruce W. (1965) ‘Developmental sequence in small groups’, Psychological Bulletin, 63, 384-399. Tuckman later added a 5th phase, “Adjourning” to highlight the importance of the way the teams work is ending.
We have reached peak Agile. Not only is it being corrupted as an efficiency and control tool. Much worse is, that it lends itself towards being corrupted. It has become, for the most part, a tool that is useful in emergencies but ultimately changes nothing of fundamental importance in today’s companies.
