It is strange. On the one hand most companies seem to be all alike and not so much different from one another at all: Hierarchical beasts that employ the classical work designs of Feedback, Delegation, Status Meetings, Protocols, Policies, Orders, Rewards, Appraisals etc. to get things done.
On the other hand there are more progressive companies like Google, Buurtzorg, Amazon, Haier, Netflix or Bridgewater that utilize some “leading edge” work design such as OKR’s, Self-Managed Teams, 6 Page memos, Culture Books, Promises Beyond Ableness, Mission Command, Consent Decision Making etc. They often appear to be using quirky ways to get things done differently.
Many people are fascinated by this or that “Work-hack”. Some even try it on their own Organization. Well, I guess by now most people have been subjected to daily stand-up meetings, KANBAN Boards and more engaging workshop formats with lots of breakout groups working in parallel – just to name a few of the better known practises.
What if we could explain companies by the way people are working with another? Introducing the Liberated Company Map.
During the last couple of years I have assembled a library of Work Designs of both traditional and more progressive organizations. All these Agile Work-hacks, New Work or Self-Managed Practices were too intolerably disordered for my limited teutonic mind. So here is my roster for ordering them. It consists of three criteria.
First, all work designs have a primary function, a target that they are used for. I have clustered these targets into nine functions of management in a 3*3 matrix. That order is inspired largely by Henry Fayols classic six functions of management.
The nine types of management practices
Please note that “Management Practices” are a subset of work designs – more on that in later posts, I do not want to get bogged down in theoretical discussions here.
Second, work designs are ordered by the size of the power differential that exists between people. By doing this, I am assuming that the amount of discretionary power that bosses have over employees has a critical influence on a persons behavior. People in more hierarchical, authoritarian companies will weigh every word and deed to not upset superiors, wherelse people in more self-managed organizations will find it easier to disagree and speak up. There is much more psychological safety in more self-managed organizations, and that causes work designs that foster on intrinsic motivation and social team dynamics to work much better than they would work in an enviromment of conformity and fear. I clustered the size of the power differential in four levels.
Companies can be distinguished by the size of the power differential between people
With increasing liberation level, the power shifts away from a manager towards employees and groups. This way of ordering companies is based on a scale proposed by Renis Likert, an American business professor, and is similar to other popular ordering systems, like Laloux’s Teal Model.
Developmental stages of organizational systems: 4 models
Last, I use the severity of a work design as an ordering criteria. The “severity” is the risk of a major backlash occuring if things go wrong with the use of a work design. For example, there is usually no harm in using pratices like “Daily Standups” or “Kanban Boards” but immense harm is done by using “Elected Superiors” or “Self-Service Remuneration” out of place, i.e. without a suitable company environment and other supporting work designs being in place.
Putting it all together, here is the map. It uses the 3*3 Layout of the nine management practice categories, subdivides each of the nine quadrant’s into four sub-quadrants by liberation level, and orders the list of practices in these sub-quadrants by severity. I call this the Liberated Company Map.
The Liberated Company Map
It’s a big map: You need to zoom in to see the details; you won’t know some practices and you might disagree with some of the mapping. I can offer you some help right now: If you want to dig into the practices, here is a complete list. Howeever, there is more to it, more to the art of configuring companies with work designs. But I leave that for the next posts.
I like to close with a preview. Any company can be mapped on the Liberated Company Map: Amazon, Google, Haier, Netflix, Buurtzorg or Siemens and Ford – any company. So here is a mapping of Bridgewater, a company of about 3500 employees and the worlds successful Hedgefund, known for its radically progressive organizational design.
All the management pratices not used by Bridgewater are left out in this graphic.
In the next posts, I will go through configurations of progressive companies and explain how they work. Companies on the very edge of organizational design, such as Buurtzorg, Haier and Bridgewater – but also more traditional companies.
I have just finished a manuscript for a book called “Liberated Companies: A Map and a Compass to Better Organisations in the Digital Age” that explains the topic in about 300 pages and 45 graphics and tables. If you are interested in learning more, sign up to my blog.
And spread the word, if you like what you see.
___
Featured Picture by aitoff, https://pixabay.com/users/aitoff-388338/
I was wrong. Two years have passed since then. Time, I almost exclusively dedicated to learn and practice the art of mastering more self-managed organizations. My advice for those seeking to improve companies or teams is to read Brian Robertson’s “Holacracy”, just after you read Frederick Laloux’s “Reinventing Organizations” or listened to his excellent new video series. Mr. Laloux’s work fills you motivation and Robertson’s work will give you as close a view on the future of management as you will ever get.
The crucial thing which I got wrong in 2017 is that implementing Holacracy is not the thing. It is understanding Holacracy that is crucial for a move towards more self-management. Implementing Holacracy without having gone through a journey towards more self-managed for a couple of years before that, will properly get your company, team and yourself into deep trouble. It is simply too radical for most people in an organization to understand. Still, there is no better way to understanding a possible vision for the destination of the journey to “Management in the Digital Age” than Holacracy. The one approach on par with Holacracy is Sociocracy3.0, an updated and now very accessible version of another, similar “Self-management” Operating system. But beside it, I see no equals, no better way to understand Self-Management thoroughly.
Management 3.0 is certainly much more easily digestible with its colorful Mindsettlers app and has its merits to get more agile, liberated ways of management going, but it is ultimately less useful as a vision. It is something that you can use to start your journey but will not sustain you for long, as it lacks consistency and perspective.
Liberated Management Practices, is a term I use (inspired by Issac Geetz and Brian Carney’s book Freedom.Inc), to describe all the various management practices of progressive, more self-managed companies. They are not part of a system at all. Instead, they are just a diverse bunch of practices used at Buurtzorg, Gore, Patagonia, Haier, Bridgewater, and many more progressive companies. They lack order and consistency.
A way to picture all the ways to manage companies these days looks like this.
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.
“No theory of Management is worth anything if it has no underlying theory of performance”. I am not sure where I read this sentence, but it stuck with me ever since. The performance question is the “holy grail” of any organizational theory. The very reason why companies exist is that they are there to perform something. The very function of the market is to root out low performing companies.
Still, most management advice is of the self-help nature: There is much advice given how to do this or that, without ever being clear on why this or that management action should work. This article is the first one in a series that drills down on the conditions of performance, the underlying theory of human performance as individuals, of groups and of companies.
After all, performance is the crowning discipline of anyone who is managing. A manager/ leader’s job is to get people to do things.
But there are ways of getting people to do things which will cause people to achieve much and ways that won’t achieve much. So how can management practices be designed in such a way to maximize performance? To answer this question you got to look at the conditions that drive individual effectiveness.
Individual Effectiveness
Why does individual performance occur?
Here is the synopsis of what I learned from my research over the years.
Internal Conditions
Internal conditions are, first of all, the capabilities that people bring into a job:
A set of skills at various levels
Cognitive abilities, such as Intelligence (IQ), Emotional Intelligence (EQ) and specific talents
No big surprises here: You hire for skill. And slightly more advanced, you rely on some personality tests in order to select by cognitive ability (for more on this checkout Hiring like a Pro: Lessons from Google).
But capabilities are not enough. It takes the willingness to use those capabilities, the willingness to fully engage. Engagement can be triggered best by addressing the needs of a person’s intrinsic motivational structure. Of all the literature on intrinsic motivation, I have found the summary that author Daniel Pink made most useful:
The urge for mastery, to perfect oneself
The autonomy to act
To follow one’s own purpose
Of course, no one has the same urge for mastery, the same need for autonomy or the same clearness of purpose. Some people may like to hang loose, spend their time on youtube or engage in social media all day. These people are unlikely to be highly effective. Some may not have found their purpose, their need for mastery and autonomy just yet.
Internal conditions are more or less given to a person, at least at a certain point in time. People are endowed with capabilities and what drives them. It is a package deal. Although these attributes may change over time, they are pretty constant over a longer period of time. It’s hard to change IQ, it takes time to acquire new skills and it takes a transformational experience to shift one’s intrinsic motivations.
External Conditions
A popular myth in western culture is “you are able to achieve anything if you really want it”. Well, I guess that may true – at least as the laws of physics are not violated- but I think a more accurate version of this saying would be “you are able to achieve anything if you really want it, but some things are highly unlikely”. But that kills the motivational intent of this statement, doesn’t it?
To excel as an individual the circumstances of your whereabouts matter. You need external help. Malcolm Gladwell researched the question of individual performance and dug-out three factors that explain individual excellence best:
A supportive context
An environment full of opportunities
Deliberate practice, ten thousand hours of reflective, focused, professional practice
These claims have been scrutinized in a business context. One of those factors is not important in a business context: Deliberate practice. Shockingly for Protestant work ethics, which stresses the importance of hard work, deliberate practice is of low value in a business context. It is important for sports and arts, yes. But not in the much more complex, muddled world of business.
A work environment that provides people with opportunity and assistance to perform and grow is very relevant, though. In all organizational or educational research about performance, these factors stand tall.
I have added a third factor: Accountability and Rewards.
In a business context, it is important what people are assigned to do: What is their accountability? People may have great capabilities, possess a great intrinsic drive to excel, they may be part of an organization that provides them with truckloads of opportunities and support, but if they are kept inside a small, narrowly described job they may not be able to fulfill their potential. People need to have the authorization to act.
And not all people are easily intrinsically motivated. Some people respond better to extrinsic motivation, such as money or status that is given to them by others. Extrinsic motivators, financial bonuses, key performance indicators linked to individual pay, are used quite regularly in business settings. They are effective if well used, but tend to crowd out individual motivations or may even encourage reckless behavior, as all those things which are not rewarded will be relegated to secondary considerations.
Combining intrinsic and extrinsic motivation is tricky. The safest path seems to be to rely foremost on intrinsic motivation and to use extrinsic motivators only sparingly.
The Magnitude of Performance: 10X?
Suppose that all internal and external conditions for individual effectiveness are given: What is the difference between the performance of the highest performers and the lowest performers?
An interesting narrative is given by Jeff Sutherland in his 20014 book “SCRUM”. Joel Spolsky, a software developer, compared the time needed to complete a standardized programming assignment at Yale University. Just focussing on those people who managed to get the top 25% of grades, he researched the time spent on the assignment:
The top 10% of performers needed 10 times less time than the low 10% of performers
The 10X factor was pretty constant over the years and classes
This narrative is showing what the performance differential can be in a laboratory setting. It is illustrative, but not more. In a business setting a quantification of individual performance is much more complex. Even for more routine jobs, such as call center agents, it is very difficult, as there are so many things that are hard to quantify and measure. In a normal line job measuring individual performance quantitatively is nearly impossible. What is the value added by an ordinary accountant? How does that compare to another employee, say in logistics? Therefore, in traditional business settings, one has to rely on qualitative, gut-based judgments of managers.
But two things are sure:
Even one good or bad decision of an individual might sometimes determine the fate of the company.
The sum of all tiny, daily decisions of all colleagues in a company does a lot to determine the overall performance of the whole company
So optimizing the work environment and management practices in a way to foster the conditions for individual performance is a sure winner. You might disagree with the conditions I laid out, but you absolutely need a yardstick.
Individual Performance Does Not Equal Team Performance
A question for you: Is most work actually done by individuals or by teams? That question may sound silly. After all, the sum of each person’s work makes up the work of a team. But here is another perspective: How much of work is actually already structured, in established processes and daily, habitual work practices and therefore does need much personal interaction? I guess the latter is actually the bulk of the work in most companies. I.e. my answer to the first question is: Most work inside companies is done by individuals and not teams. True team tasks, that require intense collaboration between people and can only be solved by their close cooperation, are rare.
I share that view with Richard Hackman, a professor who was specialized in the research of teams. According to Mr. Hackman, most departments are work teams. In a work team, work is parceled out to each individual by a manager, through job descriptions, processes and day to day delegation. Close collaboration, “a true team” as he calls it, is not needed.
Indeed, treating work teams as true teams is very wasteful. Investments in team building of ordinary work teams have no measurable benefits. None, nada, niente, aucun, gar nichts. Still, companies send their so-called “teams”, which are really Work Teams, to team building exercises.
Companies confuse work teams, which make up the majority of teams inside most companies, with true teams. What a waste of resources.
The preponderance of work teams in organizations highlights the need to have a consistent and holistic theory of individual performance in business. The one given above is my best shot.
Meet Emil and Marc. Emil just signed a contract to work for Marc. This makes Emil an employee and Marc a manager. With his signature, Emil has agreed to follow the orders of Marc. Disobedience is an option, but it comes with the risks of being fired.
Marc the manager points Eric to chop a stack of wood. By doing this Marc is using the most basic form of a management practice, the direct order. Next day, Marc orders Eric to stack the firewood on a need pile in that corner over there. On the third day, Marc is late. Eric sees a stack of wood, and being human and not an automaton, starts to chop it, like on day one. Without knowing, Eric has developed a job description for himself: “My job is to chop wood and staple it”. The job description is another basic form of a management practice. It spares Marc the Manager the time and effort to direct Eric. Unlike a robot Eric the Employee is able to see the work and do it, without being ordered. Marc may continue to supervise Eric, but he might find a better use of his time in carting the firewood to the market and sell it.
One day, after a heavy rainfall, Eric sees that the roof of the shack, where the firewood is stored, needs repairs. Without being ordered, he fixes the roof. What Eric did is to use his judgment of Marc’s interest and decided to act autonomously. Marc has not directed Eric to do that, but Eric has developed a sense of purpose in his work, and chances are that he feels responsible for it. Marcs comes back later in the day and wonders that Eric has not produced his usual stack size of firewood, but he sees that the shack is repaired. Marc may tell off Eric for not making the numbers, but he decides to praise Eric for having taken the initiative and prioritizing repairing the shack over his chopping duties. Thereby Marc has embraced another two basic management practices: Feedback and Delegation. Eric is no longer just following orders but he is empowered to do other things necessary to keep up the production of firewood.
Why has Marc opted to praise Eric and accept his autonomous acting? Marc, hard pressed to make living out of his business, see’s those management practices as being efficient. In his mind, Eric has saved him a lot of trouble, as wet firewood doesn’t sell. Marc may not know it, but he has developed the performance hypothesis in his mind that Job Descriptions, Feedback, and Delegation produce better results, than just ordering Eric the Employee around. Marc the Manager benefits from adopting those Management practices. Eric the employee likes being responsible, too, which is part of why these management practices are working. But even if Marc didn’t give a damn about Eric, he knows he would hurt himself by not employing these practices.
Over time Marc might decide to adopt other management practices, like
a regular, weekly meeting to discuss issues
providing a budget to Marc that he can spend on axes or saws
a bonus scheme based on Erics productivity
job sharing, so that Eric is assisting Marc at the market from time to time, in order to get a larger picture of his duties and exposure to customers
Annual objective setting and performance review to clarify high-level targets for Erics work
Marc the manager will introduce and maintain these management practices only if he expects that these contribute to the performance. Margins in the firewood business are so slim these days.
The Case for Constant Experimentation with Management Practices
Shouldn’t any company seek to emulate Marc’s way of working? Things like…
Adding new management practices if they work
Getting rid of those that don’t seem to work
Constantly adapting practices to the need of the business
In a business world that is ever-changing, why do we emphasize so much the need to act like a daring entrepreneur, who finds ever better problem-solution fits, but overwhelmingly fail to engage in experiments with the very ways we are working together? Instead of seeking to constantly improve our way of collaborating with one another, we focus hard on business models, productivity figures, financial performance.
Marc would see that fixation with direct business results as being silly. Results are important, yes, but they can not be enforced directly. Instead, they need to be approached obliquely, by working better together. If we can achieve that, results are not guaranteed, but they will come much more easily.
What is a business if not a sum of decisions taken at all levels of the company? If we can just increase the quality of decisions by some minuscule percentage point, isn’t a companies performance bound to increase? Better management practices result in better decisions result in better performance.
Management practices are like the underlying factors of a companies performance formula.
Company Performance = f (Strategy, Execution, Chance)
Strategy and Execution = f (Management Practices, Chance)
In other words management practices, the way work in done, influence a companies ability to come up with a good direction (strategy) and competent implementation (execution).
This sounds like a no-brainer. But there are three caveats with this logic:
Managers do not care too much about the performance of management practices
Owners care about performance, but can’t really observe the impact of management practices on performance
The empiric, scientific evidence of the link between management practices and company performance is weak
Manager’s Do Not Care so Much About Performant Management Practices
Marc the manager holds four distinct advantages over most other managers:
Direct Feedback: The impact that the management practices he adopts have on Eric’s performance are very direct
Underlying simplicity: The firewood business is simple. Causes and effects are directly visible
Small numbers: It’s just Eric the employee, not a group of employees or a host of departments to coordinate. This spares Marc the manager from the otherwise inevitable power and social dynamics
No agency problem: Marc is the owner and the manager. He is able to prioritize performance of the business very highly – his performance and the business’s performance are the same. Managers, who are not owners, quickly see their well being and the businesses well being as two separate things
No ingrained, legacy practices: Most managers join companies that have a certain way to do things, a certain management culture. It’s much harder to experiment with management practices if social norms are already firmly entrenched
For a typical modern-day manager, it is not only much harder to see whether his way of managing works better than other ways. On top of that, an employed manager does not even share the same passion for performance than an owner. Risk minimization by not sticking out one’s neck, social conformity and self-optimization might be more important than performance optimization. The fact that the performance of one’s management practices employed can’t be measured easily compounds this agency problem.
The result is that performance becomes a secondary concern while selecting management practices. Control is much more important.
Owners Can’t Really Tell What Management Practices Work
Owners care about performant management practices, don’t they? After all, it is their money that is wasted. But even owners care for performant management practices is limited:
Ownership might be diluted. If an ownership share is sufficiently small, influence is very limited.
The Agency problem, again: Managers, who are in day to day contact with the business know a lot more about the business they are managing than owners. Owners might employ a few checks on managerial powers here and there, but finally, owners have no option, but to trust.
There are other factors easily observable, like those found in the P&L or balance sheet. By their very nature management practices do not lend themselves to be measured in hard numbers. Humankind is excellent at measuring financial systems, but we suck at measuring social systems
The point that I am making is not that no one is not concerned with the performance of organizations. Indeed, there are many people caring about profits and corporate outlooks. The point I am trying to make is: Few people are making a major effort to influence the performance of an organization by virtue of its management practices.
Science found a bit of evidence, just a bit
Financial performance is a primary concern for any company. But it is usually tackled head-on by looking at market share, product portfolio, customer bases, competition, cost structures, distribution networks, business models etc. Management practices get into view only with hindsight: If a company is successful, it must have great management practices. Phil Rosenzweig, a professor at IMD in Lausanne, has written a whole book about the ex-post sanctioning of management practices. He named this the “Halo Effect”. Huge business books bestsellers like Jim Collins “Good to Great” or its predecessor “Built to Last” or Robert Watermans “In Search of Excellence” fell for the Halo effect. Great stories, but no scientific value.
But there are a few recent studies that imply a link between good management practices and a companies performance. According to one of those (Bloom et al 2011) management practices explain about 10% of the success of companies. And according to another study (Bloom, Mahajan, McKenzie 2011) that link is causal, i.e. management practices improved first, company results followed.
That is not overwhelmingly strong evidence. But this is only natural: We just can’t measure social matters with the same exactness as physics. Social systems are highly idiosyncratic things. Take for example the human invention of the stock market. The way prices on the stock market are determined is a result of the human social system, the value humans attach to the stocks listed. Despite hundreds of billions of investment, no one can predict stock values with any certainty. Great efforts are being made in analyzing stocks, but finally, all this effort is undermined because we suck at measuring social systems. It hard to predict human behavior with certainty. Social systems are even more complex than the individual human actor, so science is bound to fail. There are no social physics, no immutable rules. There are things that appear to work for a time, but that is no guarantee that those correlations will hold in the future.
Experimental Management
To sum up my argument:
There is a clear logical link between management practice and a companies performance. The sum of all decisions of all employees should make a great deal of difference to a companies success.
There is academic evidence of this link, but it is weak
Owners and Managers prefer management practices that work over optimal management practices. All sing the hymn of performance, but asymmetrical information, the pure opacity of causes and effects in social systems and individual incentives let them focus on the observable, largely financial facts, instead of the underlying intangible social performance of the organization
My point is:
If we can’t say what management practice is really working, why are nearly all companies keeping their management practices static?
Do such companies suppose they already found the optimum?
Those companies implicitly assume that there is nothing to gain from experimenting with management practices
Is it not silly that Lean Start-ups, Entrepreneurial and Agile Movements all have a strong emphasis on experimentation, but experimentation with management practices are of a (at best) secondary concern for most companies trying to become fit for the Digital Age?
Therefore, I suggest Experimental Management. If we don’t know what works best at that time, we need to try things, observe the effects and tune and tune and tune our way of “doing things in a group”, of managing.
We do not need big theories of Leadership and Management for this. We just need to experiment and watch. In other words, managers need to work empirically, not ideologically. Find out what works themselves and not following snake oil selling business book authors, leadership gurus or opinionated non-empirically focused consultants.
Liberation?
Experimental Management is a term that is slightly provocative to our cultural norms. First, we expect competent management that knows which practice works. Dabbling in management practices smells like incompetence. We want certainty. For certainty, we are ready to prefer the professional illusionist to the empirically driven realist.
Second, we shouldn’t subject humans to experiments. Manipulating humans is rightly abhorred. We value freedom and self-fulfillment.
My hunch is that experimenting with better ways to work, will lead to more freedom and more self-fulfillment in the workplace. Why? The only way to get better decisions is to employ the abilities and senses of all the people in an organization. And we can’t get that level of engagement without offering more freedom and self-fulfillment.
The arch-capitalist quest for performance might just end up liberating people.
The way most managers do their job is rather dull. It all begins with the very basic assumptions that managers have about their job. Most managers frame their job as being three things:
to lead some people
to make most decisions
to balance the organizational needs of performance with the needs of the ones performing
Basically, they think they are in charge. Which is perfectly right, only that they picture themselves to be in charge of the wrong things:
The Managerial Fallacy
Managers usually think of themselves as being in charge of a performance mission …but they are really in charge of getting people to do things.
This difference between these two frames is far from being subtle. Being on a performance missions triggers you to think in terms of the mission, to dissect it into its component parts, to reassemble it into a better organizational machine, and to place the workers to operate that machine. It triggers a rational process of solving a performance problem. This is exactly the thing we have been trained for at school and at universities. This way of working feels natural and comes easily to us. The frame is: “I am in charge of running this”. But it is wrong.
Analytical analysis is an optimal method to solve a mathematical equation, a physical, mechanical or most problem in natural sciences. Given sufficient information, you can rely on the stable causality of the natural laws to come up with an optimal solution. But an analytical approach does not work in social sciences. Here you never have all information, as the information does not lend itself to being measured well. Plus causalities are always hidden and unstable. You can’t predict individual behavior.
In such a much less predictable, social environment the best method to proceed is not an analytical one. It is an empirical one. You need to try things to find out the best way of doing things instead of assuming that you found the optimal solution. In social systems there is no thing as an optimal solution, there are only solutions that work better at a certain point in time. People and organizations are volatile. The whole business environment is more and more volatile in this digital age. A stable optimum needs to be replaced by neverending tinkering to always try to come up with a better solution.
Therefore the much superior frame is: “I am in charge of getting people to do things.”
This frame prompts a manager to:
tinker for a better solution, continuously
to lead people in such a matter so that they can do things better
to consider oneself as a manager of a socio-technical system, the performing organization, not of a mechanical device with measurable in and outputs
to understand the work of a manager as a craft. A craft that is to be perfected over time, through tinkering, try, error and learning
After all, management (or leadership) is about this: Getting people to do things. It is not primarily a problem to be solved by the manager. It is not constantly firing a barrage of orders or motivational messages, as this would be tiring and therefore ineffective. But it is about creating an environment where people do those things that need to be done because they want those things to be done.
That environment is built from of Management Practices which are often unlike the ones we commonly take for granted. Here is a comparison.
Management practices are the building blocks of the craft of management. There are hundreds or even thousands of management practices available. Many of those practices have their origins in the Agile or Lean Movements. But the goal is not to adopt as many advanced practices as possible. First, these are not necessarily better than existing ones in the context of a specific organizational challenge. Second, adopting too many practices means creating a highly regulated work environment. This is contra productive. The target is to create an environment where people do those things that should be done because they want to do those things. Keep it simple – allow freedom.
The Full Stack Manager
Let’s summarize this modern understanding of a more clever way to manage. A manager is:
the builder of environments
the provider of freedom
the one who connects the performance missions of an organization to the calling of the individual
the one who experiments with different management practices in order to find ever better ways to engage groups of people
If you continue on this line of thinking, an optimal scenario to run a sociotechnical system may be to even delegate designing, building and running this system more and more to its component parts, i.e. the people doing the work. By going down that path you end up with a self-managed organization, that has left behind the hierarchical way most organizations are organized.
While this is attractive to more and more companies – even parts of the likes of Daimler, Porsche, Unilever, and Michelin – not to talk of AirBnB, Netflix, Haier etc. – this is not a natural given end state. Hierarchy, as an easily understood, time-proven coordination mechanism has its merits.
Nobody can say where the optimum is for your organization. Nobody can say which management practices are best for your organization. But you can find it out: Tinker, you Craftsman!
A Master Craftsman in the trade of Management is what I would call a Full Stack Manager. One who knows how to run meetings, to know how to create transparency, to know how to make decisions, to know how to create a feedback and learning-rich environment etc.
So, why are managers (so often) dumb?
There are a number of explanations:
Peter principle: Everyone is prompted to her or his level of incompetence. Only the competent get promoted. But their career stalls when they are incompetent. This leaves most managers incompetent. This logical argument is a heuristic, that is hard to prove or to disprove.
Principle-Agent Problem: Managers may appear to act incompetent, but they really have their own agenda. This agenda might entail risk minimization (or – less often -risk-taking), personal enrichment or aggrandizement, or just having a good time. They should be taking care of the organization, though. Alas, the amount of information that the principal (a superior or shareholders) is always less than the information the agent (the manager) has.
Getting things done is more important than doing things great: Success in business is a function of doing the right things on a strategic level, good execution and a good dose of luck. It’s not fully correlated with good management practices. In fact, there are studies that suggest that just 10% of a companies performance is related to good management practices.In other words: You do not necessarily need good management to succeed. Survival is mandatory, performance is optional.
Human Nature: Power corrupts. We tend to warm ourselves in the shine of it, making us blind to things going bad and feeling entitled to the status quo.
All of this is true and there is not much we can do about it.
But what we can do to decrease our dumbness as managers is to reframe management from “a solver of performance equations” to a “Gardner of socio-technical performance systems”.
Or to say it in simpler terms: From a Scientific Manager to a Gardner of Sociotops.
___
Let me know what you think.
Sources:
I am such a sucker for recency bias. So here is what I read last and which therefore didn’t fail to influence this post:
Nissam Taleb, “The Black Swan” and “Antifragile“. Both great book if you want to learn the differences between physical and social systems
Phil Rosenzweig, “The Halo Effect“. If you want to know why 95% management literature are stories, but not science, read this. The bad thing is, you will be deeply depressed. The good thing is, re-read this article to cheer-up: Experimentation is the way to go, not dogma.
The other books I happened to rate highly on the Sources page
We attach the label “great” to persons who achieved outlying performance in certain areas through their efforts and talents. Malcolm Gladwell has analyzed such stellar performance in his best-selling book “Outliers” (see Sources ). He found that three conditions explained a lot of an individual’s success.
The Three Conditions for Great Individual Performance
Upbringing & Support: Few great persons would have been great without being raised in an education rich environment and without the support of others. Bill Gates, for example, had access to an advanced IBM computer at the age of 13, already in 1968, and his mother has been a director for IBM
The 10.000 Hour rule: It takes about ten thousand hours of deliberate practice to become a world-class achiever in a particular area. Bill Gates was able to clock those 10.000 hours quite fast, due to his early exposure to computers in 1968
Sheer circumstance, especially the type of selection process used to identify talent. Take elite Canadian hockey player as an example. They are disproportionally born in the first half of the calendar year, as the cut-off date to select players is the 31stof December. Players are selected by pro teams at an early age, being born is a substantial physical advantage that turns into a career advantage just because some administrative organization set the cut-off date arbitrarily to the last day of the year.
Only the second factor, 10.000 hours of deliberate practice is fully actionable. By practicing hard, challenging ourselves every day, we might achieve greatness. That is a message that aligns well with meritocratic and protestant work ethics: It is a call to work hard.
Working hard does not help in Business
The problem is: Working hard does not always help. More exactly, the truth depends on the field where one aims to be great at. If you aim for a career in gaming, music, and sports, deliberate practice is the key to greatness. According to a 2014 study[1]deliberate practice is by far the most important factor, the factor with the strongest link between the input (deliberate practice) and career success.
But deliberate practice would not help you much less if you seek a career in education: The strength of the link between deliberate practice and success is just about a fifth of what is sports or music. Other things are just more important, presumably, the upbringing and support, which might explain why being poor is such a sticky social condition.
Plus, the relationship between deliberate practice and professional career success is even weaker. There is still this positive relationship, but it is weak, about 1/20thof the relationship in Sports and Music and one-quarter of the one between deliberate practice and Education.
Seek Advice and Show-up to a Place where Opportunity is
So, if working hard not help, are we helpless to influence our chances to become an outstanding achiever? We are not. Statistical analysis is instrumental in telling us something about average probabilities. But everyone human being is unique and can influence probabilities through actions. While changing personal performance or fortune is hard, it is by no means impossible. Working hard still counts for something, if not as much as one would think is “fair” – if judged from a moral point of view. Here is what can be done to influence the other two factors that Malcolm Gladwell come up with:
Upbringing & Support: It is never too late to ask for support by others, be that individuals or organizations. It requires courage and the humility to listen to advice and take it in. The ability to listen to advice is a mighty asset. How many people have you met that were impervious to any advice and went on ahead anyway? If you met that kind of people, chances are that, whatever they went after, it did not end well. Even if you are a contrarian and do your own thing anyway, knowing the challenge what you are up against is an advantage.
Opportunity is not as God-given as one might think. If you lock yourself up in your four walls, if you do not show up and engage with others, the number of opportunities you will discover is limited. In sociologist, self-help and spiritual literature, there is the notion of serendipity. According to the dictionary “Serendipity is the occurrence and development of events by chance in a beneficial way. A random event that happens in the absence of any obvious project, which is not relevant to any present need, or in which the cause is unknown.” Serendipity cannot be forced, but it can be helped by moving into an environment “that gives luck the chance to occur.” Moving into such an environment can be a conscious step: “Luck favors the prepared mind.”[2]
The 4 Layers of Serendipity
Improving yourself through deliberate practice alone is unlikely to increase personal effectiveness in a business career. It helps a bit, but it is not decisive.[3] One is tempted to conclude that hard work is not critical for the advancement of a career either. But that would be pushing Malcolm Gladwell’s findings too far. After all, he explores the condition that allowed top performers to prosper in any domain, not just in business. He wasn’t out to give career advice for the ordinary business professional.
Being Effective in Business
The more relevant question is: What makes a person effective in a business context? That is a question that HR professionals ponder a lot. In order to hire the optimal candidate, HR professionals need to forecast the candidate’s success inside the organization. That is an arduous task. Personal effectiveness is very hard to measure. An excellent effort to do this measurement and forecasting in an academically sound manner has been described by Lazlo Bock, a director of HR at Google, in his book “Work Rules.”[4]The complexity of this subject does not lend itself well to generalization. But what is clear from Bock’s work is that it is not a list of characteristics that is a good predictor of success, but the results of a series of structured tests. Work sample tests deliver the best results for structured tasks with few dependencies. Cognitive ability tests, psychological tests and structured interviews, varied by the type of job, are instrumental in predicting performance for any kind of job.
There is no list of character traits that make a great coworker. There is only a list of tests that ensure that the mental abilities that are needed to succeed in an organization are there. These tests give the data points, that can be used in an elaborate hiring process that manages to weigh the data with subjective inputs from reviewers in a disciplined process.
A hallmark of a proper hiring process is that the odds that a candidate will succeed in a given organization are maximized. The tests devised by HR center around skills and cognitive abilities, as HR can only ensure that the personal endowments that a new hire brings into an organization are what is needed. But these two endowments are just a fourth of what is required for a person to succeed in an organization once hired. Based on a slightly adapted model of Malcolm Gladwell’s model, outstanding performance in a business can be pictured to be a function of:
A. The Endowments
Skills
Cognitive ability
B. The Organization
The richness of opportunity & support that a business provides
Personal motivation – as a precursor to deliberate practice, to engage and thereby investing time and personal cognitive abilities fully in the organization
C. Randomness: Sheer Circumstance
Stated this way, each person arrives in an organization with given skills and cognitive ability. These, in turn, have been determined by Gladwell’s three factors: Upbringing & support, deliberate practice and chance. But once a person enters the organization, her or his performance level will be determined by the organization. Consciously designed or not, organizational design and management practices will determine the richness of opportunity and support. And organizational design and management practices determine the ways that employees can find their personal motivation and tie that to their service of the company.
The Serendipitous, Learning Company
A company designed in such a manner can increase the odds that things happen serendipitously, as it allows its members to grow. To grow skills, to sharpen cognitive ability, to find new sources of motivation.
What is needed is an organization that is designed in a way to harness the power of growing individual capabilities. Not just a design to harness the individual capabilities that one has at a given point in time. Rather a design that recognizes the potential of human growth.
[1]Case Western Reserve University’s assistant professor of psychology Brooke N. MacNamara and colleagues have subsequently performed a comprehensive review of 9,331 research papers about practice relating to acquiring skills. They focused specifically on 88 papers that collected and recorded data about practice times. In their paper, they note regarding the 10,000-hour rule that “This view is a frequent topic of popular-science writing,” but “we conducted a meta-analysis It found that deliberate practice explained 26% of the variance in performance for games, 21% for music, 18% for sports, 4% for education, and less than 1% for professions. We conclude that deliberate practice is important, but not as important as has been argued.”
[3]Shockingly, the most important factor for professional greatness, to advance your career and yourself might be the company you joined. A company that provides you with opportunities to learn, grow and advance.
Unless we try, we do not learn. But if we try, we will fail from time to time. I tried a few things in my business life which did not work out. Things that are never mentioned in any official setting. Here are what I consider to be my biggest blunders.
My CV of failures
2000/2001 Not sustaining the Startup I co-founded for longer than a year We wanted to build a cloud solution for managing B2B contracts (Links2U.com) on marketplaces. Then the 2001 dot.com bubble burst. We were forced to earn money doing services and not building the product. But I guess the dot.com bubble is not really to blame: Our business idea was a bit too early & a bit too academic
2008/2009 Not being promoted to Vice President at Capgemini: Despite all my success in managing projects – my skill and interest in sales have been found wanting. I guess these observations are still correct.
2011 Not getting a Culture of Experimentation going: Who is to blame for today’s sales? Always the weather! I wanted to move beyond that and use experimentation and statistics to help to guide our efforts to run our European Store network. But the methods I used didn’t stick across the organizational silos – all reverted more or less back to the status quo ante after a year. There were always other things to take care of.
2014 Costly negotiation with Microsoft: In negotiating an important group-wide contract on Office365 I failed to invest enough time in building my next best alternative. The skillful negotiators on the other side saw through the veils I employed to obscure that fact. We overpaid.
Failures are embarrassing…
We all have been groomed for faultless performance. That is what schools, universities, and businesses aim for. We have, consciously or not, transferred the basic performance ethics of the machine to the human social sphere: If only everyone would do the assigned job without any fault, the organization would enjoy success. Cogs in a machine doing their jobs.
Therefore we hide failures instead of learning from them. We might reflect on failure silently but rarely choose to talk about them with other people in the organization. For the sake of keeping our outward appearance shiny and clean, we miss out on a great learning opportunity.
..but vulnerability is a must in high-performance organizations
We fear to be vulnerable. But Vulnerability is one of the core features of truly agile, innovative, liberated organizations. One can only truly engage with others, if it is safe to speak up and if ego is not in the way of a better solution.
Looking back, one can argue that I did not fail enough: I should have tried more often and aimed higher. I could respond to that: I did try often and aimed high, but I just had success more often than I failed. Alas, that would be a lie. Careers in traditional businesses are made more by avoiding failure than by seeking success:
A failure makes a powerful narrative that may destroy careers. A success is often not more than a statistic.
So the better, time-tested career tactic is to not try too much.
Battles not picked
A second, lesser class of failure could be those times where I might have picked a battle but did not. These are more numerous.
Not pushing the envelope in a major global implementation. Instead, I choose to support it but husbanded my energy.
Not facing up to a company crisis and help to turn around the company at all costs. Instead, I choose to cut losses and leave.
Not transforming a company into a fast, real-time driven business with a masterful supply chain. I weighed benefits, costs, and risks and walked away from this vision. I still deem it feasible, but not in every circumstance.
Not driving google cloud adoption all over the company. Instead, I choose to focus on customer demands, which might have been short-sighted.
Success lies in the skill of knowing which battle to fight, and which to avoid. I might have been clever to avoid those battles. Or not. One will never know until one tries.
Failures are Silent Evidence
I think that people should not only be described by the things they have done and succeeded. Failure is an integral part of what a person is. Failures are silent evidence. Being open about it, without “humblebragging”, might be beneficial for everyone around.
Are you willing to be vulnerable?
___
This blog is about finding better ways to manage organizations in this more and more digital age.
Employee engagement matters. Can we agree on that? Ok, so why is your organization not measuring it? Is it, that management is too afraid of the results? Except for ignorance, I do not know other reasons, do you? But boy is that silly! That’s all the more astonishing, as you can criticize modern management practice for much, but not for not being analytical, measuring and evaluating enough. So how on earth do most organizations neglect to measure how their arguably most important resource is utilized, the worker itself?
I can’t see any other explanation then just blank denial of reality. This fear of managers to get to know what is really going on invariably leads to:
If you know any other reason except ignorance or fear, dear reader, let me know. Fear of results, fear of feedback, fear of transparency, fear of impotence to do something with the results, fear of sticking one head’s out and being attacked by the rest of the organization for being seen to “weak on the worker.”
Yet I dare say that in 90% or more of organizations, employee engagement is not measured in any meaningful way. And if I say meaningful, I mean actionable. In some corporations, there is the odd HR survey, which results are never seen except at senior management level and with actions that rarely go farther than more investment in “one size fits all” team building, work-life balance initiatives, or shallow employer branding exercises. Shallow and disingenuous actions at best which only achieve one result: These shallow, token actions based on pointless surveys make workers cynical over time.
It takes guts to face reality. And it takes an even greater manager to devise actions that improve things. The timid or impotent manager should stay away from measuring employee engagement. Let me explain.
Are you sure you can sustain an opportunity-rich work environment?
Motivation is the reason for people’s actions, desires, and needs. A strong motivation is a prerequisite for people to be highly engaged. Thousands of books have been written about motivation, as it is a complex, important and even crucial feature of work and life.
There is a critical caveat, which degrades the effectiveness of all motivational exercises drastically. It’s all good and well to be motivated, but all the motivation in the world is of no use if you do not have the chance to act on it. The Count of Monte Christo, in Alexandre Dumas novel, might have been very motivated to take revenge, alas his motivation was not actionable until he got out of his prison cell.
Motivated employees face the same problem. They might arrive at the office all fired up after a highly energizing seminar or workshop. But all their motivation is worth nothing if they are not allowed to act on it.
Motivation plus action equals engagement. Motivation is worth nothing if not connected to action. Motivation itself is useless if a person does not have the opportunity to act on the motivation.
A managers job is to supply opportunities to engage. If a manager does not feel she or he can do that, measuring engagement is not needed at all. It is a waste of money which only produces cynicism. Being a gutsy, daring manager only does damage if not backed up by competence – and a sufficient mandate to do things differently.
The IEQ – a practical way to measure engagement
The “Inclusion and Engagement Quotient” (IEQ) has been proposed by Henri Lipmanovic and Keith Candles in their 2014 book “Liberating Structures.” While there are many ways and surveys to measure engagement, this survey has some advantages:
It is simple & efficient: Just 15 questions to ask
It is centered on engagement in meetings, not on who people feel about their jobs
Because of this focus on meetings, it is easily actionable
Besides that, it is aptly named IEQ, a combination of IQ (Intelligence Quotient) and EQ (Emotional Intelligence Quotient), two popular ways of thinking about individual resourcefulness. It’s just a name, I know, but it is catchy.
The IEQ is based on a standard list of questions that are to be answered in an anonymous survey, for example online via SurveyMonkey or any other polling tool. Each question is given with an ordinal ranking from 1 (never) to 10 (Always). Here is the list of questions:
The result of this survey can be pictured in a diagram depicting the cumulative percentage of people who are engaged (Y-Axis) and the one to ten rating level (X-Axis). For a typical low engagement company the curve would look like this:
The total level of engagement of the surveyed group of people is the integral beyond the curve, which can be expressed as a percentage of the total space beneath the curve should all employees been fully engaged at level 10. A low engagement organization might have an engagement level of 20%, while a highly engaged one might be at 80%.
But there are significant downsides of the IEQ:
It lacks academic foundations. Basically, it has been created by its authors with the intention to show the potential that good meetings have over traditional ones
It is just about meetings, not about individual job conditions, the relationship to a manager or peers, or general organizational conditions
Each question is quite long and requires some concentrated reading
These are significant shortcomings Let’s contrast the IEQ to the Gallup Q12 survey, the “gold standard” of engagement surveys.
Alternative: Gallup’s Employee Engagement Study
Gallup, after “30 years of in-depth research involving more than 17 million employees” has settled on 12 questions to get to the heart of employee engagement:
1. I know what is expected of me at work.
2. I have the materials and equipment I need to do my work right.
3. At work, I have the opportunity to do what I do best every day.
4. In the last seven days, I have received recognition or praise for doing good work.
5. My supervisor, or someone at work, seems to care about me as a person.
6. There is someone at work who encourages my development.
7. At work, my opinions seem to count.
8. The mission or purpose of my organization makes me feel my job is important.
9. My associates or fellow employees are committed to doing quality work.
10. I have a best friend at work.
11. In the last six months, someone at work has talked to me about my progress.
12. This last year, I have had opportunities at work to learn and grow.
Like the IEQ survey, all questions are ranked on an ordinal scale and are to be answered anonymously. This, the “Q12 Survey” can be bought as a service online, directly from Gallup. The tool delivers all the neat looking graphics to illustrate the result.
The downside of the Gallup study is that it is not very actionable. Now, Gallup would argue with that. As any fine consulting company, they have a list of proposed actions in store, for each and every point. But the thing is, it is the very holistic nature of the Gallup study that restricts its usability at work level. It gives a very good holistic view, but at the expense of specific insights into any of those categories. In other words: It serves the needs for information of the board better than the needs of the frontline manager.
Actionable vs. Holistic Survey: The Case for the IEQ
Therefore, if you are a first line manager, I suggest trying the IEQ. Its limited focus on the way the individual feels about her or his role in meetings delivers actionable results. Moreover, Meetings are where people discuss every important issue of whats going on in an organization. New, improved forms of running meetings, that result in more enagaged co-workers are a catalyst for improvement in every other field.
There are lots of other employee engagement surveys out there, provided by companies or academic institutions. To sum up, the points that I like to make is:
Measure employee engagement. There is no excuse to neglect this
If your company does not allow you to measure engagement or there is no chance of turning insight into action: Consider the odds of these impediments vanishing in the near future. If the odds are bad, consider quitting, as the work environment may be toxic.
Use a survey that delivers actionable results. There is no point in measuring anything if learning is not followed up by actions
So do not be a wimp. Face up reality and measure employee engagement and do something meaningful with the results.
It is true that people can be actively engaged no matter if engagement is measured or not. But it certainly casts no good light on an organization if it turns a blind eye to the question of employee engagement.
IEQ: Henri Lipamanovic & Keith Candles “The surprising power of liberating Structures: Simple Rules to unleash a culture of innovation”, 2014, p. 37ff.
Hire the best people, give them clear goals, give them the authority to achieve those goals, and then you get out of their way
Accountability is holding someone’s feet to the fire
If everybody is responsible, nobody is responsible
A company is a Sociotop of performers and slackers, introverts, and extroverts, engaged and apathetic, liers and uprights. In this wilderness you want people to be motivated and engaged. The first step is to hold any of these personality types accountable for results.
Accountability is an Individual Commitment
Accountability is a necessary condition for any form of organization to succeed. One of my all-time favorite probing questions is “Who is feeling accountable?”:
If no one is feeling accountable, get one. Getting someone accountable is more than just assigning accountability. The person must feel a sincere desire to live up to that accountability – the person must commit as wholeheartedly as possible
If no single person is feeling accountable, get one person accountable. Shared responsibility – a shared urge to achieve something- is valuable and should not be done away with. Still, if push comes to shove individual responsibility is much more powerful in most situations
If no one can be pinpointed to be accountable, the solution is often not to declare a critical thing that must be achieved a shared responsibility but to redefine the problem to a higher level of abstraction. Usually, this means giving out a broadly defined mission and leaving the way how the work is done to the accountable person
This is a recipe for organizational success that has been proven and proven again since time immemorial. Individual rewards and punishment are still vital, even in the digital revolution.
Making Teams Accountable
In classic organizations, that are high on hierarchy and low those structures supporting self-management, making teams accountable does not work. There is simply not enough alignment of purpose, not enough trust and relationship capital around to make shared commitments work. Therefore, a manager and not a group is made accountable for any more significant task.
In more self-managed organizations, that have invested in the 10 Habits of Organization, making teams accountable becomes a real option. The need for accountability does not go away, but a team pledge becomes as good as an individual pledge to perform.
Making teams instead of individuals accountable is an option, once a high level of maturity, say level 3+ on the scale of liberated organizations is achieved (see 4 Steps to Release the Full Potential of Organizations).
An Accountable Environment is a Tough, Results-Oriented Environment
Holding people accountable is a tough job: Using carrots and sticks in a manner that benefits the organization, in the long run, is an art. It requires personal impartiality, empathy, and a long-term perspective.
Rewards and punishment do not need to be material (e.g., money or career progress). Often immaterial rewards and punishments work better. Even the pain of having other people let down might be significant punishment for some people. Turn up the heat by highlighting that failure through individual feedback or a team based post-mortem session. The same goes for rewards. There is power is the simple act of giving praise for good work in public.
It takes an active, engaged manager or co-worker to do the straight-talking. But that is the essence of holding people accountable. In traditional settings, managers are somewhat left to their own devices to do this. In more liberated organizations structured meeting formats (76 Agile Workouts & A Fish) help to deliver feedback regularly, in an environment where it is ok to talk about feelings and failure.
There is No Good Alternative to Tough Accountability
I challenge you to think of any workable alternative to accountability. Taking away accountability means that you end up with two scenarios:
Seldom: Hippy island, campfire Comfort Zone where people have a good time, and nothing gets done
Most of the time: Working zombies, 9 to 5, “I am in for the money,” Apathy Zone where people have a bad time and work results are uninspiring
There is no alternative to high accountability in human groups that want to achieve something of higher value. But Accountability alone is not enough. It must be combined with Fairness, or as Edmondson puts it “psychological safety”: A climate where people feel free to express relevant thoughts and feelings.
Harvard Business School Professor and psychologist Amy Edmondson sums up the zones in a matrix.
Tough guys, this might come as a shock to you: Psychological safety is universally recognized in the academic literature as being the most fundamental requirement of high performing teams. It’s the number one of the 5 criteria that make a good, high performing team (see Good Managers – Good Teams: Lessons from Google).
Beware of Fear induced Accountability
Accountability can be created by fear.
Harsh punishment of failures, by firing, demoting or shaming persons fosters accountability, which is a good thing – is it not? People will certainly take care not to let their responsibilities slip again. This recipe for accountability has been tried successfully over thousands of years.
And no, strengthening accountability by instilling fear is not a good thing. By focussing single-mindedly on accountability and employing the methods of fear, people will:
Cease to speak-up
Cover up failures
Choose unambitious, risk-free targets
Seek to keep in the shadows: hiding at their desks
Feel the emotional costs
Accountability is tough, and it needs tough actions – but fear will kill off innovations, learning, and performance.
Combine Fairness with Accountability
Instead of using fear with all its unintended collateral damage, use fairness. Fairness in the organizational, managerial context has three practical dimensions:
A. Distinguish the type of failure
A punishable offense is any failure that is not based on well-intended efforts. The more complex or experimental work-environments are, the more failure is unavoidable. Alas, with the digital revolution work is getting ever more complex and experimental. That means that failure should even be rewarded, as long as the effort was well intended. Thereby risk-taking is incentivized, a fundamental requirement for any entrepreneurial organization.
B. If faced with a failure, be proportionate
Small failures should be embraced as opportunities to learn. Learning occurs through feedback or group reflections with the target of understanding the root cause. Some failures are just a fact of life and can’t be prevented in future, but the totality of all failures an organization makes gives it a good chance to learn and improve.
Big failures are bad. But even those should be framed as opportunities to learn. Consequences need to follow and might be harsh, but always based on the factual, cool-headed analysis of what is to be done to prevent or mitigate those in the future
The credo of iterative ways of working is powerful in that context. By working iteratively towards a target, in small increments, failure can be held small, and learning is immediate. The number of big failures can be reduced. That is the very concept of agile projects methods such as SCRUM or modern Start-up methodology (e.g.,missiles Lean Start-up).
C. Be impartial
Handling failure is always nasty for everyone involved. For a manager (or a self-managed team) this means the willingness to face the facts and dish out the hard truth in an impartial manner.
It takes courage to stand proud and upright on the deck in times of failure and crisis. But standing on the deck, you must, in order to direct the ship.
Even in more liberated organizations, this courage is hard to summon. On the one hand, the level of trust and caring enables much more insight, but on the other hand, people are reluctant to act cool, analytically towards people known well to them.
When it comes to privacy and accountability, people always demand the former for themselves and the latter for everyone else. (David Brin, Author)
Yet Fairness means different things to different people. Like Truth, fairness is often a high minded concept, as Rawls has shown. In the toolset of Liberated Organizations some tools help to push things towards fairness:
The way feedback is given and built into daily work routines
The way work is transparent
The way meetings are run in an inclusive manner
The way teams are set up to resolve tensions themselves
The true north that a hierarchy of purpose gives each team and the whole organization
Nothing might be ever genuinely fair. But by building in management practices that implicitly foster fairness, the sense of fairness can be increased for everybody.
The Learning Zone
This is where high accountability meets high psychological safety.
A workplace is the more psychologically safe, the more a team member would agree with the following statements:
If you make a mistake on this team, it is dealt with constructively
Members of this team are able to bring up problems and tough issues
People on this team sometimes do not reject others for being different
It is safe to take a risk on this team
It is not difficult to ask other members of this team for help
No one on this team would deliberately act in a way that undermines my efforts
Working with members of this team, my unique skills and talents are valued and utilized
In short: A climate where people feel free to express relevant thoughts and feelings is one where the perceived chances of being yourself and straightforward, without being subject to negative consequences, are high.
Intellectually leaders may endorse psychological safety and the voice and participation it enables, but it is difficult to forgo the raised voices or angry expressions that signify dominance. And for the coworkers is more natural to flee into the safety of silence.
Psychological safety does not imply a cozy environment. On the contrary: Make an environment too cozy and groupthink follows and performance drops. There is a natural tendency to end up in a comfortable environment once you encourage psychological safety. We are primed by Evolution to value warmth, trustworthiness, and morality more than competence. Evolutionary, the intents of others are more critical for survival than the other’s competence. People with evil intends are more dangerous than incompetent humans. Still, America, you shouldn’t let a world-class incompetent get access to missiles that could destroy the world several times over…
The Learning Zone:
It’s safe to speak up
It’s safe to admit failures
It’s safe to ask for help
Every failure is framed as an opportunity for learning
But consequences are still tied to results, especially if the effort has not been well-intended
How to Change from one Zone of Engagement to Another
The Apathy Zone is the one dominating most companies today. With disengagement at about 85% of the workforce (according to a yearly, long-term global Gallup study) withdrawal is rampant. Whats even worth, this disengagement level is not different between work and management level: Only 15% of Managers are engaged.
So what is to be done to engage workers and get them out of the Apathy zone?
Moving an organization towards a comfort zone does not engage anyone. It helps social well-being, but not economic results.
Using fear to spur people into action is much more effective. Results will come from management by the time-proven approach of management by fear. There is a human cost to this, but economic results will improve compared to apathy or comfort.
The trouble is: The more an organization needs to use the intelligence, creativity, and willingness to experiment and improve the status-quo, the less able management by fear is able to produce positive results. Management by fear violates the fundamental foundation of high performing teams: Psychological safety.
The silver bullet is to use the principles of Liberated Organizations (The 10 Habits of Liberated Organizations) to get from Apathy, with low Accountability and low psychological safety, to high Accountability and high psychological safety.
The downside is: The path towards high accountability and psychological safety is a journey. It can’t be done at once and has to be done in a process. Waypoints for this journey are the maturity levels of Liberated Organizations (see 4 Steps to Release the Full Potential of Organizations)
To be an idealist is a great asset to the world as it takes a non-conformist to change the world. But the graveyard is full of – mostly young – idealists whose ideas fell victim to the harsh realities of the status quo they were (naively) trying to change.
The whole Agile Movement is an idealistic movement. A movement of smart people who want to change the way people collaborate into a more liberated, engaging and fundamentally more humane way. In this effort, the Agile Movement has much better chances to succeed than many other idealistic endeavors, as it appeals to the profit motive that is so predominant in today’s business world. The obvious success of Silicon Valley and those liberated ways of working provide companies with a justification to try those high minded agile management practices. In other words: The profit motive is a strong reason to embrace Agile.
But still, the odds are steep, and the fight will be one for generations. Let me explain why.
Being a Great Company is Optional
Peter Drucker listed the three things that a company really needs to be great.
A company can only exist if it serves a customer need by supplying a product. This is mandatory. In contrast to this, having a great company culture is helpful but not required to build products, good economic results or to simply survive as a company in the long run:
A company may survive quite comfortably for a long time if the competition is as badly organized as it is
A great culture improves the odds of building a great product, but you might end up with a great product just by chance even with a mediocre culture
The law of high numbers is at work here – provided that many try, some will get lucky
According to economic theory, competition will come in the long run and uproot the underperforming companies, simply because there is a profit to be made. This might be what is happening today in the digital revolution, but this process takes time.
The Status Quo is far from abdicating
Agile or Liberated companies (as I prefer to call them) have great working cultures. They are, therefore, systematically more likely to achieve great results than companies running a command and control model. But is that enough to win against the status quo en masse? Here are some reasons why the command and control paradigm might still win:
More and more Start-ups are sold directly to corporate investors. Mostly, they become a part of the established way of doing business thereafter
Every generation, even the youngest, is still primed for command and control. The Education system is still built on conformity to hierarchical norms
The economy gets more and more geared towards monopolies or oligopolies. It is the very nature of the platform and digital economy that the winner takes all benefits (e.g. Amazon, Google, Facebook). By their very nature, the dominant strategy for monopolies and oligopolies is to exploit their customer, as this is a much safer way to compete than risky innovation
Income inequality and the rise of the new right in global politics (e.g. Trump, Brexit) and of autocratic leaders (Erdogan, Orban, Al-Sissi, Putin) will not leave economic structures of the companies unaffected. With the suppression of free speech in the political realm, facts becoming optional alternative facts and filter bubbles companies will not be able to hold a space for truthful and open speech, two core pillars of liberated companies in jeopardy
The prevailing mindset today is that of shareholder value, which is centered on making profits no matter what while still being legally compliant. With Liberation, managers got to pick up a trick: In order to achieve profits, it is better toapproach the profit target indirectly, obliquely: Do not go directly for the Sale or the cost cutting but manage by values. Sales and efficiency will follow.
In total: Not a pretty picture- the Imperial forces are strong, young padawan.
What can be Done?
The most often heard criticism of Liberated Companies is that it takes an enlightened benevolent dictator for it to succeed. A leader who holds the space for the values of the Agile Manifesto, for the 10 Habits of Liberated Companies and who allows people to implement Agile management practices.
That kind of leader is hard to find. Plus, an organization running on liberal principles is inherently unstable, once its top leader changes (or changed her mind). This instability is even greater in Liberated Companies than in Command & Control Companies. Things like trust, open speech and individual autonomy and freedom to act are very fragile things, time-consuming to grow and very easily destroyed. In contrast to this, command and control organizations are much more stable: Everyone knows the rules, the direction might change with a new leader but the way work is done is almost never changing to a significant extent. People might need to learn a new trick to please their superior, yes. But not much more.
As long as there are private property rights, people remain entitled to run their companies (or delegate running their companies) the way they or the stock market wants. This won’t change over a foreseeable period.
Hold the space, young Padawan
Let me explain why I still think that liberation is worthwhile:
Every period of Liberation is likely to produce superior economic results
Everyone involved in a Liberated Organization picks up skills and mindsets, that will make it easier to work on a higher level for her at any point in time in the future
With every agile practice the DNA, the organizational memory of the Organization, evolves. A part of this DNA might become inactive for a time, but it can be reactivated
Meanwhile, we Corporate Rebels, Management 3.0 enthusiasts or Holacracy champions, need to work on achieving a tipping point. There definitely is momentum for Liberation within even the conventional business community, and the Liberation movement is getting at least nearer to a Tipping point:
There are more and more important multipliers embracing the values of Liberated Organizations, like for example Management Thinker Gary Hamel or Microsofts CEO Satya Nadella.
The staying power of the leading figures (e.g. Brian J. Robertson, Jurgen Appelo or Frederick Laloux) is strong and their number of energized followers is expanding
Liberated Organizations have all the hallmarks that deliver a deep sense of motivation to individuals: Innovation, Self-Fulfillment, Human Betterment and even Profits and Efficiency – what a package!
This package might feel too good to be true. But many inventions made people feel that way. Liberated Organizations are a social invention. Social inventions take more time than technical inventions to take root. But it might propel humans to new heights by enabling humanity to use our collective intelligence more systematically than ever before.
So young Padawan: Hold the space. Embrace an Agile Mindset. Fill organizations with the 10 Habits of Liberated Organizations. Management Practice by Management Practice.
