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Silicon Valley Clowns and their Fanboys

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

scc.png

I guess you can add to this list.

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

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

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

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

B. Snake oil traders selling to the Hinterland

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

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

Good luck with that!

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

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

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

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

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

Face the deep challenges… or else

So the deep challenges are

  1. Building companies that last and avoid instititional sclerosis
  2. Learning to see everyone as Knowledge Worker
  3. Step away from the Cowboy Style of Leadership and becoming a Servant Leader

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

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

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

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

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

___

Sources: 

Here are some legacy posts which you might find helpful:

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

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

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

 

 

 

 

 

 

 

Adopting Self-Management: Big Bang or Baby Steps?

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

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

bsvsbb

Baby steps: Agile Work-outs

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

uu2

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

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

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

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

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

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

Big Bang: Revolutionary Designs

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

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

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

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

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

Conclusion

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

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

Is there a middle way?

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

What do you think?

___

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

cXm

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

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

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

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

Screenshot 2017-12-15 12.47.48.png

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

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

Screenshot 2017-12-15 12.47.07

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

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

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

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

Screenshot 2017-12-15 12.49.16

Conclusion: We just started exploring collective Intelligence

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

Maybe.

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

  • better results,
  • more accountability,
  • and more engagement.

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

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

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

This is what I think. What do you think?

___

Sources:

 

 

 

 

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

Sometimes I wonder how I ended up with such an interest in Self-Managing Organisations.
I spend the last 20 years in a career in global management consulting, starting up two start-ups, and working as a Chief Operating Officer for a fashion company. My interest in organization and management theory has always been keen, but I felt my know-how was getting a bit rusty.
Then, late 2015, I finally got the chance to update my thinking. I started with wanting to understand Digitalization better, and over time I realized that it’s not about business models, fancy applications, disruptive technologies, Design Thinking, Agile Practices or Lean style experiments. That is all good and well. But beneath that, there is a common denominator: Knowledge Work.
mj2.pngOh yeah, good old Knowledge Work. That’s what I considered my specialty over the years, anyway. But the more I read, the more I doubted that I am really as learned on the subject of managing Knowledge Workers as I thought. After all, I had a career. I needed to solve issues, fit into companies and social cliques. There was only so much time for going into depth.
Now, the more I learned about Knowledge Work, the more I understood that it’s really Autonomy and Purpose which drives performance:

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

In ended up with the question: Which form of organization is the one allowing utmost Autonomy and utmost Purpose? It is the Self-Managed Organization.
Becoming an advocate for self-managed Organizations befuddled me. After all, Self- managed organizations smell like communist habitats, like idealistic greens communes where nothing is ever decided, and endless discussions are the norm.
But I learned: Digitalisation needs Self-Management.
Moreover:

All Knowledge-based Work Needs Self-Management

Don’t take it from me. Take it from the greatest Capitalist of all Capitalists: Ray Dalio has arguably been the worlds most successful Hedgefund Manager for the last 4 decades. He is worth 15 Billion and managing a 150 Billion Euro fund called Bridgewater.
40 years ago Ray wanted to make money. He had a knack for the stock-market but he, like so many others, couldn’t consistently beat the market. So he studied harder and harder as an individual, only to understand, that an individual’s perception of the world is so prone to bias, so limited in its perception of the world. Time is too limited, senses are too weak, memory is too limited, and the workings of the mind are too fallible.
rj3.png
As a Hedgefund Manager, the key to better performance is making better decisions. But if an individual is so limited in its decision-making ability, why not tap the resources of other minds? The formula to do that is, Ray found out, is to create a working environment where people can speak their mind freely, honestly and where everyone has access to best and complete information as possible. It is a work environment built, as Ray Dalio puts it, on “Radical Truth” and “Radical Transparency”. On these two principles, he founds his central idea for Bridgewater, the “Idea Meritocracy”: A workplace where everyone can be at his best, where the best ideas prevail, not just the ones of the superiors:
vv
But Bridgewater is not a self-managed organization per se. There are lots of components which are clearly hierarchical. But its very essence, the way decisions are made, is clearly liberated from all Hierarchy.
Just take a breath and let it sink in: The worlds leading, 150 Billion$ Fund is running on key principles of Self -Management! It can’t get any more capitalistic than a hedge fund. For Ray Dalio, it has started out as a journey for more Profit, but it is now a journey to make people whole, to treat them as adults.
Profits were key. People were an after-thought.
Now, People are key. Profits will follow. 
Because it makes business sense & because it provides fulfillment – not just for Ray.
There is a lot of original, quirky and interesting stuff in his 2017 book “Principles”. I will explore that in another post. Here is a teaser:

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

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

 
 

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

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

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

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

mj2.pngOh yeah, good old Knowledge Work. That’s what I considered my specialty over the years, anyway. But the more I read, the more I doubted that I am really as learned on the subject of managing Knowledge Workers as I thought. After all, I had a career. I needed to solve issues, fit into companies and social cliques. There was only so much time for going into depth.

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

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

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

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

But I learned: Digitalisation needs Self-Management.

Moreover:

All Knowledge-based Work Needs Self-Management

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

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

rj3.png

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

vv

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

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

Profits were key. People were an after-thought.

Now, People are key. Profits will follow. 

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

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

__

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

Sources:

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

 

 

Delegation on Steroids

The best thing about being a manager is that you get to decide. You call the shots. It is thrilling to use that power to get things done. And if you want to get some bigger things done, things outside your assigned areas, you just have to convince a limited number of other managers to go along. Not everyone, only those managers relevant to a more prominent initiative. Thereby a manager is able to come up with decisions decisively, speedily and without spending too much effort on the decision process.

But here is the problem: How does a manager know what is actually “good” for the company and for people? In reality, it is often dangerous to rely on an individual maker:

  • Analytical Errors: The Assumptions and Analysis that lead to a decision might be flawed. Too few checks might have been in place that would have prevented this faulty reasoning.
  • Insufficient Information: Accurate perception is hard and very time consuming
  • Biases: Every Individual is subject to inherent biases. It is just the way the mind works.
  • Insufficient Time: With a multitude of obligations, the incentive to take a shortcut is high: “I feel it is right. How can I be wrong? So let’s go for it, now!”
  • Reality is complex: There are many situations where the tendency to do good doesn’t help at all, as all options might be grey

Out of this list, the most important killer of good decisions is time. Given enough time, you might get rid of all logical errors, get all information from all the different perspectives, rehearse the decision to remove biases and reduce the complexity of situations. Alas, there is never enough time.

LT2.png

So what can be done to make better decisions? Here is a list.

It starts with Delegation

Delegation is the assignment of responsibility to a subordinate to carry out specific activities. The larger the area delegated is, the more time is freed up for the manager. The opposite of Micro-Managing is Delegation.

Delegation might be the best tool to let people develop and learn. In fact, most management writers think that Delegation is the one best tool a manager has. Manager-tools.com names it one of the three foundational skills that a manager must have, besides running one on one meetings and giving feedback.

Job descriptions are nothing more than a tool for a permanent delegation. But what is most commonly defined as Delegation is the case by case, temporary assignment of responsibility for some minor purposes, which might include some minor decision- making authority.

Delegation is a skill. It requires the mastery of giving briefings, setting targets, remaining hands-off during the execution, giving feedback, etc. There are lots of ways to get it wrong.

The more Delegation is practiced, the more a company…

  • moves from Command & Control towards Mission Command
  • moves from Hierarchy to Self-Management
  • is able to relief Managers from noncritical tasks towards high value-added tasks

Let’s have a look at different options managers have to come up with decisions.

steroids

More on this graphic see: 4 Steps to move Companies towards Life.

Beyond Traditional Delegation

There are three main ways to move beyond traditional delegation:

  1. Collaborative Leadership practices, which still rely on a manager as a central decision maker
  2. An Appointed Decision maker to whom a significant and specific decision making power is delegated by a manager
  3. Voting techniques for decision making by groups

1. Collaborative Leadership Practices

With delegation, some, mostly minor choices are offloaded to subordinates. Significant choices do still need to be made by a manager. Here is a way to make those decisions as a manager, but involve everyone affected in a systematic process.

In his 2013 book “Flat Army” Dan Pontrefact comes up with a framework for collaborative leadership. One aspect of his work, the “Collaborative Leadership Action Model,” describes how a leader can get others to get more engaged in the decisions and actions that she makes.

clam.png

What this 6 step model is highlighting is the need to involve the impacted people in all stages, before and after the decision has been made – and to be truthful and forthright in the following up.  I think it is a great way to get started on the way to become a collaborative leader and use the wisdom of the crowd.

2. Appointed Decision Makers

Taking delegation one step further, beyond execution, is the technique to appoint a decision maker on a case by case basis. This is a pretty radical step, as a manager needs to move beyond today’s prevailing mental model – the all-knowing manager – who knows best.

To appoint a decision maker is to make oneself step aside, to be on the sidelines, like a coach in a sports game. To not intervene in the decision process, and to accept the decision made by a subordinate is tough. After all, making decisions is at the very core of the self-understanding of most managers today.

Niels Pfläging in his short book “Organize for Complexity” provides a four-step process how to do this:

cdp

This gets tougher the more significant the decision is. If it’s just, for example,  the selection of office furniture, it might be easy. But picture delegating the decision for the procurement of a million dollar system. Any Manager delegating crucial decisions to sub-ordinates makes herself vulnerable to attacks. The Manager can be seen as weak, soft and not doing his job.

Appointing Decision makers on a large scale cannot be made in an organization which culture is stuck deep in the hierarchical way of working.  Where micro-managing is the norm delegation is usually frowned upon. A company must have embraced the “Mission Command” management style before subordinates can be appointed as decision makers for decisions that maker. Otherwise, the immune system of an organization will attack the “over-delegating, passive” Manager.

3. Simple and Advanced Voting Techniques

Voting! Pah. This is public sector stuff. It is not something we do in business. A manager decides, and execution starts. It is as simple as that.

But wait a minute:  Decisions by voting are not as strange as you might think. It is the method of choice to run the board of directors or supervisory boards, where decisions are made by voting in compliance with the statues of a company. Or think of typical steering committees, where different managers of different parts of the organization have to come up with joint decisions through consensus, the most demanding form of voting.

In fact, voting is involved in a lot of what business does. It is just not always explicit. Take for example a manager proposing a particular action and then discussing it with co-workers. By doing so, the manager is taking a measure of the constituency. People are voting by giving their opinions. This can be pictured as an informal way of voting, albeit with a non-binding result. Of course, there are hard-nosed managers out there, who make decisions on their own. But there are those Managers who know that lonely decisions are more likely to fail in execution, too.

Why not making more decisions through explicit voting?  In a team setting, this is already happening in today’s companies as agile practices such as SCRUM are adopted. Within SCRUM, there are autonomous teams who decide by consensus within the rules given by method. And there is a referee, called Scrum Master, who mediates conflicts.

In an organizational setting, voting needs the same:  Rules and a Referee. There are two options:

A. Voting controlled by a Superior

For small decisions, managers aiming to increase employee engagement can put up some issues to vote, e.g.

  • Letting people vote on possible projects through internal crowdfunding
  • Evaluating the performance of co-workers through Merit Money
  • or by allowing more and more votes on a case by case basis. First on small topics, like the purchase of office furniture and later on more crucial issues

Voting can be done by simple or qualified majority, by consensus, in secrecy or by open vote. Whatever the voting mechanism, it is essential that the manager clearly explains the rules and adopts the role of an impartial referee.

B. Voting by systematic integration of objections

Voting is has a basic shortcoming: It fails to engage people. It does not force people to come out and state true preferences. Instead, some people will estimate what their superior wants and vote accordingly, especially in open votes. To really engage people a way must be found to make everyone come out of his shell and state her or his opinion.

One of the most elegant ways to vote on a team level is supplied by Holacracy (see Holacracy, Liberation and Management 3.0).  In the “integrative decision-making process,” a proposal is presented, clarified, discussed and amended in 6 stages until all objections to it have been taken care of and the proposal is adopted.

IDMP

Basically, this is a consensus vote that addresses the main shortcoming of consensus votes, namely that nothing is ever decided. It does that in ingenious ways:

  1. It provides a clear script that specifies how and when to engage in the discussion
  2. It involves everyone,  giving introvert and shy people a place and time to speak out in a protected environment
  3. A facilitator is specified at the start of the meeting and keeps the meeting on track
  4. Social pressure is applied on every objector to remain reasonable, as each objection is discussed step by step in front of all other meeting participants. Thereby proposals are not drowned in an unidentifiable mass of resentment, but the irritation, the objections, are identified and discussed on the smallest, most concrete base

In a company context, this process can be tuned to achieve even more decisiveness. The consensus requirement might be lifted and replaced by a majority vote. As with all Agile concepts, tinkering is possible to suit the process to the situation at hand.

Accelerants: Values and Constitutions

Adopting any mode of making more participative decisions is easier if companies embrace values, that promote employee participation. Like Netflix, which even publishes its continuously updated values and value stories for anyone in the world to see in the Netflix Culture Book.

Practicing values means making those values the basis for the hard decisions about salary increases, promotion, and firing. Not just for some inconsequential HR exercise.

But values only allow a company to get so far to self-management: Any list of values is far too vague to give sufficient direction to most real decisions. A manager is left with a lot of leeway to interpret and apply values in daily business.

Self-managed, networks teams cannot be run on this arbitrary level.  The solution is to adopt a corporate constitution. Such a document codifies how authority is distributed, in processes and committees. It is based on values, but it is far more concrete than that. It is a document detailing the distribution of power,  with checks and balances.

An example of a corporate constitution is given by Holacracy.

Conclusion: Actions speaks louder than words

It amazes me how much is written about leadership, corporate values and corporate culture in contrast to the tiny volume that is written about the hard facts like decision-making processes.

Tae Hae Nahm, Managing Director of Storm Ventures, in an interview with the New York Times:

“No matter what people say about culture, it’s all tied to who gets promoted, who gets raises and who gets fired. You can have your stated culture, but the real culture is defined by compensation, promotions and terminations.

Basically, people seeing who succeeds and fails in the company defines culture. The people who succeed become role models for what’s valued in the organization, and that defines culture.”

Talk and action need to be the same. Therefore, I think Management and Leadership are really one. To talk about leadership without addressing the hard facts that management stands for is all but empty talk. Time to get real and try some new decision methods to come up with better, more timely decisions -while at the same time getting people engaged and companies innovative.

Sounds like a total win for me!

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

Sources 

How to move step by step towards Self-Management

Gosh, I am fed up with empty company talk of “Leadership” and “Our Values.” Why? For a start, I have my own values. I do not need yours. Thank you.

Second, what most people call Leadership, sounds like manipulation, interference and mind control to me. I am from Germany. We certainly had “great” leadership in the Third Reich…

Usually, these corporate value and leadership exercises are dishonest, glitzy exercises to get a company more “Startupy.” At best they are inept attempts to lessen the degree of the companies sclerosis.

I really think there are more effective ways to make use of your limited lifespan, than spending it in an amateurish corporate innovation theater.

Screenshot 2017-11-03 08.49.42.png

The Corporate Innovation Theater (Source: xplane.com)

Start moving toward Self-Management

Autonomy, Entrepreneurial Spirit, Empowerment – call it any way you like: Moving Organizations towards more Self-Management is probably the one mission-critical piece of DNA that traditional companies are missing.

More Innovation is tied to more Self Management. It’s as simple as that. More Self Management means moving organizations towards the Sweet Spot of Innovation (see the last post What kind of Organization do modern Companies aspire to be?).

On a team level, there are frameworks for self-management. From the Lean Startup to Scrum to Amazons two-pizza teams, there is a lot of advice, techniques, and best-practice to create high performing teams. But on an organizational level, this is a lot harder.  The risks of hierarchical interference by some manager into the cherished “entrepreneurial and empowered” behaviors shown by underlings increases exponentially with each new level of a hierarchy. It’ as simple as that: Hierarchy and Innovation do not match well.

So what are the ways organizations can progress?

The 4 Management Paradigms

To get a company to innovate, transform and learn new Management Paradigms need to be adapted.

sm1.png

Paradigm 1: Command and Control

What you have experienced during your education in school or while working for a company is Command & Control Management: People who told you what to do, because they had the mandate to it. Your school teacher held this mandate to control you, as did the manager you report to. Those Hierarchs holding power over you might have been benevolent or nasty, giving you a good or a hell of a time.

Chances are you adapted to their style. You accommodated to the situation, you blended in. You did your job. You raised your head in opposition only if it was safe to do so. Otherwise, you did your job. It was or is the thing you are paid for.

So did I. In 42 Years of Education and Work I blended in. Despite a perceptive streak that always made me rebellious underneath, I seldom let this come to the surface. And if I did allow it to surface, I usually did no more than vented my anger in supposedly safe environments with coworkers. It just doesn’t pay to pick a fight with the hierarchy: The few times I tried to stand up for truth, decency or plain reason, I was defeated. It pays to accept that the Status quo is the most potent force in a hierarchy.

Paradigm 2: Mission Command

But there were far more good times than bad times. When did you experience good times in organizations? I bet that these good times can be characterized as such:

  • There was trust in you to achieve things in your way
  • You worked intensively with colleagues
  • You felt a sense of purpose or contribution by helping others, the customer or the organization

What you felt those good times can be linked to a management style called “Mission Command.” Someone has been managing you, but that person brought out the best in you – or left you alone to bring yourself to bring out the best in you.

A Manager practicing Mission Command allows an individual or a unit of an organization to define how she or he will achieve commanders intent. If the purpose is clear, the objectives are stated, the manager practicing this style leaves the subordinate to rely on their own ingenuity.

mcom1.png

Command & Control and Mission Control are not mutually exclusive.  A Manager can exercise both Management style, depending on the situation and issues at hand. Managers leaning toward Command & Control can be described as “Micro-Managers.” Managers leaning toward Mission Command are Managers that empower others.

For more on mission command, look at this post from October 2015: Force 4: New Work organization.

Paradigm 3: Self Management

Self-Management is defined as “management of or by oneself; the taking of responsibility for one’s own behavior and well-being.” Wherelse a superior keeps an employee locked in an adult-child relationship, modern Management Systems based on self-management aim to establish adult relationships in organizations.

How do they do that? By getting rid of the Hierarchy. It’s an egalitarian approach based on discipline. Think of it: Most of us cringe if they hear “egalitarian”: “That cannot work.” But if you combine this with discipline – a term we all know too well from our command and control past – it gets interesting.

I won’t say any more here about those Management Systems relying on Self Management. Shame on you if you did not read the last 12 long posts starting in May 2017. Here is the starter: A New Ideology for Management in the Digital Age and the post starting of a whole series on  Holacracy, Liberation and Management 3.0.

Paradigm 4: Crowd Management

Behind self-management with the gradual dissolution of the hierarchy, of more and more superior-subordinate relationships, comes the demise of the company as the legal glue that holds people together. This is the terrain of the crowd, which can bring into existence such wonderful things like the World Wide Web, Linux or Wikipedia.

It has been argued by many futurists since Thomas Malones 2008 book “The future of Work” that companies will tend to get slimmer because they will spin-off more and more of their activities towards the crowd. And today, 9 years later, it is happening. Take for example the platform economy, e.g., Uber, Airbnb, 99 designs et al.

How to move towards Self-Management

What vexed me a lot during the last two years is the following:

It’s good and fair that Mission Control achieves better results through more engaged employees and more organizational learning. It even makes the workplace a better place to be.

But how can I get Managers to embrace this empowering Management style? How can I get people who lived for nearly all their lives in Command & Control environments to trust, relax control and truly empower people?

To tell them to do it, through training, conversations, and coaching is just not enough to ensure consistency – otherwise, we wouldn’t have this high degree of disengagement in companies and the high degree of resistance to change.

mcom2

Let’s face it: Command and Control is what we inhaled in our upbringing. It is part of our culture. It requires exceptional people to let go and embrace mission command. This feeling is primarily shared by many Silicon Valley companies like Google. The Solution to this? Hiring – see Hiring like a Pro: Lessons from Google. The empowering, entrepreneurial, team working, curious type of candidate must be hired!

I have three problems with this:

  1. Hiring your way out of trouble is not an option for established companies
  2. Putting the “right” people in toxic, command and control enterprise cultures will end up with the new hires leaving the firm or adapting to become part of the system
  3. Hiring the people with the right character traits is a great way to sustain a given culture, but not a way to create a new culture.

Hiring is, therefore, a supplemental, flanking action, but cannot be the main angle of attack. Lazlo Bock, an HR Director at Google, states in his 2014 book “Work rules,” that  “hiring is the most important skill of an organization.” I disagree. Hiring is supplemental.

The most critical and fundamental management skill is to “terraform” the organization through holistic, learning organizational design.

Such a powerful terraforming tool are Participative Management practices. It can be pictured as Delegation on Steroids. An excellent name for the next post – so bear with me.

Conclusion

If you really want an organization to be innovative and an excellent place to work in:

  • Renovate your Management Techniques
  • Update your world-view and embrace the Digital world
  • Step outside the corporate Innovation Theater

Embrace more self-management. I am not saying “go all-out for self-management.” There is not enough proof to advise that (yet). But try more Mission Command yourself, read Jurgen Appelo’s Management3.0 and get into your read about Participative Management Practices – Delegation on Steroids – in a fortnight.

where-the-magic-happens

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This is what I think. What do you think?

Further Reading:

What kind of Organization do modern Companies aspire to be?

Let’s face it: Traditional companies, with purely hierarchical, command and control based organizations have lost. They have lost in market evaluation, they are bleeding market share and have lost the initiative to their digital, less hierarchical competitors. So what do they do: Either they remain shell-shocked or they are “going digital.”

Going Digital – the superficial way

But what does “going digital” mean? Usually…

  • some investments in start-ups
  • founding a digital laboratory charged with breeding innovations which should somehow find their way into the rest of the organization
  • experimenting with Scrum in IT projects
  • experimenting with lean start-up techniques in product innovations

But they are just scratching the surface. Over time those companies run into trouble with the way they are managing things. Traditional management is based on the premise that

  1. a manager finds the “one best way” to do things
  2. commands things to be done in that “best” way
  3. controls the execution

This formula turns out to be a bad one in everchanging, data-rich, technologically complex times. Innovation and Change is a weak point of the traditional management system. All those digital initiatives are torpedoed again and again by the hierarchy, like an immune system attacking the virus of change spread by start-ups, digital labs and agile practices. These attacks may not even be made with malicious intent. These attacks originate in a firm belief in rules and processes – which are just incompatible with innovation and change.

Going Digital – the right way

Going genuinely digital means changing management systems. It means …

  • making the hierarchy more irrelevant
  • listening to the wisdom of crowds, last not least employees
  • embracing uncertainty and experiments
  • building an environment, that ensures that all signals of the markets are reflected in the day to day decisions that employees do

Today there are about three significant templates of management systems available:

  1. Traditional Management, based on hierarchy
  2. Liberation, based on self-management
  3. Management3.0, based on agile practices

All other Management Systems of any size (such as Holacracy), are contained within these three major systems.

mdcomp.png

In the last series of posts, I have explored Liberation, Holacracy, and Management3.0 versus Traditional Management in great details (see Holacracy, Liberation and Management 3.0). Let me explain why I think there are only these three systems out there:

  • Traditional Management, i.e., Frederick Laloux’s “Orange” state of human collaboration (have a look at Moving an Organisation to Self Management for a quick view of Laloux’s model), is the status quo system still used nearly universally around the globe
  • Liberation, i.e., Fredrick Laloux’s “Teal” state of human collaboration, is all about self-management. The Abolishment of hierarchy changes everything. Holacracy and Sociocracy are subsets of Liberation
  • Management 3.0, is a set of agile practices promoted by Jurgen Appelo. It straddles the middle ground between Hierarchy and self-management. While Management 3.0 is not yet universally known in Management circles, it nevertheless describes all the attempts to soften up the hierarchy with agile practices quite well. It is therefore implicitly practiced by a lot of companies, that are not even aware of Management3.0 existence

The Lean Start-up Method is limited to – well – Start-ups. It is not a universal Management Model but a set of prescriptions who to come up with new products through structured experimentation and learning. While this thinking model is excellent for continuous improvement, too, it is still rooted deeply in the core problem of getting new products to the market, not in running all aspects of an established company.

For the sake of completeness, I have included team-centric frameworks such as Scrum, Prince2. PMI in the graphic. These are not holistic management frameworks, as they are limited to the management of projects and teams. Some companies think that scaling agile team practices such as Scrum to all sorts of teams will result in overall organizational transformation. But finally, even with templates for doing this scaling, such as SAFe, LeSS and Nexus being available, it’s always about projects and teams. Not Organizations. These attempts are like attempts to use a hammer for an all sorts of purposes at home, e.g. like cleaning the dishes.

All these Management Systems have been described by practitioners. Academic research is used as a foundation for these models, but the complexity of organizations prevents researchers from holistic, stringent definitions. So you got to live with my attempt of categorizing. It’s only my view – so contrarians forward and tell me what you think!

Which companies use which Management Model?

Let’s position some companies in this matrix. This positioning is just my subjective guesswork, which is inspired by all the sources that I happened to read (see Sources). It is tough to put something as multidimensional as a Management System in a two-dimensional matrix, but here it is my hunch:

zx1.png

What strikes me in that graphic are three points:

  1. The VOID: There are no hierarchical companies which are innovative, i.e., score high in the Start-up Y axis.
  2. The Sweet Spot: The most successful, poster children of silicon valley are located on the border between hierarchy and self-management
  3. The drive for Purpose: All Companies with an inner purpose beyond pure profit-seeking are located more to the left of the matrix.  While an overarching purpose is a prerequisite of self-managed Organizations, the Organizations in the “Sweet Spot” appear to need an overarching purpose as a necessary condition to maximize innovation

Each placement is, of course, an oversimplification. Look at Amazon. The famous “two pizza team size” so often cited as one of Amazons cultural ingredients, is alive and kicking in the product divisions. The worker in the distribution centers couldn’t care less about this rule, except for the occasional continuous improvement exercise. Different units of companies can be in different locations in the matrix. For more on the topic of how to differentiate different ways of managing various parts of organizations, check out You are playing the wrong game! Learn to zone.

Where is the Momentum?

Next, let’s take on a dynamic perspective: What do companies aspire to be? To which organizational and management model do they move towards?

md5

Established companies are moving from the lower right to the upper middle by introducing more and more of Agile and Lean Start-up practices into their organizations. In no small part, managers in those organizations rarely think about moving to self-management, but that is precisely what they are doing.

The earlier and the more managers accept that more self-management is the new reality of effective management, the more successful their digitalization efforts will be.

In the upper left corner are the start-ups. These have a slightly unique organizational model that can be best described by Eric Rees book “The Lean Start-up”. As they are maturing and face the need to scale, those companies are moving to the lower right of the matrix. They are getting more like established companies with “adult supervision.” Only time will tell which companies will be able to pull off the feat to remain in the sweet spot and not become the next Yahoo, eBay or Nokia.

This is what I am thinking. What are you thinking?

 

 

 

The Startup Way by Eric Ries – Book review

Want to know how to scale the “Startup Way” of doing business to conventional organizations? Want to know how to keep on perpetually innovating new products and processes? Then “The Startup Way- How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth” should be for you. According to Eric Ries, it outlines nothing less than a “unified theory of management.”

Wow. What a claim. I was excited, as I admire Eric Ries last book, the “Lean-Startup” and many of its sister publications like “The Lean Enterprise.” And finding better ways to manage in the digital age is all that my work is about.

Spoiler Alert: I was bitterly disappointed.

How to transform a company to work like a start-up?

The recipe according to Eric Ries is to:

  1. Fully understand the Lean Start-up Model with its Minimal Viable Products, Experimentation, Pivots, Leap of Faith Assumptions, Iterations & Learning, etc.
  2. Gain top Management buy-in, so that they commit themselves fully to a big change management program that focusses on training more and more people in “Entrepreneurship.”
  3. Institutionalizing Entrepreneurship in a separate line function.  So Entrepreneurship become a department, such as HR, Finance, IT, Sales and Purchasing are. In contrast to the other departments, the “Entrepreneurship” unit has some matrix functions in the other line functions, such as training and coaching entrepreneurs and maintaining start-ups like funding and governance structures. Thereby the “Entrepreneurship Department” is mimicking external start-up functions internally inside a company.
  4. Continually change the processes of a company by experimentation and iteration to come up with just the right ones for your company. Do it scientifically, never stop experimenting and adapting and you will be fine for all time to come.

Eric’s “Unified Theory of Managment”

The new organization will be a combination of “general management practices” (see the left side of the graphic below) and “experimental management practices” (on the right side). Traditional management practices based on hierarchy and experimental, team-based, lean start-up practices are meant to coexist in every company:

Experimental Management is like a bolt on general management practices. IMG_6527.PNG

Nothing much changes in General Management practices. Eric describes experimental management – in a less than humble manner – as the “missing part of the lean manufacturing system,” known as Toyota Production System (TPS), the mother of all Lean and Agile movements. Lean Manufacturing (and its off spins like Six Sigma) have been all about efficiency (doing the things right). But they couldn’t help at all in effectiveness, i.e. determining what things are the right things to do. These “right things”  can only be identified by customer-centric experimentation. This is exactly what the lean startup method is there for.

And if these two pillars of the house of management are built on solid foundations, i.e., vision, purpose, a focus on people and long-term thinking, the house will stand. It will deliver excellence and continuous improvement if only the shared values of all people in the company embrace truth and discipline.

That’s it. That’s all there is. How stupid have we been not to see this future of management! Just bolt on experimental management and get the senior management team to sponsor vision, truth and discipline et voila: The Organization of the future.

Naivete galore!

It is so naive. So torpedos away.

Eric’s 4 step recipe for transforming a company is EXACTLY what a conventional change management program is all about since time immemorial. Get Management Buy-in, teach and motivate people, lead by example, devote time and attention, train-the-trainers, etc. This is business as usual in modern companies. It is just another top-down driven Change Program. There is nothing to assume that this program will be more efficient than any other change program is.

Oh, wait! Maybe there is: Entrepreneurship is an institution now. We are adding a new department to the company. Surely this will help! It will help exactly like installing a “Chief Digital” or a “Chief Innovation Officer” helps to promote those themes on the board. The name is different, but there is nothing that indicates why a “Chief Entrepreneur” should be more effective. Those Organisations will always be the “weak line”:  Organizations are dominated by those “strong lines” of the departments doing the real work, closer to the business. Hell, they ARE the business. Entrepreneurship is just another matrix function.

But wait again! The strong lines, the realm of General Management, will be all aligned with experimental management now, as they all share a vision and embrace truth and discipline now – as in the neat graphic above.

This degree of naivete leaves me speechless. There is nothing in this book and in the world that will indicate any more success with this as with all other Change management initiatives before.

Looking deeper into “Deep Processes.”

Eric Ries describes the deep processes, such as career and promotion, salary management or purchasing, as “Deep Processes.” Those are the final frontier to conquer once all the successful experiments produced such a momentum to do this in a company’s drive to everlasting change and improvement.

This is very shallow. These are not the deep processes of an organization. These processes are just the result of the management hierarchy coming up with rules and regulations, that minimize variation, seek security in control and assign people to jobs like cogs in a machine.

To really change the “deep processes” you need to change the “metaprocess” under which decisions about processes are made. These are things like giving people a voice, letting the people who are doing the work decide what is best, utilizing all their local knowledge and sensors to come up what is best, giving them leverage to experiment and learn by their own initiative and not by the initiative of an autocrat of the management hierarchy.

It requires flatter hierarchies. It needs more self-management. It requires more local autonomy, less fear, and less separation. But there is no reference to that in the Startup Way. None at all.

A House divided against itself can not stand: The insecurities brought about by experimental management and its rule-breaking nature collide fundamentally with the stability and predictability seeking hierarchy. 

Eric asserts that companies need to act more based on rigorous “scientific experiments,” for which Lean Start-up is the vehicle. In doing that, he is basically giving the same advice that Frederick Winslow Taylor gave in 1911 in his book “The Principles of Scientific Management.” While no one can argue with this benefits of putting more science in management by doing more experiments, the “Startup Way” adds nothing new. The problem is still: How to get the hierarchy to embrace uncertainty and unpredictability? There are no answers to this in his book.

Damm it, he even gets the reference to Taylor’s all-time classic book wrong. This book, one of the most important books ever in the realms of organization and management, has been published in 1911, not 1915 as Eric Rees claims on page 355. A small, insignificant error? I think this is a symptomatic error. Just skim through the list of sources, and you will find secondary sources taken for example from such “authoritative” sites like Quora.

What happened to Eric Ries?

I feel kind of personally injured by “The Startup Way.” Lean Start-up was a great book. So many fabulous ideas that inspired such a great movement and community.

But it appears that all the well earned success within the Corporate world, for example in his long commercial engagement with General Electric, all those speeches to deliver, left him with only minimal time for deep thinking and research.

It feels like Eric Ries is out of his (Start-up) waters in the corporate world. His intentions are good, but there are much more thoughtful and ultimately helpful books available on the future of management such as Fredericks Laloux’s “Reinventing Organizations,” Jurgen Appelo’s “Management 3.0” or even General Stanley McChrystal’s “Team of Teams.” Or this Blog 😉

The “Startup way” is a shallow book.

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This is what I think. What do you think?

 

Moving an Organisation to Self Management

What organizational change is the most severe of all? Mergers are pretty dangerous, especially for the weaker company. Scaling back operations, “downsizing,” is extremely hard because of all the psychological stresses it puts on people. Turning around unprofitable companies is hard, as it takes grit to create a sustained momentum.

But top on my list of tough things is to let go of hierarchy and introduce advanced management systems. Why? Because you need to let go of the steering wheel. While managing a Merger, a Downsizing or a Turnaround is complicated because of so many uncertainties, at least it leaves Management with the hands directly on the controls of an organization. If you want something done, you can order it. The outcomes may not always be what you asked for, but you are in control of the actions performed.

By adopting advanced Management models, you need to let go of the steering wheel and transfer control to people who have the autonomy to act as they think best. Think of how hard it is to hand over an area of responsibility to a successor. Things you genuinely care about and invested a lot of time in – e.g. by building relationships and great solutions – are now done by someone, who will make changes you might not be fond of. How great the temptation to interfere if you think something is not done “properly”!

Devolving control is hard. But you are not out totally out of control. Think of it as a self-driving car:

  • You task the car with getting you from A to B
  • You relinquish control to the car
  • The car chooses its route, determines its speed, distance to other cars, when to apply the brakes, and all the minutiae of driving

Likewise with organizations in an advanced management setting with flat, egalitarian hierarchies. The driver/manager is not out of control, she just relinquishes day to day control but remains in strategic control. This will feel pretty unnerving at first, but after a while, one will get used to it and focus on higher value-added things.

The Starting Point

To adapt Liberation or Holacracy, you need to make that leap of faith. So the very starting condition for those Management System is your faith. Without holding deep, inert convictions yourself and the willingness to personally invest yourself, suffer and learn, do not make the leap. It takes a benevolent dictator in capitalistic systems based on private property rights to start. Are you that benevolent dictator?

How deep must your convictions be? Here is a test:

  • Get introduced to the concept of TEAL, best by reading this Article on HBR or even better chapter one of  Frederick Laloux’s “Reinventing companies.” The picture below provides a clue what a Teal organization is

teal2.png

  • Then ask yourself: Do you think mostly from a state of “Teal”? Do you accept contradictions, complexity, uncertainty and embrace a good deal of spiritualism?
    • If the answer is no and this all seems a bit too alien to you:  Do not start. Read more and try some Management 3.0 or Agile Workouts to build up more experience
    • If the answer is a wholehearted yes: Go for it and liberate your Company through either Liberation or Holacracy

adopt.pngWith Management 3.0 you do not necessarily need to hold those deep convictions that the other two system require. Management 3.0 allows you to experiment with this or that agile practice, thereby learning and shaping your and your team’s beliefs in the process. Management 3.0 offers two things that the other two systems are lacking:

  1. An evolutionary, explorational path to devolving control to more and more autonomous people and groups
  2. It enables any manager of any level in the organization to introduce agile principles. Holacracy and Liberation you can only start if you are the CEO of an organization. If not, your experiment will fail as the resisting forces of the hierarchy will come crashing down on you and your autonomous, liberated teams in times of a pinch, for example by HR descending upon you with some reasonable corporate standards policies on titles, etc.

Barriers to Adoption

Once that leap of faith is done, there is a period where the effort to maintain the system is high. Everyone involved needs to learn new ways of thinking and acting.  The intake of new values to heart and coming to grips with new practices takes time. This places a heavy demand on the time of Managers, who need to coach the organization and individuals intensively in the initial period.

Therefore, opting for the adoption of advanced management systems in times of crisis may be more of a measure of last resort. Best to go for it during reasonable stable times.

Due to the flexible nature of Management3.0, single practices can be tried here and there, consuming only as much effort as one is ready to invest at a certain point in time. These small-scale introductions can be pictured as a low benefit – low-cost interventions into the existing organizations. Over time, the benefits might add up to a sizeable number, as a self-reinforcing feedback loop of learning get’s going.

Brace for brittleness

I like the term “Brittleness.” An organization is brittle if small strains on it tear off more and more parts until eventually, it breaks. The parts torn off may be of any kind, e.g., lost revenue or employees leaving the company.

An increase in brittleness is a part of every organizational change. The larger the change, the more brittle (“less robust”) an organization becomes, at least in the immediate period after the intervention has been made.

After introducing Holacracy, organizations become extremely brittle. Zappos, for example, experienced about 30% of employee attrition p.a. in the first two years after introducing Holacracy (Attrition is the proportion of employees leaving the company relative to the total number of staff). A benchmark for businesses in the e-commerce sector is about 8 to 10%. There is much speculation about the root cause of this attrition, but the consensus view seems to be that people have difficulty finding their role in a Holacracy driven organization vs. the clearness offered by command and control.

This tension is inherent to all advanced management systems, but it is accentuated in Holacracy,  as organizations are governed by a constitution which standards are rigorously enforced. Liberation is more accommodating, as it focuses on values and behaviors and let people seek their own structures. Nevertheless, while data is difficult to get, war stories indicate increased attrition, too.

Richard-wilson-1.jpgIn the long run, however, attrition should end up at a level below any that can be achieved by running the organization as a hierarchy. The promise of all advanced management systems is self-fulfillment, so all things being equal, people choose not to leave the reformed organization.

Principal Risks

Liberated Companies are very much dependant upon implicit guidance that a commonly felt purpose, values, and social norms provide. If this guidance is defunct, for example by values that mean different things to different people, nasty things are bound to happen.

In the much more rule-bound system of Holacracy, this risk is much less acute. Here, the written constitution is very crisp about the core inner workings of the company. But that is achieved by incurring a different risk.

Roles are central pieces of Holacracies operating system. There are “link” and “representative” roles that connect one team to another. While roles are designed to be only temporarily assigned to any single person and roles may be transferred by a decision made in a group, there is a clear bias in everyone minds. The bias is to equate these leading roles with a higher hierarchical position. After all, Kindergarten, School, and previous Work experience have deeply ingrained in us the thinking patterns of hierarchy.  Taking away roles is socially challenging, as it can be pictured as a humiliating move to demote the primus inter pares. Over time, another kind of hierarchy becomes a de facto reality in all but name. There is a lot of egalitarian attitudes necessary for an Alpha type character to move back to the ranks.

With Management3.0 the biggest risk is that nothing gets done at all. Just using a small work-out here and there can quickly be interpreted as gimmickry. Modern cooperations are full of corporate gimmickry, for example, team building sessions, “embrace the value” exercises, Football tables, follow-up fewer sessions full of Post-it notes or whatever soft skill training you suffered during your career.

Used in a disconnected and inconsistent manner, all Agile and Management3.0 exercises won’t get you anywhere.  Therefore you need to have a master plan ready. Don’t go and waste good Agile or Management3.0 work-outs here and there. Instead, plan your path systematically by…

  1. Creating a rough master plan that starts from the current state of the organization, the customer, the business environment and the team members. Plan maturity stages, results, and behaviors accordingly
  2. Establish rituals that allow groups to reflect their work, their communications, and their emotions
  3. Build a shared sense of purpose over time
  4. Introduce only those work-outs that work well together and only when the foundations for their success has been laid. It’s no use to demand “total transparency” when there is no sufficient base of trust

The flexibility of Management3.0 is a blessing and a curse. It allows the incompetent manager to dabble with it and frustrate people even more. It may fail to provide sufficient momentum for any lasting impact on the organization. Management 3.0 practices may simply be crowded out by all the rest of the cooperate initiatives and noise, if not applied with sufficient force, without it being a “Schwerpunkt” of the Agenda of an organization.

A personal story of learning

Let me prepare the wrap-up of this series with a personal story about my experience with advanced Management Systems. I have read Mr. Laloux’s work, which can be seen as providing the foundations of all advanced management systems, shortly after its publication in 2015. I loved the case studies in the second part of the book, but I regarded the first part as a bit too esoteric to swallow for anyone in management.

Oh, I have been blessed to be associated with some very enlightened, highly successful, value-driven organizations during my career. I am deeply thankful for that. But I am still convinced, that most Managers are driven by an ethos of achievement that relegates values to the realm of glossy books: Values are not to be found in daily actions.

So I discarded the first, “esoteric” chapter about human stages of evolution and the rather awkward foreword by Ken Wilber. But two years later, after learning more and more about advanced management systems, this all makes much more sense to me. It’s like the underlying structure of all there is to reshape organizations. It’s like looking at a building:  I needed to have a look at the facade first, then the interior, then got interested and dug deeper and deeper. Finally, in 2017 I was ready to face the level of abstraction that is required to understand the conceptual foundations.

It takes deliberate effort to understand more about all the layers there are to people and organizations.

It takes this understanding to reshape long-held beliefs.

So finally – after 8 long posts with over 16.000 words – which of the four systems is “best”?

The Best System of Management there is!

Oh well, you know it’s complex.

I am fond of Liberated Companies:

  1. There are a lot of positive examples of companies using this model, e.g., well-known brands such as South West Airlines, Michelin, Spotify, and Patagonia. I love the model of the 14.000 employees working for the Nursing Company Buurtzorg
  2. There is a lot of positive momentum for this model in the market as more and more people get onboard
  3. I think it can be applied to any kind of organizational challenge, not just knowledge work. From Nursing to running a nuclear submarine to manufacturing and retail stores – anything
  4. I am convinced it will beat the hierarchical model by length, even in some low complexity, low uncertainty situations. By utilizing the cognitive and brain power by everyone in the organization, which always come in a package with the muscle power, even routine work will improve

The two largest pains I have with Liberation is that

  • it takes a whole company to adapt Liberation. It can not be done piecemeal, unit by unit.
  • It takes a “messiah” like CEO: Enlightened, Spiritual, Disciplined and quite heroic.

This is strange quirk: For a higher state of organizational performance and human existence at work, we have to rely on a brave leader again. Like in the days of Julius Caesar and Napoleon.

The good news is: Over time this heroic CEO will appear less and less heroic, as companies like Silicon Valleys Google, IDEO, Netflix, and AirBnB or companies like Gore, Buurtzorg, South West Airlines, Atlassian, and Michelin continue to win more and more in the marketplace. It will just make good business sense to liberate businesses and it there will be much more CEO’s ability to operate from a “Teal” mindset.

This path is paved by the planned, robust and decisive application of Agile and Management3.0  practices. With an Agile mindset and with an end in mind, in a systematic and sustained manner.

I am optimistic.

Appendix 1: Apps and Nuggets

There are a couple of Apps out there that facilitate different aspects of advanced Management Systems. This list is not exclusive. There are more apps out there. Can you recommend some? If so, leave a comment on the blog.

appsSpecific Apps

These Apps support the organizational modeling, maintenance, and communication  of loose network structures:

  • Holaspirit – supports not only Holacracy
  • Glassfrog – the classic Holacracy App
  • Agilityscales – a new app created by a company set-up by Jurgen Appelo (under construction)

Collaboration Apps

Apps that are critical to foster the free, spontaneous and transparent information flow across the organization:

  • Slack: The most advanced whiteboard and communication app there is
  • Jira: The Swiss Army Knife for Tracking
  • Trello: A multiuser Kanban board for any device. Integrates neatly into Jira.

Knowledge Management Apps

There are a lot of knowledge management apps in the market. One of the most significant problems with these apps is that they are not integrated enough in day to day business. The limited usability often results in these systems being out of date and incomplete.

Confluence circumvents this because it integrates neatly into Jira and Confluence. But you may choose to use any other system. Just remember this: It’s never a single tool that will help you most, it is the integrated tool-scape.

Appendix 2: Other Management Systems: Sociocracy, SAFe, LeSS, and Nexus

This series focused on three advanced, comprehensive Management systems. There are some other systems. But those have either…

  • limited usability outside the realm of Software Development (SCALe, LeSS, and NEXUS)
  • or have limited traction in the business world (Sociocracy)

Sociocracy, an alternative to Holacracy

There is a third way between the fast and speedy decisions provided by hierarchies with its sole decision maker and the slow and tedious, but ultimately more just and participative decisions of systems relying on majority or consensus votes (e.g., Democracies). Sociocracy is such a system which originates in a system described in 1926 by a dutch reformist educator.

Holacracy is a modern application of Sociocracy, but it is not the only one. An alternative to Holacracy is Sociocracy 3.0, albeit with less traction in the business area.

SAFe

SAFe – the “Scaled Agile Framework” describes how to scale small, agile projects to large projects or even entire organizations.

While it is has a sizeable number of adoptions in larger businesses, it is heavily criticized by the founders of Scrum for its complexity and top-down nature. It basically installs a top-down layer of control to multiple agile teams. Therefore it is logical, analytical, provides some agile stardust, but remains founded on hierarchy in its core – and this is precisely what it makes so attractive to established businesses.

LeSS

LeSS – Large-Scale Scrum: A lightweight framework to scaling Scrum. Useful for large-scale software engineering.

Nexus

Nexus is a lightweight framework to scale Scrum, too. Just like Less. There appear to be few significant differences to LeSS.

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I hope you enjoyed this 8 part series of long posts devoted to comparing Liberated Companies, Holacracy and Management 3.0.

In the next post, I like to dig into the central concept of Servant Leadership by extracting the lessons learned from a story of liberating the crew of a nuclear attack submarine. Transferring control in this “mother of all critical work environments” to work level is quite impressive.

Last, not least: The final Comparision Table:

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 Sources

  • Frederick Laloux, “Reinventing Organizations,” 2015
  • Issac Getz et al. “Freedom 2.0”, 2017
  • J. Appelo,  “Management 3.0”, 2010
  • B.J. Robertson, “Holacracy,” 2015
  • J. Gotthelf, “Lean vs. Agile vs. Design Thinking”, 2017
  • L.D. Marquet “Turn the ship around”, 2015

All sources and a short review can be found on  ManagementDigital.net/Sources