MBA libraries and airport bookstores are testament to a surfeit of ideas about how to manage companies more effectively. Most of this advice takes corporate structures as a given, and offers sage advice to enthusiastic executives on how to succeed within the existing framework. But some management theory points to entirely novel ways of orchestrating labour and resources in pursuit of business performance.
As ever, the best ideas are not always new. For example, Toyota’s innovative product system in the late 1980s was influential on lean, agile and kanban methods that have only recently become the new mainstream in software development. Similarly, although written in 1990, Peter Senge’s seminal book The Fifth Discipline: The Art and Practice of the Learning Organization, with its focus on systems thinking, is still regarded as innovative in comparison with contemporary management practice.
What is new, however, is that it has never been easier to apply these concepts in the workplace thanks to ever increasing connectedness and opportunities for collaboration provided by social technology.
We have seen first-hand how easy it is for even natively digital companies to fall into old habits when growing quickly. If you are not careful, before you know it you might have an HR function, a cheesy consultation on what your values should be, time-sink meetings and inter-departmental territorialism, and then you start hiring people the wrong sort of people to populate these defensive structures because you make the mistake of thinking the bureaucracy is the company.
The fact is, most of our company building templates are wrong, but it can be challenging and risky to create your own. But that is what you need to do if you want to create the right structures and culture to support your particular mission. It is worth evaluating a few of the emerging theoretical approaches to management and organisation design, but creating productive and positive culture and practice is the real litmus test, regardless of whether or not this is informed by theory.
“When I speak of a golden age of management, I am obviously not referring to the dreary bureaucratic practices that are pervasive in big institutions and taught in business schools, still less to the shady but profitable arbitrage schemes of the financial sector. I am referring to management in the broader sense that it has in common with all forms of action that induce fulfilling human experiences and outcomes.”
Trawling through 24 recent books on new management thinking (including Dave Gray’s wonderful Connected Company and John Hagel’s excellent book The Power of Pull), he identifies ten key shifts that seem to be underway:
- From maximizing shareholder value to profitable customer delight.
- From sustainable competitive advantage to continuous strategic adaptation.
- From a pre-occupation with efficiency to co-creating value with stakeholders.
- From uni-directional value chains to multi-directional value networks.
- From steep hierarchies to shared responsibilities.
- From control and bureaucracy to disciplined innovation.
- From economic value to values that grow the firm.
- From command to conversation.
- From managing the machine to stewardship of stakeholders.
- From episodic improvements to a paradigm shift in management.
Taken together, Denning believes these developments will create the outline of new management thinking for the next era:
“As Gary Hamel wrote in his landmark article in Harvard Business Review, Moon Shots for Management, ‘Equipping organizations to tackle the future would require a management revolution no less momentous than the one that spawned modern industry.’ As Don Tapscott said, we are ‘at a punctuation point in human history where the industrial age and institutions have finally come to their logical conclusion.'”
Elsewhere, First Round Capital Review recently wrote about the use of a new methodology, Holacracy, as the management blueprint for Medium, a long-form publishing company founded by Ev Williams of Twitter. In the piece, Jason Stirman of Medium explains how Holacracy enables them to support a very task- and role-oriented management culture, but without needing dedicated managers per se.
“This role-centric organization also optimizes for number of ideas and strategies tried, while also keeping a tight grip on what gets shipped live. For example, there’s a single role titled ‘Product Strategy’, currently filled by Ev Williams himself, which decides which features go public. But, teams like RAD get to decide which ideas actually get prototyped and built.”
“Once there’s too much work for a particular role, it can evolve into a circle with multiple members to shoulder the load. ‘In a traditional company, the structure doesn’t change based on the work,’ Stirman says. ‘You see a lot of companies trying to force the work they have into their existing structure, and that can get messy.'”
Holacracy draws on various previous ideas, as one of its founders explains, and it has a lot in common with agile development methodologies that have transformed software production in recent years. It also shares some thinking, such as the concept of linked circles as a way of scaling informal structures, with methodologies such as Sociacracy. One very interesting element that has echoes of Kevin Kelly’s thesis in What Technology Wants, is the idea of the organisation as ‘transpersonal’ – i.e. having its own purpose and evolutionary potential above and beyond its constituent people and structures.
As with all formal methodologies, these ideas can be applied as templates and guides or they can become ideological and inflexible, where adherence to the tenets of the methodology becomes more important than pragmatism. But Holacracy looks worthy of further consideration for new firms looking to codify a peer-to-peer culture of getting things done.
Management methodologies are in many ways the easy part. It is where they intersect with organisational design and culture that determines how well they work in practice. And this is where the behaviour and culture of leaders within the organisation can play such an important role. One reason why successful, radical company cultures such as WL Gore and Morning Star are such outliers is perhaps because of their reliance on visionary and determined founders to create and protect the space in which their unique cultures could flourish.
As large organisations becomes less dependent on the bureaucratic structures built up over the Twentieth Century, so over time the ‘professional managers’ whose job is to police the bureaucracy and manipulate the politics of the organisation will lose their power as influence becomes more valuable. But when thinking about leaders and leadership, I believe we will see two apparently contradictory forces at work simultaneously.
On one hand, as Will McInnes writes in Culture Shock (a passionate and enjoyable book on how to create a workplace and a working future that supports greater purpose and meaning), leaders will shift from being omnipotent heroes to helpful gardeners:
“Perhaps a better style to adopt, more of the time, is not that of the hero … but of a convener or curator of the group – be that a whole organisation or a small team. The shift here is from being the individual fixer that the most complex issues get escalated to, to being the person that helps the group observe what is happening, creates the space for them to share in that information, helps them reach decisions and create accountability. This is a more removed personal style of leadership than the heroic mode – this is leadership as facilitation or, if you prefer the metaphor, gardening. Adding something here, pruning a little there, encouraging this bit to come forward, digging deeper, patiently nurturing changes and growth. Given that we are now managing groups of people whose behaviour and attitudes may be becoming more like volunteers, that we are managing people distributed physically (whether they are working from home or working across multiple geographies), and in an environment where the best talent has given up on the idea of a job for life and can pick or choose from the best jobs, our style may need increasingly to become one of influencing rather than directing …”
But on the other hand, it is probably also true that confident, visionary leaders are needed to create and protect the space in which people can work together in smarter, more productive working structures and cultures since, for the most part, it remains an act of courage in the eyes of investors to trust people enough to get on with their work without micro-management and traditional control mechanisms. As I have written previously, I do not believe leadership is obsolete in a networked world – quite the opposite in fact.
There is probably no single management methodology or organisational structure that can meet all the needs of a growing firm, let alone be replicable across industries, and so part of the challenge lies in enabling methodologies and working practices to evolve over time to meet new challenges. For this to happen, leadership and culture must be resilient enough to allow for constant adaptation. Individual personalities are also a factor, since some people need more structure and certainty to flourish, and can become defensive of the status quo in the face of attempts to change it.
Whatever the starting point, however, in my view the goal should be to evolve just enough structure along the way to meet the changing needs of working practice, much like a wiki begins without a priori structure but gradually evolves its structure to meet the needs of the content it organises. At the end of the day, if your firm’s working practice and culture are strong and positive, and if your ‘values’ are simply how you behave rather than posters on a wall, that usually counts for more than adherence to any particular doctrine.
Image courtesy of Holacracy.org