Customers on top

In a previous post in this series, I suggested that it might be a good idea to put the customer on the organization chart.

Consumers, I argued, are the real “boss” of any business. It is they who decide which businesses succeed, and which ones will fail, by virtue of the purchasing decisions they make. Those enterprises that meet a particular need, or satisfy some unmet demand—and are able to turn a profit doing so—live to see (and sell) another day. Those that can’t, or don’t, are not likely to be long for this world.

In other words, customers are the ones truly in charge – not anyone else. Or, as former Wal-Mart CEO Sam Walton once put it:

“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”[1]

So for this week’s post, I’ll do what many organizational theorists and management scholars (and economists) seem reluctant to do, oddly enough. I’ll draw an organization chart that includes the customer….which, as you shall see, has some perhaps unexpected consequences.

 

My hierarchy, my hierarchy

Organization charts come in all shapes and sizes, but typically they look something like this:

Here’s how to read one:

  • The boxes on the diagram represent individual workers, or specific organizational roles – On most organization charts, each box corresponds to a particular job or organizational position, which in turn is assigned to a particular employee. So whether you’re a sales associate, customer service representative, engineer, or even the CEO, a box representing you, and the organizational role you fulfill is likely to be found somewhere on the diagram. Furthermore, boxes representing workers performing similar tasks, or who are engaged in closely related work, are typically grouped together.
  • Organizational authority increases as one moves up the diagram – The higher up one’s box is positioned, the more organizational authority that person is considered to have according to most organization chart. Consequently, the CEO or business owner (or board of directors) is usually to found at the very top of the diagram, while those employees with the least authority—often referred to as frontline employees (sales associates, customer service representatives, engineers, or any other non-management position)—are to be found at the very bottom.
  • The lines connecting the boxes are referred to as “lines of authority,” and describe who reports to who – Managers are located directly above those they manage on these diagrams, and their boxes are typically connected to each other by an uninterrupted solid line. So, for example, according to the chart shown above, Manager A manages Employees #1 and #2. He or she might also be referred to as their “boss” or “supervisor” as terms are often used interchangeably with “manager.” And those employees are considered to be Manager A’s “subordinates.” Similarly, Employees #3, #4, and #5 report to Manager B.

That’s it for the basics – that’s all you really need to know to understand and navigate a traditional, pyramid-shaped organization chart. However, a couple of other organizational concepts that have come to be associated with these diagrams are probably worth mentioning as well:

  • Span of control refers to the number of employees who report to any given manager. So according to the chart shown above, Manager A has a span of control of two (Employees #1&2), and Manager B’s is three (Employees #3,#4&#5). This value is often viewed as a crude estimate of a manager’s organizational influence.
  • Unity of command stipulates that no employee be assigned more than one supervisor. This requirement is thought by many to reduce organizational indecision, as well clarify organizational purpose, in that is presumable eliminates the possibility of receiving conflicting directives from multiple bosses. While many organizations (and organization charts) adhere to this requirement, there are exceptions.[2]
  • Chain of command is considered helpful in the resolution of organizational conflict. It is determined by tracing upwards on the diagram from a given employee’s box while at the same time being sure to pass only through those boxes connected by solid lines. So, for instance, Employee #1’s chain of command is: #1-Manager A-CEO, according to the chart shown above. Employee #3’s is #3-Manager B-CEO. Here’s how it might be applied: Let’s say Employees #1 and #3 disagree on how to best accomplish some organizational objective, or shared task. The organizational actor considered to have the authority to resolve this dispute would be the first individual common to both Employee #1 and #3’s chains of command. In this particular instance, that person is the CEO.

Okay – so let’s get to it at last.

Let’s add customers/consumers to one of these diagrams.

 

Sovereignty, above all

Given all of the attention paid to the idea of consumer sovereignty, it is perhaps by now apparent to you that customers belong at the very top of the diagram, and in the position of utmost authority.

Again, consumers not only determine which goods and services are produced by the market, and at what price. They also decide which businesses succeed, and which ones will fail as a consequence of the purchasing decisions they make. Those organizations that are able to meet a particular demand, or fulfill some unmet market need—and can turn a profit doing so—will prosper. Those that can’t, won’t.

Less obvious is to whom the customer should be “connected.” That is to say, if a line (or lines) of authority are to be drawn connecting the customer to the remainder of the organization, it remains to be seen to whom that line (or lines) should be drawn.

There are really only two possible options to consider here, neither of which is ideal:

(1) The CEO

To be sure, this arrangement does have a certain aesthetic appeal. It’s simple, straightforward, and reflects the idea that everyone, from the CEO on down, “reports to” the customer. Sam Walton would probably approve.

What it does not do, however, is offer a very accurate picture of what might be considered “normal” organizational function.

Consider it: At most for-profit enterprises, only very rarely does the CEO interact directly with the customer…if ever. Instead, CEOs typically concern themselves with “big picture” organizational issues – such as profitability, cash flow, product development, marketing, etc. When it comes to dealing with individual customers—that is, answering their questions, addressing their concerns, and finalizing individual sales—typically it is a frontline employee who engages in such actions, and not the CEO or other members of management

The above chart does not reflect this. It suggests that CEOs would be expected to interact directly with individual consumers, not the frontline. And that’s hardly true for most businesses – especially those in the retail sector.

Which leaves the other option:

(2) The frontline

 

Now frontline employees are in fact connected to the customer, thus addressing the concern just described. But this arrangement is also problematic. In order to make this connection, those lines of authority are forced circumnavigate the rest of the diagram, resulting in a decidedly awkward arrangement.

But this criticism is more than one of appearance. As drawn, the diagram now invokes a sort of double standard when it comes to unity of command: Frontline employees have been assigned two “bosses”—customers and a manager—whereas everyone else in the organization reports to just one. In order for this arrangement to have any validity then, this inconsistency would need to be accounted for in some way.

Clearly then, neither of these two possibilities is particularly satisfying. Nor is moving the customer to the bottom of the chart an option, as tempting as that might be. Doing so violates the principle of consumer sovereignty, the acknowledgement of which, need I remind you, was the point of this exercise. And so, given the absence of any other obvious alternative, it is perhaps not difficult to understand why so many businesses choose to omit the customer from their organization charts altogether.[3]

Or why they decide not to draw one up at all.[4]

Tear it up

There is, of course, one other possibility.

Starting with customers on top, those sales associates, customer service representatives, and other frontline employees might be positioned directly beneath the consumer. Next, these two sets of boxes could be connected via lines of authority. Consumer sovereignty, check. Customer-frontline interactions, check.

As for management…well, the only remaining option is to position managers below those they manage, like this:

Now, of course, everyone from the CEO to the frontline “reports to” the customer (either directly or indirectly) as Sam Walton would probably have liked. This arrangement also reflects more normal, routine organizational function in which individual frontline employees attend to customers’ needs – not managers, management, or the CEO.

But what are the implications for management?

This diagram seems to suggest that employees are “the boss” of their managers – that managers should listen to, and then do what their employees tell them to do, not the other way around. And the CEO, according to this configuration has less authority than anyone else in the organization, not the most. That can’t possibly be right.

Or can it..?

 

 

Next in the series: The “upside-down” organization chart

 

Endnotes:

[1] “7 Sam Walton Quotes You Should Read Right Now” by Andrew Tonner. The Motley Fool (online), Sept. 8, 2016. https://www.fool.com/investing/2016/09/08/7-sam-walton-quotes-you-should-read-right-now.aspx. Retreived Nov. 16, 2017.

[2] (a) Raymond E. Hill, Bernard J. White Matrix Organization and Project Management Michigan Business Papers #64, 1979, (Division Of Research, Graduate School Of Business Administration, University Of Michigan, Ann Arbor, MI) p. 4; (b) “Dow draws its matrix again- and again, and again…” The Economist, August 5, 1989, p. 55-56.

[3] To be reminded why the customer should probably be included on the organization chart in the first place, check out my post “Who’s your boss?

[4] By all accounts, organization charts remain deeply unpopular. For more on why this might be, check out my post “Not a pretty picture”.

Who’s your boss?

In my last post in this series, I suggested that there might be a problem with the pyramid-shaped organization chart.

You know, those strange organizational diagrams that look something like this:That flaw, I furthermore hinted, lies not so much in what’s on the chart, as what (or who) is perhaps conspicuously absent.

So this week, a closer look at this diagram – what that omission might be, and why it’s important.

 

Show me the money

If you’re wondering why the decades old organization chart is at all relevant today, it’s because these diagrams remain an influential, if not entirely respected “mental model” of sorts for managers and workers alike.

How we think about the work environment, and how we act towards our colleagues and co-workers is profoundly shaped by the organizational principles and precepts that these diagrams have come to symbolize. And this is true whether you realize it or not – and whether the organization you work for uses one of these charts or not.

What it represents, of course, is a way of organizing perhaps best described as management by hierarchy.

Management by hierarchy is the top-down, command-and-control, “manager-in-charge” way of managing with which you are probably familiar, and even take for granted. According to management by hierarchy, managers do the telling, and employees do the listening (and then the doing). It is a way of organizing that is all but universal in today’s working world – and it is a way of running a business believed to be both effective and efficient. Indeed, for most of us it would be difficult to conceive of managing in any other way.

But is it really the best way to run a business?

To address this question—much less offer some sort of meaningful answer to it—it will be necessary to take a step back for a moment. How, for instance, should we define “best” in this context? What, in other words, would make one way of managing/running a business “better” than another? And to get at these questions, we’ll need to first answer an even more important/fundamental question:

What is the primary purpose of a business?

Fortunately the answer here is obvious enough. The purpose of any business is to make money. This is their primary function, and the reason for their existence:

To turn a profit.

Of course, businesses serve other important functions as well. They supply needed goods and/or services to the communities in which they operate. They provide jobs (and therefore income) to the members of those same communities that they employ. The workplace is also an environment in which an individual might experience the sense accomplishment that comes from producing something of value, or the satisfaction derived from cooperating with others to achieve a common goal. These might be considered some of the “purposes” of a business too.

But at the end of the day businesses still need to make a buck – for themselves, and for their employees. If they don’t do this at a bare minimum, obviously they won’t be able to fulfill any of those other purposes either. And no doubt few of us would show up for work tomorrow if we knew we weren’t going to be paid for it. That’s probably true no matter how satisfying your job might be.

So if profit and revenue is what it’s all about, where (or who) those profits come from is perhaps equally obvious:

Customers.

To be sure, it’s the customer’s willingness to purchase its products and/or services that determines whether a business succeeds or not. Enterprises that satisfy a particular consumer need, and are able to turn a profit doing so, live to see (and sell) another day. Those that don’t are not likely to be long for this world. Consumer demand (or anticipation of that demand) is therefore not simply the force that “creates” a business in the first place. The degree to which an enterprise is able to satisfy that demand determines its ultimate fate.

Again, if this seems at all obvious or familiar to you, it should. This is all wrapped up with the idea of consumer sovereignty – that foundational economic principle which recognizes that it is consumers who determine which products and services are produced in the marketplace, not anyone else. Individual consumers in effect “vote” with their dollars for the goods and services they want, and the marketplace responds.

And yet just as important, although not nearly as widely acknowledged, is the corollary of consumer sovereignty that I just alluded to:

Consumers also determine which organizations succeed, and which ones will fail by virtue of the purchasing decisions they make.

So one more time – the fate of any for-profit enterprise lies in the hands of consumers. Those businesses that are able to provide needed goods/services to the market at prices consumers are willing to pay (and still turn a profit), succeed. Those that don’t, or can’t, are destined to fail.

 

Know your place

Again, none of this is apt to surprise to you. Managers and businesspeople of all stripes have come to recognize this basic economic truth. Consider this quote attributed to Sam Walton, the former CEO of Wal-Mart:

“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”

A simple statement, and undoubtedly true.

But what of its ramifications? Especially with respect to management and organizational theory? If customers are truly the “one boss,” where is the acknowledgement/recognition of this fact? On most organization charts (like the one above), the customer/consumer is typically nowhere to be found. But why, given their authority?

Why are customers/consumers routinely left off of these diagrams?

To be sure, putting the customer on the org chart probably seems counter-intuitive. Think of it: To somehow include consumers in the organizational hierarchy is to suggest that they are “part” of the organizations they patronize. And that would seem to be a pretty questionable assumption.

Never mind, however, that this very suggestion was made nearly a century ago by the former president of The New Jersey Bell Telephone Company (and pioneering organizational theorist) Chester I. Barnard.

In The Functions of the Executive (1938), Barnard defined an organization as “a system of consciously coordinated activities or forces of two or more persons.”[1] He furthermore posited that “the actions which are evidence of organizational forces include all actions (my emphasis] of contribution and receipt of energies…”[2] And then he wrote:

“…it appears necessary to regard as part of an organization certain efforts of many persons not commonly considered ‘members,’ for example, customers [my emphasis in both instances]…”[3]

So customers are “members” of the businesses at which they purchase goods? In Barnard’s eyes at least, this does not seem so very unreasonable.

Nevertheless, he never took the next logical step. So far as I can tell, Barnard never then tried to include the customer on his company’s organization chart. Nor did he attempt to more formally incorporate the consumer’s “energies” into the organizational hierarchy.

Two reasons stand out as to why he may have been reluctant to do this:

(1) Us vs. Them

Putting the customer on the organization chart is counter-intuitive primarily because it is generally assumed that the members of any organization share some common goal. A shared purpose unites them – and in the case of a business, this goal is to turn a profit.

The motivations of a business and it’s patrons, however, would appear to be fundamentally at odds with each other. On the one hand, customers are looking to get the best deal (that is, the best possible product/service for the lowest possible price) while on the other, the suppliers of those goods and services hope to charge as much as they can. So their motivations are mutually exclusive and inherently adversarial. Therefore it would seem inappropriate and inaccurate to suggest that customers are “members” of the businesses they frequent.

(2) Short-term vs. Long-term

Businesses and their customers also appear to have divergent interests when it comes to the long-term sustainability of that enterprise.

A consumer’s main focus is typically the short-term goal of getting what they need at the best price. Once a transaction has been completed, there would seem to be little concern on the part of that customer regarding the business’ ultimate fate. And so long as they get what they came for, why should customers care? Businesses, on the other hand, are very much invested in their own long-term success. Satisfying one consumer in the moment means nothing if it does not also move the organization towards sustainable profitability in some way.

 

You need me as much as I need you?

For these two reasons then, the claim that customers are somehow “part” of the businesses they patronize would seem to be baseless. Barnard, it appears, miscalculated.

But not so fast.

Consider again that first argument for excluding customers from the organizational construct: Yes – consumers and businesses have what might be described as competing interests. Customers hope to pay as little as possible, and merchants hope to charge as much as they can.

And yet the same can be said of employees and their employers.

Just as consumers hope to get the best possible products/services (for the lowest possible price), employees hope to get the best possible wages or salary in exchange for their efforts. Likewise, just as businesses hope to charge customers as much as possible for their products/services, they aim to get as much effort from their employees as they can for the lowest possible wage. So the idea that customers can be excluded from the org chart based on a “conflicting interests”-rationale doesn’t hold up. Indeed, this very same argument could just as easily be invoked to exclude employees from these diagrams as well.

The “short- vs. long-term interests”-justification is similarly weak. While customers might appear to be solely focused on obtaining the best possible deal in the moment, with no real interest in a business’ eventual success, this is not always true. For instance, what if a satisfied customer foresees a need for that good or service in the future? Having a reliable, low-cost supplier nearby is to their advantage – not only in terms of convenience, but it also eliminates the need to comparison shop every time that good or service is desired. Therefore a buyer might very much hope to see a particular merchant succeed in the long run – and even be willing to pay a little more to see that they do.

Meanwhile, it also goes without saying that employees don’t always act in their own employer’s best long-term interests either. And this goes beyond taking long lunches and stealing office supplies on occasion, or cutting out early on Fridays. For example, consider the salesperson who discounts a product just to make a monthly quota – or who pushes especially hard to make a sale for the same reason, and in the process alienates a customer. Such actions are motivated by short-term interests, and yet may cost the organization in the long-term.

 

Why not the customer?

Still, it’s understandable if you are perhaps less than convinced.

Maybe these arguments strike you as a bit too involved…or overly theoretical. Instead, you may be saying to yourself:

The reason we don’t include customers on the org chart is because…well, we just don’t.

Not the strongest of arguments, to be sure, but also hard to argue with. Management by hierarchy has been the preferred mode of organizing since the industrial revolution (if not for far longer). And businesses seem to be doing okay, nevertheless.

(Although there’s certainly still a lot of bad management going on out there).

So let’s approach this question from another angle: Why not put the customer on the organization chart?

If customers are in fact “the boss,” as Mr. Walton asserts, what would be the harm in considering them “part” of the organization, as Barnard suggests? If consumer sovereignty is as fundamental an economic principle as it has been made out to be, why not acknowledge this fact in some way when it comes to the organizational form and how we organize?

And even if management by hierarchy is in many respects “good enough,” perhaps there’s an even better way..?

So for the next post in this series, I’ll engage in an exercise that Chester Barnard seemed reluctant to take on back in the day. I’ll draw an organization chart that includes the customer.

Which, it turns out, is right where they belong.

 

 

Next in the series: Customers on top

 

Endnotes:

[1] Barnard, Chester I. The Functions of the Executive. (Harvard University Press: Cambridge, MA), 30th Anniversary Edition, 1968. (Originally published 1938), p. 81.

[2] Ibid., p. 77.

[3] Ibid., p. 71.

Bad Manager Habits, Part 2 (#27 – #49)

As many of you know, last month I took break from blogging.

The President, however, was not only hard at work for most of the month, but has been busy all summer.

So this week, I’m adding to my list of bad manager habits that I first posted back in May. As you may recall, these were habits inspired by the real-life actions of President Trump during his first 100 days or so in office – but which I feel managers should take pains to avoid if at all possible.

And as with my original list, I offer evidence for each.

(For those of you who follow me on Twitter, these will not come as any surprise to you.)

First, a disclaimer:

  • I’m not saying Trump is a bad manager necessarily. It’s possible that he manages his businesses in an entirely different way than he is running the country.
  • I’m also not saying that Trump behaves this way all of the time – or that he is guilty of each and every one of these behaviors. (He has, however, given the appearance of engaging in each on at least one occasion.)
  • And I’m not even saying that it’s not alright to behave in these ways every now and again. (But I will say it’s probably a bad idea to make them habits.)

 

And so:

Bad Manager Habit #27: Spying on your own employees (or threatening to).

Trump of course insinuated that he’d taped his conversations with Former FBI Director James Comey. But there are also those who claim that other government officials may be the focus of presidential surveillance. (http://www.newsweek.com/trump-officials-fear-they-are-being-spied-upon-565739 and https://tcf.org/content/commentary/trump-white-house-spying-fbi/)

 

#28: Revealing trade secrets to your competitors.

In May, Trump met with high level Russian officials – and apparently revealed to them classified information regarding US intelligence efforts aimed at foiling ISIS terrorist plots. (https://www.washingtonpost.com/world/national-security/trump-revealed-highly-classified-information-to-russian-foreign-minister-and-ambassador/2017/05/15/530c172a-3960-11e7-9e48-c4f199710b69_story.html?utm_term=.d1f1c6287c9b)

 

#29: Speaking ill of former employees.

In that same meeting, Trump called former FBI Director James Comey a “nut job.” (https://www.nytimes.com/2017/05/19/us/politics/trump-russia-comey.html?mcubz=0&_r=0)

 

#30: Changing your story.

Trump has repeatedly changed his story on why he fired former FBI Director James Comey in the first place. (http://www.msnbc.com/all-in/watch/trump-changes-story-on-comey-firing-947668547523)

 

#31: Pursuing short-term profits at the expense of long-term growth.

Trump’s decision to pull out of the Paris Climate Agreement might be seen as evidence of prioritizing short-term economic growth over the longer-term costs/externalities of climate change. (http://www.cnn.com/2017/06/01/politics/trump-paris-climate-decision/index.html)

 

#32: Ignoring the concerns of your employees, and the community.

Trump’s decision to pull of out the Paris agreement was opposed by NASA (https://climate.nasa.gov) and Secretary of State Rex Tillerson. (https://www.washingtonpost.com/politics/trump-to-announce-us-will-exit-paris-climate-deal/2017/06/01/fbcb0196-46da-11e7-bcde-624ad94170ab_story.html?utm_term=.46f8a56d7900)

 

#33: Lack of empathy.

Shortly after a terrorist attack in London in June of this year, Trump (incorrectly) criticized the response to that attack by the city’s mayor, at one point calling it “pathetic.” (http://www.pbs.org/newshour/rundown/trump-criticizes-londons-mayor/)

 

#34: Not doing your job.

An unprecedented number of crucial government positions within the Trump administration have yet to be filled. (https://www.theguardian.com/us-news/2017/jul/21/donald-trump-administration-us-government-jobs-unfilled)

 

#35: Confusing the issue.

In a June 15th tweet, Trump seemed to confuse collusion with Russia with obstruction of justice, both of which are currently the subject of an FBI investigation. (http://www.npr.org/2017/06/14/532985377/report-trump-under-investigation-for-possible-obstruction-of-justice.)

And in a press conference following former FBI Director James Comey’s testimony before Congress, Trump denied that he told Comey he “hoped” the investigation would dropped, before adding “But it would have been okay if I did.” (https://www.youtube.com/watch?v=W0q9epeV55Q.)

 

#36: Denying your employees basic benefits.

The Trump administration and the Republican controlled Congress have repeatedly tried to repeal the Affordable Care Act, which would leave millions uninsured. (http://money.cnn.com/2017/05/24/news/economy/obamacare-repeal-cbo/index.html)

 

#37: Falsifying your credentials.

According to the Washington Post and other sources, Trump hung a phony Time Magazine cover (featuring himself; see above photo) on the walls of several of his golf clubs. (https://www.washingtonpost.com/politics/a-time-magazine-with-trump-on-the-cover-hangs-in-his-golf-clubs-its-fake/2017/06/27/0adf96de-5850-11e7-ba90-f5875b7d1876_story.html?utm_term=.636a44fbaff1)

 

#38: Managing via intimidation.

Trump has threatened to back primary challengers to any GOP lawmaker who didn’t support his healthcare bill. (http://www.washingtonexaminer.com/trump-threatens-gop-back-health-bill-or-get-primaried/article/2617074)

 

#39: Trusting the untrustworthy.

The President seemed to take Vladmir Putin at his word when the Russian president assured Trump that Russia had not hacked the 2016 US presidential election. Trump also briefly considered collaborating with Russia on a cyber security unit to prevent future election fraud. (http://abcnews.go.com/Politics/trump-time-work-constructively-russia/story?id=48530164)

 

#40: Setting your subordinates up to fail.

Former press secretary Sean Spicer never really had a chance. (http://www.foxnews.com/politics/2017/07/21/spicer-resigns-from-white-house-team-sources-say.html)

 

#41: Publicly criticizing your employees.

Trump has openly criticized Attorney General Jeff Sessions—an early supporter of the President—on at least one occasion. (http://www.foxnews.com/politics/2017/07/21/sessions-in-tough-spot-after-trump-criticizes-him-in-new-york-times-interview.html)

 

#42: Encouraging employees to break the law.

In a televised address, the President urged New York City Law Enforcement Officers not to be “too nice” to suspected criminals while making arrests. (https://www.usatoday.com/story/news/politics/onpolitics/2017/07/29/police-trump-speech-violence/522561001/)

 

#43: Remaining conspicuously silent when words/action/leadership are needed.

Trump waited two full days to condemn the white supremacists who marched in Charlottesville… (http://www.cnn.com/2017/08/14/politics/trump-charlottesville-north-korea/index.html)

 

#44: Espousing/tolerating racist views.

…and then a day later defended some within their ranks as being “fine people.” (http://www.cnn.com/2017/08/15/politics/trump-charlottesville-delay/index.html)

 

#45: Needlessly going over budget.

In part due to the President’s many trips to Florida, the Secret Service has already spent its entire annual budget. (https://www.aol.com/article/news/2017/08/21/report-trumps-travels-have-left-the-secret-service-unable-to-pay-agents/23155707/)

 

#46: Excusing illegal behavior.

Last month, Trump pardoned former Arizona Sheriff Joe Arpaio, who in July of this year was convicted of criminal contempt of court. (https://www.washingtonpost.com/world/national-security/trump-pardons-former-arizona-sheriff-joe-arpaio/2017/08/25/afbff4b6-86b1-11e7-961d-2f373b3977ee_story.html?utm_term=.28e31ad25136)

 

#47: Appearing to capitalize on/exploit others’ misfortune.

On a recent visit to areas affected by Hurricane Harvey, Trump wore a hat available for purchase at his re-lection campaign’s online store. (http://www.npr.org/2017/08/30/547396137/trump-wore-usa-hat-to-visit-hurricane-zone-and-trump-fans-can-buy-the-look)

 

#48: Picking fights.

In recent weeks, the President’s fiery rhetoric has escalated the likelihood of potential military conflict with North Korea. (http://www.foxnews.com/politics/2017/09/05/trumps-comments-on-north-korea-from-fire-and-fury-to-blaming-china.html and https://www.thenation.com/article/trumps-handling-north-korea-going-lead-us-straight-nuclear-disaster/)

 

#49: Blindsiding your colleagues.

Earlier this week, Trump sided with Democrats in agreeing to attach hurricane relief to a shorter-term hike in the debt ceiling than Republicans had hoped for, and in the process seemed to have caught Mitch McConnell and Paul Ryan completely off-guard. (http://secondnexus.com/politics-and-economics/trump-blindsides-republicans-making-deal-democrats-conservatives-livid/ and http://www.cnn.com/2017/09/06/politics/trump-meeting-with-democrats-deal/index.html)

 

 

See you next Friday.

August break

I’m unplugging for my usual August break. But I’ll be back with more new posts just after Labor Day…

 

 

 

 

 

 

 

Cynical! says Robert Sutton

So it seems I’ve done it again.

To be honest, though, I’m not trying to upset anyone. I’m really not.

Nevertheless, I get it. My repeated criticisms of best-selling management-advice books and the management establishment… The at-times contrarian tone of my blog… Even it’s name: “insubordination”… I can see why some people might assume my sole motivation here is simply to rage against the corporate machine.

But I’m getting ahead of myself.

Let me explain.

 

If you feel I’ve misrepresented your work…

As many of you by now know, when I criticize a particular management book, I usually make an effort to reach out to the author for comment, correction, or rebuttal.

Typically I shoot them an email that reads something like this:

Dear_____:

As a professional courtesy, I am writing to let you know that I cited your book _______ in a recent blog post. If you feel that I have misquoted or misrepresented you or your work in any way, please do not hesitate to contact me.

Regards, etc., etc.

Most of the time I don’t hear back. Occasionally, however, I do. And recently, I got a reply from Robert Sutton, Professor of Organizational Behavior at Stanford’s Graduate School of Business.

And Professor Sutton does not appear to be pleased with what I had to say about his 2010 management book, Good Boss, Bad Boss.

In one post I pointed out that, contrary to what most people believe, he seems to suggest that “micromanaging” employees on occasion might actually be a good thing. (To read the full post, click here.) And in another, I highlighted a couple of passages from his text that contradict each other. (To read that post, click here).

All of which resulted in a rather terse email from Dr. Sutton. It begins as follows:

I think you don’t understand evidence-based management.. It is great to be cynical, but you are taking a post-fact perspective… if you want to see everything as shit, fine with me..

And concludes thusly:

I won’t engage with you ever again after this, and research shows that logic rarely sways people with strong opinions.. But your logic is terrible. I have my doctoral students write scathing reviews of my work sometimes.. I am constantly seeking people who are worthwhile to argue with as I am right and listen as if I am wrong; but your arguments are so weak it is stunning.. 

(And lest I be accused of taking Professor Sutton’s comments out of context, I’ve reprinted the full text of his email below – please see Endnote [1]).

So there’s a lot to respond to here. Let’s begin with:

  • “I think you don’t understand evidence-based management”

I’m not entirely sure where Dr. Sutton is going with this, but I’d just point out that neither of my posts called into question his research, nor any of the evidence presented. As I just stated, I simply found it notable that (1) his book seems to support micromanaging on occasion, in defiance of conventional management wisdom, and (2) the author of a book titled Good Boss, Bad Boss couldn’t seem to make his mind up about whether bosses actually matter or not.

As for “evidence-based management,” I would just add that I do understand the concept. And so far as I can tell, there’s considerable and compelling evidence to suggest that listening to your employees is about as close to a sure-fire recipe for success—and being a “good boss”—as you’re going to get. (For more on this, click here.)

  • “It is great to be cynical…”

Actually, I disagree. I don’t think it’s great to be cynical. But more on that in a minute.

  • “…but you are taking a post-fact perspective…”

“Post-fact”? Again, I’m not sure what Dr. Sutton is getting at here. But perhaps it’s related to one of my own frustrations with his text, and management advice books in general…

As I’ve already written about at length, for every management “principle” offered by one of these management advice books, one can almost always find a contradictory counterpart. This makes them very useful in rationalizing behaviors after the fact—or “post fact”?—but little else. For example, one might invoke the idiom “look before you leap,” or “he who hesitates is lost” depending on the which action you’d like to justify.

In my post that was so upsetting to Dr. Sutton, I had simply pointed that some of the advice in his own book is guilty of this flaw as well. For example, on the one hand he writes: “…talented employees who put their needs ahead of their colleagues and the company are dangerous” (p. 102). And yet later he offers a contradictory opinion when he insists: “…to be a great boss you’ve got to think and act as if it is all about you. Your success depends on being fixated on yourself” (p. 245).

(It is worth noting that the first person to identify this weakness in management theory was an organizational theorist named Herbert Simon. For more on this, click here.)

  • “if you want to see everything as shit, fine with me..”

Not true. I don’t see everything as s***, nor do I wish to. I do however believe that very little of substance has been written on the subject of managing, and how to do it well. [For more on this, click here.]

 

Now to be fair, Dr. Sutton’s email isn’t all insult and abuse. He makes a few points worthy of both acknowledgement and consideration.

For instance:

  • “…my book and everything I have written have made three things very clear…”

[This part of Prof. Sutton’s reply gets a bit wordy, so I’ve taken the liberty of summarizing/paraphrasing. But again, if you’re at all worried about my objectivity, the full text of his email can be found in Endnote #1.]

Point 1: People consistently overestimate the impact of “leadership” (that is, the single, inspiring leader)

Point 2: The bosses that matter most are immediate supervisors

Point 3: People quit bosses, not companies

These are all great points – and indeed, ones with which I wholeheartedly agree. So if taken together they comprise the primary thesis of Dr. Sutton’s text, as he insists, I will admit to not having picked up on that. You see, I was under the mistaken impression that Good Boss, Bad Boss was an advice book written for managers on how to manage better – an impression I got from the book’s subtitle:

How to be the best…and learn from the worst.”

  • “I believe what you are mistaking for inconsistency is a reflection of nuance, of what researchers call boundary conditions (some theories hold in some conditions and not others)…” 

I’m glad Professor Sutton brought this up, because I’ve actually heard this argument before.

Dr. Sutton claims says that “some theories hold in some conditions not others,” or are dependent on “boundary conditions.” In my own experience, however, these “conditions” are never then specified in sufficient detail – or at least not in any text on management or organizational theory that I have ever read (including Dr. Sutton’s). Instead, any and all ambiguities are simply chalked up to “nuance,” or seen as proof that good management is an “art” more than it is a science.

This, to my mind, is a cop-out.

(Note that Sutton’s argument here is essentially the backbone of contingency theory – a theory of managing which states that there are no universal management principles that might be applied in any and all circumstances. Instead, concepts are considered to be situationally-dependent – that is, appropriate only under specific circumstances or in certain situations. For my more detailed critique of contingency theory, please click here.)

  • “And as a sign you are just reading for inconsistency…”

Yes – guilty as charged. For the reasons I just gave, I read Professor Sutton’s book looking specifically for inconsistencies.

  • “I am sure I say things that wrong or inaccurate, as many of us do…”

Agreed – I too make mistakes all the time. For instance, it seems that I offended you in some way, Dr. Sutton, even though that was not my intent. I apologize.

  • “…but I think your point that opposite argument can be made about anything, so it is all crap, is destructive and leads to cynicism and bad decisions.”

Alright – so allow me to address Dr. Sutton’s charge that I am “cynical,” and prefer to see everything as “crap.”

 

Constructive advice

As I’ve already conceded, I can see why someone like Dr. Sutton might assume that I’m simply throwing stones at glass houses. As my blog reads so far, I understand how one might get that impression.

So a little context is probably appropriate.

Let me start by pointing out that I am a scientist by training (a chemist, actually). And as such, I was taught to approach problem-solving in a very specific way.

Step one of that process involves identifying the weaknesses in the current state-of-the-art in whatever field you may be investigating, or hoping to improve upon. If you are attempting to build a better mousetrap, for example, you might investigate and then call attention to some of the deficiencies in those mousetraps already on the market. And if you’re attempting to come up with a better theory of management, a good place to start is to identify the weaknesses in current management theory.

This is fundamentally important for two reasons: (1) There is perhaps no better way to fully understand whatever problem you hope to tackle; and (2) it enables one to demonstrate to others (and yourself) that there is a need for something better.

This, to be clear, has so far been the aim of my blog.

By pointing out the deficiencies, inadequacies, and flaws in current management theory (of which there are many), I am simply attempting to justify the need for some new approach—or theory—of managing, as well as better define the weaknesses that would need to be addressed.

So, no – I don’t see my critiques of Professor Sutton’s book, or Roger Martin’s book, or any of the other management advice books that I have examined as “destructive,” as Sutton charges. I’d argue just the opposite: The exercise is in fact just the first step in something fundamentally constructive. Although it might not seem it—nor always be pleasant—I am simply attempting to contribute to improvement of management theory in the only way I know how.

And if I have caused offense in the process, I apologize.

In the meantime, I remain optimistic. It is my sincere belief that Dr. Sutton’s strong opinions will not prevent him from engaging in logical debate with individuals such as myself in the future, even though we would appear to disagree.

And even though, as he rightly points out:

“Research shows that logic rarely sways people with strong opinions..”

 

See you next Friday.

 

Endnote

[1] Hmm

I think you don’t understand evidence-based management.. It is great to be cynical, but you are taking a post-fact perspective… if you want to see everything as shit, fine with me.. But the path of the evidence (I spent 25 years writing peer reviewed papers and follow the evidence religously) , and if you spend a lot of time with splendid leaders as I have had the privilege to do such as Ed Catmull, senior execs who played key roles google and facebook and so on, I believe what you are mistaking for inconsistency is a reflection of nuance, of what researchers call boundary conditions (some theories hold in some conditions and not others), and of the fact that initial findings that seem to be right are eventually proven wrong or at least suspect by new and stronger evidence.   So while throwing mud might be fun, I think you are missing the point.. My point about assertiveness, whether you agree with it or not, is based a set of studies in rigorous peer reviewed journal.. I think your argument that both sides of an argument can be made is silly and shows the problem with our post-fact world.. Yes there are a few crummy scientists who argue global warming is not caused by human activity, but the weight of evidence suggests otherwise.. The stuff I draw on is not that strong, but that is where I start.   I am sure I say things that wrong or inaccurate, as many of us do, but I think your point that opposite argument can be made about anything, so it is all crap, is destructive and leads to cynicism and bad decisions. 

And as a sign you are just reading for inconsistency, my book and everything I have written have made three things very clear (this is evidence-based), you just didn’t process the nuance:

  1.  People consistently overestimate the impact of leadership on team and organizational performance (this is called the romance of leadership.. It is very well-documented, and the larger and older the organization, the less a single leader matters).
  2. The bosses that matter most for performance are, essentially, team leaders.. immediate supervisors, whether it be the CEO and senior team, an agile team, or a combat team.. So bosses matter, just not as much as most people think.
  3. And people do tend to quit bosses, by which as I make very clear, the next person above them in the hierarchy..so they don’t quite google or GM so much as they quit their immediate boss at google or GM.. 

Note the nuance.. I wont engage with you ever again after this, and research shows that logic rarely sways people with strong opinions.. But your logic is terrible. I have my doctoral students write scathing reviews of my work sometimes.. I am constantly seeking people who are worthwhile to argue with as I am right and listen as if I am wrong; but your arguments are so weak it is stunning.. 

Professor Robert I. Sutton
Department of Management Science & Engineering
Stanford University

 

Paradox of the week – Jim Whitehurst

According to Jim Whitehurst, business has changed.

As he writes on the very first page of his 2015 management advice book, The Open Organization:

The classic rules of the game—which used to define who won or lost in business—are being swept away.”

And as a result, Whitehurst adds, “You can’t keep doing the things the way you’ve always done them” (p. 2).

Whitehurst is the CEO of Red Hat, a publicly traded company that offers customer support to the users of open-source software, including Linux. The organization employs just over 10,000 people, and in 2016 took in $2.4B in revenue. And for over 20 years, according to Whitehurst, that company has been managed as an “open organization.” And, as he insists:

Managing and leading an open organization could not be more different from leading a more conventional one.

So for this installment of my “Paradox of the week”-series of posts,[1] a look at a couple of his management “principles.”

Funny thing, though. They seem pretty familiar.

 

Everything new is old again

“It starts with a purpose,” Whitehurst writes on page 27 of his text.

This, to his mind, is critical to generating the passion and engagement necessary to the success of any open organization.

But, of course, companies of all sorts (including conventionally managed companies) already craft their own mission statements. Indeed, some of the statements of purpose that Whitehurst then cites as exemplary belong to some pretty old, and well-established organizations. For example (p. 28):

  • The Walt Disney Company, founded in 1923 (“To use our imagination to bring happiness to millions.”)
  • BMW, founded in 1916 (“To enable people to experience the joy of driving.”)
  • Johnson & Johnson, founded in 1886 (“To alleviate pain and suffering.”)

Are mission statements a good idea? Some businesses seem to think so. But are they innovative, “unconventional,” or something that could be considered unique to an “open organization”?

Not so much.[2]

Whitehurst also attributes Red Hat’s success to hiring passionate people (p. 40), making efforts to celebrate the company’s culture (p. 47-48), offering a dual “ladder” of advancement for those who would prefer not to go into management (p. 95), and even its casual dress code (p. 126).

Again, these are all fine ideas. But are they management “principles” that could be considered unique to an “open organization” like Red Hat? Not really. For example, companies having been trying to hire passionate people probably since the beginning industrial revolution. Even Delta Airlines, Whitehurst’s employer before he was hired by Red Hat, aspires to recruit workers with passion.[3]

And by his own admission, Delta is managed in a far more traditional manner (p. 11).

 

Up is down?

Finally, for someone who thinks “the conventional way of running companies” has “major limitations” (p. 11), and who argues that you can “no longer rely on top-down management hierarchies to solve problems” (p. 63), Whitehurst sure draws an awfully familiar diagram to depict this new type of management paradigm.

[Note that the figure on the RIGHT represents an “open organization” in Whitehurst’s estimation, while a “conventional organization” is on the LEFT.]

 

 

Looks to me like Whitehurst has it reversed…or is it upside down?

 

See you next Friday.

 

 

Endnotes

[1] These are instances in which a management author/”expert”/advice-giver/guru offers contradictory advice or makes paradoxical claims, typically without any awareness of having done so. For more examples of this phenomena, click here. For an explanation as why this happens—and why it happens so often—check out my post “Why you can throw out that management advice book” (Parts 1,2&3).

[2] Interestingly, Whitehurst brings this paradox full circle by later contradicting himself yet again when it comes to mission statements. On page 40, he seems to dismiss their utility (as well as admits that the idea itself is not at all novel): “Most companies have a stated corporate purpose or mission statement. Unfortunately, these are rarely used words that do little to drive purpose or passion within the company.”

[3] http://www.deltajobs.net/flight_attendants.htm.

 

Holacracy (Or, Robertson’s rules of order)

Holacracy.

Maybe you’ve heard of it…and maybe you haven’t.

But if not, according to the inside jacket cover of Brian Robertson’s 2015 book on the subject: “You will.”

Holacracy, Robertson insists, is a “revolutionary new system for running companies.” And businesses that choose to adopt it, he assures his readers, will enjoy “efficient communication, effective meetings, less red tape and fewer roadblocks, [and] crystal clear lines of responsibility and accountability.[1]

Well, that all sounds pretty good to me.

So this week, a closer look at Robertson’s book, Holacracy: The New Management System for a Rapidly Changing World. What it is, how it works, and what it may (or may not) mean for managers.

 

Distributing authority

Businesses, Robertson laments, are stuck. “We haven’t seen any robust alternatives or significant improvements to our modern top-down, predict-and-control ‘CEO is in charge’”[2] – a way of managing that at one point he likens to a “dictatorship.”[3] Furthermore:

Even with the best intentions and great leaders, a top-down authority system leads almost inevitably to a parent-child dynamic between the boss and the employer.” (p. 22)

But Holacracy counters these tendencies, Robertson assures us, through something he calls “distributive authority.”[4]

Inspired by the sort of “self-organization” that occurs in cities and other communities as they grow and develop, Robertson argues that organizational power can be successfully transferred from people (the old way) to a “process” (the new way). No more bosses in charge, and no longer will subordinates have to wait around for directives. According to management by Holacracy, employees at all levels have the power to make their own decisions.

And with distributed authority, no one has the right to tell anyone else what to do.[5]

 

Jargon

Before going any further, I should point out that Robertson’s book is a little heavy on the jargon.

In addition to this idea of “distributive authority,” he also assigns new terms to some very old and familiar organizational concepts. For instance, people don’t have “jobs” in the Holacratic organization. Instead, they fill one or more organizational roles. Nor do employees belong to a specific “department,” “group,” or “team” (although Robertson still makes liberal use of that latter term). They belong instead to one or more organizational circles.

Here are a couple of other terms you would need to become familiar with, were you and your organization to adopt Robertson’s management system:

  • What a link is, including the differences between a Lead link, Rep Link, and a Cross link
  • What distinguishes a role (which can be “expressed” or “energized”) from an accountability (which is “enacted”), and a domain (which is a “property right”)
  • What constitutes the general company circle, and how it differs from the anchor circle, as well as other super-circles and sub-circles
  • What a core circle member is, as well as the duties of a circle’s facilitator and secretary
  • What the governance process is, and how it differs from the operational process

And finally, you would need to know what a tension is. This is Robertson’s term for what you or I might call a “problem” or “conflict.” Tensions aren’t identified and then fixed or resolved, like problems are, either. Instead, they are “sensed,” and then “processed.”

If it all sounds a little confusing, it can be. And on occasion, it results in the sort eye-rolling management-speak that you might expect. For example:

As a lead link, rather than directing the action, you hold the space within which the purpose of the circle can be fulfilled, and you keep out issues and concerns that are not within the scope of that circle.” (p. 51)

When you fill a role, you gain the authority to take any action you deem useful to express that role’s purpose or energize one of its accountabilities, as well as you can with the resources available to you, as long as you don’t violate the domain of another role.” (p. 80)

With the foundational structure created through governance, Holacracy provides further operational distinctions, rules, and lightweight processes that help a team get work done together and express their roles.” (p. 87)

Nevertheless, Robertson insists it is all worth it. As he explains:

Change your language, change your culture.” (p. 176)

 

Meetings

New language notwithstanding, Robertson’s aim in developing a this management system is nevertheless worthwhile and commendable, in my opinion. And that aim is:

To make work easier.

In attempting to break the centuries-old lock that management by hierarchy has had as the default management paradigm, Robertson hopes to rid for-profit organizations of needless bureaucracy, unnecessary red-tape, and stifling indecision. Which is great. If you know something needs to be done, and have what you need to get started, you no longer have to wait for a manager’s approval.

Just do it.

Where things get a bit tricky, however, are in those instances when it’s unclear what needs to be done.

Or who should do it.

Or how it should be done…or by when.

And these, of course, are the sorts of questions/conundrums that enterprises of all shapes and sizes grapple with on an almost constant basis. For example:

  • Maybe you know what needs to be done, but you aren’t sure if it’s your decision to make?
  • Or maybe you know something needs to be done, but you don’t know what exactly..?
  • Or maybe you know what should be done, but you also know it would directly impact/disrupt the work of someone else, perhaps adversely…
  • Or maybe you know what you need to do, but you simply lack the resources to do it…

According to Robertson, all of this can be most efficiently and effectively accomplished in meetings – provided, of course, that those meetings are efficient and effective. As a result, much of the practice of management by Holacracy seems to boil down to getting used to two (2) new meeting types, and their very specific procedures and protocols. They are:

  1. Governance meetings – These are gatherings at which decisions are made regarding who is responsible for doing what. Need someone to update the corporate website with favorable press reviews on regular basis, for example? No problem – that particular responsibility can be assigned to a specific “role” in a governance meeting.
  2. Tactical meetings – These meetings concern “everything that happens outside of governance,” as Robertson puts it – or are about “getting things done.”[6] They provide a forum in which progress is monitored, priorities are set, metrics are reviewed, “tensions” are acknowledged (and hopefully “processed”), and the work of individual circle members is coordinated with the efforts of the rest of the organization.

There is, as might be expected, much to know and understand about how these two types of meetings are run.

For example, in governance meetings there is a “check-in” and “closing” round, as well as time set aside for “agenda building.” Decisions are made using something called the “integrative decision-making process,” which includes specific rounds for presenting proposals, clarifying those proposals, reacting to them (and their clarifications), and then amending those proposals, and/or objecting to these amendments, and finally “integration.”[7] Tactical meetings also have a check-in and closing round, as well as a “checklist review,” “metrics review,’ “progress updates,” “agenda building,” and “triage issues.” What can and cannot be said at various points in these proceedings is also strictly defined. Feedback, input, or responses of any kind—“cross talk,” as Robertson terms it—is often prohibited.[8]

But it’s all worth it, Robertson assures us. These stipulations are part of “protecting the process” he insists, which is absolutely necessary if Holacracy is to work for you.

 

The circles of the organization go round and round

And yet if it all of this seems a bit involved, or unnecessarily complicated, you might be forgiven for thinking as much.

According to “work-life management expert” and early Holacracy-adopter David Allen, you should prepare yourself for an extended learning curve if you go with Robertson’s system. As Allen writes in the book’s forward:

I did (luckily) have an intuition that exploring Holacracy was going to be a five-year project.” (p. x) [9]

But no matter – so long as it works, right? Indeed, the more curious/troubling admission made by Allen is this:

There are times when many of us would love to prove Holacracy doesn’t work. It’s easy to blame the process as the perpetrator of our discomforts. … What is wonderful is that the model doesn’t care. As a matter of fact, getting rid of it [Holacracy] is totally acceptable and allowed, within the model.” (p. xi)

Hmmm.

Maybe it’s just me, but the book’s forward seems an odd time to bring up the apparent unpopularity of Holacracy, not to mention entertain the possibility of abandoning it. But don’t look to Robertson to disagree. As he later writes (p. 167):

Holacracy isn’t for everyone.

 

3 Contradictions

There is also the problem of contradiction.

For those of you who follow my blog, you are probably well aware that my main complaint with management advice books is that they all too frequently engage in contradiction, or make paradoxical assertions – often without any apparent awareness of having done so.

[For some examples of this phenomena in other books, click here. Or here. Or here, or here, or here, or here…or here. For why it happens so often, click here.]

Robertson’s text is no different. For example:

  • On page 21, he argues that the successful implementation of Holacracy requires adopting a “Holacracy constitution,” which he describes as the “the core rulebook for the organization.” Nevertheless, he also insists that “you don’t need to read it” (p. 22), and does not include its text in his book. (It is, however, available as a free download.)
  • On page 145, Robertson informs readers that it is not possible to adopt certain parts of Holacracy—like the meeting formats—while ignoring others. It is not a “bolt-on” technique, he explains[10] – or at least not if you want to reap its full benefits. And yet on page 181, he has this to say:

“I’ve heard of companies that successfully used [Holacracy’s meeting format] in place of their general staff meetings even though they were not running on Holacracy.”

  • And then on page 25, Robertson makes the sort of overtly paradoxical claim that I’ve found to be quite typical of modern management advice books in general. As he asserts: “Holacracy liberates those within the organization to be simultaneously more autonomous and more collaborative [my emphasis].”[11]

 

Hierarchy nevertheless?

But my primary objection to Mr. Robertson’s management system is that it seems to fall short of its stated objective. And that is:

To do away with hierarchy.

As Robertson’s repeatedly insists, Holacracy transfers organizational power from people to a process. However, on page 39 of his text he argues that “when we distribute authority…we distribute it not to individual humans, but to the roles that they fill.” But if authority is distributed to roles, and people fill those roles, how is this really any different?

Alright, so it seems people still have the power according to management by Holacracy – albeit based on their roles. So to whom is organizational power “distributed”? A careful reading of Robertson’s text offers a few hints. For example, on page 107 there is the following:

…the duty of prioritization means you can get a lead link involved in prioritization questions and expect others to align with the lead link’s decisions.

And from page 134:

The Holacracy constitution requires that individuals align their operational decisions with any strategies specified by a circle’s lead link…

In other words, these “lead links” seem to have some of the powers/authority traditionally associated with managers. For example, not only do lead links set priorities, they also play an important role in determining organizational strategy, and can expect others to fall in line and support that strategy. Lead links are also responsible for role assignments within the circle – much like managers decide who does what in their own organizations.

Apparently I am not the only one to make this comparison. On page 50, Robertson points out that readers shouldn’t “confuse [the lead link’s role] with the role of a traditional manager.” As evidence, he points out that lead links do not have the power to fire someone (although they may remove someone from a role), and they do not determine compensation.[12]

Still, if there is any similarity between management by Holacracy and management by hierarchy these lead links would seem to be…well, the link. For instance, the lead link for each circle is not elected, but appointed – and the person/role responsible for that is—you guessed it—the anchor circle’s lead link. And that individual is typically whoever decided to make the switch to Holacracy in the first place – usually the CEO, business owner, or company founder.

This detail is significant because the person with the power to adopt Holacracy also has authority to undo it all. According to Robertson:

“For adoption by a CEO… He or she can retain the right to “unadopt” Holacracy at any point and go back to the old way of running things…” (p. 152)

In other words, while it is the CEO who “cedes power” by agreeing to adhere to a Holacratic constitution, he or she can pull the plug on the whole experiment whenever he or she wants.

And that is something in all likelihood that is not lost on the rest of the organization.

 

Testimonials

So perhaps there is a “hidden hierarchy” lurking beneath all of Holacracy’s fancy new terminology, and strictly defined meeting protocols? Robertson seems willing to concede as much:

Holacracy uses a different type of hierarchy than we’re used to, for a different purpose.” (p. 48)

But the better question might be: Does Holacracy actually work?

Well, so far as I can tell, the jury still seems to be out on that one.

For instance, as of this writing David Allen still runs his company according to Robertson’s method. That organization, The David Allen Company, is an executive coaching firm offering services based on the Getting Things Done (GTD) work-life management system.

But there is also Evan Williams’ experiences to consider. Williams was a co-founder of Twitter, and is currently CEO of Medium – an online publishing platform. On the jacket cover of Robertson’s book, Williams effused: “Holacracy creates clarity.” However, in March of 2015 his company choose to abandon Holacracy after just a few years. At that time, Williams was quoted as saying:

[Holacracy] had begun to exert a small but persistent tax on our both effectiveness and our sense of connection to each other. For us, Holacracy was getting in the way of the work.”[13]

 

By far the highest profile (and largest) company to have adopted Holacracy, however, is Zappos – the online retailer founded by Tony Hsieh.

In 2013, Zappos began its own implementation of Robertson’s system. Many in the organization opted to leave at the time of Holacracy’s adoption – and in the eyes of some, turnover remains relatively high at 29%. Notably too, in 2015 Zappos also fell off Fortune’s list of “100 Best Companies to Work For” for the first time in 8 years. Nevertheless, the company did achieve their profit goals for that year.[14]

More recently Hsieh has decided to focus efforts on transforming Zappos into a “Teal” organization—or one characterized by “self-management”—even as the company continues to adhere to Holacracy’s procedures and protocols. In a 2015 memo to employees, he wrote:

We are going to take a ‘rip the Band-Aid’ approach to becoming Teal organization…in order to eliminate the legacy management hierarchy, there will effectively be no more people managers.[15]

Management by Holacracy aside then, it would seem that—in Hsieh’s opinion at least—shaking the last vestiges of hierarchy is not as easy as Robertson makes it out to be.

 

Robertson’s Rules of Order?

To be honest, I’ve never worked in a Holacratically-managed organization.

Nor have I seen one up close.

So far be it from me to say whether Holacracy will prove to be the “revolutionary new management system” of the future that Robertson’s book claims it will be.

Nevertheless, I applaud Robertson’s efforts. In addition to hoping to make work “easier,” his stated aims of making organizational conflict less personal, and more professional, and ensuring that everyone within an organization is heard and taken seriously—even the lone dissenter—is to be commended.

And according to some, at least in this one respect it seems to be working. As one Zappos employee put it:

The structure of the meeting forces each person to…say what they want. Before I might’ve thought something and wouldn’t have jumped in.[16]

 

So perhaps what we’re looking at here is a new way of conducting meetings – an updated version of that classic Robert’s Rules of Order.

Recall that this was the little book penned in 1876 by U.S. Army officer Henry Martin Robert, and which offers detailed instructions on how meetings might be run orderly and efficiently. In it, Officer Robert codified such now familiar concepts/protocols as making a motion, holding a debate, putting a motion to a vote, and majority rule. And back then, much of what he wrote might have struck some as a bit “jargony” too.

But when it comes to eliminating managers and management by hierarchy altogether, it is my opinion that Robertson’s paradigm comes up short.

As far as I can tell, the CEO or business owner still holds most of the power in the Holacratically-governed organization. This individual retains the authority to set goals, determine strategy, prioritize work, and make role assignments throughout the organization (even if only indirectly). And should things not go his or her way, this individual might “un-adopt” Holacracy at any time.

To rid organizations of hierarchy altogether, it seems we may just have to wait for something else to come along.

 

 

See you next Friday.

 

 

Endnotes

[1] Roberston, Brian. Holacracy: The New Management System for a Rapidly Changing World. 2015. (Henry Holt and Company: New York), inside jacket cover.

[2] Ibid., p. 11.

[3] Ibid., p. 18.

[4] Ibid., p. 91.

[5] Ibid., p. 53-54.

[6] Ibid., p. 87.

[7] Ibid., p. 72.

[8] Ibid., p. 70.

[9] It is perhaps interesting to note that at the time of it’s writing, Allen and his own organization were only three years into that project.

[10] Ibid., p. 58.

[11] I first encountered this phenomena in the management advice book classic In Search of Excellence (1982) by Tom Peters and Robert Waterman. In it, the authors argue that “excellent” companies exhibit “simultaneous loose-tight principles.” That is, they are “both centralized and decentralized,” and “on the one hand rigidly controlled, yet at the same time allow…autonomy.” They also are “simultaneously externally focused and internally focused,” and seem to obey something Peters and Waterman call “the smart-dumb rule.” None of this, of course, really makes any sense.

[12] Robertson, op. cit., p. 53.

[13] “Management Changes at Medium” by Jennifer Rheingold. Fortune (online), March 4, 2016. http://fortune.com/2016/03/04/management-changes-at-medium/.

[14] “How a Radical Shift Left Zappos Reeling” by Fortune (online), March 4, 2016. http://fortune.com/zappos-tony-hsieh-holacracy/.

[15] Ibid.

[16] Ibid.

About the Blogger

David J. Rys is a former pharmaceutical scientist who first became interested in managing, and its malpractice, almost a decade ago, while sitting in a meeting. After an hour of listening to upper management tell him and his co-workers how to do their jobs better, he found himself wondering: why am I listening to you, when you should be listening to me? This blog reflects his efforts to answer this nagging question, as well as explain what “good management” really is, and why good managers are so few and far between ... read more
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