The New Ecology of Leadership

A radical retake on the field of management, which stresses creativity, innovation and fair returns for all stakeholders and supplies a mental model and the management tools to do it.
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David's Blog

Don’t Throw the Past Away: Rediscovering the “Drucker Space”

History repeating itself

History

For Peter Drucker history was an essential resource. Commentators have described the scope of his writings as “Braudelian” in honor of the work of historian, Fernand Braudel, the leader of the French Annales school of history, renowned for its broad, integrative approach. Drucker’s illustrations of organization and change included both the British Raj in India and the Meiji Restoration in Japan. A trio of little-known German thinkers, Willem von Humboldt (1767-1835), Joseph von Radowitz (1797-1853) and Friedrich Julius Stahl (1802-1861) informed his understanding of what it took to preserve the traditions of the past while facilitating rapid change.

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Management by Machine: MBO as Manipulation?

Recently Adrian Wooldridge, the Schumpeter columnist for The Economist, reviewed the introduction by BetterWorks, a Silicon Valley startup, of “goal science” to the workplace. The New York Times reviewed the same company on Monday. The company “makes office software that blends aspects of social media, fitness tracking and video games into a system meant to keep employees more engaged with their work and one another. With the software, employees and their bosses set long- and short-term goals, and, over time, log their progress on a digital dashboard that everyone in their company can see and comment on.” The idea is to make the Management by Objectives (MBO) process more frequent and more “data-driven”. One wonders whether this is the real challenge with MBO. More often the problem is with the philosophy behind the technique, rather than with the technique itself.

MBO; an Elusive Philosophy

Management by Objectives (MBO) is a deceptively simple technique that is very difficult to employ effectively. The philosophical framework within which it is used is critical. Given Peter Drucker’s background, upbringing and his emphasis on self-discipline, it seems likely that his original intent was that MBO should be the civilian equivalent of the system of mission command or auftragstaktik, developed by the Prussian army in the 19th Century. The essence of this system was that no commander should issue an order that went beyond what he could know of the actual situation. Rather he should declare an intent that created a space within which his subordinates would have the freedom to act as they saw fit. They, in their turn, would declare their slightly narrower intents and so on, down the line. This cascading set of “action spaces” preserved autonomy and creativity at every level of the organization. Helmuth von Motlke the Elder (1800-1891), who perfected the system, made no distinction between strategy development and execution – strategy could emerge bottom-up through “directed opportunism”, just as readily as it could be formulated top-down. Mission command is still the gold standard for armed forces all over the world. But, outside of small Special Forces units, it has proved extremely difficult to implement – the words are easy, but behavior and the selection and training required to produce and sustain it are difficult.

In America the management philosophy required to use MBO successfully is rarely found. The prevailing perspective is engineering, instrumental and individualistic. Strategy formulation is separated from implementation and the notion of emergent strategy is diminished if not denied. Often the assumption is that cause-and-effect in a complex organization is well understood when, in reality, it is hardly understood at all. The emphasis is on performance and efficiency at the expense of creativity and learning. “Clear objectives” are seen as the CEO’s input to the process rather than as an outcome of a process of discovery. “Clear” is usually taken to mean SMART: specific, measurable, actionable, realistic and time-sensitive but too often the default is to financial measures. These are always desirable outcomes that, of course, leave the assumptions about cause-and-effect unexamined. In addition, clarity is often mistaken for detail, which encourages senior management to get far more specific than they should. Metrics become straightjackets – targets that define performance and are linked via incentives to compensation. This raises the stakes in the organization, leading to all kinds of dysfunctional outcomes. Instead of promoting cooperation it can easily stoke competition. The worst outcome is that it turns what should be means into ends-in-themselves. This makes the true ends of the enterprise undiscussable. Purpose and meaning dwindle and the whole MBO process becomes manipulative. Thus MBO morphs into authoritarian micromanagement, a tool of oppression. The Prussian army called it befehlstaktik – detailed command. It is the bane of large bureaucracies everywhere, disengaging people and crushing creativity and innovation. It is unclear how mechanizing the MBO process can change this. Conducting a dysfunctional goal-setting process more often seems to be a recipe for disaster.

The Wreck of The New Republic – How Not to Run a Turnaround

the-new-republic-logo-3

Wrecked

The economist Joseph Schumpeter famously argued that the central feature of capitalism was “creative destruction”. Last month the destructive aspects were on full view in the wreck of the 100-year-old magazine The New Republic (TNR). In the first week of December 2014, a month after the celebration of its centenary, almost the entire senior staff resigned in response to the forced departure of the magazine’s respected editor, Frank Foer. In one day the publication lost two-thirds of the names on its editorial masthead.

The New Republic was founded in November 1914 by leaders of the American Progressive Movement and backed financially by a Whitney heiress and her wealthy husband. Over the years, under its masthead symbol of a square-rigged frigate, it has attempted to tack and jibe between the ancient menaces of Scylla and Charybdis. That is, it tried to find a way between “left” and the “right” in many, perhaps most of the instances of that polarity: tradition and progress, liberal and conservative, rural and urban, agrarian and industrial, arts and sciences, community and individual and so on and on. The result was an often scintillating publication, but with a limited readership. TNR lived perpetually on the edge of financial catastrophe, which was staved off only by philanthropic support. Even then, there were regularly crises, when the magazine’s very survival was threatened.

Internally the TNR culture was what a former editor, Andrew Sullivan describes as a “cauldron of first-class minds and third-class temperaments, engaged in something roughly called journalism not for money or pageviews, but because they believed in something, and were prepared to engage every ounce of their brainpower to fight over it. Editorial meetings were tempestuous, ribald, hilarious, and unmissable .…We experimented every week – and took risks others balked at.” Not surprisingly this atmosphere proved to be a great incubator of writing talent and many of America’s finest journalists have spent some time at TNR. This must account in part for the shock and anger expressed in the media at its wrecking.

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Words and Looks: Leadership Lessons from A Christmas Carol

A Christmas Carol First Edition

Charles Dickens’ classic, A Christmas Carol, was first published on December 19, 1843. So it’s close enough to roll this blog out again. Happy Holidays to all!

Management gurus have drawn lessons on leadership from diverse sources, ranging from the practices of Attila the Hun to the fictional events in Star Trek. Yet they seem to have missed one of the finest accounts of transformation and change familiar to us all. It is Charles Dickens’ best-loved story, A Christmas Carol. He said that he himself laughed and cried over it more than anything else he wrote, and it can still have that effect on us today. For there is a little bit (perhaps more than a little) of Ebenezer Scrooge in each of us and Dickens’ penetrating observation of the condition of our “shut-up hearts” is as relevant now as it was 171 years ago. As everyone knows, it is the story of personal renewal, of the conversion of a grasping, joyless taskmaster into a public benefactor and caring friend. Dickens also outlines a process of change, which many modern organizations might try to follow. Indeed, as a story of personal and organizational transformation, it reports results that would delight any change consultant. Of course Scrooge had three consultants…

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The Ecology of Innovation

A few weeks ago I delivered a keynote presentation at the Innovation Congress in Villach Austria. I spoke for about 30 minutes on the topic of The Ecology of Innovation to a group of over 600 participants. I began by saying that I wanted to leave them with three things:

  1. The image of a forest in springtime as a model for innovation
  2. The symbol of an infinity loop as a process of continual renewal
  3. A quote, “Nothing lasts unless it is incessantly renewed”

I then took them off to look at a lodge-pole pine forest and how it renews itself through fire. The core of such (temperate) forests is choked with hierarchy (tall trees) that hog the resources and don’t allow anything to grow underneath them. Thus innovation can take place only along the edges of the system and in open patches, where small-scale experimentation is possible. Fire opens up these innovation spaces while releasing the system’s resources that have been trapped in hierarchical structures. From there I went on to show how the same ecological processes operate in business organizations: enterprises are conceived in passion, born in communities of practice and trust, grow through the application of reason and mature in power. Here they become “frozen” – insensitive to what is going around them – which sets them up for crisis and destruction, but with the possibility of renewal. Conception, birth, life, death and renewal – these are topics central to an ecological perspective!

“Steering” the Enterprise

The ecological perspective is an inherently complex one. The ecological or systems view can be thought of as a three-pane window that operates in space and well as time. The result is a nine-box framework with management in the middle:

Slide1

The three-level, nine-paned systems view

This perspective promotes the right questions about the dynamics at each of the three levels. At the product or component levels there are often fast-moving technological changes taking place. At the contextual level, political and institutional change becomes important. Clearly a manager is a person in the centre of a field of tension. This feeling was best conveyed by a single slide in the presentation. It shows the “steering wheel” of the enterprise that allows managers to navigate, using a well-known set of management “tools”:

Slide2

The “Steering Wheel” of the Organization

The managers have to navigate between exploration on the one (left) hand and exploitation on the other (right) hand. Their ways of doing this can be grouped into four categories – according to this framework – power, management, leadership and culture. I didn’t have time to go into these in any detail, but I showed the steering wheel being turned left and right to keep the enterprise in a “sweet zone” between exploration and exploitation. To go “left” is to try something new and different and to court failure: to go “right” is to stick with the familiar and to risk falling into the crisis of a competency trap.

Supporting Evidence for This View

For the evidence to support this perspective of managers “in the middle”, alternating between the exploration for new opportunities and the exploitation of the most promising of them, I used MIT Sandy Pentland’s work. I have just reviewed his new book, Social Physics, and selected it as the best book of the year on innovation. In it he explains how he uses sociometers (smartphone-size instruments) to monitor multiple dimensions of body language (not content) on management teams. From a study of their interactions he can predict (with a surprisingly high level of confidence) which teams will do well on a variety of tasks. One of the things he looks for on creative teams is a “pulse” between exploration and exploitation and his measurements allow networks to “tune” themselves to the amount of these two activities they need.

In a broader context I think that measurements like Pentland’s, when used as feedback to allow teams and individuals to monitor and control their own interactions, point the way to liberating us from the tyranny of Key Performance Indicators (KPIs), the top-down management approaches that accompany them and the resultant crushing of innovation in large-scale organizations.