What Values are Driving Your Organization?

steve-denning-radical-management-leadership-values-drive-your-organisationThis is a post form Steve Dennings blog entitled ‘What Values are Driving Your Organization?’

“Every organization is “values-driven.” The only question is, what values are in the driver’s seat?” – Shawn Callahan

One of the questions that has bothered me for some time (and others) is: why hasn’t traditional management already died?

On August 21, 2010, the Wall Street Journal published Alan Murray’s article, “The End of Management”.
In February 2009, Harvard Business Review published Gary Hamel’s article “Moon Shots For Management” that declared traditional management’s day was done. Excellent books like “Reinventing Management” by Julian Birkinshaw (2010) declare that “management has failed”.  And yet, in established organizations, traditional management (aka Dilbert-cartoon style management) grinds on, seemingly triumphant. Why?

THE CALL FOR CHANGE IS NOT NEW

The question is even more puzzling because the call for change has been made repeatedly. In the 1920s, Mary Parker Follett was giving lectures at Harvard Business School and Oxford University about the need for a different type of management based on the principle of noncoercive power sharing and emphasizing “power with” rather than “power over.”
In 1930s, Elton Mayo was urging that work based on a team which gave itself wholeheartedly and spontaneously to cooperation.
In 1938, Chester Barnard argued that to survive, an organization had to satisfy the motives of its members while attaining its explicit goals, and foster cooperation among its members.
In 1943, Abraham Maslow made the case for self-actualization in the workplace.
In 1960, MIT professor Douglas McGregor questioned the assumptions of traditional hierarchy that people are lazy, which he labeled Theory X. McGregor urged managers to explore Theory Y: that people want to do a good job and wanted to have responsibility.
In 1971, the report by the Department of Health, Education and Welfare, Work in America, commissioned by the Nixon administration, concluded that the workplace would have to change to fit the aspirations, attitudes, and values of workers. Job redesign and increased participation of workers were necessary for America to be competitive.
In 1982, Tom Peters and Robert Waterman announced in their book, In Search of Excellence, that it was attention to employees, not work conditions themselves, that has a dominant effect on productivity.
In 1993, Michael Hammer and James Champy wrote that American companies had become “bloated, clumsy, rigid, sluggish, non-competitive, uncreative, inefficient, disdainful of customer need and losing money.” A new kind of management was required.

So the idea that there is something terribly wrong with traditional management is not exactly new. During the 20th Century, these calls were largely based on an intuitive feeling that something was amiss. Today, we know more.

THE BOTTOM LINE: TRADITIONAL MANAGEMENT DOESN’T WORK

Deloitte’s Center for the Edge published its magisterial study of 20,000 US firms from 1965 to the present. The results are mind-boggling:

The rate of return on assets of US firms is one quarter of what it was in 1965.
The life expectancy of a firm in the Fortune 500 has declined from around 50 years to 15 years and is heading towards five years if we continue in this fashion.
Only one in five workers is fully engaged in their work.

SO WHY DON’T THINGS CHANGE?

Yet despite these pleas, and despite this evidence, traditional management—hierarchy, bureaucracy, economies of scale, downsizing, outsourcing, exploitation of “human resources”, attempts to manipulate customers—remains the norm in Fortune 500 companies, in business schools, in management textbooks and journals. In a world that is supposedly rational, why is there no change?

IT COMES DOWN TO VALUES

Some insight comes from a recently published book, which examined all of these phenomena, and concluded: “There is nothing wrong with traditional management. It can be highly efficient and profitable in a stable and predictable business environment.”

The values here are clear: if you can make money, it’s ok. There’s nothing wrong if:

  • The rate of return on assets is steadily declining.
  • The life expectancy of the firm is decreasing.
  • The employees are more and more disengaged from their work
  • The customers are increasingly frustrated by the cost-cutting measure.
  • The profits that are being made are bad profits, i.e. being made at the expense of customer satisfaction, by cutting corners, adding charges, doing whatever it takes to make the quarterly dollar target.
  • The bottom line looks good. Nothing wrong here!

Well, actually there’s a lot wrong. These firms are destroying their own future, undermining the livelihood of their people, and even putting national economic independence in question. If your central value is making money, then all of these negative consequences flow

THE VALUES OF THE 21ST CENTURY ORGANIZATION

By contrast, if your central value is delighting customers, as in radical management, then a lot of positive things flow:

  • You end up having loyal customers
  • You have inspired workers
  • Productivity is high
  • Innovation is continuous
  • You make a lot of money

TRADITIONAL MANAGEMENT IS NOT JUST WRONG, IT’S STUPID

Why do large numbers of seemingly smart people go on acting in a way that is utterly counter-productive to their own interests, as well as the interests of society? You can offer excuses by pointing to the business schools that continue to teach traditional management, the management textbooks that continue to regurgitate its principles or to Wall Street that rewards short-term profits.

What we have is vast numbers of people living a collective delusion. How long will it take for people to awaken from the delusion? History gives some pointers.

MEDIEVAL VS MODERN MEDICINE

Take the practice of medieval medicine. Medicine in medieval times consisted of blood-letting, exorcism of devils, spells, incantations, and a proscription of bathing. It didn’t work. In fact, like traditional management, it made things worse. But everyone believed in it and they went on doing it, despite all the evidence to the contrary. It took hundreds of years before these counter-productive practices were set aside in favor of modern medicine. Eventually, people awoke from their collective delusion.

MEDIEVAL VS MODERN SCIENCE

The principles of modern science were discovered in the early 17th Century, when people like Francis Bacon started saying that we have to stop taking on faith what Aristotle said and find out what actually happens. Did people accept this right away? On the contrary. Initially there was fierce resistance, particularly in the universities. Many people’s livelihoods were threatened by the suggestion that everything they were doing and saying was counterproductive. It took decades before rigorous observation was embodied consistently in scientific practice. But eventually it happened. Eventually people awoke from their collective delusion.

IT TAKES TIME FOR A WHOLE SOCIETY TO CHANGE ITS VALUES

We may be sure therefore that eventually we will all awaken from the collective delusion that traditional management is the way to run organizations. But if history is any guide, it may take an agonizingly long time. Values don’t change rapidly. That’s no reason not to get started on the change.

We can all help hasten the awakening by asking the question: “what values are driving our organization?” and spreading the word. Traditional management doesn’t work! There is a better way!

To learn more about radical management, go here: http://www.stevedenning.com/Books/radical-management.aspx

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