Radical Management         Steve Denning          www.stevedenning.com         steve@stevedenning.com   http://blogs.forbe...
VideoRadical Management Explaining the idea in sixty seconds
1978         Robert McNamara       President, Ford Motor Company, 1960       Secretary of Defence, 1961-1968       Preside...
1996-2000            A knowledge management             program was launched
2000-2008       Teaching the Fortune 500              how to use        the power of leadership              storytelling ...
One clue…
It’s not just leadership storytelling!   Knowledge management                    Not just the World Bank                  ...
It’s not just leadership storytelling!      Lean Manufacturing                     “Only 1% of lean initiatives           ...
It’s not just leadership storytelling!            Marketing              25 ways in which traditional              managem...
It’s not just leadership storytelling!             Innovation                    How management                   systemat...
2008   The question was broader             Why did management       systematically kill all the creative            thing...
Most management textbooks…Most business schools …         Traditional        management           rests on      five inter...
Five planks of traditional management  1. The purpose of a firm is toproduce outputs that make money
Five planks of traditional management2. Managers act as controllers of         individuals
Five planks of traditional management    3. Work is coordinated by   hierarchy and bureaucracy                            ...
Five planks of traditional management4. “The main thing is efficiency”
Five planks of traditional management 5. Communicate by directives
The shifts are interlocking & self-reinforcing                        Make money                             for          ...
Five planks of traditional management    “Traditional management     practices are a success”                 “the smartes...
2009: Conclusive proof of the  failure of traditional management1965                              • The rate of return on ...
2009: Conclusive proof of the  failure of traditional managementSource: Deloitte’s Center for the Edge
Many are now concluding:        Management         is broken!
What we have nowFailing                Dispirited firms                 employees          Frustrated          customers  ...
What we have now: tradeoffs Quality                Speed           Efficiency     The iron triangle
Implication for organizational survival: “The significant problems we  have cannot be solved at the  same level of thinkin...
What is needed: win-win-win  Quality                Speed            Efficiency       No trade-offs!
What we needThriving               Deep job firms                 satisfaction           Delighted           customers    ...
We know how to achieve this:      5 big shifts  ( and 70+ practices)!
The shifts are interlocking & self-reinforcing                                    Goal                                   D...
11. NEW GOAL: delight the customers    from outputs to outcomes       1. Delight           the       customer!
Practices for creating customer delight        Customer delight        is not a new idea:      Ancient Romans e.g. Vitruvi...
Practices for creating customer delightIs “customer delight” a serious business proposition?                       “Provid...
Practices for creating customer delightIs “customer delight” a serious business proposition? “happiness”      “enchantment...
Practices for creating customer delightIs “customer delight” a serious business proposition?                      • “custo...
11. NEW GOAL: delight the customers    from outputs to outcomes Produce outputs               Generate outcomes
11. NEW GOAL: delight the customers    i.e. from outputs to outcomes         An epochal shift in the balance         of po...
11. NEW GOAL: delight the customers    i.e. from outputs to outcomes      The   bottom    line for   business Make money  ...
11. NEW GOAL: delight the customers    i.e. from outputs to outcomes  “You take                     “We want to   what we ...
11. NEW GOAL: delight the customers    i.e. from outputs to outcomes   This changes the game completely   Outputs         ...
11. NEW GOAL: delight the customers    i.e. from outputs to outcomes           A paradoxical discovery! Customer delight  ...
11. NEW GOAL: delight the customers    i.e. from outputs to outcomes  The goal is: delighting the customer  • “Making mone...
11. NEW GOAL: delight the customers    i.e. from outputs to outcomesDeliver it sooner !                           In a bur...
11. NEW GOAL: delight the customers    i.e. from outputs to outcomesAim for the simplest thing!                        20t...
11. NEW GOAL: delight the customers    i.e. from outputs to outcomesMake “delighting the customers” explicit!             ...
11. NEW GOAL: delight the customers    i.e. from outputs to outcomesIs “customer delight” a serious business proposition? ...
11. NEW GOAL: delight the customers    i.e. from outputs to outcomes   Customer delight is the firm’s new bottom line     ...
Why it is inexorable …   It makes much more money…
11. NEW GOAL: delight the customers    i.e. from outputs to outcomes1. New goal: “Delighting the customer” means ….     a ...
2 NEW MANAGER ROLE: from controller to enabler 2.   2. Enableself-organizing     teams
2 NEW MANAGER ROLE: from controller to enabler 2.Bureaucracy can         Bureaucracy cannotproduce outputs         generat...
2 NEW MANAGER ROLE: from controller to enabler 2.    Controller of         Enabler of self-     individuals          organ...
2 NEW MANAGER ROLE: from controller to enabler 2.                       Diversity                        defeats          ...
2 NEW MANAGER ROLE: from controller to enabler 2.                                    Hire                                 ...
33. COORDINATION: From bureaucracy to dynamic linking      3. Dynamic         linking
33. COORDINATION OF WORK: Dynamic linking                                       Short                                     ...
33. COORDINATION OF WORK: Dynamic linkingDynamic linking: work in short cyclesEven “lumpy” work!    E.g. Quadrant Homes   ...
33. COORDINATION OF WORK: Dynamic linkingProgress is measured by direct client feedback                  The case of    Er...
33. COORDINATION OF WORK: Dynamic linkingDefine work goals in the form of user stories…                   Joie de Vivre ho...
33. COORDINATION OF WORK: Dynamic linkingManagers’ role:Give employees a clear line of sight to the customers…            ...
4 4. FROM VALUE TO VALUES: radical transparency 4. From value       to     values
4 4. FROM VALUE TO VALUES: radical transparency     “Just do it”           Alan Mullaly CEO, Ford
4 FROM VALUE TO VALUES: continuous improvement4.                                1 million Get the product out             ...
5 INTERACTIVE COMMUNICATON: conversation 5.5. From top-down       To   conversation
5 INTERACTIVE COMMUNICATON: conversation 5.                        Commands                           kill                ...
5 INTERACTIVE COMMUNICATON: conversation 5.                          Money                           kills                ...
5 INTERACTIVE COMMUNICATON: conversation 5. Top-down commands   Peer-to-peer conversations
The shifts are interlocking & self-reinforcing                            Delighting                            customers ...
WHAT’S NEW: doing all at once                        Delighting                        customers        From     command t...
Agile has focused on part of the agenda                         Delighting                         customers    From comma...
Agile has focused on part of the agenda                          Delighting                 The driver                    ...
Agile has focused on part of the agenda The oil                  Delighting                          customers    From com...
Without all five pieces….                        Making                       money for                      shareholders ...
The transition is inevitableTwo- to four-times    gains in  productivityEconomics will drive the change!
Change is inevitable…
The opportunity for Scrum and AgileLead the revolution!  • Embody the change  • Be the strategy (not support the strategy)...
The transition won’t be easy            The world’s best plant:            Ford’s Hermosillo plant                   in Me...
Reinventing management requires systemic change     “Once you introduce this, it affects      everything in the organizati...
The real voyage ofdiscovery consists not inseeking new landscapes,but in having new eyes.                 Marcel Proust   ...
Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011
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Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011

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‘Radical Management’ is a set of 5 principles. There are only two types of organizations: The ones that love and delight their customers and the others. Amazon, Apple, Salesforce are organizations that have succeded despite fierce competition due to delighted customers.

What’s their management principles?

Speech by Stephen Denning at Reto Hartinger’s Internet Briefing in Zurich.

Published in: Business, Education
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Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011

  1. 1. Radical Management Steve Denning www.stevedenning.com steve@stevedenning.com http://blogs.forbes.com/stevedenning/
  2. 2. VideoRadical Management Explaining the idea in sixty seconds
  3. 3. 1978 Robert McNamara President, Ford Motor Company, 1960 Secretary of Defence, 1961-1968 President, World Bank, 1968-1981 “the smartest man I ever met” John F. Kennedy
  4. 4. 1996-2000 A knowledge management program was launched
  5. 5. 2000-2008 Teaching the Fortune 500 how to use the power of leadership storytelling Why doesn’t it stick?
  6. 6. One clue…
  7. 7. It’s not just leadership storytelling! Knowledge management Not just the World Bank • BP • Ernst & Young • IBM Within a few years, it had • HP been put on a back-burner
  8. 8. It’s not just leadership storytelling! Lean Manufacturing “Only 1% of lean initiatives meet their goals.” Jeffrey Liker
  9. 9. It’s not just leadership storytelling! Marketing 25 ways in which traditional management systematically kills great marketing ideas
  10. 10. It’s not just leadership storytelling! Innovation How management systematically kills disruptive innovation
  11. 11. 2008 The question was broader Why did management systematically kill all the creative things in organizations? • knowledge management? • lean manufacturing? • innovation? • marketing? • leadership storytelling? • even Agile and Scrum
  12. 12. Most management textbooks…Most business schools … Traditional management rests on five interlocking principles
  13. 13. Five planks of traditional management 1. The purpose of a firm is toproduce outputs that make money
  14. 14. Five planks of traditional management2. Managers act as controllers of individuals
  15. 15. Five planks of traditional management 3. Work is coordinated by hierarchy and bureaucracy Rules plans reports
  16. 16. Five planks of traditional management4. “The main thing is efficiency”
  17. 17. Five planks of traditional management 5. Communicate by directives
  18. 18. The shifts are interlocking & self-reinforcing Make money for shareholders Top down Managers are commands controllers of indivduals Efficiency, Bureaucracy: cost cutting rules, plans, reports “Single fix” improvements make no impact
  19. 19. Five planks of traditional management “Traditional management practices are a success” “the smartest man I ever met” John F. Kennedy
  20. 20. 2009: Conclusive proof of the failure of traditional management1965 • The rate of return on assets has fallen by 75% since 1965 • The life expectancy of Fortune 500 firms down to 15 years, and is heading towards 5 years. • Only 1 in 5 workers fully engaged TodaySource: Deloitte’s Center for the Edge: The Shift Index
  21. 21. 2009: Conclusive proof of the failure of traditional managementSource: Deloitte’s Center for the Edge
  22. 22. Many are now concluding: Management is broken!
  23. 23. What we have nowFailing Dispirited firms employees Frustrated customers Lose-lose-lose!
  24. 24. What we have now: tradeoffs Quality Speed Efficiency The iron triangle
  25. 25. Implication for organizational survival: “The significant problems we have cannot be solved at the same level of thinking with which we created them.” Albert Einstein We have to think differently!
  26. 26. What is needed: win-win-win Quality Speed Efficiency No trade-offs!
  27. 27. What we needThriving Deep job firms satisfaction Delighted customers Win-win-win!
  28. 28. We know how to achieve this: 5 big shifts ( and 70+ practices)!
  29. 29. The shifts are interlocking & self-reinforcing Goal Delighting Communications customers Role From command From controller to conversations to enabler Radical From bureaucracy transparency to dynamic linking Values Accountability
  30. 30. 11. NEW GOAL: delight the customers from outputs to outcomes 1. Delight the customer!
  31. 31. Practices for creating customer delight Customer delight is not a new idea: Ancient Romans e.g. Vitruvius’s treatise on architecture
  32. 32. Practices for creating customer delightIs “customer delight” a serious business proposition? “Providing a continuous“Customer delight” = stream of additional value to customers and delivering it sooner”
  33. 33. Practices for creating customer delightIs “customer delight” a serious business proposition? “happiness” “enchantment” “joy”
  34. 34. Practices for creating customer delightIs “customer delight” a serious business proposition? • “customer success” • “customer trust in us” • Net Promoter Score
  35. 35. 11. NEW GOAL: delight the customers from outputs to outcomes Produce outputs Generate outcomes
  36. 36. 11. NEW GOAL: delight the customers i.e. from outputs to outcomes An epochal shift in the balance of power in the marketplace: The customer is now the boss! Sorry about that!
  37. 37. 11. NEW GOAL: delight the customers i.e. from outputs to outcomes The bottom line for business Make money Delight the customer
  38. 38. 11. NEW GOAL: delight the customers i.e. from outputs to outcomes “You take “We want to what we understand & help make!’ solve your problems!”
  39. 39. 11. NEW GOAL: delight the customers i.e. from outputs to outcomes This changes the game completely Outputs Outcomes Things People
  40. 40. 11. NEW GOAL: delight the customers i.e. from outputs to outcomes A paradoxical discovery! Customer delight Costs come down of their own accord!
  41. 41. 11. NEW GOAL: delight the customers i.e. from outputs to outcomes The goal is: delighting the customer • “Making money” is not the goal • “Being agile” is not the goal. •“Working software” is not the goal. • Agile & Scrum & working software are means to achieving the goal. • Everyone must focus on the goal
  42. 42. 11. NEW GOAL: delight the customers i.e. from outputs to outcomesDeliver it sooner ! In a bureaucracy, large amounts of work wait in queues
  43. 43. 11. NEW GOAL: delight the customers i.e. from outputs to outcomesAim for the simplest thing! 20th Century 54 buttons DVD controller L ESS Complicated IS 21st Century MORE ! 4 buttons Simple iPod Easy to use
  44. 44. 11. NEW GOAL: delight the customers i.e. from outputs to outcomesMake “delighting the customers” explicit! The sad story of Zappos
  45. 45. 11. NEW GOAL: delight the customers i.e. from outputs to outcomesIs “customer delight” a serious business proposition? “Customer delight” is measurable.
  46. 46. 11. NEW GOAL: delight the customers i.e. from outputs to outcomes Customer delight is the firm’s new bottom line Making money is the result of the firm’s actions, not the goal. By focusing on delighting the customer, Apple & Amazon make more money than they would if they set out to make money.
  47. 47. Why it is inexorable … It makes much more money…
  48. 48. 11. NEW GOAL: delight the customers i.e. from outputs to outcomes1. New goal: “Delighting the customer” means …. a different way of running the organization. 2. New role for managers 3. New coordination mechanisms 4. Shift from value to values 5. New way to communicate
  49. 49. 2 NEW MANAGER ROLE: from controller to enabler 2. 2. Enableself-organizing teams
  50. 50. 2 NEW MANAGER ROLE: from controller to enabler 2.Bureaucracy can Bureaucracy cannotproduce outputs generate outcomes
  51. 51. 2 NEW MANAGER ROLE: from controller to enabler 2. Controller of Enabler of self- individuals organizing teams
  52. 52. 2 NEW MANAGER ROLE: from controller to enabler 2. Diversity defeats intelligence!The Difference: How the Power of Diversity Creates BetterGroups, Firms, Schools, and Societies by Scott E. Page
  53. 53. 2 NEW MANAGER ROLE: from controller to enabler 2. Hire women, Forget IQ: The Emerging not Science of Collective Intelligence Einsteins! (Or female Einsteins)When women are 60% of talent and 90% of customers,it’s not diversity: it’s the future.
  54. 54. 33. COORDINATION: From bureaucracy to dynamic linking 3. Dynamic linking
  55. 55. 33. COORDINATION OF WORK: Dynamic linking Short cycles Client drivenHierarchical bureaucracy Dynamic linking
  56. 56. 33. COORDINATION OF WORK: Dynamic linkingDynamic linking: work in short cyclesEven “lumpy” work! E.g. Quadrant Homes Naval radar system Polaris submarines
  57. 57. 33. COORDINATION OF WORK: Dynamic linkingProgress is measured by direct client feedback The case of Eric Ries: “Most changes the missing make things worse for the customer” button
  58. 58. 33. COORDINATION OF WORK: Dynamic linkingDefine work goals in the form of user stories… Joie de Vivre hotels: customer outcomes vs outputs As a hotel guest, I want a unique room that I have a home away from home. Work = making the story come true
  59. 59. 33. COORDINATION OF WORK: Dynamic linkingManagers’ role:Give employees a clear line of sight to the customers… E.g. writing a book
  60. 60. 4 4. FROM VALUE TO VALUES: radical transparency 4. From value to values
  61. 61. 4 4. FROM VALUE TO VALUES: radical transparency “Just do it” Alan Mullaly CEO, Ford
  62. 62. 4 FROM VALUE TO VALUES: continuous improvement4. 1 million Get the product out improvements each year 63
  63. 63. 5 INTERACTIVE COMMUNICATON: conversation 5.5. From top-down To conversation
  64. 64. 5 INTERACTIVE COMMUNICATON: conversation 5. Commands kill motivation
  65. 65. 5 INTERACTIVE COMMUNICATON: conversation 5. Money kills inspiration
  66. 66. 5 INTERACTIVE COMMUNICATON: conversation 5. Top-down commands Peer-to-peer conversations
  67. 67. The shifts are interlocking & self-reinforcing Delighting customers From command From controller to conversations to enabler Radical From bureaucracy transparency to dynamic linking
  68. 68. WHAT’S NEW: doing all at once Delighting customers From command to From controller conversations to enabler Radical From bureaucracy transparency to dynamic linking Individually, none of the shifts is new
  69. 69. Agile has focused on part of the agenda Delighting customers From command From controller to conversations to enabler Agile Radical From bureaucracy transparency to dynamic linkingAgile has downplayed “touchy feely” stuff
  70. 70. Agile has focused on part of the agenda Delighting The driver customers From command From controller to conversations to enabler Agile Radical From bureaucracy transparency to dynamic linkingAgile has downplayed “touchy feely” stuff
  71. 71. Agile has focused on part of the agenda The oil Delighting customers From command From controller to conversations to enabler Agile Radical From bureaucracy transparency to dynamic linkingAgile has downplayed “touchy feely” stuff
  72. 72. Without all five pieces…. Making money for shareholders Top-down commands From controller to enabler Agile Radical From bureaucracy transparency to dynamic linking… an organization is at war with itself
  73. 73. The transition is inevitableTwo- to four-times gains in productivityEconomics will drive the change!
  74. 74. Change is inevitable…
  75. 75. The opportunity for Scrum and AgileLead the revolution! • Embody the change • Be the strategy (not support the strategy) • Master leadership storytelling • Challenge management to join the future • Encourage others who share the vision • Take charge of the future Let’s move to the front of the bus!
  76. 76. The transition won’t be easy The world’s best plant: Ford’s Hermosillo plant in Mexico 1990s: Ford’s Romeo plant in Michigan 2006: The new CEO, Allan Mullaly, embraces it 1990
  77. 77. Reinventing management requires systemic change “Once you introduce this, it affects everything in the organization— the way you plan, the way you manage, the way you work. Everything is different. It changes the game radically.” Mikkel Harbo VP, Systematic Software (Denmark) More than a new set of management tools!
  78. 78. The real voyage ofdiscovery consists not inseeking new landscapes,but in having new eyes. Marcel Proust Everything is different!
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