Purpose, power and productivity in the new economy


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This presentation - shown in Notes View to include the underlying script - summarises a variety of underlying large-scale strategic changes that impact on all organisations in the early 21st century.
[Copyright (c) Tetradian Consulting 2001]

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Purpose, power and productivity in the new economy

  1. 1. Tetradian Consulting Unit 215, 9 St Johns Street Colchester Essex CO2 7NN United Kingdom [+44] (0)781 560 6624 www.tetradian.com December 2001 1
  2. 2. Change. That‟s what‟s driving the so-called „new economy‟. Changes in business practice, in technology, in regulations, in social expectations: it‟s happening all the time. And it‟s getting faster, and faster, all the time. So how do we cope? The short answer is that most of us don‟t - not well, at least. We survive, but we don‟t exactly thrive. And neither do our businesses and other organisations. There‟ve been many attempts to „fix‟ this by changing the system: downsizing, rightsizing, restructuring. Sometimes there‟s been a shortlived improvement; most often it‟s just made things worse. But there is a better way. An obvious way. It‟s called „treating people as people‟. Because people - treated not as „work-objects‟, or „human resources‟, but as people - have the power to do anything that they want. Such as making their organisation a great success. So far, most organisations have managed only to hinder them from doing that. But it‟s easy to learn how to help them instead - and make the organisation a success, for everyone. 2
  3. 3. Embracing change - rather than hiding from it - will be essential for each organisation‟s survival. As the economist Peter Drucker put it, in a recent article: “The most effective way to manage change successfully is to create it. But experience has shown that grafting innovation on to a traditional enterprise does not work. The enterprise has to become a change agent. This requires the organised abandonment of things that have been shown to be unsuccessful, and the organised and continuous improvement of every product, service and process within the enterprise. It requires the exploitation of successes, especially unexpected and unplanned- for ones, and it requires systematic innovation. The point of becoming a change agent is that it changes the mindset of the entire organisation. Instead of seeing change as a threat, its people will come to consider it as an opportunity.” („The Way Ahead‟, in The Economist, 3 Nov 2001) In practice, the new focus for each organisation will be its purpose, its relationships and its knowledge, its shared learning. 3
  4. 4. Confusions about power - what it is, where it comes from, who has it, who doesn‟t, how to gain it, how to maintain it - cause enormous difficulties in almost every organisation. „Power-struggles‟ of one kind or another invariably reduce the organisation‟s effectiveness, and can destroy an organisation‟s relationships with its staff, its customers, its shareholders or the wider community very quickly indeed - sometimes leading to the death of the organisation. Most people seem to think that these problems are inevitable - a fact of business life. But in fact they all arise from one single, simple, easily-made mistake: the delusion that „dumping‟ our discomforts on others solves the problem - whatever the problem might be. It‟s a common mindset: everyone falls into it from time to time, especially under stress. But paying attention to this, and addressing it consistently throughout an organisation, will improve the organisation‟s overall performance - often showing spectacular improvements as the energy wasted in infighting is at last released for practical work. 4
  5. 5. Many of the power-confusions arise from mistaken ideas about „winning‟ and, especially, „losing‟. One of the most common beliefs is the „zero-sum‟ concept - the idea that it‟s only possible to win by making others lose. In reality, as Roger Fisher and William Ury demonstrated many years back, in their classic study “Getting To Yes”, there‟s only „win/win‟ or „lose/lose‟: either everyone wins from a transaction, or everyone loses. „Win/lose‟ is just an illusory form of „lose/lose‟, in which a short-term gain in one area masks an overall loss for everyone - including the supposed „winner‟. In a sustainable business - one that‟s still going to be around long-term - the only way to win is to ensure that everyone wins, in every transaction. Creating awareness of this fact sometimes isn‟t easy - but it‟s the only way to create lasting success. 5
  6. 6. In the past, organisations could just about get by whilst still ignoring these issues. But not any more: the background to business has changed too radically for that. In the past decade or so, as Peter Drucker described in another „Economist‟ article, every one of the basic assumptions about „business as usual‟ has been turned on its head. The relationship between corporation and employee; the nature of employment; the scope of management; the source of industry knowledge; and the relationship between industries and technologies: these are all now almost the exact inverse of where they were in the 1950s. But most businesses are still trying to run their organisations with a 1950s mindset. And not tackling power-problems means that organisations lose access to the creativity, flexibility and innovation they need for their present and future business. Facing these issues is no longer a luxury: it‟s a matter of survival. 6
  7. 7. Let‟s look briefly at some of Drucker‟s examples. In Frederick Taylor‟s now century-old model of „scientific management‟, the corporation controlled all the assets, including the „human resources‟. There were clear and sharp divisions between the „owners‟, who owned everything; the owners‟ managers, who decided everything; and the „workers‟, who did what they were told, and could be disposed of at once if they didn‟t. It looked productive - but it only worked when markets were stable, and products so simple that everything could be decided by management. Those days are gone. In the new knowledge-based economy, the „knowledge- workers‟ themselves provide their own capital - intellectual capital. The physical capital can be small, almost non-existent - perhaps just an office and a handful of computers. So knowledge-workers regard themselves as professionals, controlling the „means of production‟. And they won‟t - in fact can‟t - work well unless they‟re treated as equals. This changes the power-dynamics completely: the old bullying ways never did work well, but they simply won‟t work in the new economy. If the organisation wants access to their skills, their experience, their knowledge, it needs to create and maintain a working relationship with them. 7
  8. 8. In the old days, most employees worked full-time for one corporation, and often worked there till the day they retired or died. Since their only income came from the corporation, it placed them in a dependent position. The corporation gained the illusion of control, but the inevitable power-problems were concealed, surfacing only through the safety of the occasional collective outburst - and in a very poor real level of efficiency and synergy. That „control‟ mindset still remains common, but it can‟t cope with the current realities: part-time work, job-share, mandatory maternity leave, long-service leave, contractors, outsourced „deployees‟ and the rest. Unwanted individuals can be „disposed of‟, perhaps: but the key knowledge-workers are highly mobile, and may choose to leave at any moment - leaving the corporation stranded without the knowledge it needs to do its business. So once again, the onus is now on the corporation to create, and maintain, functional relationships with all of „its‟ people - or they‟re gone, perhaps taking the business with them. 8
  9. 9. Management in the 1950s was usually a simple hierarchy: everything came down from the top. The company rule-book defined procedures for every eventuality - or, more often, anything which wasn’t in the rule-book was deemed not to exist. It seemed to scale well enough: a larger corporation only needed an extra layer or two of middle-management. Corporations grew larger, and larger, and larger… …until the inefficiencies finally caught up with them. One-way hierarchies can easily become lumbering dinosaurs, collapsing under their own weight. The much faster pace of current business demands much more flexible management models: outsourcing, rightsizing, federal structures and so on. Transcultural complexities can destroy the apparent efficiency of the global corporation. So we can‟t run a company by „edicts from head-office‟ any more: instead, we need clarity on common purpose, to hold a shared vision for the organisation; and active maintenance of human relationships, to help each other fulfil that shared purpose. 9
  10. 10. The old „scientific management‟ model viewed management as the „brain‟ of the organisation, holding all its knowledge, and making all its decisions. By the same analogy, the Public Relations department was the organisation‟s eyes, ears and mouth - controlling all information moving between the organisation and the outside world. We still see this mindset in „position statements‟ and the like: but it makes little sense any more. Like the human organism, the greatest efficiency in the organisation comes from local autonomy provided with overall direction, and from synergy - the working of the whole. Despite databases of ever-increasing size and complexity, most corporate knowledge resides in its people - and nowadays, as the Cluetrain Manifesto demonstrated, there may be more knowledge about the company‟s products outside the company than within. Building relationships with those „insider outsiders‟, and systematically sharing knowledge in a secure way, makes that information available in ways that help everyone win. 10
  11. 11. Even a decade or two ago, it was still mostly true that each industry had its own specific technology, and each technology was specific to one industry. Knowledge about steel-making applied only to the steel-industry, and so on. This was what made research laboratories so common in large organisations. But many of their greatest inventions - such as Bell Labs‟ invention of the transistor - were at first deemed irrelevant to their own industry‟s needs, and were all but given away to „outsiders‟ - who then created a whole new industry based on that invention. As more and more technologies span many different industries, we need to be able to see new opportunities for our ideas, our products and processes, in industries very different from our own. And that calls for a new approach - a new mindset - that comes from new relations across all the old boundaries of „Us‟ and „Them‟. 11
  12. 12. The ability to invent opportunity is not something that can be ordered, created on demand. It doesn‟t come from robotic „human resources‟: it comes from people treated as people. It only arises, and is only available, from a relationship that works - and one in which everyone wins. So it‟s in the organisation‟s interest that such relationships are created, nurtured, maintained. And that requires a very different mindset from the old notions of „command and control‟. Drucker also makes an important point about the need to identify and exploit unexpected achievements. Most large companies have excellent risk- management, disaster-recovery planning and the like; but their management of opportunities often ranges from poor to non-existent. Statistically, serendipity is just as probable as disaster: it‟s up to us to learn to notice it, and work with it - and help everyone in our organisations to do likewise. 12
  13. 13. These changes remind us that there are three key attributes at the core of every organisation: - its purpose, and its means of fulfilling that purpose; - its relationships, within itself, with other organisations, and with all of its wider stakeholders; and - its knowledge, its shared learning about its past, its present and its future. In the past, it‟s been easy to forget this; but not any more. We can‟t afford to be distracted by side-issues, however important they may seem. One of these is „making money‟, making a profit. Yes, it‟s important - very important - but we should never make the mistake of thinking that it‟s the sole reason why the organisation exists. Profit is an indicator of successful conformance to purpose - not the purpose itself. As Charles Handy put it, “it‟s like saying that we play cricket to get a good batting average”. We need a good „batting average‟ to continue playing in the first league; but to get there we first need to be clear why we‟re playing at all. To do anything well, we need a compelling reason to work - or even to get out of bed in the morning. To be compelling, that „corporate purpose‟ needs to be something deeper, and a lot more meaningful for everyone involved, than merely „making money‟. Sony‟s purpose for being in business is „to enhance the reputation of the people of Japan‟: what‟s yours? 13
  14. 14. These are big issues, right at the core of every corporation. And at first sight, the scale of the changes needed to make most organisations really work - to come alive, to be places where people really want to work - will often seem impossibly large. So much so, in fact, that most organisations give up before they even start - and remain inefficient and unprofitable, until they finally fade into oblivion. But it‟s nothing like as hard as it looks. It‟s not a change in system, or structure: it‟s just a change in mindset. And in practice, that comes from just three steps: - create a new understanding of power - what it is, and what it isn‟t - create new understandings of a number of key related business concepts, such as the nature and purpose of competition - and assess, audit and enhance for continuous improvement. We do this by providing tools for the organisation‟s change-agents and other individuals, to create and anchor those changes in everyday practice. And those „internal consultants‟ then repeat those three steps , over and over, wider and wider, until it spreads throughout the whole organisation - an organisation that works, for everyone. 14
  15. 15. Most organisations operate at only a tiny percentage of their true potential. And the main reason for this is confusions about power, at individual and collective levels. It‟s often so severe that even a small amount of effort in addressing the issues can create spectacular improvements in the corporate bottom-line - the so-called „miracle recovery‟ of many a large corporation. True, we can also achieve some short-term gains through aggressive „restructuring‟ and the like: but they don‟t last. For long-term stability and long-term gains, we must resolve those confusions about power. Many people say they want to be powerful. But in practice what most of us really want is the „right‟ to not feel powerless - which is very different. We try to „export‟ that feeling to others in two main ways: propping ourselves up by putting others down; and manipulating others into taking it on for us. Because both of these approaches seem to work for us - for a short while, at least - they‟re highly addictive. That one addiction - in many, many different forms - is what really cripples most corporations. And everyone is addicted to it to some extent - including us. Ouch… 15
  16. 16. The only way forward is to keep reminding ourselves, individually and collectively, of what power really is. In which case, we need a meaningful definition. And if we start from physics, we find that power is the ability to do work - whatever that work happens to be. In human terms, we need to expand that definition a bit. We need to include human needs for choice, for purpose, for responsibility - the ability to choose appropriate responses to any given context. And we need to understand that „work‟, „play‟, „learn‟ and „relate‟ are so closely interwoven that they‟re really just aspects of the same thing. This is obvious any school playground - though the fact seems to have been forgotten in most adult workplaces! Power is the ability to do work - to work/play/learn/relate. By working together - sharing that power, and helping each other find that power from within ourselves - we get more done. And that sharing is why organisations exist. It really is that simple: though sometimes, of course, it can seem extraordinarily difficult to reach that level of simplicity… 16
  17. 17. We can help that process along by re-framing some other key concepts. A sense of purpose becomes central to business, because it‟s from there that power really arises. Ownership shifts in emphasis, from rights to responsibilities - the kind of personal commitment we mean when we talk about „owning‟ a project. Since the power of synergy arises from sharing, it‟s much more in our interest to engage others‟ ideas and involvement in our work; and it becomes obvious that shared knowledge - shared learning - helps everyone. Competition becomes something we need, not for a short-term illusion of dominance, but as a challenge to continuous improvement. The same applies to winning and losing: it becomes something that shows us what works, and what doesn‟t - something to help expand our own knowledge. This isn‟t some idealistic notion of „being nice to others‟, by the way: time and time again, it‟s been shown that this is the only way that works well long-term. Though it‟s just that it‟s kind of easy to forget this in the sometimes desperate rush of here-and-now! 17
  18. 18. But because it‟s so easy to forget this, what we really need to do is instill a kind of background awareness of this in the whole organisation - a new organisational habit, part of the corporate culture. This isn‟t something that can be imported from outside, or imposed from above: it has to be encouraged to grow outward from within the individuals of the organisation themselves. External consultants can help to start this process, especially if there is clear support from senior management, who tend to set examples that others will follow. The consultants provide conceptual tools and techniques which address these issues: power, ownership, structures, dynamics and so on. Once the process is started, though, it needs to be expanded and maintained by the organisation‟s own internal consultants and change-agents - of which there are many. In effect, everyone becomes a change-agent - supporting constructive change throughout the organisation. 18
  19. 19. And it isn‟t just „fit and forget‟: it needs to become part of that process that Peter Drucker described, of “organised and continuous improvement of every product, service and process within the enterprise”. As with TQM and ISO 9000, there‟s a three-stage audit/improvement cycle: assess, audit and enhance, repeated at regular intervals. The quantitative results from the audit process can be compared across a team, or department, or the organisation as a whole, producing a „river diagram‟ showing the strengths and weaknesses of each area. But we have to remember that the purpose of this comparison is not to blame, or to create „winners‟ and „losers‟ all over again, but to identify organisational best-practice - and thus the „internal consultants‟ who can share that specific knowledge throughout the whole organisation. 19
  20. 20. In a way, none of this is new: all of the components have long since been proven elsewhere. Those concepts of power may seem „new‟ to the business world, but they‟re essentially the standards that have been used for decades in skills-education and conflict-resolution. They‟re merged with concepts and models that have been used with real success in small software teams, medium-sized businesses and organisations as huge as the US Army. And they link exactly to the proven principles and practice of the Quality movement, and more recent „sustainable business‟ developments such as Balanced Scorecard and triple-bottom line accounting. So unlike downsizing and restructuring and the like, none of it is new or uncertain. What is new is the way they‟ve all been brought together into an integrated whole, to provide - perhaps for the first time - a unified view of the business process. 20
  21. 21. As I mentioned, the concept of power used here is derived from proven research and practice in skills education, and in conflict-resolution. In skills- education especially, the nature of power not just as the ability to do something, but the integration of work, play and learning, is well understood. I do recognise that including the word „play‟ there, in a business context, may seem to be a cause for concern! Think about it for a moment, though. When children learn new skills, they practice what they‟ve learnt, both on their own, and through relating with others, gaining a sense of enjoyment and achievement in doing so - and that‟s what we call „play‟. Adults are no different: but in a work-context we seem to be so afraid of the word „play‟ that we allow no space for practice, or for relating with others, developing shared learning with others - and then wonder why people have difficulty in learning new skills… So there‟s an important lesson there, from the schoolyard: that real productivity arises only when we integrate play - purpose, practice, shared learning, a sense of enjoyment - into every aspect of our work. 21
  22. 22. We also know that whilst new systems can help in business, what really works long-term is the development of better disciplines and habits, linked to personal power and personal purpose. And the best tools for this are those which apply in many different contexts. For example, Peter Sengé‟s group at MIT Sloan School of Management emphasise five key disciplines of the „learning organisation‟: systems thinking, personal mastery, mental models, shared vision, and team learning. The value of Stephen Covey‟s „seven habits‟ model has been demonstrated in businesses, in families, in schools and many, many individual stories. The US Army gained an enormous increase in effectiveness through its „After Action Reviews‟, with their four simple questions: „What was supposed to happen?‟, „What actually happened?‟, „What caused the difference?‟ and „What have we learned?‟. And the Open Source movement - as documented by writers like Eric Raymond - has been extraordinarily successful in unifying the work of tens of thousands of volunteers to create the freely-available software on which the Internet and much else now depends. 22
  23. 23. In the same way, as Deming demonstrated long ago, we won‟t get „quality‟ automatically from any externally-imposed system. Instead, it can only arise from the disciplines and habits of each individual involved in the process. Everyone matters; everyone contributes to quality - or lack of it. So the principles of TQM, for example, are all founded in individual power and purpose. The same applies to ISO9000 - in fact the later version, ISO9000:2000, requires a purpose-statement as the anchor for any functioning quality-system. And quality will falter if we ever forget these facts. Quality systems fail whenever - and because - we rely on the system rather than the people. Quality, in turn, is central to the organisation‟s effectiveness. New accounting models such as Balanced Scorecard recognise that we need to measure qualities as well as quantities: for example, the qualities of our stakeholder relationships - such as staff morale or public reputation - are almost impossible to measure in monetary terms, but we can‟t run the business without them! 23
  24. 24. So it‟s all about a shift in mindset, about power and purpose; it‟s about a shift in habits, not a change in system; and it‟s all based in proven principles and practice. In other words, it works. And it‟s something you will want to see in your organisation. The next question, of course, is about what to do next. If it applies everywhere, in every business context, where would you start? Where would you use this first? The key indicator is change, and potential for conflict: somewhere where you know there‟s a major change in progress - such as before or just after a merger, or for a new project team - or where change is definitely needed, such as in a poorly performing team, or one in which there‟s constant argument and infighting. Almost by definition, the best gains come from facing the worst problems - though it‟s always a good idea to deal with them before they happen! The tools also provide direct incentives to reduce conflict, because it becomes personally obvious that‟s in everyone‟s interest to do so: everyone wins. 24
  25. 25. Much as was proven with other mindset-shifts, such as the uptake of quality- systems and knowledge-management, it‟s always best to start small, with a pilot-project, and expand outward from there. The aim is to create new disciplines, new habits, and spread them by example: a spiralling process of „apply, evaluate, review‟. External consultants can help to start the ball rolling, but because trust and personal example are central to success in expanding the process beyond the pilot project, it‟s best to use the organisation‟s own change-agents for this - especially people who can convey their enthusiasm to others. Because power and purpose are generic human issues, most of the tools are fully transcultural. Whilst the language will change from country to country, there‟s little or no need for contextual translation - which simplifies creation of unity across multinational or multicultural organisations. 25
  26. 26. Before applying any new process to a business, we need to assess the risks. And here - unlike downsizing or restructuring - the risks are actually very small. It‟s a change in mindset, not system - so there‟s no upfront disruption or demoralising disorientation, as there would be with any structural change. The organisation is likely to develop new systems as the shift in mindset settles in - but they‟ll evolve from those changes, rather than the other way round. The only significant risks come from failing to recognise that whilst people don‟t resist change as such, they do resist being changed by others. As with quality-systems and knowledge-management systems, any attempt to impose a new mindset all at once over an entire organisation all but guarantees failure. And whilst enthusiasm is essential, over-enthusiasm puts people off in a big way: we need to be wary of this! Even so, the worst we‟re likely to do is fail to make any improvement. Unlike downsizing and restructuring, the risk of causing actual damage to the organisation is very low indeed. 26
  27. 27. And if we do avoid those mistakes, the payoffs can be huge. The existing interpersonal inefficiencies in most organisations are so great that even small improvements can bring large returns on expended effort. Simply by gaining a true understanding of purpose, we end up with an organisation that actually works - and one that‟s improving all the time. By gaining a direct, experiential understanding that everyone wins if we set out to ensure that everyone wins, and that everyone - including ourselves - loses if we don‟t, we end up with an organisation where everyone wants to work together. And the results in that kind of organisation can only be described as spectacular - whichever way we measure the bottom-line. Shifting the organisation‟s mindset about power and purpose, to something more constructive than the usual one, may not be easy at times, but the results - for everyone - are definitely worthwhile. 27
  28. 28. I hope it‟s clear that we can‟t afford to ignore these issues any more. The current confusions about power and purpose are crippling our corporations - and often making life a misery for everyone who works with them. And even without outside help, without systematic support from „above‟, there‟s a lot we can do as individuals - because it‟s from within us as individuals that purpose and power arise. We can watch our own and others‟ power-transactions, and, with that better definition of power, we can intervene to create better „response-ability‟ - the ability to choose appropriate responses to any given context. We can explore our own sense of purpose, and our relationship with the organisation‟s collective purpose. (If there isn‟t one, help to create it!) With that wider awareness, anything we do will help that purpose. In today‟s business environment, getting everyone in an organisation to reach that understanding can sometimes be hard work - but it is worthwhile, because everyone wins as we do so. 28