Presenting the BetaCodex (BetaCodex06)


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Introducing the BetaCodex - formerly: the Beyond Budgeting model. Here you find a short overview over the foundations of the codex.

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Presenting the BetaCodex (BetaCodex06)

  1. 1. PRESENTING THE BETA CODEXPutting an end to “command and control”: 12 laws for defining the 21st century organization Make it real! BetaCodex Network Associates Niels Pflaeging & Valérya Carvelho & Silke Hermann BetaCodex Network White Paper No. 06. New version Jan 2011
  2. 2. When Frederick Taylor published his landmark book “The Principles of Scientific Management“, in 1911, he suggested ”management“ as a revolution that would solve the problems of the industrial-age organization. Above all, Taylor pioneered the concept of dividing an organization between “thinking people” (managers) and “executing people” (workers) – thus inventing management as a class, and as thinking principals of the non-thinking “human resources”. Taylor also pioneered the functional division of organizations. Taylors methods and concepts were soon unmasked as inhuman and non-scientific and his consulting methods as rather ineffective. But the concept of division did nonetheless became widely adopted after his death, in 1915. Management, as we know it today, is not much different from what Taylor proposed, 100 years ago. In today's dynamic and complex markets, however, tayloristic command and control management is proving more and more obsolete and toxic for both organizational performance and human and social advancement. We now call tayloristic management “Alpha”. The age of management – and its inventor
  3. 3. © BBTN – All rights reserved3 Industrial age ends: ”Supplies have the power“, Evolution of mass markets: Taylorism as the superior model Characteristics •  Incremental change •  Long life cycles •  Stable prices •  Loyal customers •  Choosy employers •  „Managed“ results Dynamics and complexity 1890 1980 1990 low high 2000 2010 2020 2030 1.  Discontinuous change 2.  Short life cycles 3.  Constant pressure on prices 4.  Less loyal customers 5.  Choosy employees 6.  Transparency, societal pressure !  High financial expectations Knowledge economy advances: ”Customers have the power“, strong competition, individualized demand: decentralized and adaptive model is superior! Competitive success factors (CSF) - Fast response - Innovation - Operational excellence - Customer intimacy - Great place to work -  Effective governance -  Sustained superior value creation/fin.perf. Characteristics Most organizations still use the “alpha” organization model that was designed for efficiency, while the problem today is complexity, requiring a “beta” model. Now, all these factors are equally important! Here, only efficiency mattered, really! The world has changed – organizations have not, by and large
  4. 4. Stage 1: Beyond Budgeting (1998-2002) Stage 2: Beyond command and control (2003-2007) Stage 3: Beyond incremental change (2008-) founded 1998 founded 2008 A movement for organizational transformation that started in 1998
  5. 5. From: Managed pyramid To: Led, decentralized network
  6. 6. © BBTN – All rights reserved6 Law Beta - “Leadership” Alpha - “Management” (Do this!) (Not that!) §1 Freedom to act Connectedness not Dependency §2 Responsibility Cells not Departments §3 Governance Leadership not Management §4 Performance climate Result culture not Duty fulfillment §5 Success Fit not Maximization §6 Transparency Intelligence flow not Power accumulation §7 Orientation Relative Targets not Top-down prescription §8 Recognition Sharing not Incentives §9 Mental presence Preparedness not Planning §10 Decision-making Consequence not Bureaucracy §11 Resource usage Purpose-driven not Status-oriented §12 Coordination Market dynamics not Commands The BetaCodex: The 12 new laws of Leadership
  7. 7. Comparing the models Technology: “Management”/Alpha Technology: “Leadership”/Beta
  8. 8. Henry Mintzberg Gary Hamel Jeremy Hope Michael Hammer Thomas Johnson Charles Horngren … Stafford Beer Margareth Wheatley Niklas Luhmann W. Edwards Deming Kevin Kelly Ross Ashby Joseph Bragdon … Douglas McGregor Chris Argyris Jeffrey Pfeffer Reinhard Sprenger Stephen Covey Howard Gardner Viktor Frankl … Peter Drucker Tom Peters Charles Handy John Kotter Peter Senge Thomas Davenport Peter Block … Sciences: Thought leaders (selected) Practice: Industry leaders (selected) Complexity theories Social sciences and HR Leadership & change Strategy & Performance management Industry Retail Services Governments & NGOs The BetaCodex is rooted in both sciences and practice
  9. 9. Industry Retail Services Governmental & not-for-profit
  10. 10. on the organizational model, The BetaCodex: It means working in the model not
  11. 11. Foundation Several decades oldTime scale: organization's age Alpha! Low degree of decentralization/ empowerment Differentiation phase Stagnation within the tayloristic model Integration phase Beta! High degree of decentralization/ empowerment Sustaining and deepening of the decentralized model, through generations Transformation through radical Decentralization of decision-making Pioneering phase Bureaucratization through growing hierarchy and functional differentiation Evolution within the decentralized model (culture of empowerment and trust) Beta! High degree of decentralization/ empowerment Organizations of all kinds evolve during their lives – most have transformed themselves at least once - moving from Pioneer phase to Differentiation phase
  12. 12. Principles & shared values – not rules! Market-driven sense & respond – not hierarchy-driven command & controlMarket rules – not bosses! Socially dense & based on peer pressure – not individualized bureaucracy Funcationally integrated cells – not funcationally divided departments Radically decentralized decision-making – not centralized command Team-based self- governance – not top-down control Extreme transparency – not information bottle- necks Some principles typical of a BetaCodex organization
  13. 13. Centralized hierarchy, “command and control“ strategy control Fixed performance contracts Decentralized network, “Sense and respond“ Dynamic coordination Relative performance contracts Dynamic processes The old model is not aligned with today’s Critical success factors and it does not support ‘Theory Y’. > We need a new model to cope with complexity > We must change the whole model! From the tayloristic (“Alpha”) to the emerging “Beta” organization Fixed processes Alpha: Traditional model (supports efficiency) Beta: New model (supports complexity)
  14. 14. © BetaCodex Network – All rights reservedWhite paper – The 3 Structures of an Organization 25 Find all BetaCodex Network white papers on and on Slideshare. Special   Edi+on   Special   Edi+on   The BetaCodex Network white papers - so far
  15. 15. The “Organize for Complexity” book Paperback edition Deluxe edition (with bonus chapter)
  16. 16. Get in touch with us for more information about leading BetaCodex transformation, and ask us for a keynote or a workshop proposal. Make it real! Niels Pflaeging New York, Wiesbaden Valérya Carvalho LinkedIn São Paulo Silke Hermann Wiesbaden, Berlin, New York Lars Vollmer Hannover, Stuttgart