Organize for Complexity - Keynote by Niels Pflaeging at Stretch Leadership & Management Conference (Budapest/HU)

1. Stretch Leadership & Management Conference, Budapest, 09.12.2015 #stretchcon @NielsPflaeging

2. Culture

3. •  Fixed, individual targets •  Management by Objectives •  Budgets and Plans •  Performance Appraisal •  Hierarchical Pressure •  Pay by Position or Performance •  Incentives and Bonuses •  …

4. Formal part of value creation Solution: Machine Dynamic part of value creation Solution: Man

5. high dynamics Local markets, high customization

6. Sluggish/dull, low dynamics high dynamics Spacious markets, little competition Local markets, high customization

7. Sluggish/dull, low dynamics high dynamics high dynamics Spacious markets, little competition “Outperformers” exercise market pressure over conventional companies Local markets, high customization

8. Formal part of value creation Solution: Machine Dynamic part of value creation Solution: Man Sluggish/dull, low dynamics high dynamics high dynamics Age of Crafts Manu- facturing Industrial Age/ Age of Tayloristic Industry Age of Global Markets 1850/1900 Spacious markets, little competition “Outperformers” exercise market pressure over conventional companies Local markets, high customization 1970/80 today

9. Periphery Market Center

10. 1 Impulse 4 Command 3 Decision 2 Information 5 Reaction Center Market Periphery Client Is in charge!

11. 1 Impulse 2 Decision 3 Reaction Center Market Periphery Client Serves the periphery, if needed Is in charge!

12. Transformación tipo 2: “Profundización“ Transformación tipo 1: “Burocratización“ Transformación tipo 3: “Transformación Beta“ Young organization Older organization 1. Start-up phase or “Pioneer phase“ 2. Alpha phase or “Differentiation phase“ 3. Beta phase or “Integration phase“

15. Transformación tipo 2: “Profundización“ Transformación tipo 1: “Burocratización“ Transformación tipo 3: “Transformación Beta“ Young organization Older organization 1. Start-up phase or “Pioneer phase“ 2. Alpha phase or “Differentiation phase“ 3. Beta phase or “Integration phase“ Type 2 transformation “Deepening“ Type 1 transformation: “Bureaucratization“ Type 3 transformation: “Beta Transformation“

16. Industry Retail Services Government/ NGOs It is possible.

17. Theory X Theory Y People need to work and want to take an interest in it. Under right conditions, they enjoy it People dislike work, find it boring, and will avoid it if they can Attitude Direction Responsibility Creativity Motivation People will direct themselves towards a target that they accept People will seek and accept responsibility, under the right conditions Under the right conditions, people are motivated by the desire to realize their own potential Creativity and ingenuity are widely distributed and grossly underused People must be forced or bribed to make the right effort People would rather be directed than accept responsibility, (which they avoid) People are motivated mainly by money and fears about their job security Most people have little creativity - except when it comes to getting round rules

18. Behaviors Context Human Nature

19. ”Meritocracy“ Budgeting Planning Control of work hours Job Descriptions Competencies Management Incentives Individual targets Performance Appraisal/360° Salary Ranges Training budgets Personnel Development Org charts Target negotiation Holiday applications ”Personnel Expenses“ Suggestion boxes Assessment Centers Pay for Performance Paid extra hours Bonus Systems Sales Quotas Dress codes Job titles HR Allocations Cost Management Plan-Actuals variances Forecasting MbO Development Centers Bosses/HR hire Strategic Planning Travel policies Jours fixes Earnings Guidance Matrix Structures Key Accounting, Business Areas Business Partners SWOT Analysis… Succession planning Flat structure Flexible work hours Casual Fridays COO Rules Supervision Positions Standard Costing Investment planning Employee Surveys Sales Department Reporting lines Product management Project management Milestones

20. •  Fixed, individual targets •  Management by Objectives •  Budgets and Plans •  Performance Appraisal •  Hierarchical Pressure •  Pay by Position or Performance •  Incentives and Bonuses •  … •  Transparency & Improvement •  Comparisons between peers •  Comparisons with previous periods •  Dialog and Dissent •  Social and group pressure •  Pay by market value •  Results Sharing •  … Low dynamics High dynamics

21. Law Beta Alpha §§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

22. Data Information Knowledge ?

23. Formal Structure

24. Informal Structure

25. Value Creation Structure

26. Compliance, Power Social Work/Value Creation Formal Structure Informal Structure Value Creation Structure

27. Knowledge Age Systemic, alive Integrated, team-based Work the work Outside-in, led With-each-other-for-each-other Complexity-robust Industrial Age Mechanistic, dead Differentiated, individualizing Work the people Top-down, managed In parallel, in line Efficiency-oriented

28. @NielsPflaeging nielspflaeging.com organizeforcomplexity.com betacodex.org slideshare.net/npflaeging