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Transforming the workplace
                   with
   radical management
            Steve Denning

       Steve’s daily blog on Forbes
     http://blogs.forbes.com/stevedenning/
Video

Radical Management
Explaining the idea in sixty seconds
Profit
belongs to
those who
  delight
   their
customers
Firms that
frustrate us
    won’t
  survive
All business
    must
  become
    social
But
social
   is
fragile
This was a
  great
 evening!
This was a
  great      It was pretty
 evening!        cool!
This was a
  great      It was pretty
 evening!        cool!
Money
 kills
social
This was
wonderful
evening!
How much
 do I owe
  you for   WTF!
 tonight!
How much
 do I owe   €     €   What do
  you for       €     you think

€
 tonight!
       €          €     I am?

    €    €    €    €
      €     €    €
         €         €
  €
      €    € €
  €                €
     €         €
How much
 do I owe   €     €
  you for       €
€
 tonight!
       €          €
    €    €    €    €
      €     €    €
         €         €
  €
      €    € €
  €                €
     €         €
Authority
  also
  kills
 social
This was
wonderful!
Here are
your tasks
  for the
next week!
Here’s your
 program
  for the     WTF!
next week!
Who do
you think
you are?
Here’s your
 program
  for the
next week!
Three basic modes of human interaction




                                   Social



                                              €
                                            € €
              Authority
                                             € €Money



Fiske, A. “The Elementary Forms of Sociality.” Psychological Review, 1992,
Three basic modes of human interaction




      All                                                        All
   countries                        Social                    cultures


                                               €
                                             € €
             Authority
                                              € €
                                               Money



Fiske, A. “The Elementary Forms of Sociality.” Psychological Review, 1992,
Social is allergic to authority & money




                   Social




                            €           €
                                        €
       Authority
                                €
                                Money
                                            €
20th Century
management
was based on
 authority &
   money



                €           €
                            €
    Authority
                    €
                    Money
                                €
All business
    must
  become
   social?
This doesn’t feel very social!
Authority
€
            € €€
             € €
             Money
Authority
Expecting this…      to handle this




Is like this…     …trying to do this
This is
                  not a
                person!




This is an ecosystem!
The ecosystem of traditional management

                      Make money
                           for
                      shareholders
      Top down                              Managers are
     commands                                controllers
                                            of indivduals




        Efficiency,                      Bureaucracy:
       cost cutting                  rules, plans, reports
The ecosystem of traditional management

 1. The purpose of a firm is to
         make money
Fiveecosystem of traditional management
The planks of traditional management
        2. Managers act as
      controllers of individuals
The ecosystem of traditional management

   3. Work is coordinated by
         bureaucracy

                                Rules
                                plans
                                reports
The ecosystem of traditional management

4. The main value is efficiency
The ecosystem of traditional management

5. Communicate by directives
The ecosystem of traditional management
                           Goal
                         Make money
                              for
Communicatio
                         shareholders             Role
    ns
        Top down                              Managers are
       commands                                controllers
                                              of indivduals




           Efficiency,                      Bureaucracy:
          cost cutting                  rules, plans, reports
          Values                            Coordination



          The elements are interlocking
The ecosystem of traditional management

        It kills innovation

              Traditional management
                 systematically kills
                disruptive innovation
The ecosystem of traditional management

  It kills lean manufacturing


                      “Only 1% of lean
                    initiatives meet their
                             goals.”

                         Jeffrey Liker
The ecosystem of traditional management

It kills Agile software development



                    “Only 20% of Scrum
                     initiatives are fully
                         successful.”

                         Jeff Sutherland
The ecosystem of traditional management

       It kills marketing

                  25 ways in which
              traditional management
                 systematically kills
               great marketing ideas
The ecosystem of traditional management

    It kills social business
The ecosystem of traditional management


                  Traditional management
                     systematically kills
                   all the creative things
                       in organizations

                  • innovation
                  • lean manufacturing
                  • Agile software
                  • marketing
                  • social business
2001: Firms dying faster & faster




 Source: Richard Foster Creative Destruction (2001)
2009: Conclusive proof of the
failure of traditional management
Rate of return on assets and invested capital: US firms: 1965-2011




          Deloitte’s Center for the Edge: The Shift Index:
Declines are reflected in per capita GDP
A new ecosystem is emerging
A new ecosystem is emerging

A major management discovery

“Maximizing shareholder value is the
dumbest idea in the world.
Making money for the shareholders is
the result, not the goal.”

        Jack Welch, 2009
A new ecosystem is emerging

The key to the future

“The only valid purpose of a
firm is to create a customer.”

       Peter Drucker, 1973
A new ecosystem is emerging

         Delighting
         customers
Radical management
                                 Goal

                              Delighting
                              customers
                                                         Role
Communicatio
    ns                                           From controller
           From command to
                                                    to enabler
             conversations




Transparency                               From bureaucracy to
                 From value
Improvement                                Agile, Scrum, Kanban
Sustainability
                  to values
                 Values                         Coordination



        It is a different ecosystem
Radical management

              Is “customer delight”
         a serious business proposition?


                       “Providing a
“Customer delight” =   continuous stream of
                       additional value to
                       customers and
                       delivering it sooner”
The principle of customer delight

             Is “customer delight”
        a serious business proposition?




“happiness” “enchantment”   “joy”   “raving fans”
The principle of customer delight


   Is “customer delight” a serious business
                proposition?


                   • Perfectly perform
                     the job that the
                     customer wants
                     performed
The principle of customer delight


   Is “customer delight” a serious business
                proposition?


                   • “customer
                     success”
The principle of customer delight

        A paradoxical discovery!




 Customer delight         Costs come down of
                           their own accord!
This is why the shift is inexorable …




    The economics will drive it …
1. NEW GOAL: delight the customers
1   i.e. from outputs to outcomes


1. 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
2 NEW MANAGER ROLE: from controller to enabler
 2.




   2. Enable
self-organizing
     teams
2 NEW MANAGER ROLE: from controller to enabler
 2.




    Controller of            Enabler of self-
     individuals             organizing teams
33. COORDINATION: From bureaucracy to dynamic linking


  3. Dynamic
     linking
33. COORDINATION OF WORK: Dynamic linking


                                                Short
                                                cycles



                            Client
                            driven


                                       Flow


Bureaucracy:                Dynamic linking
 Internal plans, targets,   Clear line of sight to customer
  reports, meetings
4 4. FROM VALUE TO VALUES: radical transparency


  4. From value
        to
      values
4 4. FROM VALUE TO VALUES: radical transparency




   Preoccupation                 Human values
   with efficiency,             that build trust:
    cutting costs           especially transparency
5. INTERACTIVE COMMUNICATON: conversation
5 INTERACTIVE COMMUNICATON: conversation
 5.




      5. From
     top-down
         to
    conversation
5 INTERACTIVE COMMUNICATON: conversation
 5.




                         Commands
                            kill
                         motivation
5 INTERACTIVE COMMUNICATON: conversation
 5.


                       Money
                        kills
                     inspiration
5 INTERACTIVE COMMUNICATON: conversation
 5.




    Top-down        Peer-to-peer
    commands        conversations
WHAT’S NEW: doing all at once
                                 Delight         Goal

                                   the
Communications
                                customer                    Role
         From command to                         From controller
           conversations                            to enabler




                    Radical                From bureaucracy
                 transparency              to dynamic linking
            Values                                Coordination


   Individually, none of the shifts is new
Social conflicts with the traditional ecosystem

                     Make money
                          for
                     shareholders
    Social                                Managers are
                                           controllers
 interaction                              of indivduals




       Efficiency,                      Bureaucracy:
      cost cutting                  rules, plans, reports




          This is not sustainable
Delighting customers means a new ecosystem

     “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!
The transition is inevitable


   Two- to four-
  times gains in
   productivity
Economics will drive the change!
These are not little differences…
The opportunity for Social Business

Lead the revolution!
  • Be the strategy (not support the strategy)
  • Master leadership storytelling
  • Educate your bosses
  • Join with others
  • Take charge of your future


          “Your time is limited: don’t waste it
              living someone else’s life.”
                       Steve Jobs
The real voyage of
discovery consists not in
seeking new landscapes,
but in having new eyes.
             Marcel Proust

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Transforming the workplace with radical management Steve Denning

  • 1. Transforming the workplace with radical management Steve Denning Steve’s daily blog on Forbes http://blogs.forbes.com/stevedenning/
  • 3.
  • 4. Profit belongs to those who delight their customers
  • 5. Firms that frustrate us won’t survive
  • 6. All business must become social
  • 7.
  • 8. But social is fragile
  • 9.
  • 10. This was a great evening!
  • 11. This was a great It was pretty evening! cool!
  • 12. This was a great It was pretty evening! cool!
  • 14.
  • 16. How much do I owe you for WTF! tonight!
  • 17. How much do I owe € € What do you for € you think € tonight! € € I am? € € € € € € € € € € € € € € € € €
  • 18. How much do I owe € € you for € € tonight! € € € € € € € € € € € € € € € € € € €
  • 19. Authority also kills social
  • 21. Here are your tasks for the next week!
  • 22. Here’s your program for the WTF! next week!
  • 24. Here’s your program for the next week!
  • 25. Three basic modes of human interaction Social € € € Authority € €Money Fiske, A. “The Elementary Forms of Sociality.” Psychological Review, 1992,
  • 26. Three basic modes of human interaction All All countries Social cultures € € € Authority € € Money Fiske, A. “The Elementary Forms of Sociality.” Psychological Review, 1992,
  • 27. Social is allergic to authority & money Social € € € Authority € Money €
  • 28. 20th Century management was based on authority & money € € € Authority € Money €
  • 29. All business must become social?
  • 30. This doesn’t feel very social!
  • 32. € €€ € € Money Authority
  • 33. Expecting this… to handle this Is like this… …trying to do this
  • 34. This is not a person! This is an ecosystem!
  • 35. The ecosystem of traditional management Make money for shareholders Top down Managers are commands controllers of indivduals Efficiency, Bureaucracy: cost cutting rules, plans, reports
  • 36. The ecosystem of traditional management 1. The purpose of a firm is to make money
  • 37. Fiveecosystem of traditional management The planks of traditional management 2. Managers act as controllers of individuals
  • 38. The ecosystem of traditional management 3. Work is coordinated by bureaucracy Rules plans reports
  • 39. The ecosystem of traditional management 4. The main value is efficiency
  • 40. The ecosystem of traditional management 5. Communicate by directives
  • 41. The ecosystem of traditional management Goal Make money for Communicatio shareholders Role ns Top down Managers are commands controllers of indivduals Efficiency, Bureaucracy: cost cutting rules, plans, reports Values Coordination The elements are interlocking
  • 42. The ecosystem of traditional management It kills innovation Traditional management systematically kills disruptive innovation
  • 43. The ecosystem of traditional management It kills lean manufacturing “Only 1% of lean initiatives meet their goals.” Jeffrey Liker
  • 44. The ecosystem of traditional management It kills Agile software development “Only 20% of Scrum initiatives are fully successful.” Jeff Sutherland
  • 45. The ecosystem of traditional management It kills marketing 25 ways in which traditional management systematically kills great marketing ideas
  • 46. The ecosystem of traditional management It kills social business
  • 47. The ecosystem of traditional management Traditional management systematically kills all the creative things in organizations • innovation • lean manufacturing • Agile software • marketing • social business
  • 48. 2001: Firms dying faster & faster Source: Richard Foster Creative Destruction (2001)
  • 49. 2009: Conclusive proof of the failure of traditional management Rate of return on assets and invested capital: US firms: 1965-2011 Deloitte’s Center for the Edge: The Shift Index:
  • 50. Declines are reflected in per capita GDP
  • 51. A new ecosystem is emerging
  • 52. A new ecosystem is emerging A major management discovery “Maximizing shareholder value is the dumbest idea in the world. Making money for the shareholders is the result, not the goal.” Jack Welch, 2009
  • 53. A new ecosystem is emerging The key to the future “The only valid purpose of a firm is to create a customer.” Peter Drucker, 1973
  • 54. A new ecosystem is emerging Delighting customers
  • 55. Radical management Goal Delighting customers Role Communicatio ns From controller From command to to enabler conversations Transparency From bureaucracy to From value Improvement Agile, Scrum, Kanban Sustainability to values Values Coordination It is a different ecosystem
  • 56. Radical management Is “customer delight” a serious business proposition? “Providing a “Customer delight” = continuous stream of additional value to customers and delivering it sooner”
  • 57. The principle of customer delight Is “customer delight” a serious business proposition? “happiness” “enchantment” “joy” “raving fans”
  • 58. The principle of customer delight Is “customer delight” a serious business proposition? • Perfectly perform the job that the customer wants performed
  • 59. The principle of customer delight Is “customer delight” a serious business proposition? • “customer success”
  • 60. The principle of customer delight A paradoxical discovery! Customer delight Costs come down of their own accord!
  • 61. This is why the shift is inexorable … The economics will drive it …
  • 62. 1. NEW GOAL: delight the customers 1 i.e. from outputs to outcomes 1. 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
  • 63. 2 NEW MANAGER ROLE: from controller to enabler 2. 2. Enable self-organizing teams
  • 64. 2 NEW MANAGER ROLE: from controller to enabler 2. Controller of Enabler of self- individuals organizing teams
  • 65. 33. COORDINATION: From bureaucracy to dynamic linking 3. Dynamic linking
  • 66. 33. COORDINATION OF WORK: Dynamic linking Short cycles Client driven Flow Bureaucracy: Dynamic linking Internal plans, targets, Clear line of sight to customer reports, meetings
  • 67. 4 4. FROM VALUE TO VALUES: radical transparency 4. From value to values
  • 68. 4 4. FROM VALUE TO VALUES: radical transparency Preoccupation Human values with efficiency, that build trust: cutting costs especially transparency
  • 69. 5. INTERACTIVE COMMUNICATON: conversation 5 INTERACTIVE COMMUNICATON: conversation 5. 5. From top-down to conversation
  • 70. 5 INTERACTIVE COMMUNICATON: conversation 5. Commands kill motivation
  • 71. 5 INTERACTIVE COMMUNICATON: conversation 5. Money kills inspiration
  • 72. 5 INTERACTIVE COMMUNICATON: conversation 5. Top-down Peer-to-peer commands conversations
  • 73. WHAT’S NEW: doing all at once Delight Goal the Communications customer Role From command to From controller conversations to enabler Radical From bureaucracy transparency to dynamic linking Values Coordination Individually, none of the shifts is new
  • 74. Social conflicts with the traditional ecosystem Make money for shareholders Social Managers are controllers interaction of indivduals Efficiency, Bureaucracy: cost cutting rules, plans, reports This is not sustainable
  • 75. Delighting customers means a new ecosystem “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!
  • 76. The transition is inevitable Two- to four- times gains in productivity Economics will drive the change!
  • 77. These are not little differences…
  • 78. The opportunity for Social Business Lead the revolution! • Be the strategy (not support the strategy) • Master leadership storytelling • Educate your bosses • Join with others • Take charge of your future “Your time is limited: don’t waste it living someone else’s life.” Steve Jobs
  • 79. The real voyage of discovery consists not in seeking new landscapes, but in having new eyes. Marcel Proust