One of the questions that continues to dominate many of the conversations that I have with organizational leaders is the one related to how they should structure their business.
For example, yesterday in a conversation with a friend and client, we discussed the role of the administrative assistant in his business. Like many small businesses, this role has shifted from an essential one to a discretionary one. Many employment positions have gone away because the benefit does not match their cost.
The issue isn't whether the tasks that these people do are not valuable.
The issue is whether the role as defined is.
This is a picture of the shift being taken in many places from a traditional hierarchical business structure to one that I call a parallel one. This parallel structure is a network of relationships.
As you can see by this chart, there are some real differences between the traditional approach to organizing a business, and one built around relationships. This shift is hard for everyone who has spent their work life in a hierarchical structure.
In the traditional approach, a person is hired to fill a position. That position has a job description that outlines the specific tasks and responsibilities that they are to do. The employee's expectation is that is what their time at work will be like each day. Completing tasks that are assigned through the organizational design of the company. Responsibility is passed down to the employee,while authority is held at the top. This system worked well during an era of easy growth and social continuity. It does so because the ultimate purpose of the organization is institutional integrity.
In a network of relationships parallel structure, the job description is also relational. It means that the individual's character and engagement with people is part of what makes them a valued employee. Some may think this has always been true. And that is correct. These parallel structures of relationships have always formed when a specific need emerges. But they were seen as temporary or adhoc, not a permanent or essential part of the organization's structure.
What We Want
The greatest business failure of the past thirty years has not been scandals or financial collapses. It is the failure of business to understand the value of their employees. This failure originates in the structure of businesses.
If employees are functionaries in an administrative, production system, then their value is diminished, by let say at least 30%, and in some cases twice that.
If the business is organized to create order, then employees are hired to comply with that order. Institutional integrity becomes the goal of the organization.
However, in a network of relationships model, people bring much more to their work. This is what the team building movement has been teaching us for a generation. How people relate and work together is a key ingredient in an organization's success.
I suspect though that here again the value of the individual to company is still not perceived well.
If you were to sit down with each employee for coffee and talk about their lives, you would find what I am finding. There are three things that they want. Everyone says them differently, but they can be summarized simply.
People want their lives and work to be
Socially Fulfilling, and
Make a Difference that Matters.
This is what we all want. We want the values that matter to us to be central in how we live. We want some kind of purpose for our lives. There needs to be a point to it.
We also want our relationships to be healthy and whole. We don't like conflict. We don't like to be manipulated, to be taken for granted, or to be used for someone's selfish purposes. We want to walk into work hopeful and excited about the opportunity to share my day with the people with whom I work.
We want to feel at the end of the day that we did something that made a difference. Listen to what people say when they talk about a good day. One where they accomplished something. They overcame a challenge or an obstacle and succeeded at it. Also, they did something for someone else that was appreciated. It made a difference. There was real satisfaction in helping solve person's problems. That's what we want.
The Circle of Impact Connection
The lesson for me when I began to see this picture emerge is how congruent it was to the three dimensions of leadership that I had identified as the Circle of Impact.
The three dimensions that command every leader's attention are Ideas, Relationships and Structure. We tend to segregate them, thinking that it is easier that way. Instead it creates confusion and greater complexity. That is why the four Connecting Ideas - Purpose or Mission, Values, Vision and Impact - are essential tools for helping link together the three dimensions. And it begins by clarifying the Connecting Ideas.
The Circle of Impact applies to both kinds of structures, traditional and parallel, because this is a basic, fundamental understanding of all organizations, regardless of type. Every organization must address its ideology, its social context and how the business is structured to achieve impact. All of them. However, here's the difference.
The parallel structure, described above, is a Network of Relationships. Just like in a traditional hierarchical setting, this organizational structure requires attention to the Connecting Ideas, relationships and the organization of their work.
Networks of Relationships are formed around a Shared Mission and Shared Responsibility, where leadership, authority and responsibility to contribute are shared.
From this perspective of Shared Leadership, the responsibility of the individual is to take initiative to create impact. This is the most basic contribution of the team member. And because the group is organized as a network of relationships, their collaboration and communication is an essential focus of their relationships.
Most of us have experienced team work where there was a genuine experience of coming together as a group of shared purpose and contribution. And most likely, we see these experiences as the exceptions in our lives.
Let's return to my conversation with my friend and client about the administrative staff person in his office.
How can this perspective about parallel structures, networks of relationships, shared mission, shared responsibility, shared leadership and impact fit into his traditional business structure?
It begins with recognizing that each individual has unrealized potential waiting to be released. Everyone of us wants to work in an environment that is personally meaningful, socially fulfilling and makes a difference that matters. If that is so, then the first step is figuring out how those three personal goals can become the basis for the contributions of each person.
As a result, each person contributes that which is personally meaningful. Each person contributes in their interpersonal interaction that which is socially fulfilling. And each person contributes out of their own talent, expertise and character of personal initiative those actions that create the impact that makes a difference that matters.
For each person to do this means that the social structure of the business must change. And this shift is based on what each person shares with the whole of the organization.
Here's the insight that is a key to understanding this organizational change. Because these networks of relationships are parallel structures, they can work along side of, and even within the traditional structures of hierarchy. In fact they always have. But rarely as a core strategy, but rather as a tactical approach to team work.
We can see this is the way businesses define positions of employment. Instead of focused on contribution, the emphasis has been task oriented. As result, the value of the employee is not realized, and it makes the case for reductions in force must easier to make.
The future belongs to these parallel structures. Let networks of relationships form. Let them take collective initiative to make a difference that matters, then new vitally and impact will emerge.
To create order is to create a structure for control. To release control creates a opening for initiative and collaboration. This is the transition point that modern organizations are passing through from hierarchy to the network.
If you know me, you know that meeting people from diverse walks of life is a passion for me. I find people infinitely interesting, their background, their thinking, how they found themselves doing what they do, their hopes and dreams, and their perception of their strengths and potential.
There is a reality that I see in many of them that is equally interesting. Many of them are unfulfilled in their life and work. It isn't that they don't have a passion for something, or don't know enough about themselves to know what their strengths and gifts are. No, it is that most have never found themselves in either the social or organizational setting where they could flourish as human beings.
As I write this I'm mentally scrolling through the places where I live and work. I'm thinking about the people whom I've met and known over the years. Thinking about common characteristics that distinguish them and united them together.
What are the common characteristics of non-fulfillment and of life fulfillment.
Here are three.
Do you have a purpose, a mission, or a calling? Can you define this as something more than what you do as an activity, and more as something you create and achieve?
Do you have a supportive, encouraging, open and honest network of family and friends? Are there people who understand you, who stand by through thick and thin, who believe in you, your mission and the impact you want to achieve?
Does your workplace and home life provide a context where your purpose and your relationships can flourish? Are you constrained by the structures that frame your life? Or, does the lack of order within your calling mean that there are opportunities that you fail to achieve?
My observation is that these characteristics are in descending order of occurrence. More people have a sense of purpose, fewer people have a truly healthy social network, and by a large margin, the fewest people work and live in social and organizational contexts where they can flourish.
The Circle of Impact
For a decade, I've been using this diagram as a conversation / thinking tool to help leaders and their organizations understand where the gaps are in their business. Here's a simple description of what I see.
Leadership is a function that every person can perfom to take "personal inititative to create impact."
I am not defining leadership as a role or an organizational postion. Like many leadership theorists, I see these roles as management, rather than leadership.
Therefore, the Three Dimensions of Leadership that every leader must address are Ideas, Relationships and Social & Organizational Structure. Ideally, every person within an organization takes personal initiative through their ideas and relationships, within social and organizational structures to create impact. As a result, a company becomes a leader-filled organization, rather than one starved for leadership.
The four Connecting Ideas of Purpose, Values, Vision and Impact provide the glue, the ligaments and tendons that create the wholeness of an organization.
Each of the three leadership dimensions must be aligned with one or more of the Connecting Ideas. Here's how.
The social and organizational structures are aligned with the organization's purpose. If these structures aren't, there is conflict and fragmentation.
The relationships within an organization are aligned with the values that create a common identity and character as a community of people.
However, it is not enough, to have values. Many organizations have a strong value system, but lack purpose. A community of people need a vision for how their purpose that makes a difference that matters. It must challenge them to grow, to remain open, and to inspire leadership initiative all with their community.
The Connecting Ideas permeate all aspects of an organization. Every person, every unit, office, group, committee, or board needs purpose that guides, values that unite, a vision that inspires, and an understanding of impact that defines the future of their organization.
The Structure Dilemma
Having been working with this perspective for over a decade, I've come to a challenging conclusion.
The problem in most organizations isn't the attitudes and behaviors of people. The reality is that people are products of their environment, or the social and organization structure of your business dictates what attitudes and behaviors fit within that system.
Most organizations work from a hierarchical stance. There are bosses and managers who direct employees work. This industrial model of management worked well when the tasks of work were non-creative, repetitive and mechanical skills based. Today, we live in a world of creativity, information and the skills require are for human interaction, communication and collaboration. The old structure doesn't align well with this new reality.
As I wrote in The End and The Beginning, this shift from hierarchy is an epic one. As I said recently, "Imagine Proctor & Gamble without bosses and managers, just leaders."
The emerging structure for organizations is the network. Each person participates by their own initiative. Each person contributes through their own unique offering to the network.
I call this "leading by vacuum," which simply means that people do what they are gifted or able to do, which opens up the environment for people with different talents and skills to contribute.
In an hierarchical structure, the efficient ordering of the parts and their compliance are primary. This structure is highly susceptible to fragmentation, compartmentalization and corruption through concentrations of power.
In the network, personal initiative, collaboration and communication make human relationships central. This is an emergent reality, where the whole is greater than the sum of its parts. The power resides in the network and those who know how to engage more people to contribute. It is a leadership of facilitation and ingenuity, rather than control.
I first saw this reality in mid-1970's when I heard the Modern Jazz Quartet in concert. Sitting in a large concert hall with these quiet instruments I saw these four musicians communicating through them. Here is MJQ playing one of the signature tunes, Django. Watch for how their unspoken communication and timing work together.
Each person in the band is essential. Each person has their part to play. The impact is a sound which transcends one instrument, and blends the four into something evocative.
The Quest for Wholeness
If you know that your business or organization is fragmented, splintering apart, difficult to hold together, then what you are experiencing is the end of the viability of a traditional hierarchical structure. You feel it before you can truly see it. By feeling it, you know that others do too.
Bringing wholeness to your structure begins with the Connecting Ideas.
Reaffirm your purpose.
Identify the values that build connections between people.
Create a vision that inspires personal initiative.
Define the difference you seek to create so that you and everyone else can be absolutely clear as to what your impact is.
Begin this process in conversation. Use the Circle of Impact Conversation Guides. Hire me to come facilitate the conversation, if necessary. I'd welcome the opportunity to work with you and your leaders.
Creating a network business structure starts with establishing relationships of respect, trust and mutual reciprocity. Out of those healthy relationships, the network emerges to provide a platform for leadership initiative to create impact.
As the network grows, allow it to establish the organizational structural components that it needs. Remain open to change. Stay vigilant in affirming and acting on the Connecting Ideas.
The future is the network. And the future is now.
Creating a Network of Relationships
Here are some additional conversation guides that can help you understand how to create your own network of relationships.
Near the end of my father's career, the company for whom he had worked for over 35 years, was purchased, and, not so slowly, its assets drawn off and exploited for use by the parent company.
I remember him telling me of the day that he was on a management recruiting trip in Pennsylvania, and received a phone call that the company was not going to make payroll that week. He returned home to help usher through the closing of the company and be the last executive remaining as he handled the outstanding employee medical and benefit claims against the company. He was of an age where he could retire. It was a sad day for him. He had worked for the company his entire career.
My dad's story is not unusual. It is symptomatic of the time we are living in. I thought of my father as I watched last year's under-appreciated film, The Company Men. It is a story of executives and their families coping with change as their corporation goes through a series of downsizes simply to raise the share price. Like my father's experience, the film illustrates a very common experience of change. Here's a clip of a meeting where decisions are being made as to who is to be let go.
This has become a very normal experience for people. Even with a nice severance package, the emotional trauma of being fired is something that doesn't quickly go away. What lies behind this approach to quantifying the value of a company is a way of thinking about organizations that I believe is ultimately destructive rather than a path to sustainability. The logical outcome from over a century of this way of thinking has been the narrowing of the value of a company to something short term and specifically related to its financial value.
Consider the executive's rationale for downsizing staff and eliminating a division of the company in this exchange between Tommy Lee Jones and Craig T. Nelson's characters from the movie. .
Nelson: "Stock is stalled and revenue is flat."
Jones: "Entire economy is flat. We are in the middle of a recession."
N: "I only closed two of the shipyards. Should have closed all three of them. Stock is in the toilet."
J: "Everybody's stock is in the toilet."
N: "Well, the stockholders would like to see their share value maximized."
J: "Heh, Heh, Heh, Well ... sell the Degas'. ... three thousand jobs?"
N: "Gene, we aren't some little shipyard any more. I'm not going to keep pouring money into a losing operation."
J: "We innovate, retool ..."
N: "American heavy manufacturing is dead. Steel, auto, shipbuilding ... the future is in healthcare infrastructure and power generation."
J: "I have to be involved in any decision that affects one of my divisions."
N: "You wouldn't have approved the cut. ... You'd go behind my back to the board again, right?"
J: "They were good people, Jim."
Both men are backed up against a wall. They are caught by a way of thinking about the value of companies that worked in times where growth was relatively assured. Now, the competition is tougher, more astute and far more flexible in their ability to adapt to changing circumstances.
Do you think they could have seen this coming? I'm not sure. It goes back to how to you determine the value of a company. I'm not talking about how Wall Street values it, but the people who are touched by the company in some manner. How do they value the company?
Can the value of a company be reduced to one thing, like the share price, or the charismatic leadership of the CEO or a design innovation? Or is the value embedded in the whole structure and context of the organization?
We are in a time of global transition in all aspects of life. Short-term, reductive, passive aggressive, reactive thinking is not going to lead us out of a recession into a new era of peace and prosperity. Instead, we need to realize that our approach is failing, and that we need a new way to think about how organizations function. It must start with the willingness to be different, to think differently, and invest in changes that provide for long term development.
The Context of Change
The ancient Greeks had a word for change which is metanoia. Literally, it means a change of mind, but it has come to mean something much larger and more comprehensive. Metanoia points to a change of orientation, perspective and direction. There is a sense in the meaning that the change of mind is accompanied by some regret. So the change, upon reflection, is a choice to follow a different path. People choosing to turn toward different values and new ways of expressing them. Metanoia is a change that embraces the whole person, the mind, feelings and will, and is expressed in action that is change.
This change of mind is an awareness that the path we have been on is no longer sustainable. As I wrote in my post, The End and The Beginning, this change marks an end of an era in several ways. The nature of this redirection means that the recent past is no longer an adequate guide for understanding what we must do in the future. As I began in that post,
What if our past experience instead of illuminating the future, obscures it? What if the way we have always approached a problem, or the conduct of a single day, or the organization of our work makes it more likely that we end up not accomplishing what we envision?
The continuity between the recent past and the near future has broken down. This is a turning point for us. The 20th century may provide our most immediate experiential memory, but for the purpose of understanding the future, it is now ancient history.
Reflect upon the attacks on 9/11, our response to them, and the global recession of past three years, and our response to it. Can you see how the tried-and-true methods of the last century have not worked. Neither peace nor prosperity are being restored, in fact, the world is less peaceful and prosperous than it was a decade ago. Terrorism maybe contained upon our shores, but it still festers in places of poverty throughout the world.
Fear, doubt and diminishment in the confidence in our leaders and institutions are increasing. Greater diversity, interconnectivity, and, yes, even greater business efficiencies, are not answering the question about what it is that we must do.
We are now at a crossroads that requires metanoia, a change that is comprehensive and whole. This change of mind requires us to begin to see businesses as a whole organizations, rather than as a collection of interchangeable, discardable, transferable, value-specific parts. The company in The Company Men was dying because it too, like my father's company, was just a collection of assets to be exploited. There is no future in this way of thinking. To have a future requires us to change our minds and see things differently.
To change our minds, we need to make Three Turns of perception, understanding and orientation.
The Moral Turn In the first clip from The Company Men, above, Tommy Lee Jones' character raises questions about the selection of people to be let go. His response, that there is an ethical question involved, is met with a legalistic answer.
By reducing the decision to a question of share price and what is required under the law, the company is not just making a business decision, but also a moral choice.
What is a company that no longer manufactures its products? Is it now a money machine for its share holders as long as the money holds out?
The moral turn is first and foremost about the purpose or mission of the company.
Does a company whose actual purpose is share price encourage confidence and trust?
Does a company whose primary focus is share price understand its connection to the people who work in the business and the communities where they are physically located?
Is a company more than its financials?
Does a company have a responsibility that goes beyond its shareholders, and what is defined by what is strictly legal?
Every organization exists in a context that is greater than the sum of the parts of the organization. There is a culture that is physical, ideological, technological and social.
For example, what distinguishes an insurance company in London to one based in Sao Paulo or Detroit is geography and culture. Yes, they each ofter insurance plans. Yes, they each have customers. Yes, they each generate revenue. The difference is the local context that helps to define the culture of the business.
As a result ...
a company is not primarily its mission or purpose, but its values that are embedded in ideas and relationships within the context, culture and structure of the organization.
Values permeate the whole of the business, including those persons and organizations outside of the business who are influenced by it. Values inform its purpose, its vision of impact, its relationships with all those who are touched by the company, and how the company measures its impact.
The mission of a company is a product of its values.
When the purpose of the company is more than its financial value to shareholders, it is no longer, just a reservoir of assets to be exploited, but a context in which to create the future.
Recently I heard a presenter during in an organizational development workshop describe organizations that are mission driven as organizations on the rise. He used a diagram similar to this one that I use to describe organizations in transition.
When a company reaches a point of maturity or stabilization or equilibrium, the importance of its mission as a guide often fades. What follows is an increasing focus on its financial assets as its primary purpose. The presenter was convinced that once an organization shifts from a mission focus to a financial focus, it has entered a stage of decline. In effect, they no longer see how a company can grow, but rather be sold.
The moral turn that a company needs to make is to reaffirm its values and reestablish its mission as the driving force of the company as a whole.
The Social Turn When the value of a company is reduced to its share price, the company loses the value that exists within its social structure. Not every member of the organization benefits from a rise in the share price. As a result, the company fragments into internally competitive parts to see who will survive the company's disintegration.
For example, as a Boston Red Sox fan for over 45 years, I was particularly disappointed in their collapse this year. It was not that old patterns of attitudes and behaviors that had hampered the team in the past had returned. Rather, it was the squandering of the talent and potential that existed on paper, at least, at the beginning of the season.
By all appearances, the social environment of the team is the core reason for their decline. At the beginning of the season, they were the odds on favorite to win the World Series. Great pitching, the acquisition of two all-star hitters, and a coaching staff that had produced two World Series championships held great promise for the upcoming season. Yet all that collapsed into a mess in what appears to be based in a collective selfishness and lack of accountability for the team's social environment and on field performance.
The Social Turn is the recovery of the human dimension in organizations. As human beings we are social beings through which our individuality develops. Much of the fragmentation of modern business organizations isolates individuals and business units into individualized roles that make collaborative team work more difficult. As a result, the connections that exist between people in the workplace are treated as having marginal value.
In The Company Men, when Ben Affleck is fired, the stated reason is that his position is redundant. In effect, the company was recouping a cost that it viewed was exceptional rather than necessary. The company also loses in this kind of fragmenting of the social structure of the business. Affleck's character was not just a person in a cubicle, but was a connection point in a network of relationships that provided information and influence beyond the company. The value may be redundant, but it is a redundancy that creates strength and resilience, not weakness.
Social fragmentation is not just found in businesses, but in global society at large. Its destructiveness finds its way into companies and organizations, weakening their ability to marshal the talent that exists. The Social Turn is one that values relationships of honor, respect, humility, trust and mutual reciprocity. These values function to create a social fabric that allows for diversity and interconnectivity that creates the sustainability that businesses and communities need.
The Structural Turn The industrial model of business was conceptualized around the idea that a business is filled with a few smart people and a lot of laborers. The world has changed, yet the structures of organizations have not. Still the structure is a hierarchy of decision-makers "leading" a larger number of decision-implementers.
This approach does not work as well as it once did. Here are just a few reasons.
1. Technology levels the information playing field.
2. Advances in public education, and the expansion of higher education has created a society of workers who are much better informed and equipped to do decision-making type work.
3. The complexity of working in a global environment of diverse cultures makes it more difficult for a few people to know everything they need to know about the issues that confront their business.
4. The skills required for leadership and management of business are much more accessible to far more people than every before.
5. Hierarchical structures are organized for control through compartmentalization and standardization.
The Structure Turn that is taking place elevates personal initiative, network collaboration, and adaptive learning as the keys to the organization and leadership of businesses.
Instead of a structure organized around compartmentalized roles and defined areas of responsibility, the emerging structure is an open environment where the skills and resources needed for the work of the business is acquired through a network relationship structure.
In this structure each person is responsible for the whole of the project, not just their segment. Each person can function in the role of leader, while not having a title as one.
In this networked structure, the premium skills are placed upon thinking skills that are both analytical and intuitive.
As I recently commented to Dana Leman of RandomKid,
"Imagine Proctor & Gamble without bosses and managers, and everyone is a leader."
Leadership ceases to be a title, and becomes a set of behaviors and attitudes that all share. For the character of this kind of leadership to take root, it requires changing the structure.
The Structural Turn is towards an organizational culture where people are free to create and contribute, to communicate, to initiate and to pitch in where they see a need. Instead of being doers of assigned responsibilities, they are facilitators and problem solvers. In many companies, this kind of structure is developing. However, it must happen at the senior level for the turn to be successful.
How would the company in The Company Men function differently if they operated under a network structure?
1. More people would be engaged in meaningful reflection about the challenges facing the company because they knew that had an actual stake in its success.
2. Innovation would be more prevalent as employees practiced a higher level of leadership initiative and problem solving.
3. New business applications through employee ingenuity would expand the number and range of revenue streams the company has.
4. The company would be unified behind its shared values and mission.
5. The company would be a more attractive place for the top talent to work.
6. The company could more easily adapt to financial downturns.
7. Communities would be vying for the opportunity for the company to create a local operation.
The central message of the Three Turns is for your mission to drive change in the company, centered around values that unite people to create a shared company culture of trust, personal initiative, and a desire to contribute to the company's success. When this happens, the turn from hierarchical structure to a network one can take place as a natural evolution of the company.
Over the past month, a group with whom I'm involved have been asking local leaders about the programs that we present to the community. These leadership development events are especially focused on personal leadership within the context of work and professional life. We've always seen our audience as the local business person who either has never attended a leadership conference, or the business owner who brings her staff to our event for a shared leadership experience.
One of the questions that has been asked of us concerns the Return on Investment (ROI) for attending one of our events. Here are some of my colleague's thoughts.
... this is the times we have moved into.. ROI...people on all levels are stretched - for time, money and quality.. they think before they spend now.. and what they are thinking about it is now I have to make a choice.. if I do this I can't do that... and that speaks to the decision going to the highest point of value... I have to sell ROI to get the gig ... they want to know "what is going to be different" after this event.. Tall order.. but still have to address it ...
I think we need to consider that the whole ROI question could be a red herring. Not that ROI is not important or should not be measured, but it reminds me of the companies who are scaling back on corporate wellness programs because they haven't figured out how to measure ROI.
Honestly, you CAN'T accurately measure the ROI of the programs we present. In fact, you can't measure it ANY time exactly. The reason is that there are SO MANY additional factors within the organization and out that could radically affect such measurements. Yet, the corporate CEO, business owner/leader wants to SEE the value and benefits.
Bottom line...people are spooked at all levels of life. Uncertainty in the future is at an all time high. We don't have the answers, but we can stimulate great questions and help people deal with their uncertainty in a positive fashion. If we don't inspire people to develop their creativity, think of themselves as solutions providers instead of employees...we are not creating value ... However, I believe we are doing this. We just have to be creative in positioning this message. The ultimate ROI is to help people feel as if they can leverage their uncertainty into unparalleled opportunity.
I agree with my colleagues about these issues.We live in a much more complex, demanding world. Every decision brings a level of scrutiny that is unprecedented. As a result, I've come to the conclusion that we need to think differently about ROI.
There are two aspects of ROI that are worth considering. One is the standard question of the meaning of investment and its return. The other is deeper question related to employees and their value.
What do we mean by ROI?
ROI is a concept for measuring value. It is primarily a cost-benefit measurement. If I spend this money on this event, will it return a value equivalent or greater to its cost.
This is a trap that many businesses find themselves in. It is a trap because the cost / benefit ratio is not a adequate measure of value.
Watch this video by Dr. EliyahuGoldratt that provides perspective on the trap that many business are caught in.
When cost is a primary measure of value it is impossible to understand the potential that resides in the business. Potential requires investment for it to be discovered, developed and fulfilled.
This especially applies to the highest cost within a business, employees.
Here is one of those points of transition that is important for us to recognize. The shift is from one conception of what a business is to a new conception.
A shift in values and approach.
The 20th century marked the height of the application of the industrial model in business. Employees were viewed as parts of a production system. The ROI / cost-benefit method of thinking meant that those jobs were allocated to where costs were low and production levels could be maintained. As a result, corporate businesses became huge successes by this way of thinking. That was then, this is now.
Today, as globalization flattens the business landscape, these decisions are not so simple as they once were. Factor in an accelerating and disruptive rate of social, economic and political change, and the environment for business from the largest company to the local mom and pop convenience store is filled with uncertainty.
The old way of understanding a business was to see it as a mechanical system of business and production processes, with people as the most expensive parts of the machine. A new way to understand the nature of a business is as a community of people committed to a shared mission for impact.
The old way of doing things, the person was defined by the job. In the new way, the person is defined by their potential contribution. With the former, the perspective was reductionist and limited. With a different approach, the system is open to change through the contributions of each person. The system opens up avenues for discovering the value that is latent in products and processes.The old system assumed that we know all that we need to know. The new approach assumes that we must discover what we don't know, and then build from that perspective.
A better understanding of ROI asks what kind of investment do we need to make to fully realize the value of the staff that we have?
The change in perspective here is not just about employees. It is about the business itself. Is the business about what it produces or is it about the impact that its products and services have upon its market?
With a cost orientation, the production system is the focal point of the business. With a view to optimizing (a Goldratt term) the system, the shift can be made to the benefit or impact of the products or services of the company. It is ironic that the question about the Return on Investment in people leads to the same question applied to the company as a whole.
What is the Return that a client or customer should expect from the company's products and services?
My point here is that our conception of ROI is based upon an understanding of what a business is that is more all encompassing than what we initially recognize. If our conception puts us in the trap of not being able to see the potential that resides dormant, waiting to be released, then we need to think more deeply than simply about what ROI means. We need to look at what is the purpose or mission of our business and what role do our employees have in its fulfillment.
Taking ROI one step further
One of my colleagues commented in our discussion,
...What we CAN demonstrate clearly is that the organizations that invest more heavily in their people through training and events are the CEOs who are most successful -- from Southwest Airlines to Starbucks to Lockheed Martin, Google, …
Yes. This is clear, in that we all understand that there is value in investing in people. What isn't clear is the answer to the question,
"What should be the outcome in investing in people?"
Our conception of ROI is rooted in 20th century thinking. It is a transaction based model that defines the value of people as costs within a production system. (I am somewhat overstating the point, because not every business owner sees employees in this way. They recognize that their staff are people with families, mortgages to pay, and who are the ones who make the business function.)
This transactional perspective fails to understand that the transformation of any organization comes through the people who work and volunteer within it. The agility and adaptability that businesses need today does not come by executive fiat. It comes by having employees who are passionately engaged as leaders in the company's mission. As a result, executive leadership must shift from a control stance to the practice of developing and facilitating employee leadership.
To embrace this change of mind requires us to also make the shift from a mechanistic understanding of business to something a kin to the business conceived as a a community of leaders joined together to create impact. In this sense, the company is a society of change agents whose purpose is to have as great a positive impact upon clients and customers as possible. It is an approach centered upon realizing the full potential of people as the business' strongest, most valuable assets, not as costly machine components.
What does it mean for employees to lead?
First, they are seen as people with potential that is unrealized and undeveloped.
This is the talent question that businesses are beginning to invest significant resources in.
Second, employee leadership rises from their own, individual, personal initiative to make the difference that the company's mission promises.
These employees are engaged in taking action to make their company better.
Third, their leadership is both collaborative and individual.
This understanding of leadership isn't an encouragement for every employee to do their own thing based on their own interests. This is leadership that recognizes that how people work together is a key dimension of organizational success, and of increasing importance.
One way of distinguishing the difference between employee leadership and executive leadership is the difference between tactical and strategic leadership. If the business owner spends her or his time putting out fires, addressing customer issues, resolving employee issues, then the system is designed for the executive leader to control all aspects of the business. Today, this is not realistic.
Instead, by developing the leadership capacity of people, employees learn that they have the prerogative to resolve issues before they become problems. They learn that they can take care of customers, vendors and other employees in a way that builds long term sustainable relationships of mutual benefit.
A company that supports the personal initiative of their employees is one that has opened up the possibilities and opportunities that were hidden before. People are the agents of transformation through their individual initiative and shared responsibility for the company. Employees are assets waiting to be utilized for the benefit of the company.
Redefined ROI as Return on Initiative.
The measure of initiative is the change that makes a difference that comes from the leadership of people. This kind of leadership transcends the restrictions of cost/benefit decision-making by elevating a culture of shared responsibility. It means that employees are not measured simply as costs on a balance sheet, but rather as agents of positive, sustainable change.
What does it take to create a culture where employees are equipped and motivated to take leadership initiative?
Here are four steps.
The first, the owner or chief executive has to release control, and allow for employee initiative to take place.
The future success of a company will be determined by how well the organization can become a community of leaders. It starts with the person at the top being willing to share leadership.
This is not an easy step because every inclination bred into the bones of a senior executive is the fear of losing control and failing. Often, only after realizing that over-control is the surest route to failure that openness to a more open, collaborative leadership structure can develop.
The second step is to begin to invest in specific ways to help employees realize their leadership potential.
This is not training in executive leadership. This is training in personal leadership that is reflected in their performance, attitudes, behaviors and relationships within the company. With this training, the company transitions from a mechanism of business process into a community of leaders who take initiative to develop those processes for impact.
Let them lead, and It may turn out that eight leaders can do more than a dozen people who are just time-servers as employees. Let them lead, and your company becomes a magnet for people who want to work in an environment where leadership initiative is welcomed. But to let them lead, they must be equipped to do so.
The third step is to allow for the structure of the organization to adapt to a new leadership approach.
Too often I've seen great ideas fail to return on their promised benefit because the environment is not suited to them. For employees to lead requires change in how the business functions. If there is genuine openness to change, then the right changes will be made.
The fourth step is to recognize that values are the heart of this kind of leadership.
These are values that provide the foundation for the company's purpose or mission, its vision for success and how it defines the impact that it is to have on its community of constituents. Values are the unchanging foundation that unites a community of leaders together.
The pejorative attitude that values are a secondary importance as "soft-skills" simply reveals the mechanical perspective that has been the dominant philosophy of business for the past century. An emphasis on the importance and application of values creates a shift in culture that opens the company up to fresh ideas and new opportunities. It allows for relationships to form that are based in respect, trust and mutuality.
Each of these steps needs to be implemented for each supports the other as change brings strength and growth.
Shifting from a Return on Investment mindset to a Return on Initiative one.
This change of mind is like the difference between a journey measured by a credit card statement and one measured by the pictures, videos and stories of the trip. One is like a list of activities and the other a biography of a person's life. Invest in the person, and their life and work become more integrated, providing a stronger basis for leadership.
The most important question that must answered before any of the above can be fully understood is what is the potential that each staff person has?
Do you know what that might be?
Do you have any way of understanding what potential looks like?
Then you can ask the question what does it take to develop their potential? It is part training, part creating the right social atmosphere, and part a redesign of how the organization functions.
The beauty of this new approach to being a business is that it is no longer all up to the senior leadership. As this approach produces its promised impact, more and more of the staff will be making contributions that move the company into a new way of operating.Then your Return on Investment in them will be measured in the company's Return on their Initiative in leading.
"If this afternoon, you were to lose everything, become a failure in all that you had sought to create, who would stand by you?"
This is the question I asked of a number of men during a six month period a many years ago.
At the time, I did not realize how traumatizing my question could be. Most of them answered with reflective silence.
The others? "My mother."
None of them were confident that their spouse, their children, their neighbors, the people from their congregation, work, the club or any other social association would hang in there with them during a time of humiliation. In effect, these recognized leaders of their businesses were isolated and alone, alienated from a community of support and caring.
It did not take long to realize that I had to stop asking the question. It didn't help them. I also realized that I had to become a person who could stand along side of them when they would go through the worst experiences of their personal and professional life. It changed my approach to being a consultant. It elevated my understanding of the relational nature of leadership.
Why is it that these men thought that no one stood with them?
Is it something personal?
Or is it something embedded in the way leadership, professional life and the structure of organizations have developed?
Failure of the sort that I described to them could come as a black swan, out of the nowhere, without expectation. Over the past three years, many people have found themselves in this situation. It points to a fragility that exists in our lives that is buffered by relationships of trust.
Trust is basic to healthy human interaction and the functioning of society. We diminish the value of trust when it is understood as little more than the basis of economic exchange.
In my post, The Emergent Transformation, I distinguish between human experience that is series of transactions of information and encounters between people, and a transformational one where our interaction creates a higher level engagement.
Here's an example of what I mean.
The closest Starbucks to my home is in my neighborhood grocery store. For most of the baristas, I'm a customer. I come in, order my coffee, pay for it, and leave. Whatever banter we have is rather meaningless, just the sort of talk that accompanies any transaction.
However, there is one young woman who is different. She engages me in conversation. She recognizes me, tells me about her day, asks about mine with genuine interest.
One morning, I walked in and said, "Grande bold, room for cream, please." She starts to laugh. She stops and says, "Sounds like the names of your pets." We both laugh. It is one of those situational jokes (You had to be there.). So about once every three or four visits we talk about my dog, Grande bold, and my cat, Room for cream.
Granted, the barista and I will never become BFFs or colleagues in business. However, the moment we shared that day transcended the typical economic transaction that was the purpose of my visit, and has transformed my relationship to that store.
The Social Bond Online
Over the past decade, an interest in human connection and social networks has grown dramatically. Much of this interest is taking place online through social media platforms. You only have to look at the rise of Facebook to see the extent of the desire that people have to be socially connected to other people.
Many people denigrate the trend towards connection by social media.
"They are not real relationships."
The relationships that develop are viewed as the online equivalent of a large cocktail party. Lots of meet and greet (search), exchange of contact info (befriending), and a superficial staying in touch (status updates.)
There is a social bond to this shared experience. Real relating is taking place. Some of it is at a low level of social interaction as describe above. However, some of it is at a personally meaningful level. Social transformation is taking place as our connection deepens with each interaction, and possibilities open up for good things to result. This is my own experience.
The social bond is not the online space where we meet. The bond is the connection that we share through a common interest. Our interaction is real and provocative. Like many people, I find people whom are asking similar questions, seeking similar solutions, and who are open to learning from others.
There are two conditions that determine whether the social bond online is superficial or substantive.
The first is the transformational potential of the ideas or common interests that bring people together.
The second is the willingness for participants to allow their interaction to lead the interaction where it needs to go.
As you can see, it isn't being online, but what we do online that matters. By being a particular kind of person, we engage others in such a way that the social bond emerges from its hidden place in the social setting..
Learning to see a social bond
Earlier in my career, I worked at a small college. One of my roles was to develop a student leaders program. For three years I failed as I sought out the top student leaders to form a group focused on leadership. They simply were not interested. Persistence is sometimes not the answer. Changing your approach is.
Over time, and through my doctoral work, I came to see what was in plain sight, but virtually all of us miss when we talk about leadership.
We see leadership as a set of transactions or rather interactions and moments of decision within an organizational context. We think of leadership as a function of process. Is it simply a series of transactions made between people and groups within an business, or is it something more?
When we think only transactionally, we miss seeing the social dimension.
We touch on it when we talk about collaboration and team work. But if you listen, most talk about improving those aspects of their business is not about the social dimension, but rather the tactical dimension of business processes. My observation is that most leaders don't address the social dimension until it has become problematic. By ignoring the social dimension, we create a self-profiling prophecy as issues arise that not subject to easy process change.
Let me say it this way.
The last remaining unexplored leverage that leaders have now is the social dimension.
Tactics and processes, while essential, do not address the issues that many businesses now face. Leaders must identify the social bond that exists within their organizations if they are going to find the edge they need for sustainable growth in the future.
I learned this in addressing my own failure with my student leaders program. My approach had been abstract and tactical, lacking in a context for application. So, I shifted my focus to mobilizing student groups through the social bond that brought them together.
In a college context, there are sports teams, fraternities, sororities, academic clubs, religious groups, advocacy groups and residence halls. In each, a group of students discover each other through a common bond that unites them together. It provides each person connection, a place of belonging, and a sense of identity. For the group it provides purpose, a reason to exist and possibly as they develop a way to understand the difference they can make as a group.
In a business context, there are associations based on interest, skills, industry and locale. The social bond unites the executive team, the administrative staff, the sales staff, and back office as uniquely definable groups whose shared work experience provides a basis for connection, belonging and identity.
The leader of the organization has to discover the social bond that unites all the different groups to make them one group. That social bond is wrapped in what I call the four Connecting Ideas.
When I discovered this perspective, I made two changes to my student leadership program.
The first change was to shift my attention from the individual leader to the group.
The second was to shift my leadership emphasis from teaching abstract principles of leadership to learning to lead within the context of doing it.
I did this by starting two new activities on campus. One was a campus chapter of Habitat for Humanity International. The second was an afternoon play group for the elementary age children of adolescent mothers in our community. For each, I went to the groups on campus, asking them to sign up for a service weekend with a Habitat affiliate in a nearby county or one of the play days with kids during the semester. In both instances, groups eagerly stepped forward to sign up and participate. They saw it as a fun, meaningful activity for their group. The leaders within those groups rose to the top as organization as they took on responsibility, with the added benefit of new leaders coming forth who wanted to focus on these new campus activities.
The transcendent character of a social bond
A group's social bond is not a branded idea. While ideas may describe the bond, it is more than an idea. It is instead something emergent. It is something that is whole, that draws people together into a relationship that transcends the moment.
Here's the difference. Your college's basketball team wins the national championship. The streets of town fill up with cheering, celebrating fans. The experience brings people together around their shared joy for their team. But once the cheering stops, the bars close, and baseball season begins, the bonding experience of the post-game celebration is gone.
The social bond is something that people draw upon for meaning and purpose in their relationships within a particular social or organizational context. This is historically been one of the core strengths of religious worship. It isn't just the ideas of faith, but the shared experience of faith that matters. It is a whole shared experience that elevates one's perception of who they are and how their life matters.
I look upon them ... each man with great respect ... respect that I can't describe ... each one of them proved himself that he could do the job.
The respect which is difficult to describe is the bond that unites them as soldiers. It comes through a shared experience where they were tested as men and as human beings in the crucible of battle during World War II. Shifty Powers describes it.
"You know these people that you are in service with ... you know those people better than you will ever anybody in your life ... you know them right down to the final thing .. that comes when you start your training .. that progresses."
Listen how these men, in many ways not different from people we encounter everday, describe their relationships with one another.
The social bond that these men have exists beyond analytical description. It can't be simply broken up into a collection of ideas or stories. It goes deeper than that. Their relationships matter more than just as as a group of acquaintances. Rather, they are forever connected by the bond of shared experience. You can hear it in what they say.
Here's what Ed Tipper said in the video.
There is an intimacy develops like nothing I've ever experienced anywhere, not in college, not with any other group of people.
It is like the union leader who commented to me during a values identification process with his company.
"I want us to get back to where we were twenty years ago when we were family."
Embedded in these emotions is the social bond that made working for the company or serving in 506PIR Company E something more than a job. What formed was something fundamentally important to their experience as human beings. We are not solely individuals. We are not simply interchangeable parts in a system of organizational processes. And potentially not just list of friends in a Facebook profile.
Attention to the social bond that exists in organizations is largely missing in our society today. We treat the shared work that human beings do as mechanical scientific processes that are to be performed and measured. By removing the human social element we think we are removing ambiguity and creating efficiency and consistency. Rather, we are diminishing the organization's ability to maximize the potential that resides in each employee. It produces a rush to the bottom of the lowest common denominator level of social experience. The potential that resides in each person cannot be released because it must be done so within a social context that shared purpose and experience. Our potential is not realized solely by individual initiative, but by collaborative action. At the heart of every team is a social bond waiting to be recognized and released. It is the hidden potential that awaits recognition by organization leaders world wide.
The challenge we confront
Years ago, when I asked people who would stand with them if they failed, unwittingly, I was revealing the absence of the compelling connection that the social bond in an organization can create. The reason for this is not solely the mechanistic principles modern scientific management. It is also a national culture that seeks to remove risk and danger from every day life.
When I first watched the We Stand Alone Together documentary of the actual members of Easy Company, I turned to my son and said,
"If you ever find yourself in a group where this is your experience of friendship, consider yourself to be one of the lucky few. Most people go through life never having this kind of experience of human community."
At the heart of the social bond is the recognition that we need one another. Not because we are weak, but rather because we are incomplete as individuals. The togetherness that is realized when this social bond is strong enables men and women from diverse backgrounds to join together to achieve greatness beyond their individual potential.
The challenge before us is to believe that this is true, and to act accordingly. For if this is true, then how we organize our businesses will set the stage for the elevation of the social bond creating a culture of shared human endeavor, that is required more today than every before.
First steps in discovering the social bond that exists in your organization.
I could give the standard analytical process of a set of processes that focus on the development of values and organizational purpose. But I won't, even if at some level that is important.
Instead, just treat each person with openness and honor.
Learning how to do that (I'm assuming we all need to learn to be more open to others, and to honor the best in them), a new social context will emerge that can elevate your company to a new place of shared endeavor.
To be open simply means to listen, to understand, to affirm, to let people try and fail, and to create the expectation that others will be open.
It means letting new people have the opportunity to influence decision-making and direction. It means not assuming control over every aspect of the organization's life. And from my experience, openness is a powerful attractor for talented people to come work for your business. It is a signal of authenticity and opportunity.
This is more difficult because it requires us to pay attention to the other people in the room. We must look at them not as human resources or representatives of particular social ideologies. We look at them with dignity and respect, with appreciation for the potential contributions that they can make. In many cases their contribution can only be realized when the social bond creates social strength for the depth of trust and collaboration needed for a challenge moment.
In one way or another, much of our lives is lived standing alone. But it does not have to be this way. To stand alone together is the product of intention, initiative, openness and persistence. It emerges from the thousands of individual encounters that we have where our connection to one another begins to matter beyond getting tasks done. It is where genuine transformation happens.
Discover the social bond in your business, and you discover the path to a future that is yet to be realized.
An interesting conversation is taking place about The Future of Money. A global community is engaged in discovering alternative ways of viewing the way commerce is conducted. They want to move economics beyond the transactional level to the social. What these bright innovators recognize is that trust must be at the center of all interactions in society. This is why I'm paying attention to this conversation.
The video was produced as a part of a presentation that Venessa Miemis gave at the Sibos conference of the financial services industry in Europe. In her presentation she said,
There is a class of young, intelligent, creative, passionate people who have become disillusioned with the debt-based monetary system, and are busy creating new infrastructures, right now, that are allowing a commons-based peer-to-peer infrastructure to emerge - in parallel to what currently exists. And the foundation of this economy is based on trust, and on transparency, and on the ability of distributed networks to self-organize.
For the community concerned with the Future of Money to realize a financial system based on trust they will have to address the place of culture.
Social scientist Francis Fukuyama's book Trust: The Social Virtues and the Creation of Prosperity places trust at the center of cultures that prosper.
Trust is the expectation that arises within a community of regular, honest, and cooperative behavior, based on commmonly shared norms, on the part of other members of that community.
Fukuyama describes culture as an inherited ethical habit.
Trust as an inherited ethical habit produces a culture that is predictable, open, honest and where mutuality is important. The reciprocity aspect of trust is how it becomes a culture. It is shared and exchanged between people. It creates a value within the culture because trust elevates the possibilities that come from the relationship.
Trust, therefore, has a strategic, developmental, entreprenurial value upon which organizations and communities can create the future.
Over the past few months, I have been writing about the shift that I see taking place. You can download a compilation here. I see this shift as moving us from a lower-level reality of self-focused individualism to a higher one of a shared community of responsibility and contribution.
This shift is necessary because the time of the imperial self is fading in the wake of its own exhaustion as an ideology and the growing complexity and interconnectedness of our global society. It isn't simply the idea of the influence and impact of one person upon the whole world. Rather, it is the need for higher-levels human interaction to fulfill the opportunities that are being presented each day. We need each other precisely to fulfill our individual sense of calling to make a difference that matters. It is the matters part that drives us into social arrangements that require us to be better people. It is ironic that as the world shifts from the individual to the social, it is providing a better context for the development of human potential as a result.
At the heart of this shift in human history is the importance of trust as a core condition for human community
What is the source of trust?
Trust is an outcome of attitudes and behaviors that we share. When I trust you, it is based on my respect of you and an appreciation of who you are, in other words, of your dignity and value as a person.
When a person lacks dignity and self-respect, I know that it will be hard from them to treat me with dignity and respect. As a result, it will be difficult for us to trust one another.
If trust is the outcome of mutual respect and dignity, then it is also a recognition of our interdependence upon one another. Our mutual respect means that we can see in the other person strengths and potential that is worth affirming and elevating. As a result at the heart of the experience of trust is the practice of honor.
What is it that we are recognizing when we honor people at banquets, awards shows, etc?
We are recognizing their accomplishments, their contributions, their acheivements in life and to specific organizational and social contexts.
Why do we recognize these achievements of these people, and not others?
Because those we recognize represent the values that unite us a group. They signal to others what it takes to be a fully functioning, contributing member of our society. In essence, our recognition is symbolic of our values and beliefs as a people.
What if we reverse the sequence? Instead of recognizing people after their accomplishments, what if we recognized them, or rather affirmed them, for their potential accomplishments. Why can't we honor the talents and abilities of people in order for them to recognize the opportunity they have to make a difference.
You walk into a room of strangers. You don't know them. They don't know you. You feel a bit intimidated by the experience. Who are these people? Are they important or invisible? Are they interesting or boring? You don't know. Do you wait for someone to start a conversation, or do you take the initiative? If you take the initiative, what are you going to talk about? You're nervous, so you talk about yourself. You try to impress them with your own importance so they think you are important. Yet we know this doesn't really work. We come across as self-important egotists.
If instead we approached this scenario from the perspective of honor, then we walk into the room with the expectation of honoring each person. This means that we must discover what it is that is worth honoring in them. We must, therefore, ask questions about them. And once we find out some noteworthy things, we honor them by affirming and envisioning how they can make a difference.
Since I shifted my perspective to honoring the potential in people, I find it is much easier to trust them. There is a bond that forms.This is so because as soon as I recognize their potential, I become a partner with them in realizing it. Here's an example.
A few weeks ago I was at a conference in the mountains of Virginia, at a beautiful place called Primland. One evening after dinner, we were sitting outside of the Lodge where there was a firepit. A young man named Josh came out to start the fire. We began to talk with Josh about the property, where he was from and what his aims in life were. He was a student at a local community college, and wanted to be a professional writer of poetry and short stories.
So, here is this nice young man, who expresses himself well, talking about his writing. I ask him if he has shown his writing to anyone. He tells us that his father knows a best selling novelist, and wants to connect them up with each other. Good idea. Life is made from connections. He hasn't done this because he doesn't think he can show his work to the novelist yet. He doesn't say it, but he doesn't want to be embarassed if it isn't any good.
Here's an opportunity to honor someone who has not become accoplished in life, but who has potential, and needs both encouragement and some guidance. To honor him, I offer my help to read and critique his writing so he can go see this novelist with the confidence that he has something to offer than can make a difference. A simple offer that requires him to accept and act for trust to be realized.
When we honor someone in this way, we show respect and we establish the basis for trust to be shared between one another. Of course there will be people who reject our honoring of them. But those who do accept it complete the connection required for trust to live in a relationship. Imagine a group or society where this is the practice of the community.
To live with honor and to practice diplomacy in our daily lives is not easy. It is countercultural, even prophetic in its application to our world today. It means that while we may disagree with another person, we can also honor them with respect, even if their behavior is a demonstration of a lack of their own self-respect.
I understand, therefore, that as we enter this new Presidential election campaign season, that your candidate is dishonored when you treat his or her opponents and supporters with dishonor.
I understand that your reasons for not voting for your candidate's opponent are not the same as having positive reasons for voting for them.
I understand that while pollsters say that negative campaigning wins votes, that it also poisons the well of respect that is required for the diplomacy that civic leadership demands.
I understand that dishonor in any context easily finds it way into others. Consider carefully what kind of atmosphere you want in your social and organizational life. The line between politics and the rest of life and work is razor thin.
I understand that to be honorable and diplomatic does not mean you give up your values and principles. It means that you do not win by destroying the other person. You lose by dishonoring your own values.
To practice honor and trust in this way is transformational. It sets up conditions in organizations and communities where people can discover their true contribution to society, and form the relationships that are needed to realize that calling.
To look objectively upon our world is to see a world where trust, respect, honor and mutuality are in great demand. When we treat others with disrespect and dishonor, we act without dignity. The effect is destructive and toxic. It divides, isolates and creates inequities, poverty and war. I'm no optimistic Pollyanna who believes that we should all just get along. I'm a realist in understanding the competitive ground upon which we walk each day. There is more to trust that just respect and honor.
The Trust Connection
Over a decade ago I first read Ron Burt's Structural Holes: The Social Structure of Competition. Then, I had a beginning confirmation of what I knew intuitively. That the person who is able to establish relationships of trust is the one who will have a greater competitive advantage in a disruptive, rapidly changing world. In the diagram here, Mr Blue has a competitive advantage over Mr. Green and Mr. Red. His advantage is in brokering a relationship between them. His ability to connect them together advances each of their opportunities to make a difference.
From the Burt's introduction ...
My argument is that much of competitive behavior and its results can be understood in terms of player access of “holes” in the social structure of the competitive arena. Players are connected to certain others, trusting of certain others, obligated to support certain others, dependent on exchange with certain others….the holes in social structure, or, more simply, structural holes, are disconnections or nonequivalencies between players in the arena. Structural holes are entrepreneurial opportunities for information access, timing, referrals, and control. ...
But their individuality is the key to understanding competition. The substantive richness of competition lies in its imperfections, the jostling of specific players against one another, each looking for a way to make a difference. In the substantive details of imperfect competition lie the defining parameters of competition. They are the parameters of player individuality. Competition is imperfect to the extent to which multiple players together dominate a market, is an insufficient answer. The central question for imperfect competition is how players escape domination, whether it is domination by the market or domination by another player.
This is the focus of the structural hole argument – a theory of freedom instead of power, of negotiated instead of absolute control. It is a description of the extent to which the social structure of a competitive arena creates entrepreneurial opportunities for certain players to affect the terms of their relationships.
Competition is one way of understanding the social relations of people.We see it most destructively in predatory business practices and divisive, dishonorable politicing.
Its complement is collaboration. If at the heart of competition is the competitive advantage that one brings because the other person, then at the heart of collaboration is the recognition of the advantage that another person brings to an endeavor. The most enlightened industries are ones where members become collaborative competitors.
I venture here because trust is essential to both competition and collaboration. Let's look at this expanded version of the diagram above.
Originally, Mr. Blue brokered a relationship between Mr. Green and Mr. Red. Now we see a network of relationships that is much different. Mr. Green now is the principal broker of relationships by simply bringing two rather than one new relationship into the network. As this network grows in complexity, the key to its healthy functioning is the quality of the relationship that exists.
Healthy competition strengthened by respect, trust and honor elevates the network beyond a transactional relationship, centered upon how to secure one's own benefits from the network. Instead, the network is transformed from a collection of individuals to a collaborative community that shares common values, goals and benefits.
The Future of Trust
Trust is developing as a strategic, emergent reality that transforms relationships of acquaintance into a communities of respect, honor and mutuality. It is the basis for the kind of economic system that is being explored by The Future of Money community. It is the kind of attitude and behavior that we should expect from elected leaders. It is what we should expect from ourselves. This is the future of trust.
This picture of innovative technology points to the social change that is occurring because of the advance of technology. Besides lowering the cost of prototyping and manufacturing new products, people can now take their ideas from conception to market in a shorter period of time. Kulkarni spoke about what used to take months to produce that now can be done in a matter hours or days.
As I listened to Rajeev Kulkarni's Hatch presentation, I realized that in these printers I saw three significant social shifts. When the cost of manufacturing and production time are reduced, and the technology becomes affordable for individual use, then we are moving through a transition period from one era to the next. The shifts that I see taking place are:
1. From consumers to creators / producers
2. From mass market to mass customization
3. From a mass culture to a local culture
Let me describe each.
1. From consumers to creators / producers
With the use of basic design software and the RapMan 3d printer, any individual can become a producer of products for sale. The materials that can be used in the printing process are extensive. So, no longer will people have to depend on the marketplace to provide the products that he or she needs. With some ingenuity and business sense, they can make a shift from being a consumer of products to being the creator and producer of them.
Of course, six billion people will not automatically shift from being consumers to creators / producers. And every producer needs consumers to buy her product. Yet, it does not take many people embracing this shift in culture to dramatically impact it. The picture above is of an school girl in England using the RapMan printer.
Imagine every school in your school district having a 3d printer to complete a learning process of idea creation to product completion. Imagine the change of mind that comes to the students in that school when they can create, and not just consume. Imagine a generation of men and women who think of themselves as creators and producers, as leaders, rather than just consumers of other peoples' creative output.
One of the first realizations I had about 21st century leadership was that it was about personal initiative, not about roles. Leadership begins with personal initiative. Tools like these 3D printers place into the hands of people the opportunity to initiate, to create, and to produce products and solutions that can make a difference.
2. From mass market to mass customization
The nature of product development cycles used to be months, even years, necessary to bring a product to market. As a result, it required that product to have as wide an appeal and as long a shelf life as possible. With the advent of technologies, like 3D printers, this is changing. Now in a matter of a few hours, a specialize part can be designed and produced for a customer.
There are a couple implications for this shift.
First, it changes how a company relates to the marketplace. In a one-size fits all world, the marketplace is the lowest common denominator. In a mass customized world, the individual is the market. Marketing to individuals is different than to a mass culture. This is the insight that Chris Anderson wrote about in his book The Long Tail.
Second, it makes the relationship between manufacturer and consumer more important. I've learned this as a consultant. I cannot approach any project as if there is a formula that applies to every other organization in their industry. I have to build a relationship of interest, inquiry and adaptive response to meet not only their expectations, but their needs. I enter into their organizational setting with a set of tools, not unlike a 3D printer, though I don't have one, and use my tools to address the needs that they have.
In a mass customized world, relationships matter, and that is a key to managing the shifts that I'm identifying here.
3. From mass culture to local culture
Prior to the 20th century, life for most people from the beginning of time was experienced in small towns. I remember my grandfather telling me near the end of his long life that the most significant invention in his life time was the radio. When asked why, he said, "Because it showed us what life was like in other places."
The 20th century was a century lived on a global scale, with World Wars and multi-national corporations, and, with institutions that were designed for a mass culture. It was a perspective where one size fits all, and that all people are to be treated a like. Individuality was rebellious and conventionality was the norm.
Those days are slipping away as innovations, like 3D Systems printers, make it possible to create a business that serves customers globally from an office in a small town with an internet connection. It is the twin developments of innovation for individual productivity and the failure of large organizations to function in a one-size fits all world.
As a result, the meaning of global and local is changing. It is less about a mass market culture of sameness, and more about a culture of relationship where I can serve you, regardless of where you or I live. We can be connected. We can communicate, collaborate and coordinate our projects from wherever we sit today.
It isn't just that we live in a time of the long tail, or that technological innovation provides a basis for mass customization or a better foundation for individual initiative. Each is true. At a deeper level, it means that any individual with a minimum investment can pursue their own sense of calling as a person, and do it in a social context of others who share their vision and commitment. This is an emerging reality that will seriously impact the nature of leadership and organizational design in the future.
One way of understanding this development is to see this as the ascendency of the local. I've written about it here, here and here.
The key to making a local orientation work is openness. For many people, local is just another word for provincial, or closed. However, if local is less physical place, and more a relational space, then we can begin to see that my local can include colleagues in Japan, Pakistan, England, Canada, and my neighbors nearby in Asheville.
In a local community, you share a concern for people, for families, for education systems, the business community and for those less fortunate. It is a concern for the whole person, not just for the transaction.
For example, I can share a concern that my friends in California have for the economic and social conditions of their small coastal town, and feel that as their community grows, that I contribute to their growth.
A local community orientation can function in any social or organizational structure. It is the heart of team work. It brings personal initiative, shared responsibility, and common goals and values together.
Leading Through These Shifts
The implications of these shifts for organizational leaders is fairly simple. It means that instead of being organizational process managers, we must become culture creators. The culture that forms from our leadership provides an open environment for individual initiative, relationship building, and shared responsibility.
The early Greek polis has often been called a nexus for exchange, consumption, or acquisition, but it is better to define it as an "agro-service center." Surplus food was brought in from the countryside to be consumed or traded in a forum that concurrently advanced the material, political, social, and cultural agenda of its agrarian members. The buildings and circult walls of a city-state were a testament to the accumulated bounty of generations, its democratic membership a formal acknowledgment of the unique triad of small landowner, infantry soldier, and voting citizen. The "other" Greeks, therefore, were not the dispossessed but the possessors of power and influence. Nor is their story a popular account of slaves, the poor, foreigners, and the numerous other "outsiders" of the ancient Greek city-state. The real Greeks are the farmers and infantrymen, the men and women outside the city, who were the insiders of Greek life and culture.
The rise of independent farmers who owned and worked without encumbrance their small plots at the end of the Greek Dark Ages was an entirely new phenomenon in history. This rougly homogeneous agrarian class was previously unseen in Greece, or anywhere else in Europe and the surrounding Mediterranean area. Their efforts to create a great community of agrarian equals resulted, I believe, in the system of independent but interconnected Greek city-states (poleis) which characterized Western cutlure.
The shifts indentified in this post, to me, point to a similar opportunity that the early Greek farmers had. Through their collaborative relationship of shared responsibility, together they created the Greek polis that remains as the model for what cities and communities are in the West.
The ascendency of the local will come as a result of these shifts. And with it a new conception of leadership as more personal, more collaborative, more focused on impact, will emerge to provide it descriptive power that inspires innovation.
Several years ago, I began to create diagrams of the conversations that I was having with people about their life and work in organizations. The result were these conversation guides. They are the product of hundreds of conversations.
I developed them to provide a way to see complex ideas and whole situations in organizations in as simple a way as possible. They serve to provide a way to reflect on the big picture of what is happening at a particular point in time. The following are brief descriptions of each of the guides that I primarily use in my consulting / coaching work.
1. Creating Impact In Life & Work During Times of Transition
The purpose of this guide is to shift people’s perception from change to transition in their experience. A transition perspective provides a way to see how the past, present and future are logically connected in a process of change. As a result, being able to recognize transition points makes it possible to gain an awarenes s of what one must do to move to the next level in either their personal or organization’s life.
From this perspective, we pass through transition points where we make decisions that, in part, determine how we manage change. We know we enter a transition point when our performance begins to plateau or declines, or the work that we have been doing becomes harder. The awareness that we need to gain is an understanding of those strategies, actions, behaviors, or philosophies that have brought us to this transition point, and whether they are the ones to take us to the next level. In effect, we have to decide what we need to stop doing, and what we need to start doing.
2. How Leaders Manage Change To Create Impact
Leaders must manage the change or transition experience in their organizations. To do so, they must understand how people experience or view change. This guide provides a simple way of seeing a range of feeling and action. Above the dotted line, people either adapt or initiative change as a part of the on-going experience of life and work. Below the line, a person’s attitude toward change becomes more problematic. To resist too much is to fail to recognize that change is a normal and necessary part of life and work. To embrace change too passionately creates an unstable and unsustainable life or work situation.
The ideal situation is a mixture of adaptation and initiative. For the leader, this requires situational awareness of the conditions that are impacting the organization. For example, economic changes, technological developments or competitive pressures are environmental conditions that require constant adaptation and agility. To initiative change comes from clarity about the strategic direction of the organization, and the steps required to accomplish those goals.
3. What We Want From Our Life & Work
These core motivators of our life and work are ways we practically measure our involvement in the social and organizations that we are a part of every day. To be Personally Meaningful means that our beliefs and values are a central part of our experience. To be Socially Fulfilling means that our relationships are whole, healthy, and the social environment is respectful, supportive, caring, as well as open and hospitable. For our lives and work to be described as Making a Difference that Matters means that we see the impact of who we are and what we do. In effect, we are identifying the change we create by who we are, how we think, and what we do. The difference that matters is a product of our acting upon the values and beliefs that are personally meaningful, socially and relationally healthy ways, to accomplish a purpose or mission that defines who we are.
4. Circle of Impact
This is a picture of my understanding of the nature and function of leadership. It is a complex picture because leadership is not one thing, but many things operating at the same time. I’ve reached the conclusion that leadership begins with personal initiative, and that it is not primarily an organizational role, but a way of functioning as persons. As a result I see organizations as communities of leaders, each following their own personal call to make a difference that matters in collaborative, coordinated way.
In this perspective, there are three dimensions to leading – Ideas, Relationships and Structure (of both a social and an organizational type), that correspond to the organizational functions of Communication, Collaboration and Coordination. Once a person focuses on becoming a person of impact, the value of this perspective grows. Take any issue, and one of the three dimensions can be identified as the key problem area, if not each one. The solution comes from working with all three dimensions together. For example, if communication is a problem, then it isn’t just being clear about what to communicate (ideas), but also understanding what people are looking to hear from you (relationships), and how that message is to be communicated in a manner that is most likely to make a difference (structure).
This alignment of the three dimensions is achieved through the Connecting Ideas of Purpose or Mission, Values, Vision and Impact. A Purpose or Mission is an identity perspective that says who we are and what we do. Our Values are those ideas that unite us as a congregation, and provide us the emotional commitment and resilience to do the hard work of change. A Vision is a picture of what it looks like for the people of this community working within their social and organizational structures to create the impact that is the difference that matters. It is a visionary perspective of the future fulfillment of one’s mission. As a result, it is important that a church or organization can identify what the impact of their life and work is, so that they can build upon it. Impact, therefore, is a picture of change or the difference that matters.
This is a complex picture of leadership as it functions in any setting. This guide is a tool for reflection and conversation that once learned can quickly become a way we see things happen in real time.
5. The Five Questions that Every Person Must Ask
This is a practical tool for applying the Circle of Impact. Each question is intended to create clarity of perspective and understanding of what is happening. The first question is best asked as change happening within a specific time frame, like 18 months or five years. The second question asks “What is the impact of our ideas, relationships, and structures.” Once we have a basic understanding of our impact, then reflection upon the future will be much easier. We’ll be able to see progress or decline much more easily. The third question identifies those people and groups who are impacted by our life and work. This perspective enables us to know with whom we need to strengthen relationships or a group that may have been hidden from our view, with whom we need to give our attention. The fourth question provides us direction on where our future efforts should be. Our opportunities are based on the impact that we have, and are typically ones that we should be acting on right away. The fifth question looks at the barriers, constraints or problems that keep us from making a difference that matters. We want to resolve those issues so that we can get on with fulfilling our opportunities.
6. The Leadership of Shared Responsibility
The Circle of Impact is an emergent picture of leadership. By that, I mean, it is not a picture of just the different activities and tasks that leaders do. It is a whole, complete picture of leadership which is greater than the sum of its parts. This page is an emergent or whole picture of the community that is the organization, and its shared responsibility for leadership. As a result, the senior leader of the organization, from this perspective, cannot lead from a control orientation, but rather from engagement with people to facilitate their own leadership within their role in the organization.
This vision of engagement is of each person taking initiative out of their own sense of personal responsibility as a member of a community that shares responsibility for communicating, collaborating and coordinating the organization’s work. To share responsibility doesn’t mean that everyone does the same thing, but, rather, that everyone shares responsibility for their part.
7. Leadership in Organizational Structures
This is a simple guide to help people see how an emergent, collaborative approach can be incorporated into a traditional, hierarchical organizational structure. The purpose is to show that collaboration is not just a tactic or a behavior that groups can employ, but a structural component of an organization, just like hierarchy is. The key to blending these two structures is openness to the leadership initiative of individuals working within groups. For example, if the structure requires issues to rise to higher levels of management, then those responsibility for implementing solutions not only have less say in how to resolve those issues, but also less motivation to resolve them at the source. A more collaborative approach allows for those who are closest to the implementation of a decision to have greater influence over how to implement a choice of direction. A hierarchical structure that has high functioning collaboration throughout its system provide senior management a greater opportunity to focus on strategic decision-making rather than tactical problem solving. This is not a new or particularly innovative idea. It is however, an idea that should be seen as a strategic asset rather than simple a way to apply “soft skills” in the workplace.
8. Say Thanks Every Day: The Power of Gratitude in Life & Work
The previous pages are all about leadership. This page is about relationships and community as the core life of the organization. This perspective has developed out of recognition that one of the inhibitors to a higher level of relationship interaction in organization is a lack of an understanding of what constitutes a whole, healthy relationship. The core idea is that in society at large and in organizations specifically, that we are at a transition point. This transition point concerns how people live and work together. I’ve defined this shift as moving towards an approach to life and work from a place of gratitude, rather than from a position of entitlement.
Much has been written in popular psychology about the beneficial effects of being grateful. Gratitude, in my perspective, is not just a way for us to find happiness, but how to live in relationship to others in any social or organizational setting.
The five actions here can be reduced to five simple concepts. We say thanks. We give back in service. We makewelcome people as guests in our lives through the practice of openness and hospitality. We honor others as the fundamental basis of all interpersonal relationships. We treat people with honor and respect, for without it community is difficult to achieve. Finally, we create goodness through our personal commitment to take initiative to make a difference that matters.
How To Use These Conversation Guides
The purpose of these guides is for reflection in conversation to achieve awareness leading to action. Print off the pages, and carry them with you. Begin use the Circle of Impact guide to identify the ideas, relationships and structures that are involved in the situation that is the current issue. Seek to understand how the Connecting Ideas are linking or aligning how you think, relate or organize the work that is needed. The key to using these guides is to ask questions, and let the conversation take you to a point of clarity.
If you need assistance, just ask. These guides are the basis of my consulting and coaching work. I welcome the opportunity to help you and your organization grow to make a difference that truly matters.
What if our past experience instead of illuminating the future, obscures it? What if the way we have always approached a problem, or the conduct of a single day, or the organization of our work makes it more likely that we end up not accomplishing what we envision?
Working in planning processes over the years, I've concluded that people can see what they want, but fail to reach it because of how they go about it. We can imagine the future, but not see the path that will take us there. This gap in our abilities is becoming more acute as the ways we have worked are becoming less effective.
From another perspective, we rarely see the end of something coming, or the beginning of the next thing. We tend to see in retrospect. Our aversion to change, I believe, is largely because we don't like surprises. We defend the past hoping that it is sustainable into the future, even if we see a better, different one.The past, even less than ideal, at least seems known and more certain, more secure, more stable, more predictable, more comfortable, at one level. It does not mean that it is satisfying or fulfilling, but it seems safer.
As a result, instead of providing us a sound basis for change, the past can inhibit us from achieving the vision that we see. Instead, we live by a set of cultural forms that must be defended against change. In other words, the form of the way we live and work remains the same even after its vitality has gone.
Change that has come
What impresses me about our time is how fast change is happening, and how quickly things we thought were normative seem less relevant.
Ten years ago, websites were the rage. You weren't on the cutting edge of business without one. Today, Facebook, Twitter, LinkedIn and a host of other social media platforms are the norm for a business. Twenty years ago, CDs were the norm. Now, digital I-Tunes downloads. Thirty years ago, the Soviet Union was the West's nemesis, now militant Islam. Forty years ago, Vietnam and racial equality were the dominant issues of our time. Now we have an African-American President, and Howard Schultz wants Starbucks in Vietnam. Fifty years ago, President Kennedy was challenging the nation to go to the Moon within the decade. Today, the government is putting space exploration on the back burner as space travel is becoming privatized.
Could we have imagined these changes? Possibly. We'd probably not be able to see how they'd happen. That is the curious thing about visions and visioning. We can imagine the end, but not the means. The pathway to the future goes through today and tomorrow. Yet, we are captives of our past thinking and experiences. They are the measure of what is possible and what can be done.
The End and the Beginning
I have been reflecting, in particular, on these thoughts over the past several months. I've tried to step back without prejudice and identify what I see without reducing it down to a few simple categories. What I do see are the markers of change in three broad areas.
For one it is the The Beginning of the End, for another The End of the Beginning, and for another, surprisingly, The Beginning of a long delayed Beginning.
Some of this reflection was prompted by a conversation about a project event to take place later this year. It was a discussion about how businesses function. The contrast was between a focus of work as a set of tasks to be done and the importance of human interaction in meeting organizational goals. I realized coming out of that conversation that this project, for me, represented a turning point in human and organizational development. It provided a picture of the past and the future. The past as the Industrial model of business organization and the future of organizations as communities of leaders. That last phrase was what I envisioned a decade and a half ago when I began my consulting business. Only now, after all these years, do I see that simple idea beginning to have relevance for the way we live, work, organize and lead organizations.
What I see is:
The Beginning of the End of the Progressive ideal.
The Endof the Beginning of the Capitalist model.
The Emergence of freedom and democracy on a global scale.
The first two, Progressivism and Capitalism, along with modern Science, are the principal products of the age of Enlightenment.
The Progressive ideal believed, and still does by many of its advocates, that through government control of science and industry a free, equitable and peaceful world could be achieved. Conceived during the 19th century as a belief that society could be perfected, and as a counter-balance to the industrialization taking place in Europe and the United States, it was an utopian belief in a well-order, controlled, uniform world.
The Capitalist model was born in a belief that each individual should be free to pursue their own economic welfare, and not be forced by government rules or economic servitude to do that which they choose not to do. It was the ideology that provided the basis of the industrialization out which has come prosperity for more people in history and the rise of the modern middle class.
Both the Progressive ideal and the Capitalist model have brought great benefits and liabilities to society. They form the two sides of virtually every divisive issue confronting the world today. They are quite similar, yet in very different ways. Both are organized around the control of power and wealth. Both have been institutionalized in the large, hierarchical organizations in Washington and on Wall Street, and in similar institutions throughout the world.
Over the past decade, the Progressive ideal and the Capitalist model have begun to show their age. The assumptions that underlie these ideologies are being challenged by forces of change that are beyond their control. Because the control of global forces of change is problematic and less realistic.
A principal assumption of the Enlightenment is that we can know what we need to know by analytical decision making. In other words, by identifying the parts of a situation, we understand it, and therefore can design a strategic mechanism for controling the outcome. This analytical process works very well in the realm of the natural sciences, less so in the realm of the social sciences. To paraphrase novelist Walker Percy, "Science can tell us how the brain functions, but not about the functioning of the mind."
At the beginning of this essay, I wrote of what I was seeing The Beginning of The End of the Progressive ideal and The End of the Beginning of the Capitalist model. Neither of these observations are political statements. I am not a Democrat, nor a Republican. I am not a Progressive nor a Libertarian. I find none of the current choices of political affiliation representative of my own perspective and values. I speak as an outlier, not an antagonist.
I see these ideological movements as products of a different time in history. The assumptions and the way of thinking that brought these ideologies into prominence are now receding in appropriateness. The conditions that gave rise to these ideas over the past three hundred years are now giving way to new conditions. If progressivism and capitalism are to survive, then their proponents must change.
These ideologies born in the age of Enlightenment share a reductive approach to knowledge. In other words, we gain knowledge and understanding by breaking things into parts. The assumption is that things are collections of discrete parts. Yet, we know that in the natural sciences, the mixing of different chemical elements creates something new and different that cannot exist in any other way. Water being the most obvious example.
However, in the social realm, there is a shift toward emergent knowledge as the basis for understanding what is. The emergent perspective sees connections and wholes rather than just parts. In a network of relationships, the value isn't one person, but rather the connections that one person has to other persons.
Think of it as the difference between those radio ads selling lists of sales leads, and knowing the person who has a relationship with 100 of those buyers. The former is a list of contacts, of names and addresses. It is a parts list. The other is a picture of a network of connections that one person has. This second picture is the picture of the future, for it is a picture of relationships.
We see emerging forces all around us. Again, this is not a political statement, but an observation. One difference between the Tea Party demonstrations and the Union demonstrations of the past year is the difference between an emergent organization and a traditional hierarchical one. The Tea Party organization is intentionally decentralized in local communities. Unions are designed as centralized concentrations of power. One body speaking for a host of organizations.
The difference here is between a centralized and decentralized organizational structure, like that described in Ori Brafman and Rod Beckstrom's book, The Starfish and The Spider. The centralized structure (the spider) is vulnerable at the top. Take down the leader, and the organization suffers significant loss of prestige and power. The decentralized system (the starfish) is not vulnerable at the top, because there is none. In a decentralized system, no one expression controls the fortunes of the whole. The centralized is the industrialized model, and the decentralized, an emergent one. The system that the Progressive ideal and the Capitalist model share is one of centralization. Operating separate from both are independents and small business entrepreneurs. The difference is between a hierarchy of control and a network of collaborative relationships.
The recent rebellions in the Middle East are also examples of this emergent model. The use of cell phone and internet technology to connect people in agile, less structured ways make these rebellions possible, not necessarily successful, but possible.Their desire is for a freedom that they see provided and secured by democracy. When thousands of demonstrators fill the streets of Cairo seeking the end of a repressive regime, their impact is far greater than their numbers. We see a visual counterpoint of the difference between being a nation of free people and one living under an authoritarian government.
In business, the emergent model has relevance. When a business perceives itself to be a structure of parts, processes and outcomes, following upon the centralized industrial model, then it has a much more difficult time seeing the value that exists in the relational connections that exist both between people and within the structure itself. It is why so many businesses become siloed and turf battles insue.
However, when a business sees itself as a network of interactive individuals, then the whole is greater than the sum of its parts. The result is higher levels of communication, collaboration and coordination.
While the Progressive ideal and the Capitalist model are products of the age of Enlightenment, emergence, freedom and democracy are even older ideas finding new ground and relevance. In the traditional business organization, their relevance can be seen in two ways.
First, in the freedom of the individual to take responsibility through their own initiative. This perspective harkens back to the ancient Greek democracies where Greek farmers and small business owners participated in the governance and protection of their city-state. For businesses to replicate such an ethos requires a shift in perspective from employees as functionaries of the tasks of the company to a recognition of the potential contribution that each person offers. It is in this sense that each person leads out of their own personal initiative to give their best to the company.
Second, in the emergence of businesses as human communities of shared responsibility. The traditional approach has been to break down the organizational structures into discrete parts of tasks and responsibilities, and to staff to that conception of the organization. This traditional hierarchical approach worked in simpler times when businesses were less global, more homogeneous, and employees less well trained, and had the technology to advance their contributions beyond their individual position in the company.
Today, the environment of business has changed, as the context becomes more complex and change accelerates. Agility and responsiveness are not embedded in structure, but in human choice and in relationships that amplify those shared choices to make a difference. It is the freedom to take initiative to act in concert with others that creates the conditions of successfully managing the challenging environment of business today. The result of a greater emphasis on relationship, interaction and personal initiative is a shift in culture. One only has to select any page in the Zappos.com Culture Book to see the influence of genuine community upon the attitudes and behaviors of the company's workforce.
The Keys to Change
I began this post by saying that we rarely see the end of something coming or the beginning of something new. What I offer here has been germinating in my mind for the past three years. It is still not yet fully formed, and may never be. Yet, I am convinced that the changes that I see happening mean that there is no going back to the halcyon days of the 1990's or even the 1950's. Business organizations will not long succeed as mechanistic structures of human parts. Rather they must emerge into being communities of leaders, where individual initiative, community and freedom are fundamental aspects of the company's culture
The keys to the future, in my mind, are fairly simple.
1. Leadership starts with individual employees' own personal initiative to make a difference. Create space and grant permission for individual employees to take initiative to create new ways of working, new collaborative partnerships and solve problems before that reach a crisis level.
2. Relationships are central to every organizational endeavor. Create space for relationships to grow, and the fruit will be better communication, more collaboration between people and groups, and a more efficient coordination of the work of the organization.
3. Open the organization to new ideas about its mission. Identify the values that give purpose and meaning to the company's mission. Organize around those values that unite people around a common purpose, that give them the motivation to want to communicate better, collaborate more, and coordinate their work with others. Openness is a form of freedom that releases the hidden and constrained potential that exists within every company.
We are now at the End of an era that is unprecedented in human history. The next era is Beginning, and each of us has the privilege and the opportunity to share in its development. It requires adapting to new ideas, new ways of thinking, living and working. I welcome the change that is emerging, because I find hope that a better world can be gained through its development.
Walk into most book stores, and look at the books on leadership that line the shelves, and you'll see very few that address the actual organizational structure of a business. If there are, the focus is primarily about measuring performance, not about how the business is structured. As valuable as quality programs are, as change mechanisms, they are incremental at best if the real need is a reinvention of the culture and purpose of the business.
The chief problem affecting organizational performance today is not the ability of people to perform, but the structure within which they do so.
This video is a snap shot of a conversation between two military officers. We have two cultures clashing in this conversation. One is the culture of the careerist who is a slave to the structure of the system. The other culture is of the leader who understands the organization's mission (which is not the perpetuation of the structure) and the leadership of the people who serve to achieve that mission.
If you are familiar with the HBO mini-series GenerationKill ( I highly recommend it.) you'll see these same two cultures colliding. You see the officer corps who are concerned about the unit's mission (which is in effect is reduced to their concerns about their own career advancement and longevity) and the NCO culture, where the concern is for the men who are charged with the dangerous mission that combat soldiers have.
The bureaucratic structure that constrains many large, complex organizations requires dramatic levels of change in order to function well in the future.
This image is one I've used before as a way to visualize a collaborative team working within a traditional hierarchical structure. Hierarchy does not necessarily exclude collaboration. Rather, when the system has turned in on itself to the point that the organization's mission is now the perpetuation the its structure, then you end up having the clash of cultures that is seen in the video.
The longer I work with issues affecting leaders the more convinced I am that structure is the last frontier of organizational development. There are three things to say about this.
1. The structure of an organization exists to serve the mission and the people who are employed to bring to fulfillment.
It is a tool. Nothing more. To make it more brings it into conflict with the organization's mission. Yet, what I see is structure dictating what the mission should be, and how people are to function with in it. The structure of a business exists to facilitate the leadership of each individual member of the organization. By leadership, I mean the personal initiative that each person takes in collaboration with others to fulfill the mission of the organization.
2. Structure is ultimately determined by leadership.
If a structure functions as it does in the animation above, then it is because the leadership of the system has allowed it to degenerate to that point. The relation between executive leadership and structure is a moral one. As a tool, structure serves a purpose. Just as a hammer can drive a nail into a board to build a house, it can also break a window to steal a briefcase from a car. The hammer remains what it is. It is the human use of that tool that determines its moral value.
3. Structures, not aligned with the organization's mission, and not open to the individual leadership of its members, will ultimately fail.
There is no such reality that a structure is too big to fail. They are failing all around us. Evidenced by the disparities in compensation, high unemployment rates, and the inability of many organizations to adapt to a changing economic environment.
The Leadership Question for 2011.
As we begin a new year, I want to raise some questions that we all reflect upon during the coming year.
Is your business structure obsolete?
Are your employees reflecting enthusiasm, independent initiative, collaborative decision-making and a passion for mission?
As the senior leader of your business, are you a liberating force for change or a careerist seeking to maximize your own personal benefit from a broken, declining system?
If any of these are true, then you need to take some time to consider what your alternatives are.
Every structure is just a tool. Resolve, then, to develop the very best structure to serve your business.
The challenge is before us all. The time to address these issues is now.