Month: May 2014

I'm currently working with an organization where I often hear possessive phrases like 'my sixes and sevens', or 'he's my six', or 'my sevens are good', and recently I was met someone and the person introducing us said 'meet my new seven'. I found out the real name of seven when I asked her. Sometimes I get emails with subject headings like 'Review of the sevens'. Initially all this number stuff baffled me. Then I found out it was about grades. I had to go and look up the grading system as I had no idea whether six was higher or lower than seven and what any other grades might be. (Bizarrely six is higher than seven).

Describing people by numeric grade rather than name is, for me, a weird echo of a past era. I was early in my career at Price Waterhouse when I remember being appalled that someone introduced himself as 'I'm an A1'. Again I had to ask him his name.

I am still appalled by people being lumped into number collectives but what I find amusing in this instance is that the phrase 'at sixes and sevens' is a popular phrase used to convey 'something that's in a state of total confusion or disarray, or people who are collectively in a muddle or at loggerheads about how to deal with some situation.' Hmm – maybe this is why six is higher than seven in the organization, but on the other hand most organizations I work with give the impression of being somewhat confused, hence the need for 'transformation' or 'change' – but maybe this organization is more open in its admission by openly talking about 'sixes and sevens' – they just omit the 'at'?

So are all these sixes and sevens contributing to an organization that is 'at sixes and sevens'? I'm curious to know what would happen if we changed/removed the grade/labeling system. I'm not sure it is of any value in its current form. Indeed I think it could be a value destroyer.

Grading systems in most organizations sit alongside competency frameworks, performance management systems, accountability levels, decision and authority rights, and other formal compliance and governance controls that attempt to keep people in order. They tend to give rise to bureaucratic systems which if anyone attempted to cost out in terms of operating them (if you have, let me know) would probably be abolished on the spot. Think how much time you have spent on performance reviews in the past year – either reviewing other people and/or participating in your own and recommending or not promotion to the next grade. And grading performance: met, well-met,exceeded … What is the financial cost of this and does it yield a good return on investment?

Grades are an indication of formal position in a hierarchy, and I am not against hierarchies per se – Steve Denning has written an interesting piece on this topic. However, position in a hierarchy does not necessarily reflect competence, ability to learn, experience or anything else that offers insight into human potential. I vividly remember the man who checked my entry card as I passed every day entering the building. Striking up a conversation with him I discovered he was a champion rose grower and had developed a new strain of rose that had won a European gold medal. He was the lowest grade in the organization yet think what skills of patience, experiment, innovation, knowledge sharing, and so on he exhibited in his non-work life. In the rose growers' grading system he was probably at the top.

Grading systems act as filters on perceptions. While I was thinking of grades what sprang to mind was an image of six neatly graded eggs in an egg box. (Not seven, because they wouldn't fit neatly in a box so maybe in the grading system where sixes are higher than sevens it may be that it's the grade seven out of the box thinker who doesn't get in? What does that mean for the organization?)

Out of curiosity I looked up egg grading. The American Egg Board has a whole system – rivalling any organizational one – for grading eggs. You'll be relieved to hear that 'the quality of an egg is determined by the grade of the egg and is not related to size. All eggs are classified according to the US standards for interior and exterior quality factors. This determines the grade of the egg as AA, A, or B.' There are six grades of size ranging from 'jumbo' to 'pee wee'. So an egg can be graded as 'jumbo AA' for example. Rather like Grade 7, well-met, don't you think?

Sadly we don't know how the eggs feel about being graded in this way but we do know from blind trials that eaters of them cannot tell the flavour difference between the grades (size or quality). Read this very funny example of one trial. The result was 'It was pretty clear evidence that as far as eggs go, the mindset of the taster has far more bearing on the flavour of the egg than the egg itself.'

Thus it is with organizational grading systems. The mindset of the person in the specific grade tends to feel or act that grade, while the people interacting with a specific grade of person tend to treat them according to their assigned grade. That's why TV programmes like 'Back to the Floor' are so much fun. See, for example, Peter Baker, Managing Director (MD) of British Bakeries, 'swapping the boardroom for a week of putting crosses on hot-cross buns, scooping up litres of garlic butter with his hands, and chanting business mantras in his Newcastle upon Tyne bakery'. If people don't know that the MD is the bakery worker they treat him/her as a bakery worker and not as an MD.

Grade level is (if well-earned and not a long-service award) an indicator of competence in a particular aspect of organizational skill that is valued more than another aspect. But the value system is an often unchallenged organizational aspect, and competence is situational (as MD v baker). Consider critical or strategic roles in an organization – the roles that done badly or left unfilled would jeopardize your organization's performance. Usually these are front line roles often interfacing directly with customers – call centre agents, or personal shoppers, baggage handlers or flight despatchers. None of these role holders are highly graded in an organization but all require highly competent and skilled people without whom the organization would flounder.

A focus on grade as an indicator of value or worth is demeaning. People are not gradable eggs. Their 'flavour' cannot be determined by their grade. Organizations that change their focus from grade to other indicators of value or worth – innovation, creativity, getting things done, showing initiative, for example – can do so within a flexible structure that recognizes that in any role the role-holder is at times (in Barry Oshry's thinking) a top, middle, bottom or customer. Grades may be helpful in determining something but they are not a necessary feature of organizations. Zappos, Valve, Gore, and Semco are four successful and focused companies often mentioned as exemplars of no grades and flexible structures. If they can do it so can others.

Do you think perceiving people through the lens of a grading system contributes to an organizational state of being at sixes and sevens? Let me know.

This past week I went to an organization development meeting where we were discussing Gareth Morgan's paper Reflections on Images of Organization on the metaphors he uses to interpret organizations and I've also been listening to stories of people's experiences of business transformation.
Then on Saturday, a lovely hot sunny but slightly windy day, when I was on a boat trip on the River Thames my companion remembered a story she'd loved as a child: The Wind and the Sun. Do you know it? It's an Aesop's fable with a moral to it and there are various versions but most of them are on the lines of this one:

The North Wind boasted of great strength. The Sun argued that there was great power in gentleness. "We shall have a contest," said the Sun. Far below, a man traveled a winding road. He was wearing a warm winter coat. "As a test of strength," said the Sun, "Let us see which of us can take the coat off of that man." "It will be quite simple for me to force him to remove his coat," bragged the Wind. The Wind blew so hard, the birds clung to the trees. The world was filled with dust and leaves. But the harder the wind blew down the road, the tighter the shivering man clung to his coat. Then, the Sun came out from behind a cloud. Sun warmed the air and the frosty ground. The man on the road unbuttoned his coat. The sun grew slowly brighter and brighter. Soon the man felt so hot, he took off his coat and sat down in a shady spot. "How did you do that?" said the Wind. "It was easy," said the Sun, "I lit the day. Through gentleness I got my way."

Going back to the stories of transformation (people were talking about what happened in 2011 in their organization), I heard tales of 'tightening of belts', a desire to hold on to things that people felt they were losing, 'square pegs being fitted into round holes', lack of staff involvement and leadership reflection, knee jerk reactions to the (acknowledged) need to downsize and reorganize. People asked me 'What's going to be different this time around?' I heard the worry and felt their anxiety.

That's a great question – and the answer depends partly on how people are consciously led through the next transformation. And the fable helps illustrate. Here's an example of a leader who was of the north wind ilk. At the time he was described as 'the logical extreme of an executive who has no values, no honor, no loyalty, and no ethics'.

'Chainsaw' Al Dunlap was brought it to transform Sunbeam, a failing company. During his time there, Dunlap reduced the number of factories from 26 to 8, cut $225m of costs, reduced the workforce by 6,000 and cut charitable contributions. The result of his approach, far from saving a failing company, caused the share price to drop below the price it was when he took the helm with a mission to save it. He was fired from his role as CEO of Sunbeam after just less than two years in post. As a result of his efforts 'Sunbeam could never shake the taint caused by Dunlap and filed for bankruptcy in 2001 … 'Rarely does anyone express joy at another's misfortune, but Dunlap's ouster elicited unrestrained glee from many quarters. Former employees who had been victims of his legendary 'chainsaw' nearly danced in the streets of Coshatta, La., where Dunlap shuttered a plant'.

Here's another example, this one of the sun type leader:

Mark Rogers is two months [March 2014] into his role as CEO of Birmingham City Council. His role is to manage a business transformation that saves £822 million from Birmingham's budget, sells-off the flagship NEC, reduces the workforce by 1,000 jobs this year and generally to 'turn around the giant super-tanker pretty darn quick'.

He began well by, in his first week, writing a blog on why he took on the role and has written regularly each week. Last week he wrote about leading with Birmingham City Council's values (empathy, respect and trust) saying:

'I believe passionately that it is entirely possible for a very large council such as ours to lead with its values, but previous experience tells me that, to succeed, we all need to deliver on a small number of key approaches. For starters, therefore, I expect colleagues to sign up to two key ways of working: active distributed leadership; and a positive commitment to self-awareness and courageous conversations. Active distributed leadership is all about you (and me) taking responsibility for promoting and living the values of the council. This is not someone else's business; it's ours. I can't do it all on my own. I need your support and I need you to help me ensure that the values are known and in evidence every day. And where they're not, do something about it'.

So here is someone already encouraging people to live the values, opt in and participate, and feel encouraged: 'lit up' even. Although it's very early days I heard from someone who works for the council (and has met Mark Rogers) that 'Everyone is talking about the blog and his style of management as refreshing and just what we need. Mark is going down well with people who don't subscribe to command and control as the default organisational norm. I think time will tell if he is able to cut through the organisational machine … [but] I am hopeful.'

'Sun' leaders, like Rogers, operating through positive values, involvement, role modeling and setting expectations have the qualities necessary to transform organization, They are transformational leaders, and there's a lot of organizational theory around them, for example:

Transformational leaders cause change in individuals and social systems. In its ideal form, transformational leadership creates valuable and positive change in the followers with the end goal of developing followers into leaders. Enacted in its authentic form, transformational leadership enhances the motivation, morale and performance of followers through a variety of mechanisms. These include connecting the follower's sense of identity and self to the mission and the collective identity of the organization; being a role model for followers that inspires them; challenging followers to take greater ownership for their work, and understanding the strengths and weaknesses of followers, so the leader can align followers with tasks that optimize their performance. (Mindtools has some practical tips on transformational leadership).

For an example of a long-serving transformational leader – look no further than Alan Mulally, CEO Ford Motor Company, who in 2006 was brought in to transform the organization, is still there, and has succeeded spectacularly. Here's a snippet from an interview with him. In answer to the question 'How would you describe your leadership style, he says:

At the most fundamental level, it is an honor to serve–—at whatever type or size of organization you are privileged to lead, whether it is a for-profit or nonprofit. It is an honor to serve. Starting from that foundation, it is important to have a compelling vision and a comprehensive plan. Positive leadership–—conveying the idea that there is always a way forward–—is so important, because that is what you are here for–—to figure out how to move the organization forward. Critical to doing that is reinforcing the idea that everyone is included. Everyone is part of the team and everyone's contribution is respected, so everyone should participate. When people feel accountable and included, it is more fun. It is just more rewarding to do things in a supportive environment. … if you have consistency of purpose across your entire organization and [if] you have nurtured an environment in which people want to help each other succeed, the problem will be fixed quickly. So it is important to create a safe environment for people to have an honest dialogue, especially when things go wrong.

So, in answer to the question about 'what will be different?' about the business transformation the people I was talking with are going to experience, the answer is – it depends whether all of us in the organization are willing and able to become 'sun' style, transformational leaders – whatever our organizational level.
What are your techniques for developing transformational, 'sun' style leaders? Let me know.

'Why don't people ask us why things are the way they are?' is a question I've heard several times recently. 'They don't understand the history' is one of the many variants on this question, posed by established employees about newcomers to the company. This started me wondering about organizational history and its value. It's all too easy when joining an organization to rubbish what's going on or talk disparagingly about what seem like old fashioned or odd ways of doing things. Maybe a real curiosity about why things are the way they are would be helpful in positioning organization design work.
Investigating down this track a bit I found a piece about the acquisition of Cadbury (a UK company) by Kraft (a US company).

'We also know, however, that leaders with no patience for history are missing a vital truth: A sophisticated understanding of the past is one of the most powerful tools we have for shaping the future. Consider how Kraft Foods managed its 2010 integration of the British confectioner Cadbury. Cadbury's management had mounted fierce resistance to the acquisition, and many of its 45,000 employees feared the loss of their values and an end to the product quality for which the company was known. As the clash of cultures was picked up by the business press, many observers predicted that this would prove to be yet another value-destroying deal, a nightmare of postmerger failure to integrate.'

This didn't happen: an outcome that the writer of this article puts down, in part, to the skillful uses the integration team made of each organization's history.

'Company archivists quickly launched an intranet site, titled "Coming Together," that honored the parallel paths Kraft and Cadbury had taken. Poring over historical materials, they had found much evidence of shared values, and the presentation reinforced those common themes. For instance, the founders, James L. Kraft and John Cadbury, were both religious men whose faith had deeply influenced their business dealings. Both had demonstrated a commitment to creating quality products for their customers. Both valued their employees at a time when workers were often seen as a commodity, and both believed in giving back to their communities. In addition to the founders' stories, the intranet site included interactive time lines, iconic advertising images, brief documentary videos, and dozens of detailed histories of brands such as Oreo cookies, Maxwell House coffee, Ritz crackers, and now Cadbury chocolate and Halls candies-—all designed to show how leading Kraft and Cadbury brands had come to sit side by side on grocers' shelves.'

It would be easy to scoff at this as just a PR stunt but in 2012 2-years after the acquisition came a newspaper report that despite some acrimony, generally speaking the tone was in favor of Kraft's takeover.

'Kraft is far more engaged with the local community than Cadbury ever was," says Katie Teasdale, at the Birmingham Chamber of Commerce. Steve McCabe, the local MP for Selly Oak, says: "I'm personally quite impressed with what they are trying to achieve. This R&D is pretty crucial to keeping business in the area."

And earlier this year – January 2014 – parent company Mondelez International (Kraft spilt into two companies in 2012) announced a massive upgrade to the UK facility which involved some layoffs and redeployment of staff. Following the Cadbury/Mondelez tradition of employee care and community involvement this was being carried through with care and sensitivity. Tim Pile, president of Birmingham Chamber of Commerce, noted "I would also commend the maturity of Mondelez's approach to consulting with its employees. Technology investments of this type inevitably mean a requirement for fewer jobs. However, Mondelez wants to involve its employees in thinking through every idea possible before arriving at a jobs number."

The respect for company tradition and history appears to carry through in the way Mondelez makes leadership appointments. In September 2013 Hubert Weber, more than 25 years with the company, was appointed Executive Vice President and President, Mondelēz Europe bringing 'a deep knowledge of the European business from both a country and category point of view.' h

So is this 'deep knowledge' of an organization necessary for leadership success? Certainly the Board appointing Satya Nadella (22 years with the company) to Microsoft's CEO position, in February 2014, appeared to think so. As did those appointing 'company veteran' Doug McMillion, in February 2014, to lead Walmart. Board chairman Bob Walton noted, "Doug is uniquely positioned to lead our growing global company and to serve the changing customer, while remaining true to our culture and values. He has broad experience – with successful senior leadership roles in all of Walmart's business segments – and a deep understanding of the economic, social and technological trends shaping our world. A merchant at heart, Doug has both a long history with our company and a keen sense of where our customers globally are heading next."

Seaman and Smith, writers of the Cadbury story above are strong advocates of the value of knowing the organization's history. 'The job of leaders, most would agree, is to inspire collective efforts and devise smart strategies for the future. History can be profitably employed on both fronts. As a leader strives to get people working together productively, communicating the history of the enterprise can instill a sense of identity and purpose and suggest the goals that will resonate. In its most familiar form, as a narrative about the past, history is a rich explanatory tool with which executives can make a case for change and motivate people to overcome challenges. Taken to a higher level, it also serves as a potent problem-solving tool, one that offers pragmatic insights, valid generalizations, and meaningful perspectives-—a way through management fads and the noise of the moment to what really matters. For a leader, then, the challenge is to find in an organization's history its usable past.'

Accepting that it's true that knowledge of an organization's history is a powerful tool for successfully shaping its future – how can leaders new to an organization manage without that legacy? Here are five ideas:

1. Don't ignore or discount an organization's history. You may have come in to save it but do so bearing in mind that "The past can never be hidden [we must embrace] it with new hope and new dreams so that both past and present form one unified trunk that continues to shelter our people"
2. Acknowledge the power of the past. An organization's 'store of experience – its evolving culture and capabilities, its development within the broader contexts … shapes the choices that executives have to make and influences how people think about the future.'
3. Look for people who will tell you stories about the organization's triumphs, failures, mode of operation and then listen attentively to them. With them use some of the techniques of learning histories to learn how the history has shaped today's perspectives
4. Ask 'how did we get to this point?' 'Unless you pose that question …. you risk tearing down fences without knowing why they were put up. Armed with insight into the history, you may indeed find the fence is not needed and must go. Or you may find there is good reason to leave it where it is.'
5. Where employees have a record of long service, shared experience and community, and a strong culture ask them to help you develop and tell the story of ' This is where we need to go. This is why we're here. This is why we can't be here anymore.' Ask them to tell it with you.

What is your view of organizational history? Do you think new leaders have to learn it to be successful? Let me know.

'In the olden days when wishing still worked' opens the fairy story – The Frog Prince. In it an ugly frog is transformed into a handsome prince. It's a classic tale serving not just as a good children's story but as a basis for observations on society. In one cartoon related to the story a frog longingly looks up at a young princess and says "But I don't want to be turned into a prince. I want you to accept me for what I am." In another a very jaded and irritated king and queen sit in their thrones next to one another as the king turns to her and says "If you must know, yes! I was happier when I was a frog!"

As a child I loved the story and I still like the notion that frogs can be transformed into princes (or that princes can be turned into frogs). Now I'm trying to apply the idea to organizations. Can organizations be 'transformed'? It seems easy enough for 'prince' organizations to be transformed into 'frog' organizations. BlackBerry is a case in point. Read about its rise and fall here. Is it now doomed to remain an ugly frog – did you know their original device was called the Leapfrog – or will it be transformed back into a prince by some kiss-like intervention?

One of the many issues cited for BlackBerry becoming a frog in the first place was, not quite an evil witch's spell, but a huge 'increase in bureaucracy, politicking, and a population of time servers'. An article about BlackBerry discusses a book on BlackBerry written by Alistair Sweeney, 'Sweeney described BlackBerry as "like the Soviet Union. Everyone's pretending to work and compared it to another brand-named tech firm with a reputation, deserved or not, for hidebound bureaucracy: Microsoft. RIM, he says, has lost the fire of a startup (despite heavy-handed efforts to recapture it), but without developing into a mature company. One anonymous employee agreed saying "We are no longer a company that is innovative and energetic, we are drowning in paperwork."

Many bureaucratic, long established large and rambling organizations want to transform to become slim, trim, and dynamic – and we hear the phrase 'business transformation' a lot. But is this wishful thinking, an 'olden days' leftover from 'when wishing still worked', or is it achievable?

Gary Hamel, a management academic, firmly states that 'it's understandable that most of us would assume bureaucracy is inevitable-—understandable, but not acceptable. We have to raise our aspirations … "difficult to imagine" doesn't mean "impossible to build." This implies, rightly that wishing for the awakening kiss is not the answer, rather it's 'good management and hard work' (a lovely phrase from the story Charlotte's Web) that provides the transformation. Oh, and a lot of IT. Hamel gives a 15 point list of what a transformed-from–bureaucratic to ideal-non-bureaucratic organization looks like, most of the items heavily IT enabled.

Sadly he doesn't specifically say what time, resource, effort, and will has to go into achieving a state where, for example, (number 4 on his list) 'complex coordination problems are solved peer-to-peer, rather than through top-down mandates; where people have all the information they need to recognize their shared interests, and the collaborative platforms they need to co-create win-win solutions.' I'd love to see the detailed project plan with financials to achieve this: in the absence of it I feel a Dilbert cartoon coming on.

Another item on his list that caught my eye (number 15) was 'Leadership rank is the product of peer-based assessments and objective measures of competence and contribution rather than the product of title or position'. A huge, and expensive, burden in a typical bureaucracy is the performance management system that attempts to objectively measure competence and contribution. Generally such systems fail so let's not attempt ranking by 'objective measures' in a non-bureaucracy. Even if competence and contribution could be measured then the measures would more likely be situational e.g. BlackBerry's CEO was perceived by peer based assessment to be more competent when the share price was highest and less competent when it was lowest.

However, let's applaud the MixHackathon, under Hamel's aegis, for raising the challenge of busting bureaucracy. Its aim is to encourage us to imagine alternatives to the bureaucratic model. The organizers explain that 'In the current phase of the hackathon, we're working to define the attributes of the post-bureaucratic organization-— what new management practices can provide an alternative to the bureaucratic model of top-down control and formal rules and procedures?'

Sam Palmisano, former chairman, president and CEO of IBM introduced the much talked about 'IBM jams', aimed at busting bureaucracy and introducing new management practices. In his 2003 letter to shareholders he said:

So, for 72 hours last summer (2003), we invited all 319,000 IBMers around the world to engage in an open "values jam" on our global intranet. IBMers by the tens of thousands weighed in. They were thoughtful and passionate about the company they want to be a part of. They were also brutally honest. Some of what they wrote was painful to read, because they pointed out all the bureaucratic and dysfunctional things that get in the way of serving clients, working as a team or implementing new ideas. But we were resolute in keeping the dialog free-flowing and candid. And I don't think what resulted – broad, enthusiastic, grass-roots consensus – could have been obtained in any other way.

By many accounts Palmisano was successful. During his nine years as IBM's chairman and CEO Palmisano oversaw a 10.2% annual increase in its stock price and here's what one commentator said 'As he concludes his career [2012], he leaves his successor, Virginia Rometty, with an iconic giant poised to dominate its industry for decades to come.'

But, not so fast to judge success, read what new IBM CEO Virginia Rometty says in her 2013 annual letter to shareholders. She talks of 'transformation' 'IBM is executing a bold agenda. It is reshaping your company, and we believe it will reshape our industry. In this letter I will describe the actions we have taken and are taking, and the changed company that is emerging from this transformation. … However, we must acknowledge that while 2013 was an important year of transformation, our performance did not meet our expectations.'

So did Palmisano's 'transformation' ultimately result in a different form of bureaucracy that now needs 'transformation'? Perhaps 'transformation' isn't so much frog into prince and everything is then hunky dory, but is a situational stage that needs continuous revisiting or there's a reversion to bureaucracy, albeit of a different type.

Peter Rennie commenting on the Gary Hamel blog mentioned above offers a Chinese saying; 'The more things change, the more they remain the same.' In his view 'busting bureaucracy' is the wrong approach. It's better to offer 'a better way', that addresses the fear that things will fall apart without hierarchy. He argues that 'real, sustained change is not dramatic. It is slow'. But isn't slowness one of the hallmarks of bureaucracy?

I think I'm getting stuck like a frog in a swamp. Here's what I've learned so far – the sample size is a small and skewed to tech companies but you'll get the idea: Bureaucracies are unwieldly, un-nimble, and 'olden days' organizations. Organizations of whatever era that start out as slim-trim-dynamic often become bureaucracies. Attempting to transform a bureaucracy to a slim-trim-dynamic state doesn't seem to work very well and it doesn't happen quickly enough for impatient shareholders. Quick transformation isn't possible anyway because 'the more things change the more they remain the same.'

What's your view on transformation? Can bureaucratic frog businesses transform into slim trim dynamic prince businesses and will they then stay that way or will the prince like organization age into wrinkles, sagginess and spread as a real life prince would? Let me know.

NOTE: here's a piece I wrote on business transformation a few years ago. http://www.mmc.com/knowledgecenter/BT-OrgBalance.pdf