Brave New Work: Are You Ready to Reinvent Your Organization?

by Aaron Dignan

There’s no word for accountability in Finnish.6 Accountability is something that is left when responsibility has been subtracted.

biography of Taylor, author Robert Kanigel spelled out this breakthrough. “And there it was—the Faustian bargain in embryonic form: You do it my way, by my standards, at the speed I mandate, and in so doing you will achieve a level of output I ordain, and I’ll pay you handsomely for it, beyond anything you might have imagined. All you have to do is take orders, and give up your way of doing the job for mine.

Technological progress has merely provided us with more efficient means for going backwards. —Aldous Huxley

First. They develop a science for each element of a man’s work, which replaces the old rule-of-thumb method.

Second. They scientifically select and then train, teach, and develop the workman, whereas in the past he chose his own work and trained himself as best he could.

Third. They heartily cooperate with the men so as to insure all of the work being done in accordance with the principles of the science which has been developed.

Fourth. There is an almost equal division of the work and the responsibility between the management and the workmen. The management take over all work for which they are better fitted than the workmen, while in the past almost all of the work an...

Henri Fayol, a French mining executive, published Administration Industrielle et Générale, a theory of management that would come to be known as Fayolism.

It contained principles such as unity of direction, suggesting that activities with the same objective should be directed by one manager using one plan for one common goal. And the scalar chain, which proposed that authority and communications should flow in a straight line from the top to the bottom of the organization. The boxes and lines of our modern org charts are the living embodiment of his principles.

Henry Gantt gave us the chart that bears his name—used to this day to illustrate dependencies within complicated projects and processes. But Gantt baked in a dangerous assumption: that the world can be predicted. In Gantt’s repetitive world of manufacturing, this was tolerable, even helpful. But as his practices fanned out into knowledge work, they became a ...

James McKinsey, founder of consulting juggernaut McKinsey & Company, who completely upended the accounting paradigm while every...

In his view, budgeting was to be an expression of policy and strategy, flowing direct...

The budget should be used to evaluate performance, to see who beat thei...

McKinsey believed that great managers thought deeply about their ...

Frank and Lillian Gilbreth introduced time and motion studies, the precursor to ergonomics.

Harrington Emerson fueled our fascination with efficiency.

Hugo Münsterberg popularized the notion of ...

Lyndall Urwick limited the span of control—how many people on...

Max Weber highlighted the value of rational-legal authority structures—the idea that positions and ...

Henry Ford gave us his assembly line and the mass consump...

Mary Parker Follett, the unsung mother of modern management, offered a more humanist opinion about how to realize our potential. Her ideas about reciprocal relationships (win-win) and nonc...

Increase autonomy, and motivation thrives.

offered autonomy grew at four times the rate of top-down, control-oriented firms and had one-third the turnover.

“VUCA”—an acronym that stands for volatility, uncertainty, complexity, and ambiguity

A complicated system is a causal system—meaning it is subject to cause and effect. Although it may have many parts, they will interact with one another in highly predictable ways. Problems with complicated systems have solutions. This means that, within reason, a complicated system can be fixed with a high degree of confidence. It can be controlled.

A complex system is not causal, it’s dispositional. We can make informed guesses about what it is likely to do (its disposition), but we can’t be sure. We can make predictions about the weather, but we cannot control it. Unlike complicated problems, complex problems cannot be solved, only managed. They cannot be controlled, only nudged. This is the domain of the butterfly effect, where a small change can lead to something big, and a big change might barely make a dent. Here expertise can be a disadvantage if it becomes dogma or blinds us to the inherent uncertainty present in our situation.

And what about the organization itself? When ten or ten thousand people come together around a mission, what is the nature of that collective? Is it a complicated system that an expert can fix or change at will? Or is it a complex system—full of uncertainty and surprises—that we must interact with to understand and shape? The answer is intuitively obvious. While many of the activities and outputs of organizations are indeed complicated, the organization itself is complex.

It is entirely possible that you get unpredictable behavior out of predictable rules.

The mainstream view is that performance is the result of compliance. If we can just get everyone to do exactly as we say, we will achieve our goals. This translates into a culture buried in governing constraints—rules, policies, or processes for every imaginable scenario that dictate exactly what should be done.

If we can just create the right conditions, everyone will continually find ways to achieve our goals.

The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function. —F. Scott Fitzgerald

Goodhart’s law, which states that a measure that becomes a target ceases to be a good measure.

Instead, we should think of metrics as guides for steering toward our purpose.

When you join a Legacy Organization, the default assumption is that you don’t have the right to do anything unless you are given permission. This stems from a theory of control that believes the best way to eliminate risk is through compliance. It all starts innocently enough. In the early days, everyone scrambles to get the business off the ground. If they succeed, the established enterprise attempts to protect itself by standardizing approaches, policies, and structures—it discovers and mandates the one best way. Over time, red tape builds up until hardly anything interesting can be done without three different approvals. Only very senior managers and people willing to lose their jobs are able to act freely. The rest of the workforce, unauthorized to solve their own problems, develops a sense of apathy and learned helplessness. Engagement dips. Mistakes are made. And more red tape is wrapped around the handle. Stories of mistakes and failures create a culture of fear. The sense at the bottom is that leadership doesn’t trust anyone. The sense at the top is that even more compliance is needed—that everything must be specified.

In many Evolutionary Organizations, anyone can make a big decision, but first they must seek advice from colleagues who have experience with or will be affected by their choice. That means they seek them out, sit down with them, and talk through all the implications of the decision. This takes time and discipline. For an advice process to work, the person making the decision must be humble enough to seek advice and really listen. And advisers must be comfortable with the idea that their counsel may or may not be heeded. This is not stakeholder management where dozens of leaders get to tweak the proposal until it’s truly average. This is advice, plain and simple. Once a decision has been made, it should be shared transparently along with the rationale and perspectives that shaped it, so that others can learn too. When it works, this process creates a sense of ownership and responsibility that is hard to replicate.

Integrative Decision Making Process Propose. Invite a team member to describe a “tension” they’re trying to solve, followed by a proposal or recommendation. Proposer speaks, everyone listens. Clarify. Going around the table, give each participant the chance to ask questions of the proposer to understand the proposal. Participant asks, proposer answers, everyone listens. React. Going around the table, give each participant the chance to react and/or make suggestions that might improve the proposal. This is their one chance to say whatever they want to say. Proposer accepts feedback but does not reply until the next round. Adjust. Based on the questions and reactions, the proposer may edit the proposal (or not) and clarify anything they felt was unclear. The proposer may also remove the proposal at this time if they no longer wish to pursue it based on what they’ve learned. Consent. Going around the table, give each participant the chance to voice an objection, if they have one. An objection is defined as “a reason this would be unsafe to try or would cause irreversible harm to the team or organization.” This is a high bar by design, as the goal here is progress—a safe step toward resolving the original tension. Integrate. Ask objector(s) to work with the proposer to edit the proposal, making it smaller, faster, better, cheaper—whatever is required to achieve consent from both parties. Once all objections have been addressed, the proposal is accepted. Congratulations, you’ve...

SLAM Teams. One popular way to bust up the functional matrix is by creating a series of mission-based teams. I like to refer to them as SLAM teams. S-L-A-M stands for self-managed, lean, audacious, and multidisciplinary.

The OKR, which stands for objectives and key results,

The basic idea is that each person in the organization should identify their strategic objectives for the quarter and break those down into the more measurable key results that will indicate if they’ve been successful.

OKRs should be stretch goals, not easily accomplished (to prevent sandbagging), and transparent (to encourage collaboration and understanding).

law. Once people set their OKRs, they’re going to do everything they can to hit them, including things tha...

As W. Edwards Deming observed, “People with targets and jobs dependent upon meeting them will probably meet the targets, even if they hav...

While this feels like alignment, it all but eliminates any chance of divergence or serendipity. A healthy system is not going to cascade in a perfect hierarchy of intent. We want outliers. We want wild swings. Not a lot, but enough. And it’s easy to forget to make space for them in a system like this.

› What is our current strategy? › How is our strategy informed by our purpose? › What are the critical factors that will mean the difference between success and failure? › What are the trade-offs we’re willing to make? › How do we develop, refine, and refresh our strategy? › How do we communicate our strategy? › How do we use strategy to filter and steer day-to-day? › How does our strategy inform our planning process?

The solution to this resource allocation problem, we think, is to create a budget. Perhaps no other process is so respected and reviled as the annual planning and budgeting process. For those who have managed to avoid direct contact with James O. McKinsey’s “gift” to humanity, here’s how it works: A business plan is created through a bottom-up and top-down negotiation between business units and corporate headquarters, in which they make assumptions about what will happen, internally and externally, for the next twelve months. The business “locks” a version of the plan that they believe walks the tightrope between satisfying shareholders and being theoretically achievable. This forms the basis of a budget for the year ahead. The budget includes a detailed set of targets for sales and profitability, as well as funding commitments to support operations and investment. All of this is underpinned by an elaborate set of incentives designed to ensure the delivery of the budget as written. During the ensuing twelve months, actual performance is compared to the budget with a high degree of scrutiny. Any variance is attributed to “good” or “bad” performance by the team. Managers are expected to eliminate any gaps in performance, ideally without reallocating resources. The idea that the underlying assumptions in the budget may have been unrealistic is never seriously considered. Midway through that same year, the process starts all over again for the upcoming year, the resulting work...

“Revenue targets can act as a ceiling since there is no incentive to exceed them, whereas cost budgets become a floor as there is no motivation to spend less.”

Budgeting is broken. But few organizations find the courage to bring true dynamism and collective intelligence to resource allocation. Fortunately, it can be done, if we’re willing to give up the illusion of control that modern budgeting provides.

Where a Legacy Organization might commit to a specific revenue-growth target for the year, Beyond Budgeting would recommend beating the average performance of their competitors. Why? Because what if the market was down 20 percent and the business stayed flat? That would be a miracle. But under the traditional approach no one would be rewarded. In an uncertain world, relative performance is the only true benchmark.

When teams have the right (and the inclination) to experiment with their own rules and norms, they can find ways to collaboratively leverage and preserve resources.

What does it mean to be People Positive about resources? Recognize that people are not resources, they are people—capable of directing their own time and attention to where they can add the most value. They’re also capable of delivering performance without fixed targets or individual incentives. Let relative targets and a share of the wealth created by the business guide behavior.