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An Organic Approach to Management We will present some insights into organizational dynamics in companies whose management practice is guided by principles of complexity science, in two areas: leadership style and operational structure. These are based on our study of a dozen companies in the US and the UK, which ranged in size from 35 to 22,000 people, and varied greatly in economic sector, and included a retail chain, a chemical company, a consulting organization, an advertizing agency, a biotech company, and a hospital. We view business organizations as complex adaptive systems, and as such we propose that any action or structure that enhances interaction among the "agents" of the system will promote the emergence of greater creativity and adaptability. In the "action" realm we saw that when authentic relationships were valued (at all levels) companies were able to respond to their environments, change, and innovate more effectively than had been possible previously. In the "structure" realm, companies that promoted a nonlinear way of working enjoyed enhanced creativity and business success.
Leading by not Leading The leaders we spoke to shared a common trait–paradoxes. The fundamental paradox in this leadership style is leading by not leading. Since processes unfold in complex systems in unpredictable ways, leading organizational change cannot come about by simply adhering to a conventional command and control approach, which is essentially linear. To accept nonlinear outcomes, uncontrollable processes, and uncertainty demanded nothing less than a personal transformation of the leader. We’ll talk about this transformation in terms of an organic approach to the organization and as a different way of being a leader. An Organic Approach: Work is Relationship Although all the organizations we spoke to underwent a unique process defined by their environment, their history, their objectives, they all shared similar underlying patterns in how these leaders facilitated change. In order to work with their organizations as complex systems, these leaders had to learn to let go of control. As Tony Morgan, CEO of the Industrial Society, a consulting organization in England of 300 people, said, "By nature I’m a command and control type person, very much so, but at that time I was getting a feeling that the command and control and linear thinking had a very limited life globally. So I approached the Society from a completely different angle. I was looking at how to change people from a structured organization to a non-structured one and I didn’t do this by design, but by intuition. I found that relationships are the most important thing for engaging nonlinear processes. If you don’t have this, none of it will work. What happens is you become more aware of behaviors in relationships that lead to positive rather than negative outcomes. "I can’t conceive of myself as a leader without the burden of responsibility to create positive and powerful relationships with everyone I interface with. And I mean relationships, where you can speak to me openly all the time. And that’s really difficult because you have to be interactive and keep working at it. Coming from a command and control existence, it was quite an adventure for me, but if you don’t think that I didn’t wake up in the middle of the night and say ‘this feels very uncontrolled,’ you’re greatly mistaken. I spent most nights thinking that. This is why this job has been more demanding than any other, because if you work within boxes, it’s easy, because that’s not about people, and that’s much harder." In other words, when relationships become the means for guiding nonlinear processes, leaders had to see the limits of their control, which was not an easy task. Instead they focused on the power of the interconnected world of relationships and the feedback loops they foster and feed. This makes sense from a complexity perspective because it is through interactions, that is relationships, that something novel emerges; and how people interact, whether they have a mutual affect on each other--that is respect and impact--influences what emerges, negatively and positively. By focusing on relationships, these leaders began to see their organization as an interconnected human web, a living organism that unfolds, fluctuates, and emerges--a more organic view of their organization. On this new ground, the workplace had become an experiment in progress. To engage in this experiment, they had to change the existing structures based on a mechanical model which meant pushing the system into chaos. They did this by challenging the existing relationships, both emotionally and functionally. When Morgan took over the leadership of the Industrial Society it was in financial crisis and was heading for bankruptcy. This is why he felt a radically different style of management was needed, one that was based in his knowledge of complexity science. "From the start," Morgan told us, "I said we’re going to live in chaos. This is daunting thing for people who’ve lived in a world of a certain way to behave, certain boxes to live in. The question was whether we could live in chaos. What I set out to do was to actually get rid of the negativity that existed in relationships, especially in senior management, and lead them toward a consciousness of another way of working. We started tearing down the structure by allowing people to speak up and talk honestly. I started this process by speaking very directly in ways that were totally unexpected to them. Once I took the lid off, they all did it. It’s creating a safe space for people which sounds simple, but it’s painful for them and scary for me." Within three years the society had gone from fiscal deficit to healthy surplus. At Monsanto, CEO Bob Shapiro led change in his organization of 22,000 people by challenging the functional relationships. "The challenge was how to create radical change in a very proud, successful institution? I decided that the only way to make that happen in a successful organization was to make it unsuccessful. Not financially unsuccessful, but simply making the old ways of working no longer possible. I wanted to break the organization down internally, break old habits and old ways of doing things by giving people challenges that they couldn’t handle. The problem with making changes in a big complicated organization is that all the parts fit together. They may fit in a dysfunctional way, but they do fit. So you can’t take any single part out, redesign it and plug it back into the system. You have to redesign all the parts at once. You have to get everyone working on it. "The way we pushed the organization into this grand experiment was by overloading it, by demanding much more of the system than its linkages as they were structured, which was very rigid and vertical, could handle. We pushed the organization into chaos as a way of ‘finding’ new, more adaptable, creative ways of operating in the new environment. I just felt intuitively it was the way to go. "I did know it would be hard. I used to get people lining up outside my door, saying, ‘Bob, you’ve go to tell me; I’ve got five different things I have to do here. What’s your priority?’ I knew that the minute I would prioritize it, we’d be back into the old model, of the boss having the answers and telling people what to do. The astonishing thing about the whole process was how fast it went–just a couple of years. Very soon people were self-organizing, posting proposals for a project they cared about, inviting others to join. The reason this works is because it’s what people really want." The impetus for change was to find a way of transforming what traditionally had been a hybrid company–which had chemical, agricultural, biotechnology, and pharmaceutical operations–into a life sciences company, whose business environment demanded more agility than was previously necessary. Like Shapiro, all the leaders in our study were not invested in establishing themselves as the ultimate authority, but rather they worked to extricate themselves instead of fostering dependence on their expertise. Rather than directing people, they cultivated conditions where people could self-organize and restructure around the existing issues, which meant being a different kind of leader. A Different Way Of Being A Leader There were three behaviors, ways of being, that were common to these leaders. They allowed new processes to emerge rather than be imposed; they were accessible to people by being authentic and caring; they were attuned to their organizations, both at the macro level of the whole system, and at the micro level of interaction between people. Allowing Paradoxical leaders allow--experimentation, mistakes, contradictions, uncertainty, and paradox–so that the organization can evolve. At DuPont’s Belle plant in West Virginia, plant manager Dick Knowles talked about this aspect of paradoxical leadership in terms of a bowl. "I developed this image of a bowl, a safe container, that gives people freedom to experiment, to create improvements. Paradoxically, the bowl gives you order and freedom at the same time. It’s the leader’s job to create the bowl through our conversations about our vision, our mission, our principles, our standards, our expectations. The leader creates conditions that make it okay for the people to grow, and an enormous energy gets released. People discover that they can make a difference, meaning begins to flow, you get a discretionary energy flow. That’s the difference in energy between doing just what you have to keep from being fired, and being fired up and doing the max. Most people know what to do, if they have a good sense of the bowl." When Knowles took over as plant manager, the facility had a terrible safety record, emissions were high, and productivity was low. Head office was planning to close down the plant, if there was no improvement. The following figures speak to the efficacy of Knowles’s new management approach, which were achieved after three years:
The paradox of allowing is direction without directives, freedom with guidance. Accessible: Authenticity and Care In order to create rich connections within a system, the leaders we worked with placed value on authenticity and care, which made them accessible as human beings and set a standard of behavior for the organization. Authenticity makes for a cleaner connection because you know where people really stand. "Trying to look good and be something else for someone is an efficiency as well as a mental health issue; it’s tiring and a waste of time and energy when you try to be something you’re not," Shapiro told us. All the leaders recognized the power of their example, and strove to embody these behaviors. As Morgan said, "It’s about being observant of yourself when you’re being inauthentic." All these leaders cared about their people and took seriously the task of making work meaningful and the workplace as a fulfilling place to be. As Shapiro said, "We’re not trying to extort more work out of people. We’re giving them an opportunity to grow and do things they care about. If you do enough work that is worth caring about, it taps into a whole different level of involvement, commitment, creativity, and achievement." And it starts with the leader in a very personal way. Hatim Tyabji, CEO of VeriFone, a global high tech company of 3000 people, put it this way: "The being is the cause; everything else is a manifestation of that being. That being is caring. And it starts with you. As a leader, you’ve got to care. It’s got to come from within you. Some say that’s common sense. The issue is practicing it. The most profound truths in the world are the simplest. Except they don’t get practiced." As Shapiro succinctly stated, "If we get authenticity and if we get caring–then we’ve got it; the rest will fall into place." The paradox of accessibility is leaders are mutual but not equal–mutual in respect and ability to affect and be affected by others and also not equal in power. Attuned These leaders relied heavily on their intuition and ability to listen as a way of being attuned to their organization. To be attuned at a micro level, Morgan put it this way, "The best thing you can do is shut up and listen." At a macro level, Shapiro described how he attuned himself to Monsanto. "It’s at a very abstract systems level that it seems to me I have to operate. I have to influence the systems to keep them open. I have to identify places where there are constrictions or blindnesses, where there are denials, and try to help that out. My specialization is generalization." Also, as Shapiro points out, attunement to the organization is an evolving phenomenon. "The first year I was CEO, I really thought I ran the place. I was trying to change something, and I felt I was there pretty much by myself, with a few people who understood what we needed to do. We were pushing against this enormous system. By midway into my second year, I realized I wasn’t running it, that we had the right people, at least in a lot of places, and that they were doing it. I understood what they were doing, where we were going, what we were trying to accomplish and I liked it. By my third year, a lot of the time I didn’t even understand it. And it felt wonderful. As is perfectly appropriate, it felt as if the place was outgrowing me." The paradox of being attuned is knowing and not knowing; knowing intuitively while not knowing all the facts. A Culture of Care and Connection People in these organizations told us that in this context, where they felt they belonged and were contributing to a larger purpose, they were more able to be flexible and more willing to change. People’s capacity to adapt in turn made the organization more adaptable and financially successful. And as Lao Tzu put it, they felt "we did it ourselves." But they also knew they were led to it. Operational Structure St. Luke’s advertizing agency, in London England, was formed in 1995 by thirty-five people who had constituted the UK office of the New York-based giant, Chiat/Day. They didn’t want to be swallowed up in an impending merger with another industry giant, TBWA. The breakaway move was initiated by Andy Law, head of Chiat/Day’s UK office, and now Chairman of St.Luke’s. David Abraham, co-founder and chief operating officer of St. Luke’s, described their motivation as follows: "We wanted to unlock the human potential trapped in conventional business environments in order to enhance creativity and competitiveness." Within three years the agency’s staff had more than tripled in size, and (in January 1998) had been voted The Agency of the Year, a much-coveted accolade in the business, by Campaign, the industry’s trade magazine. The agency was also strongly successful in traditional financial bottom-line terms, and was turning away multi-million-dollar accounts because its people were fully stretched. Three key elements went into the establishment of St. Luke’s as a non-traditional business organization. First, from the beginning the company’s equity was distributed equally among all staff, from Andy Law as chairman to Rose Hamilton the housekeeper. "That way you get rid of the ego and greed problem that is so rampant in this industry," says Law. "It also generates deep, genuine commitment to the organization." Second, no one has a personal office. Everyone has a place they can go to each day, of course, but no one has a desk that is exclusively his or her own. When they come to work in the morning, people pick up a cell phone and go to wherever is most appropriate place for the day’s activities, and this might include what is known as the chill-out space, which is reminiscent of a cafeteria, games room, and library combined. Third, the traditionally linear mode of creating advertisements was transformed into a nonlinear process. Some elements of the latter two had been present at Chiat/Day, but not to the extent that Law and Abraham developed them at St. Luke’s. Law and Abraham were not guided by complexity science principles when they sought a new kind of design for the agency: they didn’t know about them at the time. Rather, Law and Abraham’s intuition was that rich and fluid interaction in a context of little hierarchy would unleash greater creativity in their people as individuals and in the organization as a whole. This is very much what complexity science posits when considering organizations as complex adaptive systems. Although the experiment ultimately was successful, it took about 14 months before St. Luke’s people collectively figured out how to operate. And the learning period was extremely difficult, for everyone. In effect, the company was in the chaotic throes of breaking an old way of working and seeking a new one, a novel way that no one had a clue what it would look like, still less whether it would succeed. In the ensuing uncertainty, people were grumpy and bewildered, and there was a lot of backbiting. "I remember that time as being full of extreme agony, frustration, and despair, for everyone," recalled Law. "People were pleading, ‘Where are we going?’ ‘What are we doing?’ ‘Why can’t we have our own desks?’ I said, ‘I just know that having offices is wrong. This is an experiment, and I don’t know if it will succeed.’" Law deliberately stepped out of the organization, in the sense of not trying to make it go in one way or another, just seeing what might unfold. Law’s conviction about the benefits of disposing of personal desks was that it would encourage more casual interactions among people, breaking a static office into a free-flowing environment in which serendipitous encounters would be centers of unexpected creativity. "I sat opposite someone for two years in my previous agency," explained Sue McGraw, an account manager. "I got to know him very well, and we became good friends. But I now know that it was at the expense of interacting with a lot of other people in the agency." Mark Lewis, an account director, insists that the benefits are huge. "It’s fundamental to the process of creativity here," he said. "It may be hard and irritating in some ways, but it keeps us in contact with one another." The structural focus of the St. Luke’s is what are called Brand Rooms, which are the only physical offices in the place. A room is set aside for each client, and is then decorated according to the pitch this is being developed. For instance, the Brand Room for Boot’s the Chemist looks like a teenage girl’s bedroom, because the pitch is for a line of cosmetics for girls. All meetings relating to a particular client take place in the appropriate Brand Room, and everyone involved in the account–including the client–gathers there together. The aim is to create an environment that promotes a nonlinear development of the pitch. The traditional way of operating in the industry is rather linear. The account director assesses the client’s needs, and then communicates these to the creative director. The creative director in turn communicates these needs to the creative team, who then work up a possible pitch. The team gives the account manager the proposed pitch, and he/she then makes a presentation to the client. Lewis explained that "Usually, the client will say, ‘That’s pretty good, but it’s not quite what we had in mind.’ And the whole linear progression begins again. It’s a slow, iterative process, full of air locks, people aggressively defending their territories." At St. Luke’s the client is involved throughout the whole process, so there are never any surprises, never any ‘it’s not quite what we had in mind,’ because the client is part of the process of creativity. One consequence of the client’s constant involvement, Lewis told us, is that the client is usually much more willing to go with what he describes as "more dangerous work, more cutting edge work," because the client has seen the ideas unfold, has been part of the process of unfolding, and is not simply confronted with a wild idea out of the blue after months of silence. As important as the client’s involvement, however, is that the brand room provides a mutual space for all the people involved. Each brings his or her own expertise, but not a territory to be defensive over. "Everyone sits around–the account handlers, planners, creative people–and those meetings go crazy," Lewis said. "They’re real brainstorming sessions, and we get to solutions really quick, because we’re not pushing against each other, everyone comes together and it explodes. The planning is happening, the creative work is happening, and then, instead of saying, ‘Okay, we’ve got the brief, let’s think about strategy,’ we start writing ads immediately and we start working out whether the strategy is right or not. Everything just goes crazy really, really early on." McGraw compared the experience with that in her former agency. "You spend less time talking to a thousand different people about the same thing," she explained. "The team process is important because, rather than everyone having their own little jobs that they do and then write a piece of paper about it and pass it on to the next person, everyone sits together in the same room and talks. Differences get resolved on the spot, rather than passing a piece of paper to someone and waiting three days to get a response. Here, that takes half an hour." The whole nonlinear process is much more dynamic and less controlled than the traditional mode of working, because a greater diversity of people is interacting at any one time. The linear progression mode of working encourages ego, we were told, because each person feels a need to defend their contribution, which is done in isolation from everyone else’s. In the nonlinear team process, where each person can contribute ideas in any sector of the process, not just in their area of expertise, ego is much less of a problem, because it is a collective, emergent process. This is not to say that there are no big egos at St. Luke’s. There are, of course. But the nonlinear process serves to minimize the "I" and enhance the "we." Growth is always a big issue with small, successful companies, particularly when the creativity depends on rich interactions among people who know and trust each other. Beyond a certain size, a group is simply too big for everyone to know everyone in this way. At St. Luke’s, this problem is addressed by what Law calls the "magic number rule," which simply means that when a group exceeds thirty-five people, it splits. "With larger groups, it’s not possible for people to care enough, for people to know what’s going on,"Law explained. Coincidentally, anthropologists talk about magic numbers in hunter-gatherer societies, with the foraging band being about thirty-five people. St. Luke’s began life with thirty-five people, and is now more than a hundred, divided among five groups. The pressure to grow has been great, particularly as the agency’s notoriety burgeoned. During 1997, for instance, when the staff doubled from fifty to a hundred and new accounts were coming easily, pressure started to mount, and, said Law, "it started to get tense, with people fighting with one another, everyone working too hard, we were getting overheated." The creative work was still good, he told us, but people were suffering. "So in the early summer, we said, Enough. We stopped taking pitches. We wanted time to cool down." It was out of this that the decision to split from two groups into five was made. But even though the magic number rule may preserve the social and creative milieu within groups, the reality of size remains. "When you split into groups, to retain the spirit within each group, you still have people from other groups you might not talk to as much anymore," said George Porteous, an account manager who’s been at the agency since its birth. "Wandering around the building these days, there’s a sense of anonymity, an absence of the spirit where everyone knew everyone else when there were just thirty-five of us. But don’t get me wrong. We do need to grow, as an example of how business can change." An important aspect of this sentiment is how growth and financial success is viewed. "To me, profits are like breathing," Law said. "You need it to live, but it’s not what you live for." Conclusion Management guided by principles of complexity science leads to a human-oriented style of working, in which relationships become the new bottom line of business. Human-relations management is not new, of course, and many of the individual behaviors we saw collectively in these companies have been posited in other management theories. Much of what Peter Drucker talks about would be included in this, for instance. What is new is that complexity science provides insight into why such practices are usually successful: a human-oriented management practice is not simply "being nice;" rather it is a way of engaging the dynamics of a complex adaptive system–that is, enhancing interactions and allowing mutual effect–that leads to the emergence of a creative and adaptable organization, just as happens in other complex adaptive systems, natural and artificial. Roger Lewin and Birute Regine Ernst and
Young’s Perspectives in Business Innovation, |