Niels Pflaeging Why management is quackery. And what leadership for the 21st century must really look like Keynote at University Villingen-Schwenningen Villingen-Schwenningen/Germany, 19 December 2012 Illustrations used with kind permission by Jurgen Appelo
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Why management is quackery. Keynote by Niels Pflaeging at HFU Business School (Villingen-Schwenningen/D)
Why management is quackery. And what leadership for the 21st century must really look like - keynote at HFU Business School, Villingen-Schwenningen, December 2013
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Niels Pflaeging
Why management is quackery. And what leadership for the 21st century must really look like
Keynote at University Villingen-Schwenningen Villingen-Schwenningen/Germany, 19 December 2012 Illustrations used with kind permission by Jurgen Appelo
?!Typical questions about work & organizations
?!Together, we are kind of dumb. But why?
Not much healing going on here. But still a great business
Thinking Doing
The dependence model – inherited from the industrial age Looks like a grid. No coincidence.
There could be intelligent life in the lower part of the pyramid…
Don´t do evil.
Complicated/many rules > Stupid behavior
Simple/few principles > Complex behavior
An organization
Most organizations are obsessed with individual performance. But individual performance is a myth, actually.
We know that everyone in an organization is interconnected. So performance and success are complex things…
Complexity and its consequences for work and leadership
Formal part – solution: machine
Dynamic part – solution: man
The impact of complexity on work: Value creation has two parts
Formal part of value creation Solution: machine
Dynamic part of value creation
Solution: man
high dynamic
t
Age of crafts manu- facturing
1850/1900
Local markets, high customi-zation
Formal part of value creation Solution: machine
Dynamic part of value creation
Solution: man
sluggishness/low dynamic high dynamic
t 1970/80
Age of crafts manu- facturing
Age of tayloristic industry
1850/1900
Spacious markets, little competition
Local markets, high customi-zation
Formal part of value creation Solution: machine
Dynamic part of value creation
Solution: man
sluggishness/low dynamic high dynamic high dynamic
The dominance of high dynamics and complexity is neither good or bad. It‘s a historical fact.
t 1970/80 today
Age of crafts manu- facturing
Age of tayloristic industry
Age of global markets
1850/1900
Spacious markets, little competition
Local markets, high customi-zation
Outperformers exercise market pressure over conventional companies
Formal part of value creation Solution: machine
Dynamic part of value creation
Solution: man
Guess where in this “Taylor bathtub” timeline interdependence becomes vital!
t 1970/80 today
Age of crafts manu- facturing
Age of tayloristic industry
Age of global markets
1850/1900
Spacious markets, little competition
Local markets, high customi-zation
Outperformers exercise market pressure over conventional companies
Problems, information
Command, control
Frame: rules, responsibilities, job descriptions
“Socially dense market organization”. Is that possible?
Radical transparency, social density, group pressure Frame: values, principles, roles, shared objectives
Industry
Retail
Services
Governments & NGOs
It is possible
But… We have to build consensus about human nature. What are people like?
McGregor's critical distinction
Theory X Theory Y
People need to work and want to take an interest in it. Under right conditions, they enjoy it
People will direct themselves towards a target that they accept
People will seek and accept responsibility, under the right conditions
Under the right conditions, people are motivated by the desire to realize their own potential
Creativity and ingenuity are widely distributed and grossly underused
People dislike work, find it boring, and will avoid it if they can
People must be forced or bribed to make the right effort
People would rather be directed than accept responsibility, (which they avoid)
People are motivated mainly by money and fears about their job security
Most people have little creativity - except when it comes to getting round rules
Source: Douglas McGregor, ‘The Human Side of Enterprise’, 1960
Attitude
Direction
Responsibility
Creativity
Motivation
We have an observation problem
Behavior
Human Nature
Context
Power to the teams
Social density, or “peer pressure”
Low, or average performance High, or superior performance
Success is not a zero-sum game
Central coordination is luxury. One you cannot afford in complexity
Sales Back Office
Business team 1 Business team 2
Business team 3
Product Management
Functional division: a bad idea
Everybody knows this kind of structure. Disadvantage: It´s not actually real.
Structure No. 1
?!
?!
Structure No. 2
Structure No. 3
This one is also well-known. Much more real
But this?
1 Formal Structure
2 Informal Structure
3 Value Creation Structure
Now, this is real!
Center
Market
Periphery
Center
Market
Periphery
Center
Market
Periphery
1 Impulse 4 Command
2 Information
5 Reaction
Customer
! 3 Decision
!
! Center
Market
Periphery
1 Impulse
3 Reaction
Customer
! 2 Decision
!
!
!
!
!
Serves the periphery, if needed
Center
Market
Periphery
Organization & teams
Market (very powerful today)
When markets lead, it´s good to have a periphery that´s in charge. Decentralized decision-making becomes a question of survival
Periphery: roles, influence…
Center: roles, influence…
“Help the center lose its arrogance”. Because it´s hard
Practice. Practice. Practice
The in(ter)dependence model: Where everyone can think. And everyone has to!
The dependence model - nice illusion
Fixed & individual targets Management by Objectives Budgets & Plans Performance appraisals Pay by Position Pay for Performance Incentives & Bonuses …
Transparency & Improvement Peer team comparisons Comparisons w/previous periods Dialogue & dissent Pay by market value Result sharing …
The 10.000 hour principle
For mastery and learning.
Pretty important
Winning: only together, not individually.
Celebrate results. Not meeting targets.
Independence at work:
Leadership means working on the system. Not on people.
Law The In(ter)dependence The Dependence
model – Beta model – Alpha §1 Freedom to act Connectedness not Dependency §2 Responsibility Cells not Departments §3 Governance Leadership not Management §4 Performance climate Result culture not Duty fulfillment §5 Success Fit not Maximization §6 Transparency Intelligence flow not Power accumulation §7 Orientation Relative Targets not Top-down prescription §8 Recognition Sharing not Incentives §9 Mental presence Preparedness not Planning §10 Decision-making Consequence not Bureaucracy §11 Resource usage Purpose-driven not Status-oriented §12 Coordination Market dynamics not Commands
Organizing the work requires a new codex: based on scientific insight. understanding of complexity & human nature