To Change The System Of Work We Must First Change Leaders’ Mental Models
Attempts to change an organisations culture is a folly, it always fails. People behaviour (culture) is a product of the system; when you change the system peoples’ behaviour changes. — John Seddon
IT leaders have historically been put in positions to control IT resources, largely due to other execs not being able to fully understand what IT does and through the mis-understanding that it was a predictable production process rather than an emergent design process. Because of this, there has been a heavy focus on IT leaders to command and control, to meet project plan forecasts, to commit to estimates and remove all risk up front, to demonstrate their expertise. IT leaders were rewarded for operational performance, cost savings, and control.
However, as IT has moved beyond a service provider and is now deeply integrated into the core of what makes a business work, IT must adapt, innovate, and move at the same pace as the business. Outdated ways of control are unable to react fast enough to changes in the business context and to capitalize on opportunities or remove constraints. IT leaders need to focus more on enabling a highly collaborative workforce to adapt, pivot, and respond in the new reality of the chaotic business environment rather than simply to act as project delivery managers. To enable the enterprise, which is so reliant on technology, to succeed, we need to move beyond thinking of ourselves as the guardians of IT cost and control and move to a culture of influence, empowerment, and trust focused on profit and loss and customer value rather than only cost control. The bottom line, as W. Edwards Deming puts it, “Everyone is already doing their best; the problems are with the system . . . only management can change the system.” But to change the system, we need to change how leaders and management think.
Systems Thinking vs. Linear Thinking
When the thinking changes, the organisation changes, and vice versa. — Gerald M Weinberg
To be effective at making change in complex adaptive organizations, we need to change the way we think. Table 1 shows the shift in thinking required for leaders. To get the improved outcomes that agile and lean ways of working can bring, you need to be fully committed to that way of working; your working practices, patterns, and structure and your core values need to change. You can’t half do agile if you truly aspire to become an effective and influential IT leader.
The Problems with Command-and-Control Leadership and Management
Everyone thinks about changing the world, but no one thinks about changing himself. — Leo Tolstoy
Command-and-control management theory is based around maintaining control of people and process. It puts a strong emphasis on hierarchies, rigid rules, strictly defined specialized roles, and a siloed workforce. The unwritten premise behind command and control is that leaders know best; they have clarity on the future and believe the context won’t change. They have a plan on how to get there that they don’t want to deviate from as that will be viewed as failure. They need to control the behavior of employees so that they adhere to their plans because they don’t trust them.
Command-and-control leadership styles were designed to enforce standardization, compliance, and cost efficiency. Henry Ford famously said, “Nothing is particularly hard if you break it down into small jobs.” In an ordered system, one with problems that are routine and algorithmic, this is certainly true, but it is not true of complex and unordered systems. The roots of the command-and-control leadership style were created during the Industrial Revolution by Frederic W. Taylor’s scientific management and Max Weber’s bureaucratic management (known as “Taylorism”) and were focused on production, where cost efficiency was valued far greater than workforce engage- ment and adaptability. “Taylorism” was a popular management method when organi- zations were solely production oriented — one that streamlines the production process for its product or service. Modern businesses have evolved to become more consumer driven — influenced by the actions and needs of consumers. This is a more complex and adaptable environment to the one that Frederic W. Taylor’s scientific management techniques were designed for, one that requires a leadership paradigm that promotes trust, autonomy, responsiveness, unscripted collaboration, experimentation, adapt- ability, and innovation. Command-and-control management practices are not effec- tive for complex adaptive businesses that require an engaged and skilled knowledge workers. At best they can only offer the illusion of control.
The HIPPOs (highest paid person’s opinion) can no longer make all the decisions. Instead, they must set strategic direction and give context, the what and the why, but allow a skilled workforce to solve the how. We can no longer separate those making decisions about the work from those closest to, and doing, the work. Unless leaders lose the bad habits of command and control and adopt the values and principles of lean and agile philosophies when managing and leading teams, there is a real danger that leaders themselves, the architects of the system, will be the greatest obstacle when trying to deliver outcomes that have a positive impact on the business. Leaders need a new set of principles to guide them on how to lead and manage in the new world. For this we can look to the beyond budgeting movement.
The Beyond Budgeting Movement
Moving beyond the command-and-control management paradigm of the past to a leadership style that accepts the futility of trying to predict the future, embraces uncertainty, and empowers its workforce through trust to adapt to ever-changing contexts is the philosophy of the beyond budgeting movement. The beyond budgeting movement was created by Jeremy Hope and Robin Fraser in 1997 to look for a better governance model that would enable organizations to react to a faster rate of change. Initially their work focused on the process of developing a better alternative to the traditional way of setting budgets, but quickly they realized that the entire leadership and management models needed to change to reflect the faster pace of business change and volatility. They documented their findings in the book Beyond Budgeting (Harvard Business Review Press, 2003). In it they describe an organizational design with principles that are built around autonomous teams aligned on a common purpose with the responsibility to make their own decisions on when to pivot and adapt, with support from leadership, to deliver business outcomes. In addition, they describe a set of management processes that support the organizational design by removing overly controlling and bureaucratic governance processes in favor of a more emergent management model built around trust and relative performance measures. Beyond budgeting represents the need to change leadership thinking to adapt to the new reality of a global 24/7 business environment that is heavily reliant on technology and where innovation, collaboration, and the ability to pivot quickly is much more valuable than adherence to rigid upfront plans.
The beyond budgeting leadership model is based around 12 principles, split into two themes: decentralized leadership to instill intrinsic motivation and an emergent and adaptive set of management processes. These are shown in Table 2.
Leadership Principles to Instill Intrinsic Motivation
The leadership principles empower people by instilling intrinsic motivation — behavior that is driven by internal rewards. There is a strong emphasis on trust and purpose, autonomy, and decentralization, along with unscripted collaboration to drive outcomes and customer impacts, which is vital in complex problem domains and organizations. We cannot afford to separate those who make decisions about the work from those who are closest to the work; doing so drastically slows down throughput and leads to decisions that are made by those less informed of the problem at hand. To adapt faster and improve lead times for business impacts, we must give the responsibility of decision-making to the people who are doing the work. This requires moving away from the illusion of control to a position of trust underlined though clear alignment to strategic objectives. Leaders still need to retain governance at a steering level, but day-to-day decisions need to be made the responsibility of the team who are focused on the problem at hand. The leadership principles are underpinned on trust, which is an essential ingredient for delivering at pace.
Emergent and Adaptive Management Processes
The six management processes support the six leadership principles. They embrace a more emergent way of managing that takes reality into account by managing relative to the context you are in rather than against fixed targets and plans made 12 months ago. Trying to predict the future is impossible in a complex and adaptive organization; there- fore, setting targets and budgets way into the future to control behavior is not effective. Instead, giving relative targets based on the current context and competitors is far more effective. Setting targets that do not reflect current reality can lead to people gaming the system to hit a number even if it is to the detriment of the business. Emergent management focuses on a more holistic view of people and business performance that is beyond rigid and fixed targets and budgets.
Instilling Drive through Purpose, Mastery, and Autonomy
In his book Drive: The Surprising Truth About What Motivates Us (Canongate Books, 2010), Daniel Pink explains that the methods that worked to motivate people before the advent of digital business do not support the type of work we have today. As you read earlier in this chapter, Taylorism and the scientific method that promoted command and control, specialism and siloed working used the carrot and stick approach, extrinsic rewards, to ensure the work was done. This was successful as the work was routine and algorithmic and required no creative thinking. Pink refers to this as Type X behavior.
Somewhat unintuitively, however, Pink shows that extrinsic rewards do not work well for nonroutine and heuristic work that requires critical thinking and high levels of unscripted collaboration. In fact, extrinsic rewards have the opposite effect and can negatively impact work. This type of work requires a workforce that is motivated by internal rewards, intrinsic motivation, where the work itself is a joy and therefore the reward. This is what Pink refers to as Type I behavior. Table 3 shows the differences between the two different ways to motivate and where they are effective.
Type I behavior and intrinsic motivation is achieved by people having purpose, mastery, and autonomy:
- Purpose People need clarity on how their work relates to the strategic direction of the company and the role they play in contributing to problem solving rather than simply solution execution. Without this sense of purpose, without understanding the why behind the what, without understanding that they are part of something bigger than themselves, we cannot expect people to be intrinsically motivated.
- Mastery Type X behavior is defined for compliance, whereas Type I behavior encourages engagement. Engagement is a key factor required for learning and bet- tering yourself. Pink describes mastery as being defined by three rules. The first is that it is a mindset and that people need to understand that their ability is infinite. Second, mastery requires effort; it is challenging to improve and requires dedication. Third, mastery is itself infinite; you can always learn more, and you will never finish.
- Autonomy People have a desire to be self-directed and the masters of what they do, how they do it, and when they do it. Therefore, give responsibility and trust people to make the right decisions and choose the path they believe will lead to a solution. Autonomy increases engagement, which leads to high motivation.
However, as Pink points out, you do need to ensure people are compensated well enough as to “take the issue of money off the table.” When compensation is no longer a problem, that is, you are paying the market rate, then the focus on optimizing for joy of working will cultivate the environment that will foster motivation. The joy needs to be the activity, the pursuit, not the result. Motivation is a product of the system, and the design of the system is the responsibility of the leaders. Set up the right conditions and structure to clarify purpose, support mastery, and enable autonomy and your teams will be moti- vated and work unscripted and collaborate on driving business and customer outcomes.
In Summary
At the heart of a system is its mental model: to be agile we need to change the values and beliefs of the organisation. To change the system, we first need to change the mental models of leaders from command and control, designed to manage in conditions like those of the Industrial Age of mass production, to a more inclusive and agile style for today’s Digital Age, which is heavily built around knowledge workers and trust. Command-and-control leadership works well in obvious problem contexts with little variation and when there isn’t a need for skilled, intrinsically motivated knowledge workers. Therefore, it’s not suited to the complex problems we are increasingly finding ourselves confronted with. The beyond budgeting movement presents 12 principles for a more inclusive leadership and management style that focuses on people, purpose, and autonomy. These are three factors that Daniel Pink points out that are essential to promote intrinsic motivation, which is critical to working in complex problem domains.
What to read more?
I explore how leaders need to change the system of work in my new book The Accidental CIO: A lean and agile playbook for IT leaders. If you want to read more please follow these links or look for it at your favourite book seller.
