Radical Management slides Steve Denning

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Radical Management

Creating A Safe Space for

Knowledge Management

Steve Denning

Author of The Secret Language of Leadership

andThe Leader’s Guide to Storytelling

[email protected]

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For several decades as a senior manager at the World Bank, I saw many good new ideas implemented.

Each idea would flourish for a while, generating enthusiasm among the people doing it and benefits for the organization.

Then suddenly, management would kill the idea.

We would go back to business as usual.

My experience at the World Bank

Why?

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I saw the same phenomenon many times in:

• knowledge management. • branding. • new product development. • leadership communications. • high-performance teams.

In large organizations, any idea that was lively, vibrant, exciting or different seemed to have a short life-expectancy.

Since 2000, my experience as a consultant:

Why?

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“Expectations have not been met.”

“The idea has not lived up to its promise.”

“Savings have to be made.”

“Fat has to be trimmed, and budgets cut.”

“A hard-nosed decision has to be taken.”

“The idea is out of line.”

“We are killing it for the organization’s own good.”

The execution is always well intended …

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Why do organizations act in this way?

Why are the most productive, exciting and interesting activities systematically closed down?

Why are so many clever, intelligent, well-educated people crushing the very things that are generating results for their organizations?

For a long time, I have been wondering: why is this?

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There must be, I thought, workplaces where things are going exceptionally well.

Suppose we identify the conditions that had enabled that to happen.

Suppose we then reverse-engineer those conditions.

Could we create an environment that was persistently congenial to ideas that are lively, vibrant, exciting or different?

Early in 2008, I began exploring: can we fix this?

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I began by talking to people and asking them if they knew about a workplace that was really humming. I assumed that finding such experiences would be difficult—like searching for needles in a haystack.

In fact almost everyone I talked to could tell me about an experience that they themselves had had.

Typically, it wasn’t in their workplace of today.

But in almost every case, they themselves had had an experience of this kind.

My first big surprise:

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An unusually high proportion of these extraordinary experiences were in software development.

Initially, I didn’t pay this any attention.

These were geeks!

They spoke in a strange vocabulary.

What could I possibly learn about management from from people who had gone into computing because they preferred machines to people?

My second big surprise:

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I visited some of the workplaces where software development was being managed in this different way.

I met people who were managing the work and people who were doing the work.

I took training.

I met some of the leaders of the movement.

I checked it out:

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These people had figured out how to reproduce these peak work experiences on a routine, replicable basis.

Innovation was occurring right and left

Clients were being delighted.

Workers were having fun.

I didn’t need to invent this. It was already happening.

The third big surprise: it was true!

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It wasn’t limited to software development.

It tended to spread other parts of the company, even the entire firm.

It was also widespread in auto manufacture, particularly Toyota and Honda.

Once I understood the principles, I started to see signs in many different sectors.

The fourth big surprise:

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The most frequent examples of sustained experiences are in:

• software development• auto manufacture, particularly Toyota and Honda

Also sporadic examples everywhere:

• accounting• consulting• legal work• insurance• manufacturing• real estate • building • ad hoc task forces • song writing

It isn’t limited to software development

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“Once you introduce this, it affects everything in the organization—the way you plan, the way you manage, the way you work. Everything is different. It changes the game fundamentally.”

Mikkel Harbo, Systematic Software, Denmark

I am calling it “radical management.”

It is similar to what in software development is called: “Scrum” or “Agile”

It is very different from traditional management:

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Radical management is a way of managing that can inspire—simultaneously—extraordinary productivity, continuous innovation, deep job satisfaction and client delight.

Radical management pulls apart the black box of traditional management .

It puts the pieces together in a way that creates continuous innovation and client delight.

It involves a wholly different way of thinking, speaking and acting at work.

It leads to workplaces that are more productive and more fun. These workplaces feel different.

What is radical management?

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Four big changes in

the workplace

Radical management has emerged as a result of…

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1. Semi-skilled work became knowledge work

Traditional management was developed as a way of getting semi-skilled employees to perform repetitive activities competently, diligently and efficiently.

Today the preponderance of work involves knowledge.

The “workers” now include doctors, lawyers, accountants and researchers with Ph.D.’s. They are often better educated than their managers.

This changes the relationship between those in charge and those doing the work.

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1. Semi-skilled work became knowledge work

“Workers throughout history could be ‘supervised’. They could be told what to do, how to do it, how fast to do it and so on.

“Knowledge workers cannot, in effect, be supervised. Unless they know more than anybody else in the organization, they are to all intents and purposes useless.”

Peter. Drucker: Post-Capitalist Society, p. 65.

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Percentage of workers (world-wide) fully engaged in their work:

21%

“Closing the Engagement Gap: A Road Map for Driving Superior Business Performance: Towers Perrin Global Workforce Study 2007-2008”. http://bit.ly/GTlIg

2. Workers are disengaged

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2. Workers are disengaged

Gary Hamel:

“Initiative, creativity and passion are gifts. They are benefactions the employees choose, day by day, and moment by moment, to give or withhold. They can’t be commanded.”

The Future of Management (2007)

When the firm’s future depends on what knowledge workers can contribute, lack of full engagement is a serious productivity problem.

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3. Customers became frustrated

The 20th Century firm wasn’t sharply focused on pleasing customers. By and large, it wasn’t necessary.

Customers are no longer willing to be treated as an afterthought.

There is a fundamental shift in the balance of power from sellers to buyers.

Now unless clients are delighted, they can—and will—go elsewhere.

The firm has to change its focus from producing goods and services to an explicit goal of delighting clients.

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It’s no longer enough merely to remove defects. The bar has been raised.

To turn customers into advocates and promoters of the firm’s goods and services, organizations must find new (and economical) ways to provide goods or services that are differentiated, noteworthy, surprising or remarkable.

They must continuously innovate.

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Delighting clients takes precedence over everything else—profits, turnover, market share, everything.

Unless the firm is delighting clients, and turning its customers into enthusiastic advocates and promoters of its products and services, those financial indicators are emblems of temporary success that won’t endure.

We are now entering the age of customer capitalism:

Roger Martin: “The Age of Customer Capitalism” HBR Jan-Feb 2010


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The first era—managerial capitalism—Business should be run by professional managers.

The Modern Corporation and Private Property, by Adolfe Berle and Gardiner Means. (1932)

The second era—shareholder capitalism—Every corporation should aim to maximize shareholders’ wealth.

Led by Jack Welch and GE since 1981

The third era, now emerging, is customer capitalism. The purpose of a firm is to serve clients.

Roger Martin: “The Age of Customer Capitalism” HBR Jan-Feb 2010

3. Customers are frustrated

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4. Default management model has stalled

The root cause is that the gains in productivity that came from conceiving work as a system of things that can be manipulated to produce goods and services has largely run its course.

The productivity gains accomplished in the 20th Century using that mental model of management were amazing.

“The system” has stopped giving.

The reasons are corollaries of the other shifts.

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Workers: Once a firm sets out to maximize the full talents, ingenuity and inspiration of its workforce, it discovers that it is interacting with people, not inanimate things that can be manipulated.

Any hint of manipulation is counter-productive. Managers have to be able to inspire genuine enthusiasm for worthwhile goals.

Customers:Once a firm sets its sights on the complex goal of delighting clients, it finds that it is dealing with a radically more complex challenge.

Delighting clients is something that can only be approached by increasingly close approximations, but never fully attained or assured.

4. Default management model has stalled

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American companies are “bloated, clumsy, rigid, sluggish, non-competitive, uncreative, inefficient, disdainful of customer need and losing money.”

Re-engineering the Corporation by Michael Hammer and James Champy, 1993, HarperBusiness.

It has been clear for two decades that the default mental model of management needs to be replaced by something different. But what?

Business process re-engineering wasn’t it..TQM isn’t it.KM isn’t it.Web 2.0 isn’t it.

What is “it”?

We need something totally different!

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Traditional management Radical management

Delight clients (& stakeholders)

Purpose of of the firm

Produce goods and services

How managers communicate

Top-down: Tell people what to do

Interactive: stories, questions, conversations

How work is structured Bureaucracy & hierarchy: Self-organizing teams

Impact on employees

Only 20% fully engaged

THINGS

High productivity & continuous innovation

PEOPLE

How work is organized

Single big plan: Client-driven iterations

Transparency Tell people what they need to know

Radical transparency:

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Seven principles

Seventy plus practices

The principles are more important than the practices

Focus on the principles: the practices will follow

Principles and practices

Implementation of radical management

Delight clientsSelf-organizing teamsClient-driven iterationsAdd value each iterationRadical transparencyContinuous self-improvementInteractive communications

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It is congenial to:

• knowledge management • innovation• high-performance teams• leadership storytelling• customers• new recruits into the workplace

What does radical management help?


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Where doesn’t radical management apply?• Where the work is best done alone.

E.g. writing novels, composing symphonies or being a lighthouse keeper.

• Where the work has a small knowledge component:

Firms with mainly unskilled labor may decide to organize the work in a traditional fashion as a hierarchical bureaucracy.

But as Toyota has shown, there is no such thing as “unskilled labor”: it simply means that no one has yet taken the time and applied the intelligence to figure out how to do the job at a higher level.


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The meaning of radical management

What is the meaning of

radical management?

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Most people enjoy delighting others.

When they are in charge of their own behavior they take responsibility for it.

When they are able to work on something worthwhile with others who enjoy doing the same thing, the group tends to get better.

When people work in short cycles, everyone can see the impact of what is being done.

When people are open about what is going on, problems get solved.

Innovation occurs.

Clients are surprised to find even their unexpressed desires are being met.

Work becomes more fun than fun.

Radical management is simple …

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The principles of radical management are simple to understand but difficult to implement.

It’s very different from traditional management

Managerial habits change slowly.

Anachronistic management methods continue to be taught in business schools and textbooks

Yet even mediocre implementation generates benefits.

Simple but difficult …

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Accountants will dwell on the measurable benefits.

Two- to four-times gains in productivity

Yet if we only focus on what is measurable, we may miss how the gains have been made.

We may overlook the fact that any group practicing radical management has a certain lively quality.

Once we understand this quality, we have a way of understanding what is happening at a deeper level.

The economic gains are major

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Radical management is more than a process.

It is more than a system.

It is more than a set of structures.

It is more than a methodology.

It’s a set of values, principles and practices that spark the passion, the excitement, and the insights of the people who work there

It ignites delight in those for whom the work is done.

It also happens to be much more productive than traditional management.

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Radical management

Questions?

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“Radical Management” is a book that will be published by

Jossey-Bass in

November 2010

For more details, go to www.stevedenning.com Or contact Steve at [email protected]