By Rod Collins
In a recent global survey of more than 1,700 chief executive officers, researchers at IBM found that the CEOs identified empowering employees through values as an essential driver of high performance. When we think of values, what usually comes to mind are virtues, such as integrity, honesty, fairness, and trust. These virtues are the attributes that are generally reflected in well-meaning corporate mission statements. Unfortunately, in far too many instances, these values are more “talk” than “walk.” Despite management’s best intentions, corporate mission statements rarely become corporate behavior templates. Why, if values are so important to performance, do so many organizations have trouble walking the talk? Perhaps it’s because managers are focused on the wrong values.
Virtues are like blooming flowers. They are the most visible and the most defining part of a plant. But flowers are also the plant’s most vulnerable part. Without solid roots, fertile soil, and plentiful water, flowers quickly shrivel and die. So it is with business organizations. Wherever we find organizations that are blossoms of virtuous values, we are likely to discover the fertile soil of a collaborative culture rooted in a subtle set of structural values.
An effective business organization is the intersection of three workable models: a business model, an operating model, and a management model. In defining these models, managers generally need to make a series of structural value choices among five sets of paradoxical values:
Serendipity vs. Planning
Self-Organized vs. Centrally Organized
Emergent vs. Directed
Simple Rules vs. Detail Coordination
Transparency vs. Control
In approaching these choices, the best option is usually a balance between the two paradoxical values rather than a selection of one value and the dismissal of the other. To understand how these choices work, let’s borrow an analogy from the field of psychology.
The late psychologist Erik Erikson developed a model of human development that postulated that every person moves through a progression of eight psychosocial stages to reach her full development. The developmental task of each of these stages is the resolution of the tension between two paradoxical psychosocial values. So, for example, in the first stage— Basic Trust vs. Basic Mistrust—an individual needs to choose between these two values in approaching and dealing with other people. In the healthy personality, this is not an “either/or” choice but rather a “both/ and” balance. While it may appear at first blush that trust is a virtue and the obvious choice in this paradoxical pair, keep in mind that a person who is always trusting is often regarded as a “Pollyanna.” Similarly, one who is always mistrusting is considered to be paranoid. The healthy person develops a sense of both trust and mistrust, but not necessarily in equal parts. In striking a balance between the two values, the psychologically fit person has a clear preference for trust over mistrust. In other words, while she usually leads with trust, she is savvy enough to know when to mistrust.
The dynamics of this analogy apply to organizational development. As businesses move from the entrepreneurial stage to growth and then to maturity as large established companies, their leaders need to make a series of structural value choices. In resolving these paradoxical value choices, they need to strike a preferential balance of one value over the other.
Since their inception well over a century ago, corporations have clearly preferred the values shown on the right in the above list to those on the left. Over time, these preferences have become so solidified that many, if not most, traditional organizations today find themselves in a position where they value only the items on the right to the exclusion of those on the left. This explains why the longstanding tasks of management have been defined as planning, organizing, directing, coordinating, and controlling. It also explains why in the typical top-down hierarchical organization, there are hardly any simple rules and little self-organization and transparency, and why serendipity and emergence are foreign concepts. This also explains why so many companies have difficulty in walking the talk when it comes to virtuous values. It’s hard to be trusting when the dysfunctional dynamics of bureaucratic silos foster intense internal competition in a zero-sum game for resources and control.
Now, a new breed of business leaders who are making very different value choices are providing increasing evidence that the blossoms of virtuous values are possible only when nurtured in the soil of the structural values shown on the left. Richard Sheridan, the cofounder and CEO at Menlo Innovations, is a trailblazer who’s built an extraordinary workplace by emphasizing the values on the left.
A New Way of Working
In his best-selling book, Joy, Inc.: How We Built a Workplace People Love, Sheridan shares his experience of creating a very different type of organization. Menlo is a software company located in Ann Arbor, Michigan. When you walk into the Menlo office, the first thing you will notice is that there are no offices. Everyone sits at long tables arrayed in a large open room where people work in pairs—two people sitting together at one computer, working on the same task at the same time. These pairs are rotated on a weekly basis so that over time everyone has a chance to work with each other. Pairing, rotating, and working in an open environment provide ample opportunities for Menlonians, as they like to call themselves, to leverage the power of serendipity to delight their customers. According to Sheridan, “a culture that embraces and honors its people with a changeable space encourages serendipity. This may be the single greatest value of wide-open space.”
Menlonians are heavily involved in organizing their work. A core discipline at Menlo is that every project is captured in a sequence of story cards produced by the people who will actually do the work. Once a week, all the workers come together as a group in a weekly ritual where the different teams do time estimates for the various story cards. Because the people closest to the work are defining the parameters, these estimates are more reliable than arbitrary dues dates assigned by harried managers. The story cards and the time estimates are posted on a common Work Authorization Board so teams who finish projects more quickly than expected can support other teams with work in progress.
One of the ways Menlo builds the value of emergence into its structure is through the innovative practice of High-Tech Anthropology®. HTA’s, as they are called, engage with clients in their native environments to better understand the full scope of needs behind the client’s software requests. Their job is to listen, observe, and most importantly, to discover unrecognized needs, unusual uses of their products, or new opportunities for creating value. Their learnings are converted into stories that may inform future projects or enable new innovative lanes of value creation.
Unlike their traditional counterparts, the project managers at Menlo don’t tightly coordinate the details of day-to-day work. That’s left to those who actually do the work. Menlonian managers are facilitators whose primary job is to be the custodians of the simple rules behind Menlo’s extraordinary success. The company’s prime rule is that nothing gets done on a client project unless it’s written on a 5½-by-8½ index “story” card. Another rule is that each story card must be estimated by the people who do the work. As noted above, these are the two rules that enable Menlo’s practice of self-organization. A third rule is that story cards are not placed on the Work Authorization Board unless specifically authorized by the client. And finally, project managers are responsible for assigning the specific Menlo pairs for each of the authorized tasks. These later rules assure that there is no ambiguity around assigned work.
Transparency is the underlying context for everything that happens in Menlo. The wide-open office and worker involvement in defining work parameters, along with the unusual practice of the employees being responsible for interviewing, hiring, and onboarding all new hires contribute a sense of belonging and ownership rarely found in the workplace.
Changing how we manage is not easy, given the pervasive presence of hierarchical management and its preference for centralized command and control by an elite few. While this traditional management may have worked well in slower more stabile times, emphasizing the values on the right could be a formula for failure in a rapidly changing world. Sheridan’s successful experiment in giving preference to the values on the left provides a practical example of how and what to do to build an organization that’s able to keep pace with a rapidly changing world, while at the same time creating a workplace where people love to come to work.
This article was originally published in the Huffington Post.