Management is Broken beyond Repair

Photo 518443 © Mark Scott – Dreamstime.com

The current management paradigm is broken beyond repair. As the 21st Century progresses it becomes increasingly clear that the top-down hierarchy of control based on power, known for centuries, doesn’t work in the current environment – especially in areas dominated by knowledge work. 

 

When the hierarchical organization is combined with the misunderstandings of the modern version of Taylorism with its inflated view of big up-front planning and budgeting, its infatuation with key-performance-indicators and its separation of thinking and doing, the result can be catastrophic failure in a crisis or a period with rapid change.

 

Coming out of the Corona crisis. Organizations find their old models shattered and budgets blown to “kingdom come”. We need a new open, effective and respectful leadership paradigm that fosters much needed Business Agility and allows the whole person in an organization to engage in serving the stakeholders1. We need a paradigm based on willingness to serve, not on power. We call that Agile Lean Leadership (ALL).

Some Key observations

  • According to Gallup about 85% of the workforce is disengaged at work; about 18% of these people are actively disengaged2, that means actively working against the purpose of the organization. The estimate is that it costs the US $7 trillion per year.
    • Agile Lean Leadership offers a radically improved model, where people can and do engage to bring their full capabilities to bear on work.
    • It is hard to be specific, but a fair assessment is that this new Agile Lean approach is twice as effective as traditional models.
  • In larger organizations and especially in the public sector, bureaucracy is taking a heavy toll on the bottom line. In a study by Gary Hamell from 2017 he estimated that the US spent around $3 trillion unnecessarily out of its gross national product of $20 trillion3. About 14-15% of effort is wasted on bureaucracy.
    • Our claim is that these numbers are not too far from reality in larger organizations.
    • Furthermore we claim that with Agile Lean Leadership you can reduce bureaucracy and remove a great deal of unnecessary cost.
  • In larger projects and service organizations it is estimated that 50 – 75% of the effort is wasted because what is produced is not actually required or beneficial to the user. There are different sources for numbers in this range4.
    • This apparently is largely due to misunderstanding requirements, delivering something that someone – but not the user – thought was a good idea and finally because the world has changed since the original requirement was agreed and nobody has discovered this change.
    • It is our claim that if we build in primary focus on the value stream in the organization a lot of this waste can be avoided.
    • Furthermore by having clear roles and a dedicated person with focus on value generation (the Product Owner in Scrum) another chunk of waste can be removed and value generated.
  • Many customer surveys conclude that in general about 50% of large company customers would leave if they could find a tolerable alternative. In general, organizations just do a lousy job of keeping customers even reasonably satisfied. There is a lot of effort spent in getting customers, but not so much on keeping them, although a sale to an existing customer typically only costs 10% of a sale to a new one.
    • We claim that the experiences from the project level can be extrapolated to the organizational level. When working the Agile Lean way, over 75% of stakeholders will be more satisfied5. And the four key parameters to quote are:
      • Ability to change, Business Agility. An Agile Lean organization is much more resilient and maneuverable, it can handle change, over 90% of stakeholders say so.
      • Everything about products and services is much more transparent, over 80% say so.
      • Stakeholders experience greater alignment with the organization, we are moving in the same direction, based on common understanding, over 65% say so.
      • Risk is reduced, much fewer failures, more than 66% say so.
  • The power hierarchy has an uncanny ability to attract people with potential and slumbering social disorder behaviors. Depending on the actual research you look at, you get different numbers, but it is fair to say that apparently about 20% of people above ground level in management hierarchies exhibit psychopathic or at least narcissistic traits or disorders. Furthermore that accumulation of power has been demonstrated to quite often change people’s personality and behavior for the worse. Thoroughly ethical people can develop a clear self serving attitude based on a sense of entitlement when getting into positions of power.
    • We claim that the focus on the value stream (as opposed to primary attention to position and rank) in Agile Lean Leadership and the checks and balances built into the roles, will prevent or at least dampen those tendencies, which leads to better conditions for the colleagues involved. It seems that the people who retain their integrity also in positions of power and authority, are those who nurture a strong drive to give and to serve others. 
    • Between 40 and 50% often report that when changing jobs they do it because they want to get away from a boss or a dehumanizing bureaucratic system. Organizations lose enormous amounts of talent this way.
  • Traditional Management gets people to comply by focusing on extrinsic motivation, bonuses, KPIs and perks, plus the prospect of promotion up the power ladder. On the other side of that coin is fear, fear of losing the job, being harassed or frozen out.
    • For more than 70 years we have known that strategy does not work. “If there is fear in an organization – the numbers are cooked” said old W. Edwards Deming. So many organizations make strategic decisions based on bogus numbers because of this. Who knows how to quantify the losses. Furthermore people controlled by fear have survival as their primary objective and cannot participate in learning.
    • We claim that by building a workplace on the  principles of Agile Lean Leadership, people can let their intrinsic motivation of purpose, autonomy and mastery get into play. People can operate in an environment of greater psychological safety. This results in:
      • Better job performance
      • Less employee turnover, people simply stay longer
      • Greater willingness to take on extra job roles
      • Less stress and sick leave

Now adding this all up, there is sufficient evidence that a huge factor of improvement is possible. If all parameters are taken into account, perhaps upwards of a factor of 10. It is however dangerous to try to reduce this whole system view of the organization to one simplistic performance number – the bottom line. 

So what is Agile Lean Leadership

Agile Lean Leadership is a set of values, principles and practices that help organizations get started on their journey towards resilience and sustainability. It  is a mindset that governs how we confront challenges, opportunities and decision making, particularly when working together with others in organizations. It switches the focus from the traditional power based hierarchy to value stream in a network of teams. The values are:

  • Purpose, clear and worthwhile
  • Sustainability in all things
  • Resilience in all things
  • Respect for people

These are then expanded into some 16 practical principles to follow:

  1. At every level, be very clear about the purpose, values and constraints. 
  2. Balance the value created for customers, employees, society and stakeholders. 
  3. Hold and display the moral high-ground with integrity and strive to build trust. 
  4. Remember that the final judge of the quality of a product or service is the customer. 
  5. Sustain an unrestricted flow of information up, down and sideways. 
  6. Be in dialog with the customers to fully understand how to benefit and serve them persistently.
  7. Shorten the distance of understanding between the customers and the organization. 
  8. Create optimal visualization of models, goals, status, progress and impediments. 
  9. Strive to see and understand the facts in their full context as a system. 
  10. Build up and sustain commitment to constant improvement and learning. 
  11. Strive for collegiate decisions, pushing responsibility as far out as there are people to carry it. 
  12. Balance the need for structure and standards with the need for adaptability and innovation. 
  13. Allow people pride of workmanship and a certain autonomy, building them up to their maximum potential. 
  14. Be willing to serve colleagues, subordinates, customers and suppliers; leadership is a service. 
  15. Keep the long perspective on people and relationships; create psychological safety. 
  16. Be transparent and never use fear as a leadership instrument, as fear leads to distortion of data or systems. 

Finally there is a lot of practical advice and patterns to follow that will lead and nudge the organization in the right direction. One topic that almost inevitably comes up is: what happens to the people currently in the hierarchy? The answer is that they typically take on leadership or expert roles in the value stream; the organization has to make it very visible that this is at least as appreciated and attractive as the hierarchy positions were. Read more about this in our whitepaper here… or join our training program, read more here… 

Wrapping up

I hope the arguments above at least provoke a desire to have a qualified conversation around these matters. Agile Lean Leadership may be counterintuitive for experienced hierarchy inhabitants, but the prospect of large bottom line gains should be attractive. Contact us to get to know the details of Agile Lean Leadership. 

I rest my case!

Summary of key stats

  • 85% of employees are disengaged from the main focus of their organization
  • 50% of customers would prefer an alternative supplier if it were available
  • 50-75% of effort spent on product features and qualities are not correlated to customer requirements
  • 15% of the economy is consumed with unnecessary bureaucracy
  • 20% of managers in traditional power hierarchies exhibit undesirable self serving tendencies

Agile Lean Leadership 

  • Can double organizational effectiveness in average situations
  • Can decrease cost of customer satisfaction by up to 75%
  • 90% of stakeholders say Agile makes organizations more resilient
  • 65% of stakeholders say Agile aligns all stakeholders more effectively
  • 66% of stakeholders say Agile reduces the risk of product failures

1 Customers, citizens, users, those we serve.

2 https://www.gallup.com/workplace/231668/dismal-employee-engagement-sign-global-mismanagement.aspx

3 https://hbr.org/2017/05/assessment-do-you-know-how-bureaucratic-your-organization-is

4 Standish Group research then shows that of projects that were delivered using a traditional / waterfall style approach 47% of all features were never used and 19% of features were rarely used. https://www.quora.com/How-much-wasted-time-and-effort-is-there-in-a-typical-large-IT-department

5 https://www.amazon.com/Agile-Estimating-Planning-Mike-Cohn/dp/0131479415

 

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