What are senior executives afraid of? Loosening the reins.

Stowe Boyd
Jul 18 · 8 min read
source: Susan Yin

Three MIT researchers — Deborah Ancona, Elaine Backman, and Kate Isaacs — clearly lay out a dilemma at the heart of today’s management, or, perhaps more apt, in the heart of today’s senior managers:

Nobody has really recommended command-and-control leadership for a long time. But no fully formed alternative has emerged, either. That’s partly because high-level executives are ambivalent about changing their own behavior. They know perfectly well that their companies need to become more innovative — and they suspect it won’t happen unless they’re willing to push power, decision making, and resource allocation lower in the organization. But they’re terrified that the business will fall into chaos if they loosen the reins.

The trio of researchers decided to parse this fear, and began by examining two organizations with a history of continuous innovation: PARC, Xerox’s R&D company, and W.L. Gore, the maker of Gore-Tex. They related their findings in Nimble Leadership, but as we shall see, ‘nimble’ may not be the right adjective, as I indicate in the title of this post. The right term is probably ‘emergent leadership’.

I was struck by the similarities in organizational structure between the innovators they studied, and Haier. I think this is an example of convergent evolution since Haier has moved explicitly to an ecosystem model of operations, while the word ecosystem does not appear in Nimble Leadership, at all. The convergence is, I believe, the result of an unrelenting focus on continuous innovation, and the impact of that focus on managerial philosophy and practice.

Revisiting Lee Bryant on Digital Leadership

In a recent post, Lee Bryant on Digital Leadership, I discussed an organizational structure for Haier presented by Lee at the recent SocialNow conference in Lisbon, which I attended. Here’s the graphic he showed and his commentary:

Where digital technology can play the most important role, I think, is in automating, orchestrating and connecting the many services and processes that make up the value chain of an organisation to create a platform on which agile teams and people can be free to work in a more autonomous and creative way — a structure that is more machine-like and automated at the back-end to enable the organisation to be more human and adaptive at the front-end.

I suggested that a concentric circle model might be better, and put the customer at the center of the ecosystem (with the platform implied underneath the circles):

Lee’s model and my model share important characteristics, however: three levels of operational organization. These are

  1. Value-creating functions — The second concentric circle holds Haier’s microenterprises, small and agile ‘organelles’ within the organizational body, directly and obsessively engaged with customers both to deliver value (and receive payment in kind) and to gain new insights into customers needs and wants. This is the learning engine and the starting point of user-centric innovation.
  2. Shared services — The third concentric circle is the shared services layer (node microenterprises in Haier terminology), which provides goods and services to the value-creating microenterprises, enabling them to focus on the customer.
  3. Servant leadership — The fourth and final concentric ring is servant leadership, executive management, which creates the context for the entire organization and helping lay the groundwork for everyone’s success.

Three Kinds of Leaders

The MIT researchers wound up with a three-tier model for leadership at the companies they studied because of their history of continuous innovation:

First, we identified three distinct types of leaders. Entrepreneurial leaders, typically concentrated at lower levels of an organization, create value for customers with new products and services; collectively, they move the organization into unexplored territory. Enabling leaders, in the middle of the organization, make sure the entrepreneurs have the resources and information they need. And architecting leaders, near the top, keep an eye on the whole game board, monitoring culture, high-level strategy, and structure.

If we normalize their ‘levels’ of the organization with a concentric circles approach, with the customers at the center, there is an obvious equivalence, which lines up like this:

I believe that the characteristics of the three kinds of leadership line up with the sorts of leadership in the concentric organizational model for Haier and its cultural context (see Hamel and Zanini on The End of Bureaucracy). The researchers’ descriptions of cultural context sound exactly like Haier:

Both PARC and Gore integrate cultural norms — many dating back to their earliest days — that support innovation and resilience. The most important of these might be a shared belief that “leadership” should rest with whoever is best positioned to exercise it, regardless of title.

The three leadership roles, along with the cultural norms, have allowed the two organizations to become self-managing to a surprising degree. Many employees define and choose their own work assignments. New products and services are dreamed up not by high-level strategists or “innovators” housed in a separate incubator but by teams of employees who are free to walk away if a project loses steam. Early-stage funding goes to the projects that attract staffing; as success escalates, more resources flow in. And because lots of small bets are being made and employees are choosing which ones to back — that is, which project teams to join — the companies themselves become collective prediction markets that pool talent around good ideas and drain it from bad ones.

And here’s the real beauty of the system: The mechanisms that enable self-management also balance freedom and control. The companies function efficiently and exploit new opportunities quickly even as they minimize bureaucratic rules.

The researchers detail the characteristics of the three kinds of leaders, but rather than summarizing that, let me draw a few segments from an interview they gave to Curt Nickisch:

Kate Isaacs: In these sorts of organizations, everyone truly feels that they are empowered and they do step up and lead in their domain of expertise and they even step out of their domain of expertise and stretch into new areas of experience, and they’re supported in doing so. And so, there’s a constant developmental process going on at these organizations that’s supported by the culture and by their peers, and by other sponsors of their development.

So, when we use the term nimble, we mean that the leadership itself is appropriate for whatever needs to happen in the moment inside the organization and the organization as a whole is able to quickly adapt to changing market conditions, what they’re sensing from what their customers want. If a customer is unhappy, they’re able to quickly respond to that because everyone’s really empowered to step up and do what’s needed to execute according to their strategy and what their customers need and want.

Aha. So instead of nimbleness, what Isaacs is describing is emergent leadership, which I defined like this a few years ago:

Emergent leadership: the ability to steer things in the right direction without the authority to do so, through social competence.

Laszlo Bock, who was the head of people operations at Google, has stated that emergent leadership is the second most important criterion in hiring there, after general cognitive ability.

Returning to where we began, what about senior executives’ fear about letting go?

Deborah Ancona: I do a lot of executive education and almost every company we see is wanting to make this move from bureaucracy, commanding control to more nimble distributed learning network, whatever word you want to use, kind of organization.

This is in keeping with a lot of research being done now that executives feel like there are going to be major changes in their industries and in their environment in the coming three years — 76 percent of people, of executives believe this compared to 26 [percent] last year. So, the sense that there’s a speed up of change in the environment is going to require a different kind of organization.

The emergent organization, one with three tiers (concentric layers) of leadership. And the executives need to be guided into the new roles that will play in the emergent organization, particularly the architecting leaders, who have to be the driving force behind the transition to emergence, like Zhang Ruimin has been at Haier.

Deborah Ancora: First and foremost, the architecting leaders are creating the game board. And by game board, we mean the structures and culture necessary for the entrepreneurial leaders to be able to create and follow through on their ideas and for the enabling leaders to be able to do their jobs.

So, the architecting leaders are creating the game board that facilitates those other leaders doing the jobs that they have to do. They’re the keepers of the culture. They are very, very mindful of what the values of the organization are and what the rules of engagement are.

Ironically, the architecting leaders are the ones who are architecting change and yet, they’re in an organization where they’re not dictating because that’s not how these organizations are run. So, before they’re able to make change, first of all they have to have a reputation for being a great leader and caring about the company.

Second, they do a huge amount of consultation with members of the community to make sure that they understand why this change is necessary and why it’s a good idea. They have to listen to people who don’t agree with the change and respond to that.

Kate Isaacs: One of their functions is to, I would say, knit together the emergent product ideas and new innovative ideas into a coherent organizational strategy. And the architecting leaders have to be good “sense makers” to use a term that Deborah has been developing for a long time, in that the people who are at a more senior level have their eye on global trends, market trends, technological trends, they’re talking with other senior leaders, economic trends.

These aren’t things that maybe everybody in the organization are paying attention to, and so they’re taking all of that information about what the competition is doing, et cetera. That information resides in their heads and then they’re watching all the innovative ideas that are bubbling up throughout the organization and they’re knitting all that together into an, it’s really an emergent, strategic process.

I knew at the outset we would land on emergent leadership, in the final analysis. How? To become a company driven by continuous innovation, emergent leadership is a necessity, not an option.

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On The Horizon

the economics, structure, and behavior of platform ecosystems

Stowe Boyd

Written by

Founder, Work Futures. Editor, GigaOm. My obsession is the ecology of work, and the anthropology of the future.

On The Horizon

the economics, structure, and behavior of platform ecosystems

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