Liquid Leadership — reinventing management
Hierarchical leadership structures? In our pluralist society and dynamic business environment, this concept is rapidly eroding. However, management does not have to be understood as a rigid power and
decision-making function. Viewing it as the collective ability of an organization opens entirely new opportunities. This applies in particular to managers who follow the concept of liquid leadership.
The role of the manager, leader or executive, we will be using these terms synonymously, is still under fire. In 2019, GALLUP conducted a worldwide survey on employee motivation. One of the results: incompetent managers are the largest cause of frustration. GALLUP estimates the resulting annual economic damage at up to 122 billion Euros.
GALLUP has determined this to be the case repeatedly in recent years and no improvement seems to be in sight. In Germany, 85% of employees will only work to rule or have already mentally resigned. It is therefore not surprising that fewer and fewer people consider the idea of taking on managerial responsibility to be a professionally attractive development perspective. A study conducted by the management consulting firm BCG in the same year showed that in Germany only 7% of respondents want to take on a management role. In contrast, in China, that number is 47%.
These are devastating and hopeless developments in every respect. Furthermore, this trend reinforces an intensifying tendency that has been observable across all industries for roughly the past ten years. Self-organizing forms of working are being established. The executive himself as an organizational factor of work is losing his relevance. In the course of this trend, alternative management models such as the “servant leader” and the “coaching manager” are emerging. They describe a novel but relatively nebulous understanding of management.
In today`s digitized world it seems as if the era of management has come to an end and it is time to abandon the traditional role of the executive. Or the manager and his contribution as such must be reinvented. However, before we throw in the proverbial towel, which is always the easiest thing to do, we would like to present an alternative. But first, let us do a little historical digression to understand how we came to this point.
A Bit of History
The origins of the form of today`s typical organizational structures and their management hierarchies lie in the catholic church. At the head of the organization is the pope who reigns over the cardinals. They rule the bishops who in turn preside over the priests. Those then tell the common folk how it must live and behave. Obviously, the character and impact of the ecclesiastical organizational structure in Western Europe cannot be compared to that of the medieval ages anymore, but that is not our topic today. However, in terms of organizational structure and hierarchy, companies are still very comparable to the church. At the head is the CEO, so the chief executive officer. Based on his status he grants the decision-making authority to the other officers. From them, it is passed on to the middle management and eventually reaches department or team leaders. The individual employee is subordinate to a supervisor who determines the work content and work method of the employee. Usually, he also possesses the disciplinary power from an employment law perspective.
Unfortunately, this structure does not document how an organization functions and performs. Rather its sole focus is on how the power to make decisions and how, as Erich Fromm terms it in his book “Escape from Freedom”, irrational authority is distributed.
The Consequences
The result of the organizational form described above is that a company is only as capable and adaptable as those people who are granted power by the hierarchy enable or allow it to be. Therefore, in such an organization, the managers are the limiting factor. The practiced management model that is geared towards supervision and control emanates from them. It is not focused on fostering, enabling, changing, adapting, or empowering. It is this historically justified situation that is the central criticism of hierarchical organizational structures in the context of the digital revolution. The dynamics that are present in the economical environments of all companies have unsparingly demonstrated the performance limits of hierarchical structures. They enforce the necessity to develop alternative concepts. The previously mentioned trend towards self-organized forms of cooperation represents this exigency for new development.
The Alternative
Now, what could a newly developed management model in a self-organized company look like? Is management even necessary here? To answer this question, we must take a leap of faith and separate ourselves from the current perception of management and how it is supposed to be practiced. We must focus on the contribution that management makes in the context of a commercial enterprise. For this deconstruction, we use the cybernetics comprised within the systems theory. In science, cybernetics describe the functionality of complex systems or, as Norbert Wiener defined it in 1948, “the control and the communication in the animal and the machine”.
What does a complex system, such as a company, need to function? Wiener`s colleague Stafford Beer characterized it in 1972 with his Viable Systems Model.
First, it needs the central and operational ability to render a service, for example, the craftsmanship of a carpenter to design and manufacture tables and cabinets. Furthermore, additional elementary organizational abilities are needed, to be able to exist and develop as an enterprise system.
In highly simplified terms, these are the following five:
1.) Creating purpose, agreeing on rules, and enabling compliance with them
2.) Adapting and developing existing and new skills and requisite capabilities
3.) Ensuring that provided framework conditions and resources, as well as risk prevention measures, are appropriate
4.) Enabling internal and external communication
5.) Measuring performance level and balance
Being self-organized does not mean being left to one`s own devices
So, can you already tell what this all boils down to? Before we tie up the loose ends, a brief digression into the topic of self-organization. What is it exactly and which benefits is it supposed to offer? That always depends on the perspective. The entrepreneur usually hopes or expects that employees perform better and generate more output in a shorter time and at lower costs than in a traditional hierarchical work structure. One must be careful with this interpretation; otherwise, it quickly leads down the same rabbit hole of work intensification that classic reorganization programs typically strive to achieve.
From an employee perspective, the main goal is to win back initiative and responsibility for his work methods, work content, and performance. One could also understand it as the emancipation of the employee from the parent-child relationship that is persistent in hierarchical corporate structures.
The uniting factor of both perspectives is the notion of self-organization. However, depending on the perspective, different definitions are used. From the employer`s point of view, employees should organize the implementation of necessary tasks by themselves. These are given to them by a supervisor or a different authority that is also called business owner or product owner in modern work lingo.
The opposing point of view is that employees are the ones who should determine which tasks are necessary. They themselves are the technically competent instance and, therefore, they are able to assess which requirements are to be implemented and how. Methods for self-organized collaboration are supposed to support this process. In this context, the product owner is solely understood as a speaker and representative. He represents the market requirements and customer demands that must be taken into account.
No matter how plausible both these perspectives may sound, neither one has anything to do with self-organization. Self-organization constitutes the ability of a complex system to purposefully and immediately (re)establish an order, under the effect of dynamic influences. For example, imagine a team of product developers, so a complex system, working at a pharma-company that finds out that two of its most important pharmacologists are leaving to work for a competitor. Furthermore, the competitor filed a patent that makes the team`s own development work redundant. These are dynamic, hence unpredictable, influences that affect the existing order in the system. Perhaps they would even shake its foundations. The ability to react to such impacts is what Heinz Förster termed the phenomenon of self-organization. One can recognize it by the team`s capability to establish a new order. Can it shift its work focus to an alternative product? Can it develop and implement a different strategy that compensates for the new dynamics?
The question is: How can our shaken pharmaceutical team of product development experts establish a new order in the shortest time possible? At this point, we invite all current executives and those who want to become managers in the future, to support the team. As an approach, we propose finding answers to the following questions, that may already be familiar to you.
1.) Is the purpose of our work still given or do we have to adapt it to the new situation? Which agreements do we have to make between ourselves to remain capable of acting or becoming capable again?
2.) What expertise and which skills do we need to develop or adapt in this situation? What are our strategy and tactical measures for further proceedings?
3.) Which framework conditions do we need to be met to accomplish the purpose we defined for our actions, develop our skills, and implement the strategy?
4.) Which communication contents and channels must we use or establish to communicate effectively, internally, and with our external environment? How do we coordinate our approach?
5.) Which KPIs can we use to measure the progress of our procedure and recognize the necessary adaptations of our considerations?
Management is existential, the Manager is not
We hope that this little journey of thought into the history of management, hierarchical organization structures, and the dynamics of a digitized economy was helpful. Perhaps we were able to give you an idea of how essential and existential management skills are in a company. Furthermore, we hope that we were able to outline the self-image that is crucial for people to have, for management to enable self-organization. The combination of both aspects leads to manifold effects. The entrepreneur finally transforms his business into an agile organization. The employee receives a workplace that he wants to get involved in again at last. And the manager has hopefully found a development path: away from the irrational authority of his hierarchical status and towards the rational authority of a forward-looking and meaningful management competence. The rigid form of power management has fallen out of time. In this way, it can be transformed into a liquid form of promoting self-organization. That is what we understand by the term Liquid Lead and Liquid Leadership.
The Authors
Andreas Slogar worked in 24 countries in the USA, Europe, the middle east and Africa and has, inter alia, as CIO gained significant expertise in strategic and operative management. He is the founder of the Blue-Tusker expert network. All fees collected by the network are donated to charitable organizations. As an expert Slogar is specialized on the transformation of entire companies into agile states of collaboration. He authored a variety of scientific articles and the book “Die agile Organisation”, which was published by the Hanser Verlag.
Lukas Jochem recently graduated from Münster University with a BSc in Business Administration and is currently doing an MSc in Finance and CEMS International Management at ESADE Business School in Barcelona. He worked together with Andreas Slogar on an agile transformation project in a large German insurance company.
