Tag Archives: organizational structure

“Zappos just abolished bosses” – Baloney

“The latest management trend to sweep Silicon Valley requires CEOs to formally relinquish their authority and grants special protection for every employee to experiment with ideas. It’s called holacracy and big name tech leaders have jumped on the bandwagon,” proclaims Gregory Ferenstein in his post on Vox, July 11, 2014.

“Zappos CEO Tony Hsieh announced that he will transition his entire Las Vegas company — with a billion dollars of revenue and 1500 workers — to holacracy by the end of 2014.”

Holacracy is described as the latest management craze and it is just that – craziness. The problem with craziness is that a manager or CEO will read his article and naively follow a prescription that will cost hard dollars and create untold havoc. Following Ferenstein’s prescription could be fatal.

Holacracy is a weasel word. It attempts to use new (made up) terminology to mask a vague notion of contrived credibility.

“Holacracy is management by committee with an emphasis on experimentation. The CEO formally relinquishes authority to a constitution and re-organizes everyone into decentralized teams that choose their own roles roles and goals,” explains Ferenstein. Think about this. What is delegation? Delegation is the assignment of accountability and authority to complete a task. Delegation shifts the accountability and authority to a “decentralized” team that chooses to complete the task (or not).

And believe me. If the “decentralized” team chooses not to complete the task and adopts a six hour lunch break, some manager will step in and say “Guys and gals, that is not what we had in mind.”

If you read this column regularly, you know I am a structure guy focused on the research of Elliott Jaques. This notion of giving a team direction (an objective) and providing them latitude (time span of discretion), within limits, to solve a problem is not a new notion. Holacracy is baloney (weasel word).

Ferenstein would argue with the words “within limits.” He would argue that Hsieh would set those limits free. That will not be the case. Hsieh will define those limits (discretionary authority). Holacracy obscures what is really happening using words without meaning.

“Advocates for holacracy argue that centralization of power suffocates innovation.” Here is the biggest problem with Ferenstein’s description – most managers, CEOs and writers about management DO NOT UNDERSTAND the purpose for hierarchy. They believe that management is all about centralization of power. Hierarchy has little to do with power. Hierarchy has everything to do with accountability and authority.

So, is Tony Hseih misguided in his actions and decisions related to his management structure? No. What IS MISGUIDED is the understanding of what he is doing and its description as holacracy. Over my next few posts, we will look closer at what Tony is doing and see that it is nothing new. And if Tony understood his decisions more clearly, in the context that I will describe, those decisions would be more effective in creating his image of an organization.

The purpose of an organization is not to broker power, but to get work done. I know that is what Tony wants to do. The question is, what does that structure look like? It ain’t holacracy.

Why Structure?

If you read this blog for more than a few days, you figure out pretty quick that I am a structure guy. Most people can recite the bus analogy, “Get the right people in the right seats on the bus,” but what most miss is the quote that immediately follows. “If you get the right people in the right seats (organizational structure) your issues related to motivation and management largely go away.” Jim Collins said that.

Just finished Creativity, Inc, by Ed Catmull (Pixar). “We made the mistake of confusing the communication structure with the organizational structure.”

In my world, Catmull is confused about organizational structure. Your organizational structure is your communication structure. The purpose of structure is to create those necessary communication channels for feedback loops, data gathering, discussion and decision making.
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What is the Level of Work in Disney?

From the Ask Tom mailbag – Related to yesterday’s post on Levels of Work. Thanks to Barry for posting.

Question:
I agree that the place to start is with the work, but I’m confused by your presentation of the structure of the work. This description seems to only apply to organizations that have five hierarchical levels. When Walt Disney was 20, he was president of a corporation called Laugh-O-Gram Films, Inc., that was established to make a series of silent cartoons. This was long before the creation of Mickey Mouse. All ten or so employees reported directly to Walt.

So, I agree with your last statement that the first step is to understand the work and the different levels of work, but I’m not sure the work necessarily matches up with the five levels you provided.

Response:
Barry, thank you for a great question. You are correct. Not every organization has five levels of work. The example you provide, Laugh-O-Gram films was likely a Stratum III organization. Each film was likely a Stratum II project, but to be successful, they had to develop Stratum III systems in their animation methods. Ten or so employees would be consistent at that level of organization.

As time went by, Disney’s successor corporations, either by organic growth or acquisition, grew in complexity. We can calibrate that complexity using Time Span, examining each successive level of work. Disney is now Disney-ABC Television Group after its acquisition of ABC-Cap Cities in 1996. Now, an international media company, its highest level of work is high Stratum VI or low Stratum VII.

Time Span – Where Do I Start, How to Implement?

From the Ask Tom mailbag -

Question - 
I attended one of your workshops on Time Span.  Since that day, the subject is like a song that I just can’t get out of my head.  At the same time, where do I start?  You described Time Span, or Requisite Organization as a comprehensive management system, but where do I start?

Response - 
A first introduction to Requisite Organization and its central kernel, Time Span, can be overwhelming.  But the first steps are not that complicated.  Over the past ten years, I have shared this concept with more than 5,000 CEOs and managers, and this is always the first question – Where do I start?

It’s all about the work.

There are many kinds of organizations in the world, groups of people organized around a purpose.  There are religious organizations, community service organizations, political organizations, and organizations to get work done.  Work is my focus.  It’s all about the work.

So, what is the work that has to be done.  Where do I start?  It starts by understanding the answers to these questions.  These questions are helpful, to understand the different levels of work required in any complex endeavor.  Where you start, is by understanding the work.  The first step is understanding, the first step is a design step.

  • (S-V) What is the superior purpose for the work?  At the end of our foreseeable future, what do we want to accomplish?  This is often called vision, mission, purpose.  Without defining this purpose, the rest of the list doesn’t make sense.
  • (S-IV) To achieve the superior purpose (vision, mission), what are the big milestones that have to be achieved?  What are the big rocks that have to be moved?
  • (S-III) To move those big rocks, what are the consistent, repeatable behaviors (habits, systems) that have to be created?
  • (S-II) Inside each system, what are the deadlines and completed actions (projects) that have to be completed?  What are the materials, equipment and people required to complete those projects?
  • (S-I) What are the fundamental tasks that have to be organized?  What is the production work that has to be completed day in and day out?

The first step is to understand the work, to understand the different levels of work.

Tribal Leadership?

From the Ask Tom mailbag -

Question:
I just picked up a book on tribal leadership that suggests hierarchy is an old fashioned, out dated approach to organizational structure.  Your workshop suggests that hierarchy is the only approach to organizational structure?

Response:
I hear these things from time to time, about how hierarchy should be abandoned and replaced with throwbacks to earlier organizational models and, as you can imagine, I am not overly impressed.  First, understand that there are many purposes for groups to organize.  Groups may come together to worship, promote political causes, live as families and communities.  Each may engage in different organizational structures, collegial, political, religious, family.  When I promote hierarchy as a structure, I am referring only to those groups of people organized to get work done.

And some work does not require a complicated structure.  But, gather any group of people together and give them a task to do, they will self-organize into a structure to get the work done.  First, a leader will emerge.  That person does not have to be assigned that role, they will simply emerge from the group.  If the group task requires several separate, simultaneous actions, people will gravitate to roles and cooperate, under the guidance of the leader to complete the task assignment.  If the task is of sufficient difficulty, requiring problems to be solved and decisions to be made, that organized group will take on the shape of a hierarchy.

I know there are organizations, designed to accomplish work, that self-proclaim a flat, tribal, non-hierarchical structure.  Baloney.  If the work is of sufficient complexity, and you examine the related tasks and people playing roles to complete those tasks, you will find hierarchy.

No tribe ever sent a man to the moon.

The Problem with Matrix Management

From the Ask Tom mailbag -

Question:
Our company has a Matrix management structure within a functional structure.  Each department is struggling with execution and achieving target results partially due to resource alignment challenges associated with the functional and matrix organization structure. 

Response:
Matrix structures were created, with the best of intention, to resolve priority conflicts.  A team member who is temporarily assigned or part time assigned to a project team has a new built-in conflict.  “Who is my manager?”

Do I take direction from my manager or my project leader?  And when there is conflict between those directions, who wins?

And that is how matrix management was born.  Unfortunately, the end result simply codifies the existence of the team member’s (now) two managers without identifying who the real manager is.  Further, it does little to bring clarity to the project leader’s authority when there are conflicts.  The team member is simply stuck.

Again, the intention to invent Matrix was pure, to identify managerial authority and project leader authority related to the same team member.  Mixed results emerged.  Luckily, projects have limited duration and so the undecided conflicts eventually go away.  Some declared that Matrix was effective and then made the fatal mistake.  The fatal mistake was thinking that Matrix should then be applied to the entire enterprise.

Matrix operates under the false assumption that a team member can have two (or more) managers.  Matrix does little to identify the managerial authorities or the limited cross functional authorities required by a project leader.

This perspective was clearly identified by Elliott Jaques in his research on time-span. The prescription is to dismantle Matrix, establish clear accountability in your managerial relationships and structure cross-functional working relationships for the following roles -

  • Project leader
  • Auditor
  • Monitor
  • Coordinating relationship
  • Service getting relationship
  • Collateral relationship
  • Advisory relationship

These cross functional working relationships accurately identify the limited accountability and limited authority required to successfully move work horizontally through the organization.

If you would like a pdf about cross-functional working relationships, titled “Get Rid of Your Dotted Lines,” just Ask Tom.

 

Can I Afford to Fill the Role?

From the Ask Tom mailbag:

Question:
Let’s say I buy into Elliott Jaques model of Requisite Organization. But I have a small company. As you describe the layers in the organization, it is clear that I am missing some key roles. But in this recovery (are we still in recession), I have to stick to my personnel budget. I cannot afford to hire the people necessary to fill all the roles.

Response:
If you were thinking about purchasing a machine, a major expensive machine, for your operations, and you were concerned about budget, how would you make that decision?

Actually, it doesn’t matter whether you are concerned about budget, the answer is still the same. You would purchase the machine only if it were necessary for the operation. I don’t know of a single business owner or manager who would put something in place unless it was necessary.

I use necessity as a driver for many decisions. Is that machine necessary? Is that role necessary? If your business model requires a role, yet your budget will not allow the hire, then you have to modify your business model.  Or you might have to stretch a person across two roles.  And that person might be you.

Rather than questioning the validity of organizational roles and layers, let Elliott’s model help you understand what is missing and what modifications you might have to make until your company gets back in the zone of profitability and growth. You will get there faster.

It’s All About Work

Good friends of mine, Stephen and Chris Clement have been working on a new book for the past couple of years. It’s All About Work is now available. Here is why you should buy it.

In 2001, I was introduced to the research of Elliott Jaques, and those of you who know me, describe this research as a near obsession for me. I have collected most of Elliott’s early manuscripts, which, over the decades transformed into more polished writings. One book, in particular, caught my attention, Executive Leadership. It was written almost as a manager’s handbook by Elliott Jaques and Stephen Clement. Elliott and Stephen met during a project with the US Army, under the direction of General Max Thurman. Stephen was assigned to the project from the military side to assist in the compilation and interpretation of data collected during the research period.

Following the US Army project, Elliott was summoned by Sir Roderick Carnegie to travel to Australia to help the CRA Mining Company (now known as Rio Tinto) in its organizational struggles. Because CRA would have access to some of the findings from the US Army project, Max Thurman assigned Stephen Clement to accompany Elliott on his assignment down under.

Knowing that he and Elliott would be spending several months together, parsing data over dinner, Stephen invited his son, Chris Clement to join in the excursion. It was out of these projects, that Executive Leadership was written.

Fast forward a few decades. Elliott passed away in 2003. Stephen Clement is now in private consulting. You can see his client list by reading the testimonials on the cover of their new book, Office Depot, Textron, Con Agra Foods, Ford Motor Company, Pepsi. I can imagine rekindling the conversations between Stephen and Chris revisiting the principles established in Elliott’s research and how they have been applied in both large and small organizations.

While some may think that these principles are only for the large organization, I think they are even more important for the small organization. Standing outside the shadow of this research, Chris Clement has run several small businesses and is able to demonstrate how they apply to the manager in the trenches. Large organizations, when faced with a problem, can throw budget and people at the challenge. Small organizations typically have only one chance to make the right move.

My book Hiring Talent focuses specifically on identifying levels of work in the hiring process. It’s All About Work provides more of the backstory and how levels of work operate in the overall structure of the organization. Here is the link, buy it now – It’s All About Work.

Designed Around the Work

“I know you want me to be the nice guy,” Jim Dunbar pushed back, “that I would have a better organization if I wasn’t so hard on people, but at the end of the day, we have to get some work done around here.”

It stings against political correctness, but if you consider, for a moment, that statement is true, what changes?

What if, it is all about the work? What if the purpose of your organization is to actually get some work done, solve a problem, execute a solution? It’s not for every organization, only those with the intended purpose to get work done, complete a task, achieve a goal.

Some organizations are designed around other intentions, religious organizations, political organizations, educational organizations, collegial organizations, all with purpose, all with goals.

What if the purpose of your organization was to get some work done? What if your organization was designed around the work?