Category Archives: Organization Structure

Teal and Levels of Work

Followers of this blog know its underpinnings are in research conducted by Dr. Elliott Jaques from 1952 to the time of his death, March 8, 2003. From this period of 50 years, he published 23 books and countless articles under the moniker Requisite Organization related to his research on levels of work.

During that time into present day, there have been numerous trends in management, one specific track I plan to follow through a series of posts, is the interest in what began as Self-Directed Work Groups. The Self Directed Work Group was most notably practiced by Boeing and Motorola in the 1980s and sported the manager-less team governed by group decision making.

More recently, self-directed work groups have emerged under other naming conventions like Holocracy and Teal. Several years ago, I wrote a series in response to Holocratic methods, most notably practiced by Zappos, the shoe company under the direction of Tony Hsieh.

This past week, I was contacted by Bruce Peters, a Teal practitioner, who asked me to take a look at the Teal management approach through the lens of Elliott’s research, hence, this series on Teal and Levels of Work. My immediate response was that Teal probably works just fine, until it doesn’t. When it stops, what is the disconnect? And, how do you get it re-started and back on track. My approach will be to bring insights from levels of work that support various intentions and practices of Teal. We may still stumble across some philosophical disconnects, but let’s cross those roads when we have more context.

The cornerstone of Teal was documented in a book titled Reinventing Organizations by Frederic Laloux. Bruce became friends with Laloux several years ago and has been an ardent supporter of its tenets and practices. Bruce also comes from a longstanding background with Requisite Organization and levels of work, so this should make for an interesting discussion.

To summarize the lens of levels of work, in a paragraph, does a disservice to the profound comprehensive reach of Elliott’s research, AND still, it is important to lay some groundwork to set the context. I believe most would agree, that the purpose for every organization is to fulfill its mission (however defined) and that in doing so, the organization encounters problems that have to be solved and decisions that have to be made. Further, some problems are more complex than others, some decisions more complex than others. To understand levels of work is to embrace these distinctions in complexity, not all problems are created equal.

So, Elliott’s research, his findings, his understanding, embodied in levels of work, is based on problem solving and decision making. If we can understand levels of problem solving and decision making, we now have a basis to explore organizations and how they are structured. Without this understanding, organizations get structured in all kinds of wacky ways, some comical, some powerfully destructive.

Laloux’s book Reinventing Organizations chronicles the cultural shifts of hierarchy across the ages contrasting organizational characteristics with emerging, then mainstream social characteristics. Laloux’s schema is descriptively brilliant, capturing the shift in social milieu in a pattern of color, finally arriving at Teal.

  • Organization Magenta (Magic) – tribal groups where power emerged from magic (nature and spirits) and those perceived closely aligned with magic (sorcerers, shaman) maintained power through fear of retribution from nature and spirits.
  • Organization Red (Impulsive) – magic disappeared, but the fear remained in a dangerous world where connection to an organization meant survival. Power consolidated with those groups (and leaders) with the fortitude of violence to enforce that power. Chiefdoms, proto-empires, street gangs and mafias. Slavery was an acceptable norm, provided safety within the context of violence. Emergence of the alpha wolf.
  • Organization Amber (Conformist) – hunter-gatherers turned to animal domestication and agriculture, allowing for more social stability, emergence of laws. Chiefdoms turned into states and civilization. Personal awareness emerges creating psychological safety in like groups. Like groups established the need for conformity and group norms. Stability provided longer term planning against future uncertainty.
  • Organization Orange (Achievement) – Personal awareness of an individual as part of a group, emerges from underneath the shroud of conformity in the form of individual achievement. Effectiveness, goals and outputs breakout from pre-existing rules. Dominance comes through achievement, reinforcing within norms (slavery is no longer acceptable), the 800 pound gorilla. Nike, Coca-Cola, Walmart consolidate power in an increasingly rigid caste system. Centralized control, economies of scale readily observable. Ambers’ command and control becomes Orange’s predict and control. Individual accountability emerges.
  • Organization Green (Pluralistic) – the Orange machine lives on, yet some organizations sense its unintended consequences relative to emerging social norms. Conscious Capitalism emerges seeking fairness, equality, harmony, community, cooperation and consensus. Green endeavors to break down caste distinctions, social classes, patriarchy. Statistical evidence emerges that Conscious Capitalism outperforms Orange in its own measures. Here are the first protestations against organizational hierarchy.
  • Organization Teal (Evolutionary) – this is where Laloux explains that hierarchy disappears and organizations become self-directed.

With this as a background, I will leave you with this thought – Hierarchy still exists, but not where you may have historically found it. Even Laloux provides a hint, but then moves on, assuming to have dismissed the idea of hierarchy altogether. Yet, if you can postpone your dismissal, you will come to find insights that open doors that seemed shut.

This is likely to be a lively conversation, and I invite comments. If you have never posted before, your comment will be held in a queue (to prevent spam). Once I have weeded out the spam, your comments will post in real time. If you receive this blog by email, you will have to click through to the blog site to see the comment threads. See you online.

Span of Accountability (Control)

From the Ask Tom mailbag –

Question:
I’ve been following your blog since you spoke at an event at our office in 2015. I see a lot of posts discussing timespan and organizational structures. What’s your view of “span of control” as it relates to organizational structures? The military has a 3-5 subordinate unit rule of thumb which makes sense for matters of life and death. Yet, I’ve seen organizations with people managing 20+ direct reports. This seems to be on the other end of spectrum and untenable not just from a managerial perspective but from a human/leadership perspective as well. Your thoughts?

Response:
I am not a military expert, so I am not certain of military rules of thumb related to span of control. Any readers familiar can jump in the comments.

Before I leap in, however, I want to re-frame the question. It is not a matter of management or control (even span of control), it is a matter of accountability. Here is my re-framed question – How many people can one manager be accountable for?

Elliott acknowledged a concept know as the Mutual Recognition Unit (MRU) which addressed your question. How many people can a single manager have on the team and remain an effective manager?

It depends. The maximum number Elliott placed was around 70. Beyond 70, it is likely the manager would begin to lose effectiveness. You have to remember the primary function of a manager is to bring value to the team’s problem solving and decision making. I can already see your skepticism through my internet connection.

For a manager to be effective with a team of 70, the work must be repetitive with low variability. The higher the variability in the work, the fewer allowable on the team.

Take a high-volume call center where customer support representatives respond to the same phone calls day after day. One supervisor may attend to teams as large as 70 before losing track.

Take a US Navy Seal team. How many on the team? I am thinking six. Why? Because the work is always variable with high levels of risk. One manager to a team of six.

So, it’s your organization. How do you assess the level of variability in the work? How much is repetitive? How much risk if the team gets it wrong? These questions will guide you to your answer.

Knowing Information Does Not Assure Success

It was a short break toward the end of the day. “I studied your books, attended your lecture,” Sam said. “I am excited to share this information with my team. But, I thought our organization would be farther along than it is?”

My face simultaneously winced and smiled.

“Organizational progress has little to do with information,” I replied. “In this age, the same information is available to everyone with curiosity. Knowing is only the first step. Next comes understanding and where that information applies to your organization. Then, you must do something, decision and execution.

  • Knowing information
  • Understanding and application
  • Decisions
  • Execution

“Along that continuum, your organization is exactly where it deserves to be.

“How many companies have access to the technology, but are unable to see where or how to adopt it. It is NOT the technology that makes the difference, it is how the organization is structured. In every company, there are four organizing documents, mission, vision, business model and structure.

“The business model and structure are intertwined and will determine the effectiveness in the market. Sometimes that effectiveness means market share and success, sometimes survival or death.

“When I talk about structure, it is the way we define the working relationships between roles in the organization. On a piece of paper, it looks like an org chart, but behind the piece of paper is a set of working conditions that govern our behavior in getting work done. The way we define those working relationships, I call culture.

“And, every company has the culture it deserves.”

People Model

We continue to step our way through a short list of identified hallmarks of Agile through the lens of Levels of Work. Today, we move down the list to the people model.

  1. North star embodied across the organization.
  2. Network of empowered teams.
  3. Rapid decision making and learning cycles.
  4. Dynamic people model that ignites passion.
  5. Next generation enabling technology.

Dynamic people model
Levels of work identifies a robust framework where each role is defined by its level of decision making and problem solving. Effective decision making and problem solving at each level of work requires a concomitant level of cognitive capability.

In the transformation from analog to digital, there will be obsolete roles no longer needed and new roles created. As new roles are created, the organization has to identify the level of work in the new role and the corresponding cognitive capacity of the candidates for those roles. When people are challenged to work at or near their highest level of capability, in work they value, there is no need for motivational speakers to raise morale.

Most analog organizations define managerial roles as reporting relationships. In a digital organization, managerial roles shift from reporting relationships to a value stream, where managers are required to bring value to the problem solving and decision making of the team. This process brings alive the concept of “servant leadership.”

Rapid Decision Making

In my last post, we made two steps down a short list of hallmarks of Agile through the lens of Levels of Work. Today, we move down the list to rapid decision making.

  1. North star embodied across the organization.
  2. Network of empowered teams.
  3. Rapid decision making and learning cycles.
  4. Dynamic people model that ignites passion.
  5. Next generation enabling technology.

Rapid decision making and learning cycles
Technology is transforming analog organizations to digital organizations. Many decisions (made with incomplete, unknown or unknowable data) become calculations (complete and known data) according to defined algorithms. A decision is made in the context of incomplete information. A calculated adjustment is made in the context of complete data.

In the digital world, this data is captured in real time and is more transparent to more people in multiple functions. There will be no more waiting for a report from accounting. That data will be available in real time. And, with that accurate data available in real time, there is no need for a role that captures, collates and compiles the data, no need for a role to review the data. Analog roles slow things down.

Levels of Work acknowledges that some roles will be gone and new ones appear. The level of work is likely to be higher. It is no longer a matter of gathering and compiling data, it is a matter of which data to stream, to whom. Which data is relevant, which data irrelevant? What sensors gather the data to stream? What new sensors are available to gather new data? What sensors are obsolete?

In what technology do we invest our limited resources? Our decision making and learning cycles have to come faster.

Networks and Level of Work

In my last post, we started to look at the hallmarks of Agile through the lens of Levels of Work. We looked at North Star through three organizing documents, vision, mission and business model. Today, we move down the list.

  1. North star embodied across the organization.
  2. Network of empowered teams.
  3. Rapid decision making and learning cycles.
  4. Dynamic people model that ignites passion.
  5. Next generation enabling technology.

Network of empowered teams
In a short post by Seth Godin, he chronicled the history of networks from crude computers, each requiring its own building, to those as big as refrigerators, then small enough to sit on a table, now carried in your pocket. Something else happened.

Godin says the first computers were good at two things, arithmetic and storing data. Then, computers got connected so they could share arithmetic and data. Godin described this as the computer meets the telephone, meets the fax machine, and the more people with fax machines, the more valuable the network. The third iteration included the disintermediation of both space and time. This was the death of geography. The current iteration, Godin calls the hive mind, the intersection of technology and agile networks (some of which may contain people).

The transparency afforded in current state technology distributes data and analysis to everyone who can understand it. Distance is dead. Real-time erases delay.

What impact does this have on decision making and problem solving? What decisions are now calculations (no longer a decision)? Who, in the organization, works on those problems and the new decisions we could not see before? How do we measure the size of those decisions? In the end, who is accountable for the output of those decisions?

Godin’s insight on the state of technology provides some clarity on our understanding of the state of the organization. Four issues, problem-solving, decision-making, accountability, authority. It depends on the Level of Work.

McKinsey and Agile

From the Ask Tom mailbag –

Question:
You seem dig your heels in around hierarchy. Here is an article from McKinsey on agile organizations. McKinsey is a big company. I think they know what they are doing.

Response:
McKinsey is a big company and they know what they are doing, but with the absence of an understanding of levels of work. Here are their five trademarks. Today, we will work on the first.

  1. North star embodied across the organization.
  2. Network of empowered teams.
  3. Rapid decision making and learning cycles.
  4. Dynamic people model that ignites passion.
  5. Next generation enabling technology.

North star embodied across the organization.
This is the strategy that the organization serves. The most important function of management is context setting. This is important at every level of work, to establish the cascading contexts aligned with the overall strategic objective. There are three primary organizing documents –

  • Vision statement
  • Mission statement
  • Business model

Vision Statements and Mission Statements
These two organizing documents set the initial context, but most are nonsense about “being the premiere provider” of something and “exceeding customer expectations.” These kinds of statements do NOT set context. They are vague and contribute to the ambiguity already present in the world.

The reason most Vision/Mission statements are vague is their attempt to position the company at some point in the future, five to ten years out (rightly so). At the five year mark, all of our tangible, concrete plans go out the window. The discussion shifts from known things to conceptual things. The problem is that most people do not think conceptually and those that do, don’t practice very often. Most feeble attempts all sound the same.

So McKinsey is correct. North Star is important. But, McKinsey and Agile do not have a corner on this market. Every company I know makes this attempt, they just don’t do it very well.

For another discussion on North Star, you might also check out Accelerate, by Suzanne Frindt. Of course, she calls it Yonder Star, instead of North Star. Same idea.

The Business Model
The business model is the first step in defining the organizational structure. The business model flows from identification of market segments, value proposition in each segment, resources required including people. Often, defining the business model provides guidance on the creation of the conceptual vision and mission statements. The most helpful resource I know is Business Model Generation. It is a very easy and explanatory method of creating your North Star documents.

Sustained Achievement

What is the function of management? I often ask.

In organizations, we design roles for people to play. So, what is the role of management?

Every employee is entitled to have a competent manager, with the time span capability to bring value to their problem solving and decision making.

I once asked the definition of an entrepreneur. I was sternly instructed that an entrepreneur is that person who creates an organization that leverages the skills and talents of other people to create something that no one individual could produce on their own.

And, so it is with a manager. That person who leverages the skills and talents of other people to create something that no one individual could produce on their own.

Individual achievement is a myth. The truly great works of mankind are nestled in the collective works of people transformed from a group to a team. Sustained achievement is the collective work of people, transformed from a team to an organization, that continues to create beyond the original ideas of the founder.

By Design, or By Chance?

I was just about to leave when Lawrence stuck his hand in the air. “What about the people?” he asked.

“The role of the Manager,” I started, “is to create the system and make the system better. The most important system is the people system. How people work in your organization is top priority for the Manager. Look, here is the bad news. Right now, your people system is working exactly as it was designed to work.”

“How can that be?” Lawrence replied. “Our people system sucks.”

“You designed it that way, or by choice, you decided to leave it to chance. Either way, you designed it to suck.”

“But, it’s not my fault. I have only been a manager here for two months.” Lawrence was backpedaling big time.

“And so, for the past two months, you have supported a system by doing nothing about it,” I replied. Lawrence was looking for a better excuse, but I stopped him. “Look, in the short time you have been a manager, have you drawn a brief diagram about how people work around here, how they relate to each other, how they depend on each other? Have you written job profiles to document the specific accountabilities of each person on the floor?

“Lawrence, you are in charge of the most important system in your company, the design of how people work together as a team.”

The Source of Organizational Pain

Sometimes people on your team don’t fit. Culture is that unwritten set of rules that governs our required behavior in the work that we do together. Some people don’t fit. It doesn’t make them a bad person, they just don’t fit.

Some companies hire for culture, assuming the company can train the technical stuff. Some companies require the technical stuff assuming the candidate can adapt to the culture.

Organizational structure is the way we define the working relationships between each other. Organizational structure is culture.

Based on your product or service, your business model, what is the relationship your customer wants with your organization? The Discipline of Market Leaders documents three types of relationships (why customers buy from us).

  • Product Superiority (Quality)
  • Low Cost
  • Customer Intimacy

This narrative set the stage in 1995, and, now, there are more ways to define the customer relationship. (I would like to hear how you describe yours.)

Your customer relationship platform drives everything else, specifically your structure. It is the basis of your business model. When your organization structure (your unwritten set of rules) gets out of sync with your customer relationship, you will experience pain.