Tag Archives: power

Invisible Conflict

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There was no ticker-tape parade. It was much too early to celebrate. In May of 1998, Wall Street celebrated one of the largest corporate mergers in history. Daimler-Benz, the maker of Mercedes-Benz automobiles, and Chrysler Corporation announced a “merger of equals.” The combined company was valued at more than $36 billion, and analysts predicted more than $1 billion in bottom line value creation. It looked like the perfect strategic fit.

Chrysler brought strong North American distribution, a line-up of mini-vans, Jeep models and light trucks. Daimler brought German engineering in a luxury brand. Each company had a successful culture that sparked a conflict of invisible disagreement. Each had its own unwritten set of rules that were about to collide.

At Mercedes, precision mattered. Decisions were deliberate, carefully documented and followed a formal process. Chrysler built its success on speed. Cross-functional teams solved problems quickly and products cycled to market faster.

Neither company was wrong in its own world, they were just wrong together. The merger failed. It wasn’t engineering. It wasn’t manufacturing. It wasn’t finance. It was the belief system held by each respective management team.

The breakup was a war of attrition, not a visible conflict. Meetings became longer. Decison making slowed. Impatient Chrysler executives left. The power dynamic shifted. To many Chrysler executives, the merger of equals increasingly felt like a takeover.   The individual belief systems could not exist in the same container.

After paying $36B to acquire, Daimler made the decision in 2007 to sell 80 percent of Chrysler to Cerberus Capital Management for $7.4B. Chrysler was eventually purchased out of bankruptcy by Fiat and is now part of Stellantis North America.

The most interesting question isn’t why the merger failed.  The question is “What did Daimler have to believe for its management system to make perfect sense?”  And, “what did Chrysler have to believe for its management system to make perfect sense?” Financial models are remarkably good at estimating purchasing efficiencies, manufacturing savings, and economies of scale. They are much less effective at estimating what happens when two organizations bring fundamentally different beliefs about authority, decision making, accountability, and risk into the same conference room.

Culture isn’t an employee engagement survey. It isn’t a list of values framed in the lobby. Culture is the collection of management decisions that become so consistent they eventually define “the way we do things around here.”

The Daimler-Chrysler merger wasn’t undone by incompatible automobiles. It was undone by incompatible beliefs.
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Premeditated Culture is now available on Amazon.

The Value of a Manager

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“I don’t understand,” Margaret lamented. “I know I used to be a part of the team, and then I was promoted to manager of the team. It’s different, these used to be my friends. We used to do favors for each other, cover each other’s shift when we had a family emergency. Now, it feels disconnected. I feel disconnected.”

“Your role has changed. What else changed when that changed?” I asked.

“Now, I have to tell them what to do. I have to make decisions on priorities. I have to dictate the method and the sequence of the work. I have a bigger job, now,” she said, making a face that showed she was not happy.

“Where does the disconnection come from?” I wanted to know.

“I think everyone thinks I am bossy, when it’s just my job,” she replied.

“Is it really? You are certainly accountable for the output of the team. But, is it your job to be bossy? Look, you have worked with this team for a long time. Do they know how to get the work done? Do they know what tools to use and how to use those tools? And, more. Do you trust them in those things?”

“Of course, I trust them. I have worked with most of them for more than two years,” she counted.

“Then, what would be your most valuable contribution to the team as their manager? What value could you bring to the table. They know the routine, they know the methods, they know the materials, they can make the easy decisions and solve the easy problems without you. What value can you bring to the team?”

More Control or Less

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“It is very difficult to cede my power as a CEO,” Suzanne shook her head from side to side. “It’s my company, my accountability.”

“You are still accountable. All crumbs lead to the CEO,” I said. “And, what changes when you see your company, not as a hierarchy of power, but, a hierarchy of competence?”

“First of all, I cannot promote people into positions because of their seniority, their loyalty or their current position of power,” she was thinking out loud, knowing I was listening.

“Promote people to a position of what?” I asked.

“A position of authority,” Suzanne replied.

“Authority to do what?” I pressed.

“Authority to make decisions,” she relented.

“Now, we are getting somewhere,” I smiled. “You begin to see your organization through the lens of competence. You cannot promote someone to a position of authority, to make decisions, unless they are competent to make those decisions. If they are competent to make those decisions, are you, as the CEO in more control or less control?”

Guiding Value in Hierarchy

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“But, if I delegate things out to other people, meaning, if I delegate decision making to other people, doesn’t that erode my power, as the CEO?” Suzanne wanted to know.

“If power is that important to you?” I replied.

“Isn’t that why I started this company, built it up from scratch? I am the one who made all the decisions. I am the one who had all the accountability,” she protested.

“And, you still have all the accountability. In the beginning, it was appropriate for you to make all the decisions, there was nobody else around. And, as the number of customers grew from a handful, to a dozen, to a hundred, they demanded your organization grow to accommodate their needs. As your organization grew, through necessity, you had to delegate, first tasks, then decisions. To the point where you now feel a loss of control.”

“And, a loss of power,” Suzanne quickly added.

“And, there is the rub. You see your organization as a hierarchy of power. Don’t kid yourself, the world is biologically ordered into a hierarchy of value. You see the value in your hierarchy as one of power. A power hierarchy begins to weaken the purpose of the organization’s original intent. This is a very serious shift, to understand your organization, not as a power hierarchy, but a hierarchy of competence. And, when you see it that way, what changes?”

Dungeons, Dragons and Demons

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“If I could change the mindset of the ringleader, I could change the mindset of the team,” Ryker thought out loud. “She does not believe we can be successful in the project. It’s a limiting belief in herself.”

“So, she has an internal demon that prevents her from signing on to the project? The very same project that you already promised the customer?” I asked.

“I’m not going back to the customer to renegotiate my commitment,” Ryker was adamant.

“So, let’s talk about internal demons that reside in the mind of your ringleader,” I nodded. “But, before that, let’s talk about the internal demons you have to face.”

“What do you mean?” Ryker was puzzled. “I am not the one confused here. I already signed the contract. I’m fully committed.”

“Yes, but you have doubts,” I smiled. “You are the manager of the team, but you feel it’s important to change the ringleader’s mindset about the project. You feel that not doing so will jeopardize the success of the project. You have doubts about your own leadership ability in the face of the team. You have your own demons to slay. Who is the real leader of your team?”

This put an abrupt halt in the flow of the discussion. Ryker was thinking. “You are right. I do not see myself with the power to pull this off. I mean, I have the authority, but the team has the power.”

“And, what is it about yourself that makes you think this way?” I wanted to know. More accurately, I wanted Ryker to know. “You suggest that changing the mindset of the team’s ringleader has more impact on the team than changing your own mindset. What is the demon that you have to slay?”

Broccoli and Power

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“So how do I get my team to the point where they believe in what is necessary? How do I make them believe?” Erica was stumped.

“Indeed,” I said. “If your team doesn’t believe it is necessary, you cannot make them believe. Sure, you can trick them with a bonus or maybe a plaque, but it is still a trick.”

“Like your broccoli story,” Erica remembered, “I have the authority as a parent to command broccoli, but my child has the power to determine if broccoli will be eaten?”

“Yes,” I nodded. “If you feel the need to compel behavior, does that say anything about the power others have over you?”

A Position of Power

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“Where do you think your power comes from, as a manager?” I asked.

Angelina thought. “Part of it comes from my position. I get respect from my team, because they know I am their boss. That what I say, is the way things go.”

I nodded, and watched.

She continued, “But, frankly, that’s not the way it happens. Just because I am the boss, sometimes doesn’t mean anything at all. I feel like my mother saying – Because I said so.”

“Why do you think you were promoted to manager? So you could have power over your team?” I pressed.

After a moment, she replied. “I don’t feel like I have that power.”

“But, you do have power. For an incompetent person, that power comes from the outside. That power comes from position. For a competent person, that power comes from the inside. It is an internal discipline that everyone sees.”

Water Flows Downhill

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It’s a plumbing analogy, but demonstrates a law of physics.

Hierarchy is a value sorting process to bring order to the chaos of the world, order being what we know, chaos being what we don’t know.
Hierarchy, in a functional organization, is a value stream characterized by competence. We build the organization based on the competence required in the roles in our design. A visual picture of our design, on a piece of paper, looks like our organizational chart, our organizational structure.

Organizational structure is the way we define the working relationships between roles, related to accountability and authority. The way we define the value in the hierarchy determines the energy flow and whether that organization is functional or dysfunctional.

If the value is power, the organization will be a hierarchy of power and its energy will flow based on power. If the value is command, the organization will be a hierarchy of command and its energy will flow based on command. If the value is control, the organization will be a hierarchy of control and its energy will flow based on control.

And, if the value is competence, the organization will be a hierarchy of competence and its energy will flow based on competence.

Water still flows downhill. 

Chain of Value

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Chaos and order. The purpose of organizational hierarchy is to bring order in the pursuit of a defined goal. Often we misunderstand hierarchy, some define it as a chain of command. In a functional hierarchy, it is not a chain of command, it is a chain of value. That value being competence. Hierarchy is not a chain of power, it is a chain of authority.

Authority and power are quite different. It has been well established that a parent has the authority to tell a child to eat their broccoli, but it is the child who has the power to determine if broccoli will, in fact, be eaten.

In a functional organization, authority comes with accountability. A role with authority also assumes accountability. Only in a government oversight committee is authority assumed without accountability (It is a broken power chain, ultimately, the committee’s authority is also broken.)

In a functional hierarchy, the value chain is competence. Authority comes with accountability. Organizational structure is the way we define working relationships related to authority and accountability. A manager may be granted the role authority to make a specific decision, and simultaneously is granted the role accountability for that decision.

Play Cards and Take Naps

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“I work because I have to work,” Vicki finally stammered.

“I will accept that,” I replied, “but not for the reasons you think.” A few seconds passed. “Are you happy with your work?”

“Well, yes. I mean, there are days when it’s frustrating, but mostly, I like the work.”

“And your team, do they like the work?”

Vicki winced. “Oh, I don’t know. It’s okay, I guess, but it’s hard work and if it were me, I don’t think I would like it.”

“Then why do they come to work every day?”

“Because they have to.”

“So, your team doesn’t like the work and the only reason they show up is because they have to? And do you think, if you left them alone all day, that instead of working, your team would sit around, play cards and take naps?”