Shereef Bishay on the Open Enterprise at TEDxSF

Very similar principles to the Bossless Organization.

The End of Management

Wall Street Journal Deputy Managing Editor Alan Murray has an excellent essay in the paper today titled "The End of Management: Corporate bureaucracy is becoming obsolete. Why managers should act like venture capitalists."  It stunned me in its alignment with the Bossless Organization (aka Organization 2.0), all the way down to the venture capital model and entrepreneurial, ad-hoc teams of peers.

It starts by arguing that, if management of the corporate bureaucracy was the most important innovation of the 20th century (Drucker), changes in the 21st century are rapidly making it obsolete: globalization, accelerating innovation, relentless competition, rapidly changing markets - they simply can't adapt fast enough. That's half of the problem - the other half is rapidly dropping transaction costs reducing the need for large, bureaucratic corporations (a la Ronald Coase). Mass collaboration is now easily accessible and affordable via the Internet. He then moves on to what's next:

...the trends here are big and undeniable. Change is rapidly accelerating. Transaction costs are rapidly diminishing. And as a result, everything we learned in the last century about managing large corporations is in need of a serious rethink. We have both a need and an opportunity to devise a new form of economic organization, and a new science of management, that can deal with the breakneck realities of 21st century change.
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The new model will have to be more like the marketplace, and less like corporations of the past. It will need to be flexible, agile, able to quickly adjust to market developments, and ruthless in reallocating resources to new opportunities.
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This is the core of the innovator's dilemma. The big companies Mr. Christensen studied failed, not necessarily because they didn't see the coming innovations, but because they failed to adequately invest in those innovations. To avoid this problem, the people who control large pools of capital need to act more like venture capitalists, and less like corporate finance departments. They need to make lots of bets, not just a few big ones, and they need to be willing to cut their losses.

The resource allocation problem is one Google has tried to address with its "20%" policy. All engineers are allowed to spend 20% of their time working on Google-related projects other than those assigned to them.
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In addition to resource allocation, there's the even bigger challenge of creating structures that motivate and inspire workers. There's plenty of evidence that most workers in today's complex organizations are simply not engaged in their work. Many are like Jim Halpert from "The Office," who in season one of the popular TV show declared: "This is just a job.…If this were my career, I'd have to throw myself in front of a train."

The new model will have to instill in workers the kind of drive and creativity and innovative spirit more commonly found among entrepreneurs. It will have to push power and decision-making down the organization as much as possible, rather than leave it concentrated at the top. Traditional bureaucratic structures will have to be replaced with something more like ad-hoc teams of peers, who come together to tackle individual projects, and then disband.
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The new model will have to go further. New mechanisms will have to be created for harnessing the "wisdom of crowds." Feedback loops will need to be built that allow products and services to constantly evolve in response to new information. Change, innovation, adaptability, all have to become orders of the day.

Can the 20th-century corporation evolve into this new, 21st-century organization? It won't be easy. The "innovator's dilemma" applies to management, as well as technology. But the time has come to find out. The old methods won't last much longer.

Hear, hear!

Managers a Barrier to 'Good Jobs'

"UK employers may have the will to provide good jobs, but they don’t know the way — and claim bad management’s a major obstacle in improving work."

No excerpts for this one - read the whole thing.

Manage by Commitments, Not Hierarchies

Some excerpts from a great post at bnet (highlights mine):

If you look at how people think about getting things done in large complex organizations, they basically sort stuff into three broad categories. The first is about power: the organization is a hierarchy where information flows up and orders flow down, and you do what you’re told or you’re fired or demoted. … This tends to create silos: the hierarchy is very up and down and doesn’t work well for work that requires cooperation across different units or functions. It’s pretty slow as well; it takes a long time for information to get up the structure and for orders to find their way down.

Another approach that really started to gain traction in the 1950s in Japan, and became more well-known in the 1980s, is management by process... the organization as a bundle of processes. Six Sigma…TQM [Total Quality Management]…all of these are variations on the same theme. This is hugely helpful—it allows you to squeeze out excess resources and continuously improve on what you do. Bit here we also have limitations, probably the biggest one being that standardization gets in the way of innovation... the higher an organization’s commitment to standardized processes, the lower the level of innovation.

Which brings us to our third approach: managing by commitment. Here, we look at an organization as a network of overlapping, continually evolving promises that people make to each other to get things done. The advantage and the power of this approach is that it lends itself quite well to situations that cannot be standardized: emergent strategies, innovation, one-offs or one-of-a-kind crises. It also works well when you coordinate among people who don’t report to you: suppliers, distributors, etc. And that kind of work is quite important. There was a study done a few years ago that said 40 percent of all employees in the United States added most of their value to their organizations through these non-routine activities. And about 70 percent of the growth of employees in the U.S. was among people who did this non-routine, non-hierarchical work, so it’s a big idea in the context of the economy as a whole.

...commitments within their teams. The most effective have five characteristics. First, they are public. They’re made publicly and their progress is tracked publicly. Next, they’re active. Parties understand what they are agreeing to and what each party is requesting; people don’t just nod, they really have to take responsibility for the commitment. Third, these are voluntary. The other party has the option to say something other than “yes”; they can refuse or make counteroffers. Fourth, commitments are explicit: it has to be clear who is committing. These aren’t committees making promises, they are individuals. And it works best when it is perfectly clear to whom the commitment is made. And fifth and finally, they’re motivating: the rationale is made clear…why it matters to the individuals and the organization is made clear.

More on this approach in a followup post here.

The workforce disengagement problem

Came across this post on the problem of widespread disengagement in the workforce, based on a Towers Perrin Global Workforce Study. The excerpt:

Just 21% of the employees surveyed around the world are engaged in their work, meaning they're willing to go the extra mile to help their companies succeed. Fully 38% are partly to fully disengaged. The result is a gap - which Towers Perrin has dubbed the "engagement gap" - between the discretionary effort companies need and people actually want to invest and companies' effectiveness in channeling this effort to enhance performance.

The study found that companies with the highest levels of employee engagement achieve better financial results and are more successful in retaining their most valued employees than companies with lower levels of engagement.

"It's impossible to overstate the importance of an engaged workforce on a company's bottom line," said Julie Gebauer, managing director and leader of Towers Perrin's Workforce Effectiveness consulting practice. "The Global Workforce Study establishes a definitive link between levels of engagement and financial performance and, for the first time, begins to quantify that link. It demonstrates that, at a time when companies are looking for every source of competitive advantage, the workforce itself represents the largest reservoir of untapped potential."

The most striking data about the linkage between employee engagement and financial performance come from a study of 40 global companies which involved a regression analysis of company financial results against engagement data. It found that firms with the highest percentage of engaged employees collectively increased operating income 19% and earnings per share 28% year to year. Those companies with the lowest percentage of engaged employees showed year-to-year declines of 33% in operating income and 11% in earnings per share.

OpenTeams increases employee engagement by helping them self-organize into entrepreneurial teams around innovative ideas. Entrepreneurs are the personification of "engagement," and having more of that spirit within an organization can do wonders for motivating employees to tap their full potential.