Wednesday, October 07, 2009

The Commanding Heights of the Enterprise – Part 1 – The free-market workforce

"Underlying most arguments against the free market
is a lack of belief in freedom itself."

Milton Friedman
image A few months ago I took on a personal challenge, of imagining what it would take to achieve the next giant leap in productivity in the workplace. Strangely for someone used to push for improvements in requirements management processes and for the development of deep skills, this time I found myself in the philosophical land of long term vision.

As for the title of this posting, the idea started while watching the excellent documentary “Commanding Heights: The Battle for the World Economy”. Coining from Wikipedia: “[The documentary title] takes its title from a speech by Vladimir Lenin, who used the phrase ‘commanding heights’ to refer to the segments and industries in an economy that effectively control and support the others…”

Corporations as micro-markets…

“The Battle for the World Economy” explores the role of the state in building an economic system, first under the lens of John Keynes, who believed governments could control the markets; later from the redeemed point of view of Friedrich Hayek, who advocated in favor of markets regulating themselves.

Whereas the difference between nations and corporations is not lost on me, the similarities between a central control body and a vast array of somewhat free agents interacting with each other are striking. If the micro-cosmos of the corporation is the economy, the work force is its industry.

I can project Hayek's school of thought onto corporations, of letting the workforce find its natural balance and define what the corporation can deliver, much as I can extrapolate the Keynesian school of thought through which executives can use a model to predict and control the responses of the workforce towards corporate goals.

The greatest challenge of our leadership is not how to control the readiness of the workforce, but how to make the workforce assume control of the enterprise under a clear set of rules. In other words, the challenge is how to favor direction over control.

…and employees as free agents

It has been the norm for companies to rely on human resource management to motivate the workforce, an attempt at restoring some of what is lost at the very moment a free-agent sells his time and talent in exchange for a salary.

The irony of human resource management is that it is premised on raising the capability of the workforce through incentives, whereas the top performers are typically the ones who can best ignore the incentive structure and focus on what they really like and know how to do.

Successful work relations involve retaining a greater share of that human drive, by signing a contract with a partner versus hiring an employee. Many will point out that smaller companies and startups already operate at that level, though there is considerable difficulty in making the principles of partnership work in the taller organization charts found in medium and large companies.

The role of meta-managers

Paul Hawken once observed that “Good management is the art of making problems so interesting and their solutions so constructive that everyone wants to get to work and deal with them.”

Under the risk of falling from the immense heights of his reputation, I wanted to build on Paul’s observation with the following: Excellent management is the art of getting everyone to understand the big picture and find the problems themselves. This brings up the first two “commanding heights” of the enterprise:
  • The big picture: Ensure employees understand their role in the lives of their customers.
  • Ownership: Ensure employees own the initiative to solve customer problems with a deep sense of accountability.
You want your people to use their awareness of the big picture to identify the problems to be solved, self-organize towards the solution of those problems, and achieve that solution under the continuous pressure of financial and social accountability for their decisions.

Ultimately, you want that level of independence and self-direction to happen not only at the executive level, but at a departmental and individual level.

Taking the “resource” out of HR

A few weeks ago, while informally pitching this idea, I was asked whether this new workplace would have a place for individuals happy to work with well-defined, self-contained tasks. The answer was an unapologetic and resounding “no”.

This kind of tool-like employee would siphon executive attention from strategy towards pointing the employees at the right problems and towards keeping them moving. I don’t mean to be derogatory, the reality of today’s work relations often demand that kind of behavior.

In my early years as a software engineer I witnessed a spat between two senior colleagues. One was the most senior engineer in the team and the other a hard driven project lead with a classic command and control point of view.

In one occasion, a junior employee communicated release plans and dates to another internal team. These plans were current a couple of weeks before the communication, enough for the project lead to be infuriated by the break in protocol.

The response came in the form of a fiery email sent to the entire group, where the team was directed to not repeat the misdemeanor and reroute any information requests to the leadership team.

A few minutes later, to a general sense of vindication, a well written response was fired back from our senior colleague, in favor of information sharing over censorship. The email was closed with: “It is as much of an embarrassment for a colleague to misstate our current strategy as it is for him to be unaware of it.”

The ownership challenge

At this point, much of the above may sound common sense. Most people would be tempted to point at a myriad of examples of none of this being new. Abstract ideas often provoke that reaction, which brings me to a concrete challenge and excellent ice-breaker for departmental meetings. When the situation allows, ask yourself and your people:
What would you do if your next twelve paychecks depended solely on your own business decisions?”
If you get silence and you are not in a dysfunctional group, take a deep breath…actually take a deep breath anyway, you have a lot of work to do in that big picture criteria. Your people simply do not know enough about who buys your product and why. Even if they have initiative burning a hole inside them, they would not know where to point it.

In a better scenario, you will get questions about who buys the product and why. Time to introduce your production people to the sales teams before the next attempt at answering the ownership challenge.

On an average team, the first round of this challenge should reveal the need for better understanding of the customers and of the sales and pipeline chains. Peel that onion long enough and you will eventually pass through the need for a better requirements management process.

If you get a number of suggestions and the team is willing to bank their livelihood on these suggestions, start implementing as many of them as fast as you can.

Bootstrapping the market-based culture…

One of the most fascinating aspects of the ownership challenge is that it is more than a question or the basis for an energizing team meeting: it is a mind set to be cultivated on a daily basis.

Cultivating this mind set is also more than asking the question every day, it is about letting the answers pervade the real business operations incrementally. Over the long term, you want not only your people to have those answers, you want your people to live by the reality of business results being driven by those answers.

Resurfacing the economy theme set at the top of this entry, you want your products and people to act as market forces. Just as an exercise, imagine an organization where people cannot rely on departmental boundaries to define their next assignment, where people are invited to work on projects based on their reputation, and where people must have demonstrable business results to back that reputation.

While you are at it, imagine executive chains attracting people on the merits of their business cases or on the ability of their managers to take on Paul Hawken’s challenge to make problems interesting and solutions constructive. Imagine people looking for their next position not on the basis of what they would like to be doing, but on the basis of where they think their next team would benefit the most from their skills.

…and regulating the markets

As with any market, the internal workforce market needs a minimal set of rules to ensure its functioning. This set of rules must answer some immediate concerns:
  1. Stability, or terms of contract: For how long should a business interaction last and should each party be entitled to compensation in case of rescission? This is not about employment stability, it is about the “contract” between an employee and a project. Rescinding an internal contract does not equal to separation from the company.

  2. Flexibility: should an employee be allowed to sign contracts with multiple parties? Does dedication to a project need to be exclusive?

  3. Logistics: What if a project cannot draw in enough participants to become viable? Is it an indictment of an inadequate business case or does it reflect insufficient marketing skills in selling the idea to prospective participants?

  4. Trust. Would employees sign up to contribute all or part of their time to work with people they have not worked with previously? Likewise, what would it take for project owners to trust an applicant?

  5. Cooperatives. Would employees be able to form up entire go-to-market strategies around an initiative and bank their future on it? By employees I mean anywhere from the rank-and-file to C-level executives.

  6. Exchange of information: The dynamics of self-organization requires an unprecedented level of intercommunication, on the ability for the leaders to share plans and enlist volunteers, on the ability for the employees to connect with the leaders or become thought leaders. This topic alone warrants its own entry.

An unprecedented experiment

In this regard of institutional innovation, I find it fascinating that larger companies have a clear edge over their more nimble start-up competitors. Larger companies have the critical mass of people and products to form the internal markets. They also have tolerance for coordinating projects over longer periods of time.

Part of the answer lies in how well the chaos of a self-organizing workforce could be managed in a hypothetical transition and on the feasibility to make every individual aware of the big picture, of making people sufficiently engaged in offering solutions, or even comfortable to work with an added level of uncertainty in their work relations.

I have known quite a few individuals who would work well in such environment, though I must admit to a more than usual dose of unorthodoxy in these ideas. Ultimately, I see it as a matter of vision over hard science, even if as an experiment or as an extreme point of reference for a hybrid model.
Photos by serhio,

Thursday, August 27, 2009

The Human Resource factor – Renovating Home Depot

Yet another great interview (“Renovating Home Depot”) by Geoff Colvin in Fortune Magazine, this time with Carol Tome, Home Depot’s CFO.

On how the company responded to the tough economic outlook caused by a multi-year contraction in the housing market.

“First we wanted to make sure that we kept our associates, the men and women on the floor of the store, totally engaged. In an environment where a lot of companies were cutting back, we said no. We are going to invest in those associates. We're going to pay merit increases, pay bonuses, make contributions into the 401(k) plan. We're going to be singularly focused on them so they can take care of the customers.

We introduced something we call power hours inside our stores. In the hours when traffic is heaviest we stop all activity that is not customer facing -- pack-down activities, say -- and spend 100% of our time taking care of customers.”

On the possibility of unionization of its 300.000 non-union employees:

“We will do the right thing for our stores. When we talked to our store associates and said, Why would you want to join a union, you know what we learned? It is really not because of our pay. It is because of the relationship they have with their boss.”

On the differentiation to competitors:

“From a merchandising perspective, I will tell you that if you go to our hand-tools or power-tools aisle, we've got a broader assortment than anyone in town. We have great prices, and we should always win on product. But what is the stickiness? The stickiness has got to be about the human experience.”

Monday, July 06, 2009

“Best advice I ever got”

Fortune Magazine just ran a great article titled “Best advice I ever got”, listing short stories from 22 very successful people in their fields. A few of my favorites

Jim Senegal, Co-founder and CEO, Costco Wholesale:

Some people believe that you should say something just once. But I think you get a message across by communicating it every day.

Lloyd Blankfein, Chairman and CEO, Goldman Sach:

First, it's good to solicit your people's opinions before you give them yours. And second, your people will be very influenced by how you carry yourself under stress.

Eric Schmidt, Chairman and CEO, Google:

When there is [a] business conflict you tend to get rat-holed into it. [Bill's] general advice has been to rise one step higher, above the person on the other side of the table, and to take the long view. He'll say, "You're letting it bother you. Don't."

Thomas Keller, Chef, The French Laundry, Per Se:

Treat it like it's yours and someday it will be.

Tuesday, June 09, 2009

Learned optimism, because failure is a choice

The wise man in the storm prays to God, not for safety from danger, but deliverance from fear.”
Ralph Waldo Emerson

In the continuation of Layoffs, sheep, shepherds, and wolves, I wanted to write about overcoming failure and fear.

Recently I was faced with the decision to move to an easier assignment, with fewer external dependencies, no team to lead, a more forgiving range of time zones, and in a new technology field where I would have more freedom of action.

Against initial instinct, I chose to renew my commitment to a project anyone would consider far more challenging. I refused to leave it before I got all my lessons right, knowing the opportunity would most likely never materialize again.

This entry is largely reflective, but if your time is right, read on…

Optimism is a skill, not a trait

Most people are born with a fantastic gift: the gift of being able to explore and grow their potential until they decide to quit. Left unchecked, the human spirit is boundless. Yet, many people wake up one day convinced they have gone as far as they could, accepting a life of fear from losing what little they cherish.

We are born without fear, without failure, and at the same time, vulnerable to both. This fragility is one of our greatest strengths: the ability to learn from our failures and try again another day with our new experiences. Fear is the anticipation of repeat failure, and ultimately the choice to renounce our innate abilities to adapt.

As people go through the cycle of trying, failing, learning, and trying again, they develop a sense of what I call “learned optimism”. Learned optimism is a state of mind where you don’t just intuitively believe things will be all right, it is when you consciously *know* they will be all right because you know you were born with the tools to try until you succeed.

Some people are born optimistic, some are born brave, but learned optimism always carries the day. Learned optimism is a skill rooted in reason and practice, it gives you the certainty you cannot fail until you allow yourself to fail.

Wandering through life and the two questions

Encouraging a friend through a rough patch is an act of kindness, but encouragement alone cannot make up for a life lived as a succession of moments. As a true friend, I prefer to always ask:

Do you really want to do this?”.

If the answer is “yes”, then your friend is in the more serious ground of commitment to choice, by which time you can offer the second question:

Is it important enough that you will keep trying and improving at it until you succeed?”

You would be surprised at how few of our goals can be answered with the double “yes” to these questions. Some people find their true goals early in life; some stumble for longer; most never find what they never bothered to look for, living what Thoreau described as a life of quiet desperation.

Before we get into the long road of finding our life goals, the smaller tasks and projects at hand are good practice and should always pass the test of these two questions.

Deadlines are tools, not constraints

The certainty of success is premised on abundant time for repeat attempts at trial and error. Human lifespan is generally long enough to develop learned optimism, projects in our career are generally not.

Whereas we can try and complete a project within a deadline, fail, improve our planning skills, and try again, we must keep in mind the larger point of whether meeting deadlines is merely a skill – albeit a useful one - or a goal in life.

Skill or goal, practicing delivery within a deadline is a great exercise. There are few things that can accelerate the development of learned optimism as much as the whirlwind of impending deadlines and the knowledge that our effort will be either used by a paying customer or abandoned by the wayside for lack of interest.

I also have to keep reminding myself to practice keeping my serenity over time, though it may take a few iterations to deliver a task on time and with poise. Although careers and companies are man-made and alien to our nature, I would never dismiss them as learning tools: causality and time are also part of the universe for a reason, one that transcends the theme of this posting.

The road to certainty

For younger generations, my first advice is to become extremely good at something and watch your reactions to the learning process.

No matter how small a goal, developing certainty has a transformational effect that can affect other aspects of our lives. Once you excel at something and develop a sense of assured success, you can excel at anything you choose to.

The second unsolicited bit of advice is that until you find your goals, stay close to people who have found theirs.

People who have found their true goals are committed to their choices, knowledgeable, and invariably passionate. At some point in their lives, they chose to make the right choices, they chose to not give in to failure, they chose to learn from it and to keep on trying.

Learning and practice need good mentors and you cannot ask for better role models.

Tuesday, March 31, 2009

Layoffs, sheep, shepherds, and wolves

“And if you take a sheep and put it up at the timberline at night when the wind is roaring, that sheep will be panicked half to death and will call and call until the shepherd comes, or comes the wolf.”

Robert Pirsig, in Zen and the Art of Motorcycle Maintenance

Choice over fear

I started writing this entry months ago, under the crushing pressure of emails from friends and colleagues telling me about their layoffs.

In the spirit of true empathy, I assessed the what-if possibilities of not having a regular paying job, and each scenario felt more overwhelming than the previous. I also felt depressed for not being able to offer any material help to my fellow colleagues, not owning a company that employs people, not holding a position where I could influence the creation of a job.

Along the way, I benefited from inspiring emails from others looking ahead with optimism and hope. Not the least, I was inspired by my brother’s recent choice to abandon a cushy management job at a large construction firm to start his own successful business.

Once the jumble of thoughts settled down a few days ago, the imagined experiences of my what-if assessment sunk in too deep.

Starting last week, I chose to see the world in a different way, a world where either we live waiting in fear or we live acting on the basis of technique and choice.

I chose to see how much control I have over finding a less vulnerable position in the world, over how much control I have over my reaction to negative events, and how much personal investment these choices will take.

Clarity displaced fear.

A world of sheep, wolves, and shepherds

I now see our world as a collective of sheep, wolves, and shepherds. Once you fully realize that separation, you can never accept facing the world as a sheep.

Behaving like a sheep is about making as few choices as possible, settling into a stable situation and hoping things will not change. Sheep intentionally put their fates at hand of shepherds and unknowingly at the mercy of wolves. Time after time, sheep seek seemingly safe settings and stay there until the inexorable dangers of political and economical instability surround them again. Sheep regard being outside a wolf’s stomach to be a good life, and being inside the wolf’s stomach the result of random and cruel chance.

A shepherd lives a life of making choices for himself and for others, a life of little rest and great responsibility. Shepherds are far fewer in number than sheep and looked upon when the smell of danger spreads in the air. A shepherd may falter under impossible odds, watching a wolf snatch the stray sheep while protecting the main group from a larger pack of wolves, but a good shepherd never looks back. A great shepherd never blames the odds.

Wolves also thrive in making choices, but about making choices about their own lives, not taking great interest on shepherd and sheep other than for the occasional feeding.


At the root of sheepish thought is the belief that we cannot influence the events around us. That is partly true, but we do have control over our preparedness to face those events.

The correct thought is “I refuse to be eaten helpless in the middle of the night. I will take charge of my immediate surroundings to reduce the influence of negative events in my life.”

You see two clear choices in the corrected thought: the refusal to stay helpless and the choice to take charge of the surroundings. What you may miss is that they are both empty in absence of technique; it is easy to shake a fist towards the sky, it is much harder to raise the rest of the body out of shifting sand.

There is also the deep realization that it is a whole different world to keep an entire flock out of shifting sand. Each person who oversees a business, whether a line manager, an executive, or a small business owner, is a shepherd. It is easy to ignore the crushing pressure these times bring upon the shepherds, more so amidst the carefully chosen “golden-parachute” sound bytes picked by what passes for mass news nowadays. The exception is not the rule.

…and technique

Choice is at reach for all of us, but it does not happen overnight. The power of choice is multiplied by the choices at hand. If we wait until disaster hits to start making choices, we may find out that there are only bad and worse choices. When all alternatives look bad, we are likely to feel paralyzed. Depending on how despairing the situation, we may even wish for the wolf to come out of the woods and end our misery.

In my mind, these are the most important choices any person can make today:

  1. Identify the one thing most likely to affect them the most. One can always get struck by lightning while running from his car to the mall entrance, but that is the realm of wills and life insurance. The point here is “most likely”.
  2. Determine how many plausible alternatives you want to have if that event occurs. For instance, do you want to have a network of hundreds of followers on Twitter, have a standing invitation to join a consultancy company, be an expert on a hot technology and have standing job offers on your email inbox, become a big-circuit motivational speaker? These are all things that take lot of investment and happen on their own time. The point here is “plausible”.
  3. Start working on developing those alternatives ahead of time. Many of them may take years to materialize, and here is a plug from this believer in the power of web 2.0 social networks: developing any kind of meaningful network takes at least two or three years.

I have seen many a people losing important time in the period after receiving their job loss notice polishing resumes, reestablishing their network of contacts, assessing the possibility of seeking a new job or starting a consultancy, and pondering over many other important decisions. At best, the unpreparedness force uninformed choices, at worst it translates into months without a source of income.

The silver-lining: a renewed sense of urgency

Amidst all crisis and sense of doom, the one positive aspect I see is an opening for a renewed sense of urgency. It used to be that a botched project was followed by the opportunity to try it anew with the next big project. “It is only a job” was the theme song for lax execution and the launch of shoddy products.

My favorite example is the GM of the 90s and early 2000s, where the widespread lack of care with production could be seen in the news and at the dealership lots: union workers making three times the salary of peers working for competitors, dated pushrod engines, Pontiac Aztecs, misaligned body panels, visible mold lines in the interior plastics, you name it. It was not until Bob Lutz came aboard in 2002 that serious improvement started to be seen, to the point where I even put some of their cars on my window-shopping list. The tragedy was that all those years of carelessness and inaction took their toll and made GM’s position untenable when the recession hit.

I think that that kind of example and the lessons that go with it are about to permeate corporate America: A botched project will not be followed by another chance, but by a round of layoffs.

There is a clear opportunity for those who really care about their customers, and ultimately their jobs and businesses, to carry that flag and instill that sense of urgency in the workplace pushing for better requirement definitions, better market validation, better execution, better customer support, and that extra mile on end-user satisfaction.

Economies may stall or even shrink, but executives who manage to reshape their workforce and employees who embrace the new mindset will learn quickly that the size of the slice matters more than the size of the pie.

As sheep and shepherd have always known, collective preparedness is the ultimate safeguard.

Thursday, January 15, 2009

Barack Obama, on management

Political opinions aside, Barack Obama and his team ran one of the most efficient, most successful, large scale political campaigns in recent history. An accomplished manager himself, he offered his views on management in a recent interview on Time Magazine:

"I don't think there's some magic trick here. I think I've got a good nose for talent, so I hire really good people. And I've got a pretty healthy ego, so I'm not scared of hiring the smartest people, even when they're smarter than me. And I have a low tolerance of nonsense and turf battles and game-playing, and I send that message very clearly. And so over time, I think, people start trusting each other, and they stay focused on mission, as opposed to personal ambition or grievance. If you've got really smart people who are all focused on the same mission, then usually you can get some things done."

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