Thursday, 28 July 2011

Resistance is futile

In my college work I was asked to discuss the work of Bartlett and Ghoshal and the problems of its application in creative enterprises.

Structure follows Strategy and Systems support Structure. This aphorism I shall hereinafter refer to as SSS was cited by academics Bartlett and Ghoshal (B&G) along with the ‘scientific management’ theories of Frederick W Taylor as the philosophy that has defined the architecture and roles of corporate management for the last hundred years in their seminal series of three articles in the Harvard Business Review (1994-1995):

Changing the Role of Top Management: Beyond Strategy to Purpose

Changing the Role of Top Management: Beyond Systems to People

Changing the Role of Top Management: Beyond Structure to Processes

The SSS model of large enterprise organisation with its pyramid hierarchies of responsibility, divisional domains, uniform methods of production (Fordism) and deskilled personnel (Taylorism) enacting strategies devised by the management is credited by B&G for the rise of multinational companies and the immense growth of capitalist economies in Western countries from the end of the Second World War until the global energy crisis (circa 1950 to 1973).

B&G claim that this model is now inadequate. For organisations to operate effectively in the new post-modern world with the challenges of sustainability, scarcer resources and increasing pace of change and economic shift to Drucker’s ‘knowledge work’; managers need to adopt a new system architecture where their role is to define the organisation’s “Purpose” which in turn defines the “Process” (the means which the organisations uses) that in turn defines the “People” (the roles for the people it employs).

On the face of it, based on my experience of working in creative enterprises, I see hardly any difference in the pros and cons of PPP as a management structure whether an enterprise is creative or not. All enterprises require varying kinds of creativity or innovation from their management. An electronics maker may make it their business to constantly innovate new products but a gravel extractor may just need to innovate in their processes to keep up with competition and ensure efficiency. B&G’s examples come from studies of large manufacturing organisations where there is a constant need for innovation driven by competition to find new markets and greater share in mature markets. Some of PPP’s promise is improved communication betweens managers and divisions which is a big deal for large organisations. Small organisations naturally or informally adopt interactions of the PPP model as there are fewer components, a point I will come to later with ‘small is beautiful’. In considering PPP; size matters.

From personal experience I find that that very large ‘creative’ enterprises are not that much different that an automobile factory in terms of management complexity and working conditions. The most creative enterprises in my working experience such as Warner Bros Studios, Walt Disney and the BBC, actually have very complex bureaucracies concerned with devising the strategy and managing the workforce in ways that B&G consider will be unnecessary.

As part of my research I described this model around the coffee maker to managers in the arts organisation that presently employs me. None had heard of Bartlett and Ghoshal but some said “isn’t that what we’re doing already”. In fact not, as there ‘purpose’ is not readily articulated and the management is very much hierarchical but, in concordance, most of my colleagues derive great satisfaction from their work although for some there is jaded cynicism whether the company can innovate sufficiently and solve staff turnover in some roles.

Warner Bros. Studio employees realise they work in a ‘fantasy factory’. There’s an old joke about a man who cleaned up after the elephants in the circus. When he was asked why he didn’t quit his menial job, he retorted; “what, and leave showbiz?” 

The key difference I can derive from having had jobs in manufacturing over the hill from Hollywood and in ‘Hollywood’ is that the roles of most of the basic jobs in motion picture and television production; the grips, the gaffers, the best-boys, offer a great deal of task autonomy and variety even though after a couple of episodes, one TV sit-com looks just like another and most TV directors are complete despots. The US and UK entertainment industry is able to exploit millions of workers in menial entry level roles without complaint with the promises that they can progress to careers as directors, writers or producers (or equivalent in music, theatre, dance) but when it comes to key technicians, the glamour wears off pretty quickly and if comparing work/life balance, job security, safety and wages, the entertainment industry, the arts and media compares poorly against retailing, academia and manufacturing. What keeps the lemmings coming is probably the self esteem that comes from being valued as ‘creative’.

If subjective opinion is permissible, B&G offer all forms of large enterprise a tantalisingly attractive proposition; a promise of agility in the use of information and a greater ability for innovation which are qualities that must be improved if an organisation (or organism) is to survive by adaptation to change. Paradoxically its attractive people-centric philosophy has concordance with the works of Karl Marx and E. F. Schumacher – possibly alarming its detractors - yet it offers with unbridled enthusiasm a plausible strategy for capitalism’s survival.

Despite my confidence in my understanding; stripped of its proofs and case studies B&G’s premise remains a complex argument that cannot be grasped as simply as the aphorism it refutes nor can it be explained fully in the space here. It is a radically transformative notion; an unfamiliar model that appears to go against accepted hierarchies of leadership to redefine the manager and the CEO and, rather than replace a few worn components of their practise, it rebuilds the organisational structure. Its scope for change is enormous.

If that is overstating it a bit, the foundations sit on accepted social theories and examples such as the oft-cited Brazilian manufacturer Semco which give B&G’s ideas credibility in practise. PPP is resonating loudly in management and academia. Dr Paul Thomas, a senior lecturer at the University of Glamorgan was reported by the BBC on January 7, 2008 as recommending a world without managers where the staff can take ownership of a company themselves. He wants to see workers in all organisations have the freedom to be innovative.

It is said that analogy is the heart of human reasoning. It is an intrinsically interesting way of discovering similarities between existing proofs or theorems of the highest importance.[1]

In the most simplistic analogy, PPP alters the routing of responsibility up and down the reward hierarchy and rejects Taylorism by placing high value on the variety of the person. I will try to explain my understanding that PPP is a complex mechanism for obtaining efficiency (output less input) from people by which the gears of purpose turn communication which drives innovation which powers motivation.

In an organisation, like an organism, each node of activity can be connected to several overlapping networks wired according to the vital nutrients or stimuli they carry. Some networks are hierarchical and some are circulatory. Besides the distribution of nutrients allocated according to activity; an organism lives by the quality of the stimuli by which it determines that activity and the quality is degraded or improved by the method of transmission. In SSS, one of the manager’s roles is to collect, sieve and distil information for relevance to be passed to superiors to decide upon. The stimulus passed up comes back as the means (authority and capital) to act. Large organisations like B&G’s example of General Electric; find that as the organisation grew, their lengthening vertical communication channels separated the parts - divided by territory or process - from sharing information effectively with each other and the complexity of planning for increasing size became an ever increasing load. The pitfall of censorship of bad news to ensure approval (psychological hedonism) also misleads interpretation.

PPP posits that individuals and groups of people if guided by a rich and engaging and thus unifying purpose will be able to act in a matrix and will be more independent and able to act more effectively and this relieves managers of the huge burden of determining strategy and tasks them with steering by determining and refining purpose. Sun Tzu in his ‘Art of War’ is said to teach “strategy is not planning in the sense of working through a to-do list, instead it requires quickly responding appropriately to changing conditions. Planning works in a controlled environment, but in a competitive environment, competing plans collide creating situations that no one plans.”[2]

The strategy of autonomous units was Napoleon’s secret weapon in what became known in German as the auftragstaktik where his field marshals were given an overall mission statement then allowed to make their own decisions without having to communicate back and forth with him. The speed and creativity of this new kind of warfare overwhelmed the Prussians used to waiting for orders from their headquarters. [3]

Another tenet of PPP is management by personal interaction which makes communication between divisions occur horizontally (or circulatory) so whichever division or manager is demonstrating effective practise, it will be apparent to everyone else. This matrix network model self-regulates more efficiently than a central processer.

B&G state with conviction that in order to transition from SSS to PPP organisations must: Foster individual creativity; Task each employee with teaching and learning; Translate philosophy into norms and practises.

They see a fundamental moral difference between executives who see their role as designers of strategy than those who see it as designing institutional purpose. “The strategy makers view their companies as profit maximising entities with narrow roles in a complex environment.” Those managers underestimate - perhaps for expediency - their role in society and it likely abrogates their sense of responsibility towards it. B&G consider that companies are more than just a business; they are huge repositories of knowledge and principle agents of social change. Their role in creating wealth brings responsibilities.

B&G said “purpose is the embodiment of an organisation’s recognition that its relationships with all its stakeholders are interdependent. ….When organisational values become merely self-serving, companies quickly lose the sense of identification and pride that makes them attractive not only to employees but also to customers and others. And when managements’ respect for and attention to its employees’ ideas and inputs is diluted, motivation and commitment fade.” B&G say elsewhere; “Purpose – not strategy – is the reason an organisation exists. Its definition and articulation must be top management’s first responsibility.”

Values are by definition constants. And like a constant, they can be ‘set and forget’ like a thermostat on defining purpose. I expect that devising purpose is a more ‘long wave’ cycle of stimulus-response iteration than devising strategy and entails a shift of competitive mindset from perhaps Sun Tzu’s rapid-reaction ‘warrior’ to a Platonic philosopher-king management style. In a creative enterprise choosing one style over the other will depend on the enterprise. The challenges of mounting an event over a short term such as the Olympic Games will probably be met by warrior levels of motivation and rapidly adaptive strategies. On the other hand, reforming the National Health Service or ridding Westminster of sleaze might require a higher vision unflinchingly carried out over the long term.

Another aspect of PPP is the apparent flattening of management hierarchies and the philosophy of locating responsibility as close as possible to the point of production which pays off in lower overhead costs. Although not cited by B&G, this is borne out in MIT’s five-year 14 country $5 million IVMP study.[4]

This study refuted the Taylorist philosophy of separating ‘thinking’ workers from ‘manual’ workers. Having workers who can think as well as do eliminated the rationale for many overhead activities. After all, what is tacit knowledge cannot be put into memos. We have come back full circle to wanting to employ in industry nascent Henry Fords that are brilliant craftsman as much as talented engineers. So where are they now?

Well, some may have chosen to have careers in the arts after finding engineering too stultifying (artist/sculptor Tim Hunkin originally qualified as an engineer) but there is no lack of latent talent in ordinary ‘unskilled’ people, if they are given the means to experiment. My assertion questions national policy about education which has to overcome the legacy of streaming off the cream into universities and the dross into manual labour and the service economy under the erroneous assumptions about the present made in the 1960s.

Perhaps it is significant that in a media sector stagnant of true innovation (not for want of trying) for some years was the resurgence in 2007 of the Popular Mechanics type of magazine, in particular the quarterly title Make: Technology on your time emerging from nowhere to a market leader. In our technology obsessed world, many ordinary people are getting great satisfaction disassembling what was once thought impenetrable technology and adapting it and innovating for their own amusement in their garages. It empowers consumers to take control of technology and make it their own. I must suggest that employers should take B&G’s advice and encourage their workers in these sorts of leisure pursuits.

B&G put great store by the value of bottom-up innovation which is aided by the improved communication matrix and lighter load of regulation. Good ideas become adopted and bad ideas discarded as the overall ‘intelligence’ of the organisation to find niches in the market, formulas in the lab or respond to market trends and so on is greater. I cannot construct reasoning myself that can dismiss the value of this to a creative enterprise. This idea is built upon common sense that the customer-facing management knows what change is needed from the organisation.

B&G state their model elevates the importance of the front-line staff. The weakness in hierarchies is the drag placed on innovation and the degradation of information going up the chain of command to be decided upon by superiors to come back to those who knew it all along or have no vested interest in enacting it. Go into any factory or works and stuck up somewhere is a photocopied biblical allegory of how what looks like useful fertilizer to the management is seen as a bucket of shit to the workers.[5] B&G found that working out planning processes and measuring and reviewing strategies “eclipsed the utility of the plans they produced which were: sterile generalities to which no one had any affinity or commitment.”

The collapsed layers of management in PPP makes organisations appear more egalitarian and a sense of respect and self-worth are critical for motivating people in an organisation so it stands to reason that the whole organisation benefits if its people are empowered and rewarded if they show entrepreneurship and initiative. In PPP, people are what the organisation is and they are not, like Taylorism, interchangeable parts.

In order to define purpose, an organisation must assert what its values are and those values must be more than a glib mission statement. That is no easy job so there will be still plenty of work for managers but managers will have to master this new philosophy or organisations may have to recruit people not usually perceived in the ‘old school’ as management material. Sage wanted. Apply within.

A difficulty in enacting the PPP model is that an imposed or decided culture or derived culture is not the same as the true culture within an organisation. Even if the managers aspire to good values, if the workforce is jaded, mistrusting and cynical, these ‘good’ values will be subsumed. Many of Britain’s and the USA’s largest organisations are rife with disgruntled employees, union intransigence, “us and them” mentalities yet they remain profitable. Why should they adopt the PPP model?

There are many beacons of good labour relations such as the retailer John Lewis who have deep and long held values such as each employee is actually a ‘partner’ of the firm. Unfortunately there’s a saying in business “nice guys finish last.” Companies who are renowned for their ethical values towards employees also appear to approach growth and profit opportunities with more caution – as they presumably are averse to risking the livelihood of their valued employees - and they don’t have such stellar reputations for share growth. Just compare the share price for John Lewis/Waitrose against Tesco and Homebase/Argos. I find a huge dichotomy of organisations who speak of values in their company reports but in practise have unspeakable attitudes towards their staff. For PPP to work, the benefits of having real values are going to have to be accepted in the capital marketplace as much as the organisation. If it becomes fashionable to adopt a long term payoff in strategies for survival they might.

In business a quick-fix route to profit (do or die in ninety days) is always more attractive than any long-term approach where the results are too distant to see with certainty, even if the benefits will be greater. A “bird in hand” they say. This probably applies to management theory as well. If an organisation should become enlightened to adopt PPP, B&G say values cannot be instilled by crash programme nor should existing values be chucked or subverted. The goal should be to build on the strengths of the existing values and modify the limitations. Where value confrontation is essential, it requires care, not a broadside attack.

In B&G’s papers, the discussion is on the roles of frontline and senior management that appears to assume the employee at the bottom of the supervision hierarchy does not have a role in devising purpose or strategy. B&G consider that management must define a purpose these employees can be engaged by.
If I can imagine for a moment a digression into a dramatic scenario where a traditional toaster factory one day introduces a whole new management schooled at the feet of B&G, who, seeing their market for toasters swamped by cheaper imports, let the staff decide the purpose – and so strategy – of finding a new business or product (the Lucas Experiment run riot?) I can imagine that eventually the factory and its hierarchy would be eventually demolished and rebuilt in a different form. It might even stop being a factory and reinvent itself into a technical college as the employees ask themselves; does the world really need any more toaster makers? What else can we do with all this machinery and our skills that have richer and more engaging purpose? As Semco shows, this is not as fanciful as it sounds. We could try the scenario with an advertising agency. Here there might not be such impetus but the copywriters, typographers, photographers and ad-bookers might decide they no longer want to shill for tobacco but will take on NGOs as a client and might accept the inevitable pay cut as a result of having a much more morally palatable purpose.

Unless the managers (acting for the owners of the capital) want this to happen, there will be a tension (which Taylorism aimed to neutralise) between managers and workers taking their orders. PPP diminishes but does not overcome Taylor’s assertion that workers produce only enough to escape punishment and however egalitarian an organisation, it seems inevitable - to every reader of George Orwell - that some will try to climb onto the backs of others and do as little work for as much benefit as they can get. If workers can really become managers of other workers, they may however turn to driving the others to work as hard as themselves, lest the others are shirking.

I suppose the far-off promise of management and technology is one day that work will not be work. Science will remove the dirt, noise, sweat, stress, boredom and aching muscles of work and we shall all make a living with rich and engaging roles with the job satisfaction of some artists or celebrities. But will we be satisfied with our lot then?

As my flights of fantasy are unlikely, is difficult to know if the PPP model can really change the roles of the assembly line worker, fry-cook in the fast food restaurant or the office cleaner which are very much analogous in repetitive drudgery because at the end of the day, there are still many mundane tasks that have to be done in this world. The promise that the people who are usually the lowest paid on the organisation’s payroll might find a rich and engaging purpose and so be more productive if given more autonomy about their tasks is tantalising but B&G have not actually cited any examples where this happens. If workers in mundane jobs work will more effectively with more purpose I wonder why it isn’t widely adopted (beyond lip service) since PPP is now ten years old.

I find that in actuality successful companies like Starbucks who have every appearance of engaged and motivated employees actually have stringent sales performance criteria and rather than offer employees autonomy behind the counter, they provide scripts for employees to engage in happy banter to create an atmosphere conducive to selling coffee.[6] This company micro-manages even the workers chit-chat to make them productive.

The proofs of PPP in action are where mid-level managers, CEOs and organisations as a whole work more productively – in response to a paradigm shift – but PPP is never shown as a panacea for some of the dirty work in this world where management of workers boils down to “either work or be fired”. Giovanni Angelli, head of Fiat, said that no matter what it can do to make work more attractive with peripheral benefits such as housing and education, it cannot make sheet metal pressing a purposeful occupation.

Detractors of PPP for the workers might point to several failed experiments. To improve build quality and worker satisfaction Volvo became renown in the 1970’s for building their cars on a fixed bench with teams of assemblers doing a variety of tasks rather than a repetitive tasks on a moving conveyor belt but it has since given up on this model because this route to quality became unaffordable. Phillips once tried the same with the assembly of radios and televisions. After a just a few hundred completed products, the workers felt their work was just as dull as before.[7] A balance has been found with ‘lean production’ which doesn’t promise the best of both worlds but benefits the employer by extracting greater usefulness from the intelligence of the worker to solve production problems without rewarding it beyond that their jobs exist that bit longer. I notice that workers in ‘lean production’ automakers actually work longer hours and have more unpaid ‘quality circle’ type meetings.

What ‘bad’ jobs lack and where PPP makes its impact is the process of decision making and the perceived effectiveness of a person’s decision making (by reward) is significant in the motivation for work which PPP can’t deliver in all jobs. But where PPP is most able to make a difference is in functions and organisations that are fundamentally ‘brain’ work. Thankfully arts management is very much in that field and although pay and conditions are quite often very poor, most arts workers are getting job satisfaction because what they are providing is their individual creativity as much as their labour. Interestingly, whilst Hollywood is in the midst of an industrial dispute, I’d like to raise the point that the most intransigent workers in Hollywood are the most creative. It’s the writers and directors who have struck regularly whereas the camera operators, scene shifters, grips and drivers are fairly docile. Perhaps because the value of their labour less and can easily be replaced and have massive mortgages in the San Fernando Valley, they have been cowed into submission. Being a writer has always been a risky proposition financially so what have they got to lose?

Most creative endeavours; theatre, dance, film fall into what Henry Mintzberg defined as an ‘Adhocracy’; a very adaptive organisation set up around a specific project where “the demands of the task dictate the structure which changes frequently and is driven by the skills and the commitment of the people involved.”

Some credence for B&G also comes with the success of firms like Apple and Google. My reading bloggers and comment forums indicates that both these successful companies are structured akin to the PPP model. Yet it is not accident that ‘cult’ and culture share the same root. The action of cults - by definition people united by a purpose - shows that too “rich and engaging purpose” can be harmful too. Taken to extreme, a manager in my imaginary PPP corporation might well be seen by cynic as a cult as some companies renowned for strong employee identification are.

It is a fine line and internet blogs and forums for participants of some organisations reveal that people do become so identified with belonging to those organisations that cult-like behaviour appears. An IBM executive of my acquaintance told me beside the culture of long working hours, how important certain shirt and tie colours were in the office and how his and other employee’s families hardly socialised outside of other IBM executives. Google, which barely existed when B&G did their research, are renowned for motivating their workforce with a sense of purpose and unusual perks such as free food and a worksite laundry and carwash. Google now receives 1300 C.V.s per day[8] - probably the entire output of every graduate school in the world - but there are some graduate engineers - claiming to be qualified enough to work for Google - who blog that they refuse to be part of them because of their culture. I didn’t notice any grey eminences in Google’s staff photos. It appears that modern iterations of the dominant IT companies such as Google have not rejected the ‘Organisation Man’ but created one of their own. If it takes at least a BSc from MIT and a 4.0 GPA to get your job at the Googleplex, you won’t be seen as a team player unless you wear sneakers and an anime T-shirt to work.

There are other reasons why many organisations shy from stating or engaging in purpose over strategy. Purpose requires values and values are subjective. Stating values may alienate customers enough to organise a boycott. Walt Disney is a company that claims its founder’s moral values are still their canon and extend to every aspect of the company’s business. Many filmmakers will admit that they are secretly relieved if Disney passes on making their films. Disney demands loyalty and promises it in return but employees do have to wear the mouse ears at meetings and Disney’s record of outsourcing its manufacturing to sweatshops in Bangladesh can hardly be called ethical. Although a boycott of Disney by Southern Baptists because of Disney’s policy of extending health benefits to same-sex partners did very little to its immediate bottom line, the publicity reeled in going any further with such employee benefits. Declared values can also be hard to live up to and might have to change quickly with the times. The man himself once decided to reward the entire company with a huge barbeque picnic but was horrified that once everyone had consumed the free beer they began dancing and fornicating. Disney never had another company picnic in Walt’s lifetime.

One confusing area in describing PPP to people is the assumption – because of similarity with E. F. Schumacher - that its people-centric approach is beholden to fairer and more equitable distribution of reward within an enterprise or that the enterprise’s purpose or activity must be more responsible and sustainable than traditional models of economic activity.

The ideas expressed in the collection of essays “Small is Beautiful” and later in “A Guide to the Perplexed” are repeatedly echoed in B&G’s premise of people-centeredness. Although the Schumacher might be anathema to energetic capitalism, B&G urge businesses to adopt his shared humanistic concerns as a means to improve profits and competitiveness. Simply put; good ethical practise is better for the long term bottom line.

Schumacher identified sustainability as the next great challenge for our planet as he realised that the finite end of our resources was in sight and so in which case, the price and demand of all our resources would continue to rise and then society would catastrophically collapse. In many respects, Schumacher’s predictions have come to pass and to address these new realities is why B&G proselytise PPP as an escape strategy.

Like Schumacher, B&G cite basic survival as the primary concern of an enterprise. Another oft repeated aphorism is “the business of business is to stay in business”. The great challenge ahead for all enterprises now is their conversions from consumption of virgin resources and production of waste to survival in the climate of sustainability.

Today the paradigm is to keep the machinery running with less resources and so the challenge ahead is to innovate ever more efficient and yet profitable products. B&G don’t espouse – in my limited reading – the self imposed limits on growth of organisations as Schumacher does although they do demand organisations have self-discipline and moral groundworks and I can’t see how they would contradict Schumacher’s notion that there is an optimum size for every organisation and relentless growth is not necessarily the ideal purpose of an enterprise.

Schumacher’s influence is widespread and has credibility in government. The notion of Corporate Social Responsibility (CSR) is emerging in EU legislation and although multinational companies such as General Motors Europe[9] claim to agree with these aims (influenced by B&G?), their self-serving nit-picking on legislative definitions of CSR is reminiscent of the tobacco companies’ denials of the effects on health of smoking and the resistance to legislation for that. In some quarters no doubt, the theories of B&G are seen as calls for increased CSR which is viewed as another impediment on unfettered capitalism.

Apparently - from the quote below – Schumacher’s ‘Buddhist Economics’ are fairly damming rejection of the effects of Taylorism, as are B&G. Schumacher stated “to organize work in such a manner that it becomes meaningless, boring, stultifying, or nerve-racking for the worker would be little short of criminal; it would indicate a greater concern with goods than with people, an evil lack of compassion and a soul-destroying degree of attachment to the most primitive side of this worldly existence” - Wikipedia.

B&G argue a very similar case on the basis that the natural instinct of self-determination and entrepreneurship – an expression of the curiosity of man and his ability to innovate in response to conditions – is a vital asset to organizations and the Taylorist hierarchies limit and diminish the individual’s initiative and so diminish their desires to make a contribution to the good of the organization outside of fulfilling their obligations.

The institution of PPP into a business organisation by enlightened managers has to overcome the basic nature of mankind to resist change and if implemented from scratch in a new enterprise, it has to compete with human nature to form organisations modelled on the extended family structure or tribe, then outfox their selfishness, then compete in a market place that has competitors who do not have the ethical and holistic overhead.

Business and human life experience is often described as ‘dog eat dog’ and the base realities of humanity competing for scarce resources is justification to the shareholders for continuing with policies that might give the organisation or individual advantages but in the long term it will ultimately destroy both the victor and the vanquished. It doesn’t matter if the organisation’s engine is efficient if the fuel supply has been run dry already from the gas guzzlers.

PPP may deliver more benefits for society as a whole and ultimately make stronger and more durable enterprises that are flexible and adaptable and may release us from the wasteful boom/bust cycle of traditional capitalism but by the time we realise it, it might be too little too late.




[2] Wikipedia


[4] Jones et al. in The Machine that Changed the World, MIT, 1990



[7] Design magazine 293 (1973) ‘kicking the work habit’ p58-59



No comments:

Post a Comment