Tag Archives: management theory

Denning and the Death of Hierarchies

Steve Denning, the “radical management” and leadership guru, published a post at Forbes.com yesterday about the shift taking place within many organizations, away from hierarchical models of command and toward more fluid, flexible and agile setups. Drawing on Fairtlough’s The Three Ways of Getting Things Done — which argues that the only “effective” organizational models are hierarchy, heterarchy and responsible autonomy — Denning argues that hierarchies “must sign their own death warrants to survive” in what he likes to call the Creative Economy.

In this post, Denning’s interested in why business leaders cling to hierarchy even in the face of evidence that it’s no longer the most effective way of getting stuff done (if it ever was), and in the paradox that in all the examples he can find, “it’s the hierarchical management itself that has led the shift away from hierarchy. The shift didn’t occur as a kind of bottom-up movement. It was the top that saw that there was a better way to make decisions and went for it.” Flatter organizations tend to cleave to the status quo and work within established frameworks, he observes.

Of course plenty of other people within an organization might see that there is a better way. Those atop the organizational hierarchy are the ones permitted or entitled to say it aloud or do something about it. Hierarchy isn’t just a way to get things done; it’s also a way of distributing power, and the power relations hierarchy maintains are a daily fact of life for subordinates. They usually don’t have a place at the table when the organizational models are being drawn up or redrawn. In order to effect change within a hierarchy, those at the bottom – and the middle – would need to be enlisted as stakeholders, entrusted with real power and respected as equals (which would itself require some undoing of the organizational hierarchy).

I am a little puzzled why Denning here doesn’t present a more considered and nuanced view of the way power actually works within organizations – and the way in which concentrated power can actually hamper performance and kill ideas or even the motivation to present ideas about how to do things better.

That aside, and no matter how or why or by whom “the shift away from hierarchy” is brought about, Denning’s article is a good place to start talking about what this shift will really entail and require of people at every level of a hierarchical organization. It seems fair to say that as organizations get flatter and try to operate with more creativity and agility, the way things are coordinated – the way we use language to order the world, get things done and coordinate action — will itself have to undergo a radical change. The way I’d put it is that coordination will have to shift from the power of command to the power of asking.

Indeed, how we use language – how we make claims and demands on others, how we talk and listen to others about what to do — can itself help effect a shift from hierarchical command structures to the more fluid structure associated with the give and take of serious conversation (the rough equivalent, to my mind, of what philosopher T.M. Scanlon calls “co-deliberation”). I’ll have more to say about what constitutes a serious conversation in a future post.

Strategy’s Eclipse and the Big Chief

One of the more provocative business articles I’ve read lately appeared just last week, on forbes.com. It’s a piece by Steve Denning about the collapse of the consulting firm Monitor. The article has already generated thousands of comments and what its own author, in a follow-up post, calls a lot of “social media brouhaha”.

Most of the discussion so far focuses on Denning’s analysis of Monitor’s collapse. He traces the firm’s demise to Michael Porter’s flawed idea that “sustainable competitive advantage” could be gained in markets “by studying the numbers and the existing structure of the industry.” Monitor, in Denning’s view, was selling an “illusory product” that merely “supports and advances the pretensions of the C-suite.” Where Monitor’s approach to strategy failed was where it matters now more than ever: helping businesses connect with or “delight” customers, or innovate, or do things that customers (or, for that matter, society as a whole) want them to do.

Not everyone agrees with this analysis, of course, and Denning has been responding to criticism and comment on the Forbes site and on Twitter. I am more intrigued by what Monitor’s downfall might signify – whether it indicates that there are larger changes afoot.

Denning himself wonders if the firm’s collapse marks the end of an “era”. Several of his readers and Tweeters (including me) have suggested that pure strategy plays are simply no longer viable. But that observation only scratches the surface, I think. The downfall of Monitor may indicate something else as well – a larger change in the configuration of CEO or executive power within the enterprise, and the end of a certain idea or iconography of the CEO.

Denning approaches this very thought as he lays out his historical argument, which is basically the story of how Michael Porter got lucky and launched Monitor at precisely the right moment. When Monitor first appeared on the scene in 1979, writes Denning, a new era was dawning:

Pursuit of shareholder value (“the dumbest idea in the world”) was just getting going with a vengeance. The C-suite was starting to realize that they could cash in, big time. Along comes Michael Porter with a rain dance that justifies their cashing in. Porter arrived at just the right time. Hopefully that era is now coming to an end. People are starting to see the rain dance for what it is.

I would hasten to add that the dumbest idea in the world, the doctrine of shareholder value, helped usher in another very bad idea that is still very much with us — the idea of the “CEO” that started to take hold at roughly around the time that acronym first appeared on the scene, in the early 1970s. The CEO is largely an invention of that period.

I’ve taken up this theme in a few posts (here and here and here). A number of journalists and academics have addressed this same point, directly and indirectly. For Rakesh Khurana, the cultish construct of the CEO emerges out of the transition from managerial to investor capitalism. In response to the growing power of institutional investors (like pension funds, bank trusts, insurance firms, endowment funds, and money managers), boards had, by the 1980s, come to focus almost exclusively on the search for an outside celebrity CEO “savior” who would not only appease and appeal to newly-empowered institutional investors but also make a big splash in the newly-emergent American business press.

Needless to say, this further consolidated decision-making power at the top of the corporate hierarchy. At the same time, the newly powerful CEO had become a cultural icon of celebrity and success. We made a totem of corporate executive power.

If the mantra of investor capitalism was “shareholder value,” the central mystery of the new faith was the “agency” problem (as described in a now-canonical 1976 paper by Jensen and Meckling [pdf]). The interests of shareholders and managers were now to be “aligned.” Results have been mixed: a myopia set in, putting the “focus more on the short-term management of the share price,” writes Christopher Bennett on a Conference Board blog post, “and less on the long-term management of the business.”

In a Washington Post Op Ed, Michael Useem (who’s written the book on investor capitalism) takes it one step further. He connects the “unrelenting pressure of the equity market on company leaders to meet quarterly TSR expectations” with the offshoring of operations, “regardless of the impact on the domestic workforce.” Worse, it’s invited leaders to behave like sociopaths, or at least irresponsibly: “an incessant equity-market demand on company leaders to focus on their own advantage whatever the disadvantage for others” has made “fewer executives and directors…able to step forward to advocate what is required for a vibrant economy, not just what is required for their own prosperity.”

Shareholder value may have not have been the dumbest idea ever, as Denning would have it, but it was, at best, a Faustian bargain for American society. It was an important article of faith — and not just for the believers, but for society as a whole, during the period in which the celebrity CEO took on his (yes, usually his) unique features and cast, all the trappings of his office.

Strategy, especially Monitor’s brand of strategy, played a crucial role here. Denning refers us to a passage in Matthew Stewart’s The Management Myth:

Porter’s theory thus played to the image of the CEO as a kind of superior being. As Stewart notes, “For all the strategy pioneers, strategy achieves its most perfect embodiment in the person at the top of management: the CEO. Embedded in strategic planning are the assumptions, first, that strategy is a decision-making sport involving the selection of markets and products; second, that the decisions are responsible for all of the value creation of a firm (or at least the “excess profits,” in Porter’s model); and, third, that the decider is the CEO. Strategy, says Porter, speaking for all the strategists, is thus ‘the ultimate act of choice.’ ‘The chief strategist of an organization has to be the leader— the CEO.”

With the passing of Monitor, this concept of strategy may start to go by the board. And so, with any luck, will the idea of the CEO as the “superdecider” (Denning’s word) or super-anything. The rain dance is over, and we can now see the Big Chief as he really is.

Ask Is A Verb

If you have spent any time in conference rooms or on conference calls, you have no doubt arrived at the moment when someone, usually the person who commands the most authority in the room, articulates “the ask” of the meeting. Or someone will ask, “what is the ask?” and this poor excuse for a question will snap everyone to attention, demonstrating that they regarded most of what went before as inconsequential blather. They were merely awaiting their orders.

Against this slide into jargon – and it’s fair to talk about it as a slide, an intellectually lazy lapse into the jargon of bureaucratic command– it is important to assert: ask is a verb. Why? Because verbs describe and denote action, and asking is a special action – an action that initiates and coordinates new action (on a very basic level, the discussion of the request, the coordination of the actors who will attempt to satisfy the request.) Asking is a way to begin, and beginnings are the prerogative not just of nominal leaders, but of all human beings.

When a designated leader, or anyone, for that matter, talks about “the ask,” they are turning a verb into a noun, an action into a thing – into a command, more precisely, and depriving asking of its native connection to action. They are not interested in beginnings, but in ends, the outcome they already have in mind. At the level of the sentence, “the ask” or “my ask” obscures the basic relationship that the verb “to ask” usually creates between a petitioner (the person doing the asking) and a respondent (the one of whom a thing is asked), and converts that very fragile and mutable relationship, that conversation about the world and what we should do together, into a superior’s control over a subordinate.

When you ask someone to do something you will elicit a response. The response can be a simple yes or no; and the number one rule of asking  — of being a petitioner — is “always take no for an answer.” In other words, be prepared to listen, engage and adapt. Asking someone to do something – as opposed to ordering them to do it – is to initiate an event whose outcome is unpredictable. The request is fraught with possibility, uncertainty, promise. That is because when you ask, you implicitly acknowledge the independence and autonomy of the other – recognizing them as an agent capable of their own beginnings. When you command, you forgo that recognition, and the respect that goes along with it, to remind the other of his subordination, and treat him as an instrument of your will, a means to your own ends.

This little piece of jargon creates a big moral muddle, but sometimes a muddle is exactly what bureaucrats want to create because they are unwilling to assume the responsibility of command, they are averse to risk (beginnings are always risky), or they are just cowardly.  “The ask” preserves hierarchy without acknowledging power relations. It involves phony respect for the other: I am not petitioner asking you, the respondent, to do something; there is an object called “the ask” that we must address. It comes from nowhere, really; its origin is unclear, but our duty is clear.  That request from nowhere or at least nobody also keeps power relations, the status quo, intact. The course is set. Things have already begun; the task now is to complete them. So “the ask” works as a hedge against change, against doing something really new; it short-circuits the conversation, shuts down dialogue, and enlists others not as collaborators but as a pair of hands to get a job done.

I suppose that’s not so surprising in a context where the point is execution of an already-decided objective or plan, not debate; but without debate or deliberation a plan or objective will lack meaning for those asked to carry it out. They won’t have had a chance to figure out for themselves the best way to carry it out, whether they are the right people to carry it out, or whether it ought to be carried out at all.