Guest post: The Future of Management, by new futurist Branimir Trošić

Delighted to host a guest post by a new futurist Branimir Trošić sharing his thoughts on

The Future of Management

Self-management includes concepts like no hierarchical structures (where no one has any coercive power over anyone else) and the concept of accountability which explains that people must keep their commitments to each other (Josh Alan Dykstra, 2014). Many understand that concept, but can not quite understand how this concept could work in practical situations, partly because there is a problem of understanding this concept with a learned mental model: learned assumptions how the organization should be organized: a hierarchical structure where information flows from top to bottom. Not being able to imagine the alternative and the idea of an organization without managers frightens many: who would be in control, who would be responsible for the company’s strategy, who will lead the way? This concept purports that there is one god-like leader that sits on top of the organization and shows the way. And, usually, organizations are currently organized in that way, but the problem of that kind of organization is that not everyone in the organization understands what “The” leader is communicating, nor do people find themselves accountable for the organization to reach the common goal. Natural state of mind of every individual is that he or she will work for their own interest. And interestingly, this is one of the axioms of economy: an organization will flourish only if the individual within the organization can flourish. The problem of a hierarchical organization is exactly in hierarchy: different levels have different goals, meaning that the goal of the CEO (increasing the profits) is not the same as the goal of the worker at the bottom (usually to finish his/hers daily chores, not minding the efficiency of the work and head home). Hierarchical organizations repeatedly fail at motivating different levels to accept shared vision and to act upon it.

If motivating every worker in the organization is the problem of a hierarchical organization, and if exactly hierarchy is the show stopper in implementing that, then the logical solution would be to remove hierarchy from the organization. Solution sounds simple, but another question imposes: how can this be done in real life? If there is no boss to tell you what to do and how to do it, who should be the one to define the direction?  There were many attempt to foster self-management throughout history, and some experiments didn’t work out. Partially because people were not ready for self-management because of  wrong image of self-managing and self-organizing organization – the question of the master manipulator hangs above that idea, and assumptions that emerge from that mental model actually destroy any possibility of creating a self-organizing organization. What helps us understand that concept is to look at other things that are self-organizing, that thrive at self-organization. If we look at manmade systems, we will not find any examples because of artificial surroundings. In his book  “The necessary revolution” Senge claims that seeing systems is the most important concept that helps cultivate an intelligence that we all possess and in that way to cultivate the positive force for systems intelligence to flourish on a larger scale. When people start seeing systems, they begin to understand the basic flaws in prevailing mental models and alternative futures that are possible (Senge, P., 2014). So, if “artificial” is a characteristic of something that is not self-organizing but imposed, then everything that is not artificial should have also the characteristic of self-organization. The answer is in the question: nature is self-organizing and gives us numerous examples how human organizations should be structured. The best example that one can come across when thinking about self-organizing communities is the community of ants. Ants teach us that there is no hierarchy but specialization, and that type of social structure is called eusociality. Eusociality is the ability for the certain group of ants (or insects) to specialize for certain job or work, losing the ability to do anything else, but in cooperation work to reach the mutual goal (rising of offspring, gathering food, etc..)

In those terms, when same principles apply to human society and/or organizations, then we can understand that all the answers are in the nature, because nature is self-organized and self-managed. Nature teaches us that there is really no need for the manager in a sense of having one god-like persona that directs and tells everybody what to do, but a leader who can help individuals develop their abilities and help people find one’s own purpose.  This type of self-organization has numerous implications, both on the organization itself and on the individual.

From the organization perspective: having  fifty without a manager people that work relentlessly on mutual goal is usually more productive than having one thousand people with managers, each one working on their own goals not understanding the mutual goal. This is partly because managers tend to tell people what they cannot do, rather to empower them to do it. Google organized their project teams of three individuals, with project leadership rotating between them. Similarly how ants do it, they put in charge the one whose abilities are appropriate for given situation. Leader is appointed not according to mutual consent by deciding who has the best leader traits, but by looking which ones traits are the best answer to current problem. Furthermore, when people are empowered to take lead according to their abilities, they are put in surroundings in which management still exists, but a different kind of management: the one where behaviors of both leaders and followers are induced, rather than compelled (Hock, D., 2000.).  In such self-organizations, power is never used; at least not the one whose sole purpose is to boost an ego of a manager, but power whose purpose is to solve the problem. By giving up power and coercive control – you get it back and have access to power. The question imposes why managers are not willing to give up their power. The problem is fear, they try to manage things, force them to their will. To do that immense energy is wasted solely on defending themselves. When this control is let go, the manager/leader then frees up huge amounts of energy spent in wrong way (Watts, W.A.1968.). To be able to let go that control, one should trust their subordinates and this main characteristic of a leader: leader has faith in his followers to do the job, and this trust is born out of humility, a feeling that your subordinates are equal to you, the leader. That freed power that is gained through letting go of control, having faith in subordinates and considering them equal is then divided throughout organization, and when power is divided – everybody becomes the leader, vision becomes mutual. In organizations where everybody is equal and does his best to reach the shared vision, productivity rises because workers stop being active and start being productive: problems are communicated and solved in order to reach the mutual goal. At this point, we should stop using the term self-management and start using the term self-organization. At this point the mental model of an old hierarchical organization becomes obsolete, and its alternative: self-organization becomes clearer. In comparison to hierarchical organization, self-organized one is decentralized, or in Clevelend’s terms: uncentralized, it becomes a real network of cooperation between groups of people specialized by their passion and gained power to work and achieve the mutual goal. When a network of passionate and specialized people starts communicating in such a way, a vision becomes a flux and not a rigid non-flexible axiom.  Since it is a flux, and everybody is a leader, everybody is also invited to participate in creation of that flux. When a self-organization reaches that state, it also becomes a dynamic organization, the one that has the freedom to change (or not to change) from day to day, and is as a chaordic organization powered from periphery, not from center. In this way, the vision will be a goal that can be reached, and the one that cannot live up to its plans. This is why hierarchical organizations fail: since there is no possibility for the people to participate in the vision (the god-like creature at the top is the one who communicates the vision), to change it according to its possibilities, since the people are not empowered to become leaders in their own fields, since power is used in coercive way and taken from people, since there is no trust, no faith, and rule of fear, the probability to reach the goals of the vision is rarely high. Or to put it better: the vision is not the one that is communicated, but the one that is known and not communicated, the taboo: to fulfill the wishes and achieve the ideas of workers direct superior, that often (due to lack of specialization) has anything to do with productive fulfillment of the vision. In that way, we should understand that in hierarchical organizations the real customer whom the whole organization is serving is actually – the CEO, which is, to put it in a simple term: wrong.

From the perspective of an individual, we have to recognize that simple acts of minifying subordinates mistakes and empowering them to decide for themselves how they will contribute to a mutual goal actually transforms unsatisfied workers that probably do not sleep at night  and are afraid of what will happen to them because of the hierarchical relationship with their boss  to a highly productive workers that like to talk of different subjects, proactively solve the problems of the company  and are repeatedly praised. This is the model of how leadership should look like. A leader has to understand that the most productive system is a uncentralized system, with every center being specialized for a certain job, every specialization center should take over the lead when an organization faces the problem which can be solved exactly by that specialization center. This type of organization should be backed also financially, and this can be done in two ways: everybody should start with the same pay-check. The work people do should be then categorized in order to define what type of work brings what type of revenue (or any other benefit to the company), and the basic pay should be multiplied with the index of complexity of the productivity (not activity). In that way, people can choose to do a lot of little improvements that will lead towards reaching the same goal or one big innovation that will be the game changer. The difference between the first worker and the lateral is simply in the knowledge. Knowledgeable workers tend to be more productive by applying their knowledge into daily business.  Second way is to build profit centers and gather specialized people around them. Each profit center should be responsible for their own budget they would receive after committing to reach a goal negotiated with other profit centers. The budget would be dynamic, going up or down on every quarterly forecast depending on contribution profit center had to fulfillment of a goal.

Furthermore, from the perspective of an individual, working in chaordic organization has several benefits. First, by pursuing their passion, people are intrinsically motivated to do what they love to do. And this is the holy grail of motivation: how to intrinsically motivate the worker. The answer is simple: let him or her do whatever they want to do, while they pursue the mutual goal. It does not matter how long they stay at work, do they work from nine to five, or even if they are coming to work, while they have their own way of contributing to an organization. Being able to organize one self, and not to feel that the punishment will follow because bosses requirements are not met is the crucial thing in letting the team go (Medinnila, A, 1998.)

In terms of self-organization, management has no future. At least, not what under the word “management” we understand today. Management will become just one of the jobs being done within the company, not putting people who manage businesses above nor below anybody else. The characteristic of the third industrial revolution: decentralization of production and distribution of services will apparently happen also within the organizations. Social structures will be disrupted, since fewer and fewer people are prone to be their own boss, there is not a single reason not to create organizations and companies according to those who make the company: people. And only in the moment when every single employee is a leader within his or hers line of work, when every leader works and collaborates with a goal to reach a mutual goal, then the noun “company” will achieve it’s true meaning. Until then, people will work in slaveries, not companies, being unproductive, unimaginative and unmotivated.

We should doubt that there is any possibility of changing current companies in such a way, but new ones with described structure will arise, become disruptive, more efficient and the same thing will happen that happens with all the companies that refuse to adapt and ride the tsunami of the future: they will go bankrupt.  It is a model in which internet replaced tv and other media, how air b’n’b replaced booking the hotel, Uber the taxi and all other examples how new emerging models had disruptive effect towards old economy of scarcity models.

The disruptive transformation of a company is a transformation of doing business, and also, in a way a transformation of how we live.

Branimir’s contact details:

Branimir Trosic, btrosic23@gmail.com

The future of MBAs

I’ve reached M in my ‘the future of’ series. So, MBAs.

We have all had to sit through talks where the speaker thinks that using lots of points that start with the same letter is somehow impressive. During one such talk, I got bored and produced this one letter fully comprehensive MBA. Enjoy:

Complete course covering company conception – cremation

If you’re sick of crappy management guides that insist on using the same letter for each point, fight back in kind:

Only pay top pay for top people

We often hear organisations say they need the best people, therefore have to pay the best too. This line of argument is seriously flawed but is cited in every boardroom remuneration battle. It too often results in highly excessive reward for mediocre performance. In many cases, someone as good or even better could be employed for far less.

I meet a great many CXOs in my line of work, and with a few exceptions who really are worth their pay, I have noticed very little correlation between rank and overall capability or quality of judgement. Why should people be paid much better if they aren’t a lot better than their potential replacements? There are a few stars who ought to be rewarded, but most senior posts can be filled just as well at lower cost. Only vested interests maintain the ubiquity and longevity of this flawed reasoning that top executives have to be paid very richly within a company. 

In the vast majority of situations, and at every stage of promotion, a number of candidates apply for the job. There is usually very little to choose between the top candidates, but someone has to get the job, and it goes to the one who performed marginally better in the interview. What is then forgotten is that although the job has been filled, there are still several equally good people who could do it. If the winning candidate were to move on for higher pay elsewhere, any one of the others could easily pick up the baton and probably do just as well. It is therefore nonsense that the pay for the job has to be a lot higher than the grade below. If it were just 5% bigger than the lower grade, it would still be filled by someone just as competent. People would still want the more senior job because it is more senior. Pay is actually one of the lesser incentives, power being a greater one.

If each grade were paid 5% more than the grade below, wages would be much flatter. Typical blue chips have about 7 layers of management, and even this is open to question in terms of wisdom. That means that the top job only really needs to pay 40% more than the lowest grade. If an executive then performs far better than expected, they could be rewarded by bonuses, just like any other staff. If such a remuneration policy were implemented, it would save companies a great deal of money.

Of course, experience should be rewarded too and a wage scale within each grade is still useful to reward people who stay with a company as they become more useful. It would be reasonable to implement a bigger differential between the top and bottom of a scale than between scales. A higher grade might mean more responsibility or longer hours, but doesn’t necessarily need significantly more talent, and usually the job could be done by any number of people at the layer below. Therefore, promotion should be rewarded less lucratively than progress up each pay scale according to experience and tenure, which does correlate very highly with being more useful. Too often, someone who is excellent at their job is promoted to one where they are less excellent, and the company suffers (as does the person). Rewarding skill and experience within the job is often a better idea than promoting someone.

Clearly, some people do deserve to be paid much more than their colleagues. In many fields – design, leadership, research, engineering, teaching, law, medicine and so on, there are always a few high fliers who are so good at their job that they produce many times the value of their more ordinary colleagues. A top engineer might invent many of the key products on which the company depends, whereas many others perform at levels where they are easily replaced or outsourced. A top designer might make the product so appealing that it sells far better than it would otherwise. Companies should try hard to keep such people since they generate a disproportionate amount of income. But even here, pay is only one of a range of incentives that appeal to people, so companies should spend more effort looking at the individual’s goals and desires and target them more accurately. Bonuses and pay can be used of course if that is appropriate. In this case, there is no good reason a top designer should not be paid more than the CEO.

So, the problem is not that some people should not be paid more, it is that it isn’t always necessary to pay more. Just beating a few other candidates at an interview does not in itself guarantee that a person is much more valuable than others who also applied. In most cases they aren’t.

So, how to identify those that should be paid more? Simple. Top people stick out. If they don’t stick out, they aren’t top people. Top people don’t get discovered at job interviews. Often they don’t even apply for promotions because they are already exactly where they want to be.

If a product is hailed as having a wonderful design, find the people who were responsible and reward them. If a team performs well ahead of expectation, first reward them, and then ask them why they did so well. If they think that excellent leadership was a key factor, then reward the leader again too. Just don’t always jump to conclusions and always reward the people who happen to be in charge at the time something goes right. It may well have happened anyway, or even in spite of their involvement.

One of the big problems that many companies are now discovering is that top people no longer want to work for them. Often those people have found that thanks to the net, they can work freelance on a contract by contract basis for the highest bidder. Some of them can’t now be bought at any price as permanent employees, other will respond to higher offers. The result will be a small elite who are highly rewarded, and a large majority who are simply commodities and whose skills can be acquired at low cost either locally or from other countries.

So, what of the companies paying high salaries for top people. Well, some of them deserve it. Having them on board can save a company or dramatically improve its performance. But the simple truth is that most of the so-called top people are not top at all, but only marginally better than the competition at a series of interviews. They deserve 40% more than the junior manager, and not a penny more. We need to spend a lot less on high blanket remuneration of all executives, and start spending a little effort on identifying the really top people and reward them instead. It doesn’t take that much more effort, because as I said, the top people really stick out, and if they don’t, they simply aren’t top people.