Management innovation roadmap: What the new manager 3.0 has to do in order to enable employees to do their best and to be fully engaged 9788823844711

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Management and leadership, as we know them have come to an end. We can’t wait any longer, most organizations use management models at least 50 years old and no longer suited to the new challenges. Reinventing management and leadership is crucial, as the competitive advantage is not achieved only with a good business model but also with a valid management model. A business model without a management model is pure theory, as well as a model of management without a business model is losing. The book after having faced and declined the difference between business model and management model proposes a new management model (management 3.0) and what the new manager 3.0 has TO DO in order to enable employees to do their best and to be fully engaged.

Management innovation roadmap

bea

Vittorio D’Amato

Management innovation roadmap What the new manager 3.0 has to do in order to enable employees to do their best and to be fully engaged

Vittorio D’Amato is professor of leadership & management and director of CeRCA - research centre on change & organisational learning at LIUC Università Cattaneo. He is the founder and president of AIADS- italian association of system dynamic analysis. He is considered one of the foremost experts on the issues of leadership, management, business acceleration, organizational learning, systems thinking and change management.

Preface by Vittorio D’Amato

€ 20,00

www.egeaonline.it

Julian Birkinshaw

biblioteca dell’economia d’azienda

bea 4471-1f_bea 09/03/15 18:39 Pagina 1

biblioteca dell’economia d’azienda

bea 4471-1f_bea 09/03/15 18:39 Pagina 2

bea 4471-1f_bea 09/03/15 18:39 Pagina 3

Vittorio D’Amato

Management innovation roadmap What the new manager 3.0 has to do in order to enable employees to do their best and to be fully engaged

Preface by Julian Birkinshaw

Copyright © 2015 EGEA S.p.A. Via Salasco, 5 - 20136 Milano Tel. 02/5836.5751 – Fax 02/5836.5753 [email protected] - www.egeaonline.it

Tutti i diritti sono riservati, compresi la traduzione, l’adattamento totale o parziale, la riproduzione, la comunicazione al pubblico e la messa a disposizione con qualsiasi mezzo e/o su qualunque supporto (ivi compresi i microfilm, i film, le fotocopie, i supporti elettronici o digitali), nonché la memorizzazione elettronica e qualsiasi sistema di immagazzinamento e recupero di informazioni. Per altre informazioni o richieste di riproduzione si veda il sito www.egeaonline.it/fotocopie.htm Date le caratteristiche di Internet, l’Editore non è responsabile per eventuali variazioni di indirizzi e contenuti dei siti Internet menzionati.

Prima edizione: marzo 2015 ISBN 978-88-238-4471-1

Stampa: Digital Print Service, Segrate (MI)

Contents

Preface, by Julian Birkinshaw

pag. 7

Introduction, by Giampiero Bighiani

9

Foreword, by Massimo Pizzocri

11

Acknowledgements

13

CeRCA-research centre on change & organizational learning

15

1. Business system: business model & management model 1.1 Business model & management model 1.2 What is the business model? 1.2.1 Strategic map 1.2.2 Client interface 1.2.3 Network value

19 19 20 21 25 27

2. Management model 2.1 What is the management model? 2.2 Management model: “The employees’ point of view” 2.2.1 What makes my job motivating and engaging? 2.2.2 Management model & engagement 2.3 Minimalistic Management: when less is more 2.4 The slow factory 2.5 The democratic enterprise 2.5.1 Principles of the democratic enterprise 2.5.2 The democracy matrix

29 29 30 30 31 33 35 37 37 40

5

Contents

3. Management innovation 3.1 100 year old management model 3.2 The era of meaning 3.3 Management's mental models 3.4 Management innovation: the main challenges 4. A new management model 4.1 Management 3.0: research results 4.2 Management Model 3.0: the main pillars

pag. 43 43 46 50 51 61 61 94

5. The new competencies of the Manager 3.0 5.1 Leadership vs management 5.2 Manager 3.0: reconciling leadership and management 5.3 What a manager had to and still has to DO 5.4 What a leader had to and still has to DO 5.5 Manager 3.0: more than a manager and more than a leader 5.6 What the manager 3.0 MUST DO 5.7 The last challenge of the manager 3.0: release energy and manage company intelligence

109 109 111 112 114 119 127

Appendix A: what is the management model of your company?

135

Appendix B: self-assessment for becoming a manager 3.0

138

References

141

About the author

147

Praise for Management Innovation Road Map

149

6

133

Preface

The business world is in a constant state of flux. New technologies, a new generation of employees, and new competitors from emerging economies are all factors that contribute to what is often called a VUCA world (volatile, uncertain, complex and ambiguous). Indeed, as we emerge from the “great recession” of 2008-13 there is every reason to expect the next decade to be every bit as challenging as the last one. Faced with a changing business environment, there is a lot of experimentation underway in terms of how companies should be organised, and how leaders should act. Many of the new ideas come- from the world of start-ups and high-tech, but there is no reason for such companies to have the monopoly on new ways of working. Some of the most interesting management ideas in recent years, in fact, have come from industrial companies such as Semco in Brazil and MorningStar in California. In this important book, Vittorio D’Amato provides a fresh and insightful perspective on the new landscape of management. He blends a lot of the current thinking about management with his interviews and surveys with companies in Italy, including Angelini, Unicredit, Festo and Epson. He paints a fascinating picture of the new approach to managing, which he calls Management 3.0. This approach blends much of state-of-the-art thinking around greater empowerment and flexibility with a commitment to systems thinking and a greater emphasises on the emotions and feelings of employees. It is a “softer” version of management than most people are used to, but I think it is the right way forward. Indeed, it is an approach that explicitly avoids the old distinction between management and leadership. Effective managers in this new world are masters of paradox – they understand the need to operate in the fast-changing world of today, but they also know we cannot throw out the old ways of working that have served us so well. And of course managing in this paradoxical way requires the development of new skills and new perspectives, as this book makes very clear. This 7

Management Innovation Road Map

book provides an invaluable contribution to our understanding of the “new” way of managing that will be so vital to companies in the years ahead. Professor Julian Birkinshaw Deputy dean programmes Strategic and international management London business school

8

Introduction

A book gathering all the best practices to be a good leader in an «uncertain» market, at last! In this book, which I suggest to all the managers (from beginners to seniors), you can find well expressed concepts supported by examples and demonstrations. Vittorio, going through different times of management, recommends Unconventional Strategies closely related to a consistent management model. Manager 3.0 is represented as a person who knows how to balance management and business model through constant «adjustments» in order to adapt the organizational structure and behaviors to market volatility. Sensitivity, openness to dialogue, integrity and long-term vision are just some of the features common to manager 3.0 required to achieve a different level of a constant performing. Through testimonies of different cultures and the rich experience in the academic field and business, Vittorio is always able to make himself fully credible, concrete and effective. His skill to make timeless theories comprehensible and proven by experience is outstanding. If you wish to improve your performance, or the one of your managers/company, make this book become part of the leadership principle of your company. Giampiero Bighiani General manager Festo industrial automation Italy

9

Foreword

Every organization needs to have a direction to realise its long-term objectives whilst, at the same time, achieve the short term results. Today organizations, their customers, their suppliers are more and more dispersed across different locations: it is somehow the impact of globalization. This represents a challenge for Management and, for this reason, communication of the strategic direction is paramount for every organization. In addition the lifecycles of most business models, the competitive environments, the cultural differences are all positive drivers that suggest we need to consider changes to the traditional Management style and tools. I do not have a miraculous solution, but I can share my personal experience in managing an organization operating across more than 20 countries. Because of the complexity deriving from multiple locations, a few years ago I decided to start using a tool described in this book: the Strategic Map. This tool has driven positive changes into our teams and, so far, it has proven to be very successful. To succeed in the implementation of a Strategic Map, it is essential that the key stakeholders participate in its creation. They then must share the result with their whole organization like a positive virus, and develop a measurement system to evaluate the path whilst continuing in their predetermined direction. A Strategic Map should be thought of as the path to follow whilst pursuing the Mission, in order to aim at the target represented by the Vision. In a few words, a Map helps to reduce the gap between the Mission and the Vision. It should have measurable key milestones that are constantly being monitored. During its journey, an organization will certainly be subject to continuous change and may be required to take an alternative route. Well, a strategic map can be instrumental to select, focus and communicate in which direction to go. I came to this opinion whilst working on my journey and I found in Prof. D’Amato’s writing some reflections of my personal experience. I agree 11

Management Innovation Road Map

with several of his ideas about the new Management 3.0. It is up to us to design a structure capable of engaging people, developing a sense of belonging to the organization and creating the right conditions to let everyone contribute to achieve the required objectives. Each manager shall find their way and implement their own tools. To conclude, in 3.0 Era being simply a manager is not enough. We should at the same time be Leaders who people naturally want to follow. Providing the team with a road map for sure helps. Of course, there is no universal road map, but I feel the reader will certainly find some useful hints in the book. Massimo Pizzocri Managing director EPSON Italy Vice president consumer sales EPSON Europe

12

Acknowledgements

Many people have contributed to the creation of this book. In particular, I would like to thank Elena Tosca, professor of management at LIUCuniversità Cattaneo, who implemented constructive changes during the writing process in order to achieve the final version. Thanks to Francesca Macchi, a researcher at CeRCA-research centre on change & organizational learning at LIUC-università Cattaneo for helping me in the preparation of the first version of the book. A special thank you to Julian Birkinshaw, professor of strategic and international management at London business school and co-founder with Gary Hamel of management LAB, who inspired me to write this book during our first meeting at London business school. Thanks again Julian. Thanks to prof. Gianfranco Rebora for the help he has always given me throughout the years. Over the last ten years, I have talked to hundreds of managers at every level in organisations. I have a huge debt to all those who took the time to answer my questions and share their experiences and insight. Particular thanks is due to Giampaolo Arosio, Riccardo Bianco, Giampiero Bighiani, Alberto Capponi, Paolo Cederle, Goffredo Luraschi, Marco Morbidelli, Massimo Pizzocri, Andrea Pontremoli and together with whom we want to create and implement a new management manifesto where people can really work to their best and be fully engaged. I also learnt a great deal from their colleagues and the organisations within which I worked. These include Atlas Copco, Bosch, Festo, Epson, Novartis, MapaSpontex, Gruppo Angelini, Danone, Italmark, i-Faber, STHIL, Global Blue, Unicredit Group, Canon, Binda, Mellin, Fater, ACRAF, Colussi Group, Gore & Associates, SAME Deutz-Fahr, Somfy. I would in particular to thank our Dean, prof. Valter Lazzari, who has given me his trust during these years and encouraged me to write this book. 13

Management Innovation Road Map

The last and most important thank you is for Lorenza, partner in life and work, with whom I have always lived the main challenges of life. Thanks again to all of you. Vittorio D'Amato

14

Make the transition to the next level of management

CeRCA-research centre on change & organisational learning at LIUCUniversità Cattaneo The LIUC-Università Cattaneo has created the first research centre (www.liuc.it/cmgenerale/default.asp?ssito=181&codice=1) with the specific aim to develop and put into practise a new way of doing business, using new competences and new innovative learning methodologies to achieve the next level of management and performance. Mission CeRCA helps its partners to reach sustainable competitive advantages through the constant research of a higher level of performance. CeRCA is a breeding ground of new ideas, where new skills are explored, new management methods are analysed and where it’s possible to develop a deep dialogue on fundamental issues of corporate culture. Vision To be recognised as a leading international research centre, able to deeply influence in a significative way the academic debate and the managerial practices in order to create a new way of doing management that enable people to do their best and to be fully engaged. Distinctive elements • Working on the boundaries of knowledge • Making cognitive leaps • Learning in an international environment

15

Management Innovation Road Map

Main activities Research This category includes the applied researches with scientific value, which are developed in institutional projects of research and in studies on request. Consulting It’s about activities on request, that are oriented to reach specific corporate aims, and these activities are developed on behalf of company or private/public corporation.

Training CeRCA offers a wide range of training activities about leadership, management, change management, team building and on how to become a Manager 3.0. In addition to corporate training interventions «in house» on request, which are designed and realized according to customer needs. CeRCA is also the promoter of ALP-accelerated leadership program and of three university master's degree.

16

Make the transition to the next level of management

ALP – accelerated leadership program Course in General Management for high potentials and area managers, who need to develop a 360° vision of their company and to keep up-to-date about main managerial competencies. EMBA – second level masters' degree in business administration The Executive MBA (EMBA) prepares you for your transition into general management and leadership. Whether accelerating your existing career, or developing beyond your technical specialism, the Executive MBA can be your catalyst into a more senior role, a new industry, function or geographic location, or your own business venture. The programme format is designed to balance your demanding career and personal commitments with intensive study and professional development. Suitable for ambitious, mid career managers with their sights set on becoming multi-skilled leaders, who want to study without interrupting their career. MEMA – second level masters’ degree in mechatronics & management II level university master for young engineers, which adds managerial competence and behavioural skills to a specific technical preparation. The master is fully financed from a pool of international Companies. HUREMOL – second level masters’ degree in human resources and organisational learning II level university master for smart graduated who are motivated to obtain a unique human resources specialisation through a constant contribution of academic professors and professionals from different industries and fields. Dia_logos Dia_logos represent unique occasions for CeRCA’s partners to meet uncontested, international guru and inspirational leaders coming from different industries and fields, who tell their stories, speak about the challenges and successes of their lives. Their experiences and knoweledge are starting points for personal and organisational growth. Climate Lab This laboratory is the latest CeRCA’s research and consulting service and aims at helping companies in creating an organisational climate, where employees have the chance to deliver their best work. Listening to employees and stakeholders suggestions, needs and demands is becoming more and more essential for companies determined to reach challenging results in the current hypercompetitive market. Organisations talk and it is important to be able to listen

17

Management Innovation Road Map

to them. A company won’t go on improving and innovating, if it can’t understanding what people say. Organisational climate surveys are strengthened and reliable instruments to promptly listen to collaborators’ experience, needs and expectations, in order to intervene on all those elements which condition wellbeing, motivation, organizational quality and therefore the achievement of great entrepreneurial results. Prof. Vittorio D'Amato Director CERCA-research centre on change and organizational learning LIUCUniversità Cattaneo

18

1. Business system: business model & management model

«Business concept innovation is the key to creating new wealth.» Gary Hamel

1.1

Business model & management model

Whether you want to develop a new business or reinvent an existing business, it is crucial to think about the whole business system, see Fig.1.1. This expression could sound strange. Why talk about the whole business system instead of simply business? The business system is composed of a hard part, the business model, and a soft part, the management model. It's evident how worthless it would be to work exclusively on one of the two parts, ignoring the other. Have you ever tried to work with «geniuses», who don’t know how to behave and collaborate? Most managers invest time and energy in inventing and implementing business models, forgetting the other side of the coin, the management model. What's a business model? A business model is the way in which a company develops its own business and achieves value for the clients, the shareholders, the staff and partners (suppliers and distribution channels). What's a management model? A management model has to clearly specify the main principles on which the company sets its behaviour and consequently the main managerial choices: what's the nature of the targets that the company wants to pursue, how to motivate the people to pursue those defined targets, how to organise and coordinate the company's activities, how to take decisions, how to choose a reward system, how information and numbers are managed. It is immediately clear that investing time and energy in defining the management model is a

19

Management Innovation Road Map

matter of fundamental importance, since competitive advantage doesn't only come from a good business model, but also from a valid management model. A business model without a management model is a failure; a management model without a business model is pure theory. To be able to survive the test of time, managers must learn to work on the business model and the management model simultaneously. The unit of analysis of the innovative phenomenon isn't the product, the service, the experience, the price or the technology, but the business system. To innovate the business system, it is necessary to have the ability to imagine business systems that are completely different to those which currently exist. Figure 1.1: The business system

The innovation of the product by itself or just one of the business system elements is not enough to generate new value in a hyper-competitive market. Moreover, the lack of coherence between one or more system elements makes any innovation, which doesn't consider the whole system, purposeless. 1.2

What is the business model?

There are many ways to describe from what elements a business model is composed of. The following one is sufficiently complete and at the same time sim-

20

Business system: business model & management model

ple enough to be used, see Fig. 1.2. This proposed business model is composed of three main elements: • • •

strategic map client interface network value

Figure 1.2: The business model

1.2.1 Strategic Map The strategic map, represented in Fig.1.3, is the principal pillar of the business model and contains all the essential elements for strategic reflection concerning business and people strategy: mission, values, distinctive elements, vision and strategic intents. To build the map we begin from the present: • • • •

Who are we and why do we exist? What do we believe in? What are we really unique in? What are the needs of our clients?

After defining how the company generates value in the present, the map continues leading the management team to reflect about the future: what is our dream? 21

Management Innovation Road Map

The next step is to generate a strong creative tension within the company, unlocked by the gap between who we are and who we would like to become. This tension brings us to a paper draft of strategic intents, enabling an outline of the main strategic moves that need to be implemented in the near future. Figure 1.3: Company strategic map

Strategic Map F ut ur e

Vision A fantastic adventure that we want to achieve

Values

Strategic intents

Distinctive elements

What we believe

The steps towards the vision

What we do better than our competitors

Mission Who are we ? That is our purpose? Why do we do what we do ?

P r e s e nt

Execution

Who are we? The strategic map starts from the present, from who we are. From what is our final purpose, from what is the reason of our existing, from what is our mission and from what is the reason for our existence apart from making money. There's no shadow of a Start with why doubt that profit is necessary in order to exist, but it’s not an “People don't buy what you do, end in itself, it can't and mustn't they buy why you do it.” be the ultimate purpose of the Simon Sinek company. The purpose is something bigger than specific activities, it isn't a product, a service or a solution, but something more, something that comes before the product, the service and the solution, it is the satisfaction of a need, of a deep motivation of both the client, 22

Business system: business model & management model

external or internal, and ourselves, it is the answer to the question of why we do what we do. The purpose plays a fundamental role in the determination of who is in and who is out of the organisation. An organisation with a clear purpose is able to attract those people whose personal intents are in tune with those of the organisation and, on the contrary, it is able to distance those people whose purposes are in contradiction with those of the organisation. To clearly understand who we are and allow others to understand, we must introduce ourselves in our entirety, we must be able to answer the following questions: • • • • •

Why do we do what we do? What need are we satisfying? What product and service do we offer? Who are our clients? What do we contribute to society as a whole?

The answer to these questions must be contained in a few lines. This is the real challenge, you know that «if I had had clear ideas, I could have been more concise». What do we believe in? The compilation of the strategic map goes on with the identification of one of the most important elements: the values. Throughout the years, the constant attention given to the requirements causes us to lose sight of something much more important: the values. People choose, act, decide, see and buy based on their values and not on their competence. Values are the principles that are fundamental to us and inherently desirable, what allows us to state that a certain behaviour or way of being is personally or socially preferable to another. Values are heartfelt, the fundamental concepts at the base of the ideal behaviour. We may be willing to come to a compromise, to renounce everything, provided that our own values aren't called into question. A value is a certainty which comes from within ourselves, a lifestyle, it is a way of being that we would like to transfer to our children. A value is something personal which can't be copied or borrowed from others. The first real confrontation is on a value level; first of all you should find a way to penetrate the human component and then the economic aspects and benefits. Values are the basic precepts of the organisation that refer to the most important elements in both life and business, the way in which business should be conducted, the vision you have of humanity, the role which should be played inside society and what should absolutely not be done. If there is a conflict of values inside a community, it will cause contradictions, conflicts, frustration and loss 23

Management Innovation Road Map

of credibility. Companies primarily compete in the market of meanings and values. What are we really unique in? The map compilation continues with the identification of the last element related to the present. The main choices of «where to compete» and «how to compete» should be based on what we possess and what we know how to do well: strategic assets and distinctive competence. The strategic assets consist of what the company owns: brands, processes, copyrights, data and provenances. The distinctive competence is the sum of all the knowledge and skills accumulated by a company throughout the years and the way in which it is recognised and appreciated on the market by its clients. The distinctive competence is what the company can do in a distinctive, exclusive and collective way. In order to be considered distinctive, a competence has to provide benefits to the consumers which increase the value of the offered product or service. In the course of time, the distinctive competence represents a real competitive advantage as it becomes difficult to imitate among competitors. What is our dream? Once the present is defined, we move to the creation of the future or the possible futures we intend to create. The next step is defining the vision, the company dream. It is not correct to talk about a future, What is a dream? A dream is a fantastic adbecause there is not just one future venture we want to see waiting for us. fulfilled. A dream is the final result of an image for a possible future that we intend to build, the «picture» of a future we want to create. The ability to concentrate on the final result we want to achieve, instead of on the secondary objectives, is a fundamental aspect for the definition of dream. A dream is something absolute, not a relative concept. It is something desired because of its absolute value and not because of the connection it has with something else. Unlike targets, the vision is never be satisfied, it is the guiding star of our journey. Strategic intents Once we clarify our ideas about why we to do what we do and about where we want to go, it is necessary to chart a course in stages which draws the present closer to the future: the strategic intents. The strategic intents are must win battles; they are strategic projects that must be completed in order to draw the mission closer to the vision, the present to the future.

24

Business system: business model & management model

The strategic intents must represent a challenge for the organisation. They must go beyond the current resources and competence, they must challenge the present. The strategic intents have to act like a spring, able to trigger creative ideas throughout the whole organisation, ideas which aren't limited by the current resources. The strategic intents definition represents one of the main phases necessary to obtain future competitive advantages. 1.2.2 Client interface The second element which has a central role in the business model must explain the way in which we interact with our clients: distribution channels and services offered, information and suggestions, relational dynamics, price structure. Distribution channels and services offered The distribution channels represent the way in which the company goes into the market, how it specifically reaches the clientele: which channels it uses, what type of assistance it offers and which level of service. Internet has radically changed the way in which companies reach their customers. Look how Zalando interacts with the market: «Inside our online shop you can live a unique shopping experience, suitable for everyone’s budget. This is the reason why Zalando offers fashion items at really affordable prices. Inside our online shop you can find the latest generation in sports clothing, technical accessories and performance shoes enabling the maximum output with the minimum effort. With Zalando effort won't be a problem anymore and you will find a wide range of quality products for every kind of sport. Is your son starting a swimming course? Well, you're in the right place! And if running is your biggest passion, the Nike dart and the Adidas running clothing range are conceived for the hard-core runners; but you can also choose among many simple models of stylish fitness shoes if you want to feel fit all the time. But Zalando doesn't only think about sport: for example, it gives you very useful advice on how to deal with a job interview without anxiety or, if you want to surprise your partner, it tells you the secrets of arranging the perfect romantic dinner and let’s not forget the precious fashion advice offered by our promoter Rossella Brescia. And if you have an upcoming wedding, you can find everything you need for the special occasion on Zalando. Do you want to organise a trip or a picnic? In this case, Zalando also has the right solution for you. Additionally, thanks to the section entirely dedicated to the house, shopping on Zalando is becoming even more exciting. Zalando combines an excellent and free customer service with a huge selection of items from the most famous international brands. Choose your favourite item: more than hundred thousand original products and over thou25

Management Innovation Road Map

sand brands are at your fingertips, get lost in the wonderful shopping style of Zalando. And if you are looking for some suggestions or just want to catch up with the latest fashion trends, take a look at our online magazine: our fashion experts will amaze you with news and tricks to ensure you always have an enviable and hip outfit. Moreover, Zalando firmly believes that curiosity is what makes the world go round, with its creative lab, it gave birth to a sort of magic cauldron where you can experiment with everything fun and creative in relation to the sparkling fashion world. Here you can find the extremely useful periodic table of shoes and a vintage style video infographic full of bizarre details. When fun and fashion are combined, the result is, to say the least, crackling! As with every newborn, our little curiosity corner will grow and it can do so also thanks to you: let us know what you think through our social networks Facebook and Twitter; all your ideas are more than welcome! Zalando is easy to use, efficient and really convenient. Buy on Zalando, twenty four hours a day, seven days a week, at affordable prices and in total security with free shipping! In addition, you can also choose the most suitable payment method for you; for example, you can pay on delivery - anywhere in Italy - without any additional cost. If you don’t like the chosen item, or if it has any faults, you can return it within thirty days of delivery again, free of charge» (from Zalando's italian website). Information and suggestions The information collected about our customers is a priceless asset. Obviously everything depends on the ability of the company to extract leads from this information, which can help generate new value for the customers. What do we actually know about our customers? Are we taking advantage of every opportunity to deepen the understanding of our customer’s need-dreams? Have we given our customers all the information they need in order to make an intelligent purchase? What additional information would our customers want to have? Relational dynamics This element of the business model refers to the nature of the interaction between the company and its customers. Is this interaction direct or indirect? Is it continuous or sporadic? Is it easy for the customer to interact with our company? Does the customer perceive himself/herself as a part of the company or just as an instrument? The concept of relational dynamics underlines the fact that the company-customer relationship doesn’t just involve transactional elements, but also emotional ones. There is no other company in the world that works as hard as Harley Davidson to build an authentic relationship with its fans. The Harley Davidson owners group - HOG has a million members 26

Business system: business model & management model

worldwide, united by the same passion: making a lifestyle out of the Harley dream. Moreover, the company organises an annual meeting where the most anticipated event is the tattoo competition. As they say in HD «It’s one thing for people to buy your products; it’s another for them to tattoo your company’s name on their arm». Price structure There are endless possibilities about how and how much to charge for something. You can charge for the product or the service. You can charge before or after the purchase. You can group the components together or charge for them separately. Each choice could represent a business model innovation according to industry traditions. Before the arrival of the internet, when you bought a CD, you were obliged to buy every song the producers decided to include on it. Nowadays, you can buy one single song at a time, choosing among a multitude of online music websites. Rolls Royce, the world leader in the airplane engine industry, is selling more and more services instead of products: «a quantity of air power». After all, airline companies aren't really interested in being jet engines owners, they are simply interested in having enough propelling capacity available. Figure 1.4: Harley Davidson celebrating 110 years of freedom

1.2.3 Network value The last component of a business model is the value of the net which surrounds a company and completes and amplifies the company resources: suppliers, partners and alliances. 27

Management Innovation Road Map

The success of the microsoft windows platform is also due to the support provided by the company to the partners who develop the software, making it easier for the ISVs (independent software vendor) to write programs on their behalf. The support allowed to ISVs includes: a set of instruments aimed at facilitating the task of writing Windows programs, a service offering young companies the possibility of asset access through co-marketing opportunities, a dedicated website which offers extensive online support. In 2000, the Microsoft developer network had twelve thousand registered ISVs. Uniqueness can also be found by transforming yourself from a supplier into a partner, but this involves entering a new era. First, it is necessary to take on the responsibility of something more than a solution component second, you certainty have to take part of the commercial risk third, your contribution has to be able to make a difference for the end consumers This means, to be able to understand the needs of the final consumers, you can’t rely on the information coming from your buyer who is only one step above them. You must build your own opinion about the real needs of the end consumers.

28

2. Management Model

«…asking, what is your management model, Is as important as asking what is your business model.» Julian Birkinshaw

2.1

What is the management model?

As Julian Birkinshaw from the London business school states: «A management model is the choices by executives of a firm regarding how they define objectives, motive efforts, coordinate activities and allocate resources, in other words, how they define how work of management gets done.» A management model should clearly express the choices made by the management team regarding decisions, systems, procedures, people and organisational structure. Fundamentally, a management model should clearly express the main principles at the base of every choice related to decision making, organisation, control, motivation, evaluation and information. In order to obtain a sustainable competitive advantage, it’s not enough to work on the business model alone, companies also have to The real problem is that managers work on their management model. are more focused on business The problem is that manthan on people. agers are more focused on business than on people and that the management models as we know them have reached the end of the line.

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Management Innovation Road Map

2.2

Management model: the employees' point of view

The implications of all that we have mentioned above are evident in the creation of a new management model. Before formulating a new proposal to reinvent the management model, we want to make some basic reflections about how a new management model can be created. To create a new management model, it will be necessary to develop a binocular vision which will constantly be able to balance a top down approach (rethink the management systems) with a bottom up approach (rethink the management role). The first step could be providing a management definition which differs from the usual one. We believe that the main purpose of the management is not to do things in a good way or know how to deal with complexity, but to get the most out of your employees. To get the most out of your people means, above all, having engaged people. Engagement could have different meanings such as: a commitment to the organisation, a strong bond with the company or job diligence. People are engaged when they are physically, intellectually and emotionally devoted to their job and to the company they work for. The new management model should put people at the centre and consider their engagement as an essential result. Shown below are the results of an international research project, conducted by professor Julian Birkinshaw of the London business school and the researchers of CeRCA - research centre on change management and organisational learning of LIUC–università Cattaneo. The research focused the corporate population of employees and cadres with an average to low responsibility and salary level. The research, which lasted one year, was structured with: interviews: they were conducted in England by professor Julian Birkinshaw and his researchers; fifty interviews in six companies of different sizes and industries: manufacturing, services, industrial, educational. They interviewed a representative sample of employees and cadres, their direct supervisors and senior executives. Online assessment: the CeRCA's researchers carried out an online questionnaire, gathering responses from fifteen hundred employees and cadres from companies in different industry sectors. 2.2.1 What makes my job motivating and engaging? The interviews initially focused on understanding the main factors of motivation and engagement. We then paid special attention to the «quality» of the relationship between the interviewees and their direct supervisors. The first question to the selected sample was: «What makes my job motivating and en-

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gaging?» In spite of receiving various different answers, they all converged on five main features: • • • • •

responsibility of doing something useful, high level of freedom in the way I reach my results, opportunity of professional growth and increasing my competence, opportunity of working with professional people, recognition for having done a good job.

Management Getting the most out of your employees During the interviews, nobody (employees, cadres, executives) ever mentioned the economic aspect. This isn't a great surprise as we have known for a long time that, while money can be considered as a source of demotivation, it isn't generally recognised as a motivating factor. In the same way, none of the interviewees stressed the «physical working environment». Both compensation and the working environment are part of what Frederik Herberg defines as hygienic factors; if they are perceived below a certain level, they create dissatisfaction, but they don’t generally represent a source of motivation. 2.2.2 Management model & engagement As highlighted earlier, the engagement level is an indicator which is able to quantify how much a person is physically, intellectually and emotionally dedicated to their job and to the company they work for. The concept of engagement is very wide and involves different aspects; some studies and research have identified the essential elements which constitute it and on which it is possible to intervene in order to increase people's engagement level. A pioneering study by Gallup shows us what could possibly be considered as the basic engagement elements, see also Fig. 2.1. I'm aware of what the company expects from me at work. This is the employees’ awareness of what company expects from them. To define and clarify the results which must be achieved is the fundamental need of every employee and a crucial task of the manager. Knowing what a company expects from your job is something more than a simple job description which merely defines 31

Management Innovation Road Map

the role and its related activities. It’s about a detailed understanding of the targets and the activities which must be put into practice in order to achieve them, while remaining in sync with company policy which is continuously subject to change and transformation. I have the opportunity to demonstrate what I can do at work every day. This is the possibility for collaborators to put into practice their competence and abilities, allowing them to demonstrate their capabilities on a daily basis. Each collaborator is unique and different and has their own predispositions, which their manager should learn to recognise in order to combine the key areas of the collaborator with the company needs in the best possible way. My opinions are considered in the workplace. This element measures how much a person feels considered when expressing their own opinions. Because of their individual competence, a collaborator is able to produce accurate, effective and specific contributions about particular business aspects which form part of their own daily routine. Therefore, it is necessary to develop a predisposition for listening to collaborators in order to allow and welcome their ideas, suggestions and considerations, which could lead to the improvement of related activities and processes. The consideration of collaborator contributions to company decisions facilitates and develops a greater level of commitment and determination in task execution, since the more people feel they are the «owner» of an idea, the more they feel responsible for its result. The «mission» of «this» company makes me appreciate the importance of my work. The company's mission should be spread and shared within the company at all levels. Providing an overview, by describing the job in a wider and more general context, allows the collaborators to understand the influences and relations between their own results and the company's mission. People need to feel that their job is connected to the company's mission in order to make sense of their own activity and feel that they are an active and meaningful part of a bigger system. During the last year in the company, I had the opportunity to learn and grow. This element represents the learning and growth possibilities provided by the company. Collaborators don't lose the need to learn, improve themselves and extend their knowledge with age. To generate a sense of progress, development and improvement for the collaborators satisfies an important people’s need and, at the same time, produces competent collaborators within the company. My colleagues are determined to excel in their work. Each work team more or less creates its own set of rules and behavioural norms. This particular element, which determines the level of engagement, measures how each team’s modus operandi is oriented towards doing activities in the best possible way, looking for uniqueness in both obtaining high performance and facilitating 32

Management Model

colleagues to generate an excellent output. In this way, you spread a sense of responsibility and a culture focused on respecting your colleagues and in doing so, you discourage opportunistic behaviour which puts the workload responsibility on individuals. I believe that my talent is used by this company. In their everyday work, collaborators make their talent, competence, capabilities and knowledge available to the company. The company should be able to identify and fully use its collaborators' potential to get the best value from them. Figure 2.1: Management model a bottom up perspective MANAGEMENT MODEL A BOTTOM UP PERSPECTIVE Employees' voice Responsibility to do something useful To have a high degree of freedom in the way in which I reach results Opportunity to work with professional people To be helped when needed Recognise and reward results I am aware of what the company expects from me at work I have the opportunity to demonstrate what I can do at work every day My opinions are considered in the workplace The "mission" of "this" company makes me appreciate the importance of my work During the last year in the company, I had the opportunity to learn and grow I believe that my talent is used by this company

I'm always ready to bend over backwards for my company. This is the willingness to go the so-called «extra-mile» for the company. This concept can be connected to different aspects, from working longer hours to carrying out activities which aren't strictly related to your job. Bending over backwards for your company demonstrates a strong dedication to your activity and not just strictly conforming to do what you have to do. This absolutely implies the capability of people to be flexible and therefore adaptable to changing situations, adjusting their behaviour to different needs and circumstances. 2.3

Minimalist management: when less is more

Lighten up in order to have more time and freedom. To stop waiting for something or somebody in order to be happy and to feel satisfied with the bare essentials. This is minimalism. Minimalism bases itself on having enough. Enough means as much or as many as needed, no more, no less. Our needs are not just for material goods, but also for interpersonal relationships, work, 33

Management Innovation Road Map

commitments and lifestyle. Minimalism essentially means breaking the pattern of always desiring something more. As shown in Fig. 2.2, minimalism means finding happiness and fulfillment in what we already have instead of associating our satisfaction to material things which are out of our reach. To obtain something we have desired for a long time gives us an ephemeral feeling of happiness which quickly disappears, we have all experienced this. And then what do you do? Then we set ourselves a new goal, a new object of desire which we want to possess. It is a vicious cycle which distances us from our own focus, diverting us towards an equilibrium which doesn't resemble what we are. Minimalism isn't a reaction to consumerism. Essentially, minimalism is a way of breaking the pattern of wanting more and more. But what has all of this got to do with management? It could be that the new management model needs a lower quantity of some of the elements that we have used up until today. During an interview with a CEO of a multinational pharmaceutical company, I was impressed by the following statement: «I have to make an effort to bring fewer added values to my team; I have to be less intrusive». It is likely that the new management model will require less control, less balance, less guidance, less suggestions and less obedience, which will consequently translate into more freedom, more empowerment, more engagement and more innovation. Figure 2.2: Minimalistic management: when less is more

MINIMALISTMANAGEMENT

-

When less is more

+

Control Functional Rules Discretion Obedience Power Waiting Balance Order

Initiative Passion Innovation Freedom Thinking Responsability Meaning Velocity Trust Chaos 34

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2.4.

The slow factory

A further consideration on a different management model can be offered by Bonotto, a company founded by Nicla Donazzan and Luigi Bonotto in 1972. Bonotto is the «slow factory»; the new luxury is time, the industrial craftsman. «Slow factory» is a new manufacturing model which gives credit to the «handmade culture»: you produce less quantity, but higher artistic quality. Our master craftsmen go back to using post-war techniques, where hands make the difference. «Slow factory» is a manifesto against the industrial standardisation and low cost chain production. We italians have lost the industrial cost challenge, but have the excellence of renaissance art in our DNA.

The quality of a material is represented by the time taken to produce it. We aren't interested in «just in time», stated Bonotto. Instead we are more interested in having a modern view of work and company. That’s why we are trying to bring back production methods which remain unaffected by the fever of productivity at all costs. For this reason we have adopted old technologies in order to obtain more interesting visual and tactile sensations, real textures and materials preserving their own nature and intimacy. These are durable materials, made the old fashioned way and come from a different and more «natural» relationship between human beings and machines. Materials which are rich and precious in quality. Materials which aren't produced anymore. Memory We have to deeply live our time to savour it, understand it and build memories. We must have memories and roots to create the future. Memory is our cure against convention, against global conformism. Memory isn't and never will be something standard. It will never be repeatable.

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Art Luigi Bonotto, collector and patron, brought art and artists inside his company, transforming the organisation and productive process into a smooth, varying and flexible logic which is typical of Fluxus movement and oriented to creativity before business. The artists we love have taught and still teach us how to be entrepreneurs. We thanked the artists and the entire region for their creative input by giving them a website and an international culture centre in Bassano del Grappa. This is because art isn't just a matter of «making». Above all, it is a matter of thought, dream, beauty and innovation. Usually, the warehouse is the worst place in a factory.

Long rows of high, cold, static shelves. There are no machines, movement, noises or smells. There is no crowd bustling around, getting creative, swearing and working. Whoever is in the warehouse is always in the deep end: “there at the back”. So hang over there, at the deep end of that long row of shelves, hang up on the wall the big painting of that well known artist. Everything changes: environment and actors. It isn’t a warehouse anymore. He isn’t a factory worker anymore. Everything changes. It happens. In a place I won't mention because there is no need to: whoever understands art, work and factory knows where it is. Whoever doesn't know, doesn't know about art, work and factory. Those paintings are hung everywhere, all the way down to the warehouse, the handmade, finished products of work by famous artists. They are there to watch, provide companionship and give a hand to those who are working to the highest possible quality. This way of working is requested from everyone, all the way down to the warehouse. A way of working that everyone can do, all the way down to the warehouse. This is the tran36

Management Model

sition from the concept of work to that of a profession. From the concept work, repeated together with a machine, piece after piece, with ever decreasing costs. To the concept a profession that requires more in many aspects: to use your head as well as your hands, to work on a job until it is finished, trying again and again among successes and failures. Structure The headquarters are located in the Molvena factory, along with the commercial, design and project departments. Dyeing and finishing operations related to production are done in the Schio factory. Our quality control centre, which certifies textiles as «ready to be stitched» for the most prestigious customers, is also located here. By request, we can also offer other producers our quality control service. Territory Molvena is located near Vicenza in north-east Italy and has two thousand four hundred twenty-six inhabitants. On the same street, you can find three of the world’s leading companies in the clothing industry sector: Diesel, Dainese and Bonotto. It can be considered the area with the highest innovation density per square meter. The heart of innovation valley is a tiny corner of the world in terms of dimension, but huge for its objectives, creativity and ability to make things happen. In the past, a company’s success would create the wealth of its territory. Today, without the right territory and without the contribution of special and motivated people who have been fed by the same roots, a company like ours couldn't even exist. 2.5

The democratic enterprise

2.5.1 The democratic enterprise principles The term democracy implies the sharing of a purpose, the involvement and participation of people in the decision making process. Lynda Gratton of the London business school wrote in her book, The Democratic Enterprise: «The notion of democracy implies that citizens are sufficiently self-reflective and self-determining to take those actions that best serve both their own interests and the interests of the communities of which they are members.» Gratton identifies six principles which, in her opinion, are fundamental in a democratic company:

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Management Innovation Road Map

1. the relationship between the company and the people is an adult relationship; 2. first and foremost, people are investors, and they are actively involved in their own human capital development; 3. people are able to develop their talents and to express their qualities; 4. people participate in the definition of the conditions which determine their connection with the organisation; 5. one's own freedom can't be obtained at the expense of others; 6. people have responsibilities and obligations towards themselves and towards the company. Principle 1: equally distributed responsibilities In an adult to adult type relationship, responsibilities are shared equally between the two parts. The main focus is on the person and on their capability of behaving in an independent and proactive way. Moreover, research by Gratton demonstrated that, in the relationship between boss and employee, there could be some behaviours which clearly define whether it could be considered an adult to adult type relationship or not: • • • •

I often receive informal feedback from my boss. I have a formal debate with my boss about my job performance at least twice a year. I am permitted to ask why things are done in a certain way. Not only managers solve problems and supply solutions.

Principle 2: individuals as human capital investors This second principle deals with the theme of resource «ownership». During the industrial era, there’s not a shadow of doubt that employees didn't have resource ownership and that their position was greatly inferior to that of the employer. In the knowledge economy, each of us can choose how much knowledge and how much intelligence to invest at work. This possibility of choice radically changes the relationship between company and employee. In such a scenario, the role of the boss changes drastically, it turns from supervisor into facilitator. A few behaviours represent this principle: • • • •

I have the possibility of choosing different paths in my career, the career path isn't exclusively about the high flyers, my company encourages me to develop new skills, new ideas are positively valued in the company,

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•

people who have been successful within the company continue to look for new things.

Principle 3: the chance to express your own personal qualities In most companies, people are confined to a precise role which often doesn't allow them to release their own personal qualities. It doesn't give them the chance to become «the best they could be». People are victims of the past and their own role. Once again, this principle can be expressed with behaviour: the career opportunities which are offered to me are influenced by my desires and my choices Principle 4: people participate in the definition of the conditions which determine their connection to the company The fourth principle of the democratic company states the possibility for collaborators to define, up to a certain discretionary level, what has to be done and how it has to be done. Without this space for a discretionary action, it is impossible to establish an adult to adult type relationship which considers people as investors of knowledge and intelligence. The application of this principle can be better understood through the definition of the following behaviours: • • • •

I'm the only one responsible for defining the objectives of my own work, at least one element of my compensation is connected with my performance, I can choose my total reward package (more money, more time, flexible schedule, etc.), this company does everything possible to help people reach a good worklife balance.

Principle 5: one's own freedom can't be obtained at the expense of others This is the basic principle of every democratic company. It isn't possible to obtain results to the detriment of someone else. Imagine that this “someone else” refers to a possible stakeholder (collaborators, customers, suppliers, community). As Gratton states: «In a Democratic Enterprise, there must be a means for negotiating value differences that provides protection from arbitrary use of authority and coercive power and which enables a fair and just environment to be created». This principle can be lead to the following behaviours: • •

my compensation is fair compared to that of others doing a similar job, I think that the personnel policies of this company are fair,

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Management Innovation Road Map

• •

I believe that this company has a high level of integrity, people compete against each other.

Principle 6: people have responsibilities and obligations towards themselves and towards the company The concept of rights and duties has always been of fundamental importance in every democracy. The excessive imbalance on one side or the other generates a lack of self-criticism which consequently results in decreased productivity and innovation. Also in this case, and in order not to be vague, we can translate this principle into behaviours: • • • • • • • •

there's a common aim which ties the people together, there are clear company values, people are responsible for their own results, I have clearly defined objectives, I have similar values to those of the company, I am genuinely interested in the company's future, I am willing to make an extra effort for the company's success, the company uses my capabilities to the full extent.

2.5.2 The democracy matrix Once again, the challenge is to reduce the elements in play in favour of a simplification. The six previously explained principles have been unified onto two axes in order to create the democracy matrix, see Fig 2.3. The level of sharing the company’s purpose can be found on the abscissa, while we can find people’s autonomy level on the ordinate. Autocracy Autocracy is characterised by a low level of autonomy and a low sharing of the company’s purpose. Tasks are appointed and results are meticulously monitored. What holds autocracy together is the management’s high level of control on the assigned tasks and their execution. Historically, autocracy was adopted in stable market situations, in which collaborators had an average level of competence and were asked to repeat the same operation many times. In this case, instead of an adult to adult type relationship, an adult to child type relationship is established between the company and its collaborator.

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Bureaucracy Bureaucracy finds space for itself in all those organisations where the purpose is known and shared, but the level of autonomy is low. The lack of confidence in the collaborators drives them to act merely as executors. Moreover, bureaucracy tends to slow down the process of decision execution, causing a loss of competitiveness. Figure 2.3: The democracy matrix (source, Linda Gratton, The democratic enterprise, p. 63)

Autonomy & variety

High

ADHOCRACY

DEM OCRACY

AUTOCRACY

BUREAUCRACY

Low Low

Shared purpose

High

Adhocracy In adhocratic organisations people operate like external agents with a high level of autonomy. Generally they are highly competent people, who often don't even know the purpose of the organisation. The danger of this kind of organisation can be compared to that of a mercenary army: people only focus on themselves instead of on the organisation and are the first to abandon ship in the case of emergency. Democracy Democratic organisations are characterised by people who share the company's purpose and whose values are strongly aligned with those of the company. The combination of these two characteristics gives people a high level of freedom which leads to a faster decision making process and ultimately to greater competitiveness. 41

3. Management innovation

«Everything we do is to inspire people to do the things that inspire them so that one day we will stand shoulder to shoulder and together change the world.» Simon Sinek

Hundred year old management model

3.1

About 100 years ago the big multinationals, aided by studies conducted by the pioneers of management such as Frederick Taylor, Henri Fayol and Frank and Lilian Gilbreth, developed structures, processes, hierarchies and control systems that are adopted and still used today. These systems and structures were fundamentally oriented towards efficiency, reducing production costs and product standardisation. This model of industrial management has been incredibly successful and has contributed to the success of many major corporations during the nineteenth and twentieth centuries. However, this success has had at least two drawbacks: • •

to blind us to other possible models of management, to associate the concept of management with those of hierarchy and bureaucracy.

Other possible factors that are delaying the establishment of new management models are: The principles underlying the traditional management model are highly consolidated The ways of thinking and acting in the traditional management model are widely adopted and established in companies from various sectors and sizes and are based on a combination of the old industrial era and military prac43

Management Innovation Road Map

tice analogies. We talk about total respect for hierarchy, chain of command, subordinates, rewards and punishments. Obviously, this terminology has greatly influenced the way we see and act in the company.

The natural resistance to change Many companies, especially in recent years, have experimented with different management models, such as Rolls-Royce (self-direct team), WL Gore & Associates (ameba organisation), Oticon (spaghetti organisation), Bonotto (Slow factory) and others. But why haven’t such models been adopted by other companies? The answer is a normal resistance to change. People tend to save time and energy and the development or adoption of a new management model requires a huge investment in time and energy. The numbers above all Most companies think in terms of trimesters, months, weeks and days. Obviously, to change the management model could, like any change, cause short term deterioration and this seems to be unacceptable. How do you overcome such resistance? Have there been any economic and social changes over the past few years that could help us? The answer is yes. Over the last 20 to 30 years, there have been some social and technological changes that can surely help us switch to a different management model as shown in Fig. 3.1. Web 2.0 The interactivity of the Web has enabled all of us to communicate in a different way, to be able to speak about any subject, to participate in a forum because we want to and not because we will receive a reward.

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Generation F (Facebook) The generation born after 1980, the new emerging workforce, has completely different expectations from those of Generation X and Y. All ideas compete on the same level Any idea on the web can find followers or not regardless of the role of whoever proposed it. The web separating «share of voice» from «share of power» threatens the power of the minority elite to control the discussion or to set the agenda. The value of the contribution counts as more than the hierarchical level When we put a video on YouTube or create a website, no one asks us if we are filmmakers or journalists. Positions, academic and non-academic titles are less significant than the added value that we give to the discussion. The hierarchy starts from the bottom In any Web forum there are people who are listened to more than others. These people have not acquired their position thanks to a business appointment, but thanks to the contribution they make to others. Figure 3.1: From old to new management Reinventing Management OLD MANAGEMENT

NEW MANAGEMENT

Needs

Solutions

Needs

Solutions

Perform repetitive tasks in an efficient manner. Produce the same products on a large scale. Standardisation of products.

Clear definition of roles and responsibilities. Clear rules. Monitoring and verification of the work performed. Rigid hierarchy.

Customizing. Innovation. Search for meaning in products and brands. Uniqueness. Transparency .

Collaboration. Initiative. Adjustable rules. Flexibility. Self-organisation. Shared responsibility. Continuous innovation. Participative leadership. Speed.

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Leader as a steward: «proud to serve you» The generation F sees leaders more like stewards, as people at the service of others rather than as commanders or leaders. The tasks/projects are chosen, not assigned On the Web, people choose to participate in what interests them. Teams self-develop and self-organise On the Web, people decide who to contact and who to avoid. The power comes from sharing We could define the web as a «gift economy». If the contribution is late, someone else will take the credit. The old saying «learn the art and put it aside» is dead and buried. Mediocrity is exposed Think about the various blogs about hotels, restaurants and shops, if anything goes wrong, customers will say so and immediately post photos on the web. Reward as intrinsic value for what you have done You only have to think about the thousands of contributions, articles and open source software to understand how people are already intrinsically satisfied when they choose to do something. 3.2

The era of meaning

We are crossing the threshold of a new era: the era of meaning. You can call it «the revolution era» or «economy of experiences», but this is something different. The collapse of the defensibility of the competitive advantage, which is becoming a transient competitive advantage, is giving us a new economic order. In this new order, the competition no longer takes place between geographical or dimensional boundaries, but between companies either able or not able to inspire a meaning related to their products, services, solutions, customer experiences and to «why» the company exists. In America, Starbucks has become the leading brand of coffee, benefitting from the most loyal clientele in the country after Harley Davidson. «With its mix prepared with accuracy of colours and textures, aromas and music, Starbucks is certainly more representative of our era than iMac. It represents in the Era of Aesthetics what McDonalds represented in the era of convenience or Ford in the era of mass production. It is the success story that sets the terms for comparison, the ex46

Management innovation

ample of everything that is positive and negative of the aesthetic imperative. All Starbucks stores are accurately designed to enhance the quality of everything the customers see, touch, hear, smell or taste.» There are few leaders who have decided to choose the path to inspire others rather than manipulating them. Simon Sinek defines this way to inspire with the term «golden circle», like shown in Fig. 3.2. The golden circle, as Sinek says: «Can be used as a guide to vastly improving leadership, corporate culture, hiring, product development and marketing. It even explains loyalty and how to create enough momentum to turn an idea into a social movement.» All of this begins reversing the classic way of communicating, which starts from the outside of the circle and moves inwards. For most companies, the common way of communicating is to start from the outside and move inwards: What, How, Why. WHAT: all companies know what they sell, or maybe they think they know. HOW: only some companies have defined a clear value proposition strategy, i.e. the way they sell their products or services. WHY: even fewer organisations know why they do what they do. The “inspired organisation” and “inspired leader” communicate and behave in exactly the opposite way: from WHY to WHAT. Figure 3.2: Start with way

In1980, Steve Jobs defined the mission of the Apple in this way: «Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them.» The «inspired leader» starts from why and not from what or how. The Why fulfils one of the basic human needs, the need to belong. When a company presents itself starting with what it makes or sells, it may catch our interest, 47

Management Innovation Road Map

but it doesn’t represent something to which we want to belong or be part of. But when a company clearly communicates the reason, the belief, and such belief coincides with that of the customer, something extraordinary happens, that product, that service, that brand become part of our lives. The concept just described is not simply a tool for communication and/or marketing. The power of Why isn’t an opinion, it's part of our biology. When observing the human brain, see Fig. 3.3, it is possible to find similarities between the three circles of the golden circle and the two main layers of the brain: neocortex and limbic system. Figure 3.3: Human brain

Neocortex The neocortex represents more than 90 percent of the cerebral surface. It is the most evolved part of our brain, dedicated to the higher functions. The neocortex is considered to be the seat for the functions of learning, language and memory. It is characterised by different lobes: frontal, lateral parietal, occipital and temporal. Frontal lobes are structures that mediate the ability of abstract thinking and organising the behaviour in logical and timed sequences. They inhibit inappropriate and instinctive responses suggested from the Amygdala in relation to external stimuli. Parietal lobes are involved in shape recognition, how we interpret sensation and movement and speech recognition. Temporal lobes process visual recognition, memory and emotions, auditory perception and sounds in general (noise, music, sounds). Occipital lobes are heavily involved in visual functions. The cortex is divided into two hemispheres: right and left. The right hemi48

Management innovation

sphere controls the left side of the body and prefers the creative functions with a tendency to a global view. The left hemisphere controls the right side of the body and has more descriptive logic and reconstruction characteristics. Limbic System The limbic system includes some regions of the diencephalon and telencephalon that «coordinate sensory afferents with bodily reactions and visceral need» and that «represent the place of origin of the emotions.» Undoubtedly, the concept of the limbic system is less morphological than physiological and psychological. This portion of the central nervous system is involved in the processing of all the behaviours associated with the survival of the species, it processes all the emotions and vegetative manifestations that come with it and is involved in memory process. The limbic system is a phylogenetic ancient formation. When studying comparative anatomy, it is surprising how, despite being different sizes in various mammal species, its development and organisation are similar. These observations suggest that the physiological bases of emotion and behaviour are similar in all mammals. The areas of the limbic system converge to contribute two fundamental functions of animal life, that of the preservation of the individual and that of the preservation of the species. By the preservation of the individual, we mean emotional reactions, fear and the phenomenon known as «hit and run». In relation to the function of the preservation of the species (reproductive function), the limbic system controls sexual behaviour. Another important function of the limbic system is to participate in the process of memory. In particular, the limbic structures would be appointed to establish the trace of recent memory. When we communicate starting from the what or how, people are able to analyse a large amount of facts and data through the neocortex, but that does not lead to the final decision which is mainly governed by the limbic system. When we communicate, starting directly from the why, we are directly addressing the limbic system that controls emotions and decisions. The limbic system is so strong that it guides our behaviour, even contradicting the rational part made of numbers. As the neuroscientist Richard Restak stated: «When you force people to make decisions with only the rational part of the brain, they almost invariably end up overthinking. These rational decisions tend to take longer to make and can often be of lower quality. In contrast, decisions made with the limbic brain, gut decisions, tend to be faster, higher quality decisions.» Colonel Colin Powell stated: «Anything more than 80 percent is too much.» But what does all of this have to do with the new management and the new manager? The manager 3.0 will have to The manager 3.0 will have to start start from why. In general, we confrom WHY sider intellectual and 49

Management Innovation Road Map

technical skills as sufficient to acquire managerial or leadership positions. The technical skills are the starting point: if you don’t have them it’s likely that you can’t even aspire to leadership positions, or at least it should be like this. However, these skills alone do not make a leader. Leaders put an idea into practise motivating, guiding, inspiring, listening, persuading and, most importantly, creating resonance. Management's mental models

3.3

We know very well that many of the best ideas and strategies never get put into practice. The main reason that new insights fail to be put into practice is because they conflict with deeply held internal assumptions of how the world works, assumptions that limits us to familiar ways of thinking and acting. As Harvard's Chris Argyris, who has worked with mental models for thirty years, stated in this way: «Although people do not behave congruently with their espoused theories, they do behave congruently with their theories in use, their mental models.» Basic assumptions about reality are the paradigms of social science, such as management. None of us can carry an organisation in our mind. Assumptions are usually held subconsciously by all people working and studying in the field. Yet those assumptions largely determine what the discipline assumes to be reality. The discipline's basic assumptions about reality determine what it focuses on and consequently what we see. They determine what a discipline considers facts, and indeed what it considers the discipline itself to be all about. The assumptions also largely determine what, in a given discipline, is being paid attention to and what is neglected or ignored. Yet, despite their importance, the assumptions are rarely analysed, rarely made explicit and even challenged. In his book, Management Challenges for the 21st Century, Peter F. Drucker writes about the importance of management mental models. He has identified what are, in his opinion, the old assumptions for the social discipline of management: 1. 2. 3. 4. 5. 6.

Management is business management There is - or there must be - one right organisation structure There is - or there must be - one right way to manage people Technologies, markets and end-users are given Management's scope is legally defined Management is internally focused

The economy as defined by national boundaries is the «ecology» of enterprise and management. 50

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Peter Drucker writes: «By now all of them have outlived their usefulness. They are close to being caricatures. They are now so far removed from actual reality that they are becoming obstacles to the theory and even more serious obstacles to the practice of management. Indeed, reality is fast becoming the very opposite of what these assumptions claim it to be. It is high time therefore to think through these assumptions and to try to formulate the new assumptions that now have to inform both the study and the practice of management.» 3.4

Management innovation: the key challenges

The theme of reinventing management is the subject of study and interest by a number of scholars and business leaders, including: Eric Abrahamson, Columbia business school Chris Argyris, Harvard university Joanna Barsh, McKinsey & company Julian Birkinshaw, London business school Tim Brown, IDEO Lowell Bryan, McKinsey & company Bhaskar Chakravorti, Harvard business school Yves Doz, Insead Alex Ehrlich, UBS Gary Hamel, the management lab Linda Hill, Harvard business school Jeffrey Hollender, seventh generation Steve Jurvetson, Draper Fisher Jurvetson Kevin Kelly, Wired Terri Kelly, W.L. Gore & associates Ed Lawler, USC’s Marshall school of business John Mackey, Whole Foods Market Tom Malone, MIT’s sloan school of management Marissa Mayer, Google Andrew McAfee, Harvard business school Lenny Mendonca, McKinsey & company Henry Mintzberg, McGill university Vineet Nayar, HCL technologies Jeffrey Pfeffer, Stanford university C.K. Prahalad, university of Michigan’s Ross school of business J. Leighton Read, Alloy Ventures and Seriosity, incorporated Keith Sawyer, Washington university in St. Louis Peter Senge, society for organizational learning and MIT 51

Management Innovation Road Map

Rajendra Sisodia, Bentley university Tom Stewart, Booz & company James Surowiecki, author of the Wisdom of crowds Hal Varian, university of California, Berkeley Steven Weber, university of California, Berkeley David Wolfe, Wolfe resources group Shoshana Zuboff, Harvard business school (retired) These scholars met in May 2008 to lay out a road map for reinventing management. The following list is directly taken from the article by Gary Hamel, moon shoot for management: Ensure that the work of management serves a higher purpose Most companies strive to maximise shareholder wealth - a goal that is inadequate in many respects. As an emotional catalyst, wealth maximization lacks the power to fully mobilize human energies. It’s an insufficient defense when people question the legitimacy of corporate power. And it’s not specific or compelling enough to spur renewal. For these reasons, tomorrow’s management practices must focus on the achievement of socially significant and noble goals. Fully embed the ideas of community and citizenship in management systems In tomorrow’s interdependent world, highly collaborative systems will outperform organizations characterized by adversarial win-lose relationships. Yet today, corporate governance structures often exacerbate conflict by promoting the interests of some groups - like senior executives and the providers of capital - at the expense of others - usually employees and local communities. In the future, management systems must reflect the ethos of community and citizenship, thereby recognising the interdependence of all stakeholder groups. Reconstruct management’s philosophical foundations Tomorrow’s organizations must be adaptable, innovative, inspiring and socially responsible, as well as operationally excellent. To imbue organizations with these attributes, scholars and practitioners must rebuild management’s underpinnings. That will require hunting for new principles in fields as diverse as anthropology, biology, design, political science, urban planning, and theology. Eliminate the pathologies of formal hierarchy While hierarchy will always be a feature of human organization, there’s a pressing need to limit the fallout from top-down authority structures. Typical problems include overweighting experience at the expense of new thinking, giving followers little or no influence in choosing their leaders, perpetuating 52

Management innovation

disparities in power that can’t be justified by differences in competence, creating incentives for managers to hoard authority when it should be distributed, and undermining the self-worth of individuals who have little formal power. To overcome these failings, the traditional organizational pyramid must be replaced by a «natural» hierarchy, where status and influence correspond to contribution rather than position. Hierarchies need to be dynamic so that power flows rapidly toward those who are adding value and away from those who aren’t. Finally, instead of a single hierarchy, there must be many hierarchies, each a barometer of expertise in some critical arena. Reduce fear and increase trust Command-and-control systems reflect a deep mistrust of employees’ commitment and competence. They also tend to overemphasize sanctions as a way of forcing compliance. That’s why so many organizations are filled with anxious employees who are hesitant to take the initiative or trust their own judgment. Organizational adaptability, innovation and employee engagement can only thrive in a high-trust, low-fear culture. In such an environment, information is widely shared, contentious opinions are freely expressed and risk taking is encouraged. Mistrust demoralizes and fear paralyses, so they must be wrung out of tomorrow’s management systems. Reinvent the means of control Traditional control systems ensure high levels of compliance, but do so at the expense of employee creativity, entrepreneurship and engagement. To overcome the discipline-versus-innovation trade-off, tomorrow’s control systems will need to rely more on peer review and less on top-down supervision. They must leverage the power of shared values and aspirations while loosening the straitjacket of rules and strictures. The goal: organizations filled with employees who are capable of self-discipline. Redefine the work of leadership Natural hierarchies require natural leaders-that is, individuals who can mobilize others despite a lack of formal authority. In management 2.0, leaders will no longer be seen as grand visionaries, all-wise decision makers, and ironfisted disciplinarians. Instead, they will need to become social architects, constitution writers, and entrepreneurs of meaning. In this new model, the leader’s job is to create an environment where every employee has the chance to collaborate, innovate, and excel.

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Expand and exploit diversity Diversity is not only essential for the survival of a species, it is also a prerequisite for long-term corporate viability. Organizations that don’t embrace, encourage, and exploit a diversity of experiences, values, and capabilities will be unable to generate a rich variety of ideas, options, and experiments-the essential ingredients of strategic renewal. Future management systems must value diversity, disagreement, and divergence at least as highly as they do conformance, consensus, and cohesion. Reinvent strategy making as an emergent process In a turbulent world, prediction is difficult and long-range planning of limited value. Management processes that seek to arrive at the «one best strategy» through top-down, analytical methods must give way to models based on the biological principles of variety (generate lots of options), selection (use lowcost experiments to rapidly test critical assumptions), and retention (pour resources into the strategies that are gaining the most traction in the marketplace). In the future, top management won’t make strategy but will work to create the conditions in which new strategies can emerge and evolve. De-structure and disaggregate the organization To intercept opportunities that come and go at lightning speed, organizations must be able to quickly reconfigure capabilities, infrastructure, and resources. Unfortunately, in many organizations, rigid unit boundaries, functional silos, and political fiefdoms hamper the rapid realignment of skills and assets. Large organizational units that encompass hundreds or thousands of employees pose another danger, as they often lead to groupthink on a grand scale. To become more adaptable, companies must reorganize themselves into smaller units and create fluid, project-based structures. Dramatically reduce the pull of the past Management processes often contain subtle biases that favor continuity over change. Planning processes reinforce out-of-date views of customers and competitors, for instance; budgeting processes make it difficult for speculative ideas to get seed funding; incentive systems provide larger rewards for caretaker managers than for internal entrepreneurs; measurement systems understate the value of creating new strategic options; and recruitment processes overvalue analytical skills and undervalue conceptual skills. While continuity is important, these subtle, baked-in preferences for the status quo must be exposed, examined, and, if necessary, excised.

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Share the work of setting direction As the pace of change accelerates and the business environment becomes more complex, it will be increasingly difficult for any small group of senior executives to chart the path of corporate renewal. That’s why the responsibility for defining direction must be broadly shared. In addition, only a participatory process can engender wholehearted commitment to proactive change. Foresight and insight, rather than power and position, must determine share of voice in setting corporate direction. Develop holistic performance measures Existing measurement systems have many flaws. They tend to overemphasize the achievement of some goals, like hitting short-term profit targets, while undervaluing other important objectives, like building new growth platforms. They often take no account of the subtle, yet critical factors that drive competitive success, like the value of customer-driven innovation. To overcome these limitations, companies will need to create more holistic measurement systems. Stretch executive time frames and perspectives Compensation and incentive systems often truncate executive time horizons and skew perspectives. For instance, research suggests that most executives wouldn’t fund a viable new initiative if doing so reduced current earnings. Building new incentive systems that focus executive attention on creating long-term stakeholder value must be a critical priority for management innovation. Create a democracy of information Managerial power has traditionally depended on controlling information. Yet increasingly, value creation takes place at the interface between first-level employees and customers. Those on the front lines must be informed and empowered so they can do the right thing for customers without having to ask permission. Resilience also depends on information transparency. In volatile environments, employees need the freedom to act quickly and the data to act intelligently. If they have to refer decisions upward, adaptability suffers. That’s why the costs of information hoarding are becoming untenable. To make timely decisions that reflect the best interests of the entire company, grassroots employees need to be some of the best-informed individuals within the organization. Companies, therefore, must build information systems that give every employee a 3-D view of critical performance metrics and key priorities.

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Empower the renegades and disarm the reactionaries Sitting monarchs don’t usually lead revolutions. Yet most management systems give a disproportionate share of influence over strategy and policy to a small number of senior executives. Ironically, these are the people most vested in the status quo and most likely to defend it. That’s why incumbents often surrender the future to upstarts. The only solution is to develop management systems that redistribute power to those who have most of their emotional equity invested in the future and have the least to lose from change. Expand the scope of employee autonomy People at the bottom and middle of organization pyramids often feel powerless to initiate change. Rigid policy guidelines, tight spending limits, and a lack of self-directed time limit their autonomy. Companies must redesign management systems so they facilitate local experimentation and bottom-up initiatives. Create internal markets for ideas, talent, and resources Funding decisions in corporations are usually made at the top and are heavily influenced by political factors. That’s why companies overinvest in the past and underfund the future. By contrast, resource allocation in a market-based system like the New York stock exchange is decentralized and apolitical. While markets are obviously vulnerable to short-term distortions, they’re better in the long run than big organizations at getting the right resources behind the right opportunities. To make resource allocation more flexible and dynamic, companies must create internal markets where legacy programs and new projects compete on an equal footing for talent and cash. Depoliticize decision making The quality of top-level decision making is often compromised by executive hubris, unstated biases, and incomplete data. Moreover, the number of variables that must be factored into key decisions keeps growing. In deciding to spend millions of dollars to enter a new market or back a new technology, senior leaders seldom seek the advice of rank-and-file employees. However, those on the ground are often best placed to evaluate the issues that will make or break a new strategy. Companies need new decisionmaking processes that capture a variety of views, exploit the organization’s collective wisdom, and are free of position-influenced biases.

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Better optimize trade-offs Organizational success in the years ahead will hinge on the ability of employees at all levels to manage seemingly irreconcilable trade-offs-between shortterm earnings and long-term growth, competition and collaboration, structure and emergence, discipline and freedom, and individual and team success. Traditional systems rely on crude, universal policies that favor certain goals at the expense of others. Tomorrow’s systems must encourage healthy competition between opposing objectives and enable frontline employees to dynamically optimize key trade-offs. The aim is to create organizations that combine the exploration and learning capabilities of decentralized networks with the decision-making efficiency and focus of hierarchies. Further unleash human imagination We know a lot about how to engender human creativity: Equip people with innovation tools, allow them to set aside time for thinking, destigmatize failure, create opportunities for serendipitous learning, and so on. However, little of this knowledge has infiltrated management systems. Worse, many companies institutionalize a sort of creative apartheid. They give a few individuals creative roles and the time to pursue their interests while assuming that most other employees are unimaginative. Tomorrow’s management processes must nurture innovation in every corner of the organization. Enable communities of passion Passion is a significant multiplier of human accomplishment, particularly when like-minded individuals converge around a worthy cause. Yet a wealth of data indicates that most employees are emotionally disengaged at work. They are unfulfilled, and consequently their organizations underperform. Companies must encourage communities of passion by allowing individuals to find a higher calling within their work lives, by helping to connect employees who share similar passions, and by better aligning the organization’s objectives with the natural interests of its people. Retool management for an open world Emerging business models increasingly rely on value-creating networks and forms of social production that transcend organizational boundaries. In these environments, management tools that rely on the use of positional power are likely to be ineffective or counterproductive. In a network of volunteers or legally independent agents, the «leader» has to energize and enlarge the community rather than manage it from above.

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Success therefore requires developing new approaches to mobilizing and coordinating human efforts. Humanize the language and practice of business The goals of management are usually described in words like «efficiency», «advantage», «value», «superiority», «focus» and «differentiation». Important as these objectives are, they lack the power to rouse human hearts. To create organizations that are almost human in their capacity to adapt, innovate, and engage, management pioneers must find ways to infuse mundane business activities with deeper, soul-stirring ideals, such as honor, truth, love, justice, and beauty. These timeless virtues have long inspired human beings to extraordinary accomplishment and can no longer be relegated to the fringes of management. Retrain managerial minds Management training has traditionally focused on helping leaders develop a particular portfolio of cognitive skills: left-brain thinking, deductive reasoning, analytical problem solving, and solutions engineering. Tomorrow’s managers will require new skills, among them reflective or double-loop learning, systems-based thinking, creative problem solving, and values-driven thinking. Business schools and companies must redesign training programs to help executives develop such skills and reorient management systems to encourage their application. Transcending trade-offs Making progress on these moon shots will help de-bureaucratize organizations and unshackle human capabilities. The goal, though, is to overcome the limits of today’s management practices without losing the benefits they confer. It would make no sense to find a cure for insularity and inertia, for example, if the side effects were imprudence and inefficiency. Organizations must become a lot more adaptable, innovative, and inspiring without getting any less focused, disciplined, or performance oriented. The purpose of the management 3.0 is to make every company as genuinely human as the people who work within it. People are flexible, innovative and collaborative. Tragically, management processes and procedures frequently eliminate the qualities that make companies a community of people that never stop learning: vitality, creativity and sense of belonging. What companies once regarded as a mere moral imperative - to create authentically human organisations - has today become an essential business imperative. This is a great challenge. The first pioneers of management have

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transformed rational and wicked human beings into obedient and respectful collaborators. They fought the emotions of human nature. We, on the contrary, try to bring out the emotions. Our objective is to make companies more humane.

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4. A new management model

«What we need now more than ever are organizations that allow human beings to do just that. An organization will never be fully capable unless it's fully human.» Gary Hamel

Management 3.0: research results

4.1

To formulate a new management model proposal, we have used various approaches: • • •

some studies and research by AIADS, the italian association of systems dynamic analysis and by CeRCA - research centre on change and organisational learning from LIUC - Università Cattaneo, individual interviews of top managers coming from different industry sectors and varying company dimensions, human resources management 3.0 workshop, where hr managers from different industry sectors and varying company dimensions participated.

Human resources management 3.0 workshop The aim of the workshop was to generate a debate, without having to reach any conclusions, on the following questions: • •

Question 1: Management: which are the main challenges for the future? Question 2: What will the manager have to do to allow people to do their best?

In this chapter, we will focus on the new management model instead of on the manager 3.0 competence. During the first two hours of the workshop, the par61

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ticipants, divided into small groups, reflected on question 1 and reached the following considerations: Question 1: • Management: which are the main challenges for the future? • The collected results generated the following list: • Commitment • Trust • Innovation • Focus of the organisation on wide-ranging logics • Manage complexity • Globalisation • Multiculturalism • Rapidity • Flexibility • Well being • Transparency Then, teams were encouraged to think about the same question, but splitting it into some macro-clusters: coordination, motivation, objectives, decisions, control, and information. Coordination Today Mainly Top Down Mainly appointed to team leaders

Management 3.0 Guidelines with proactive autonomy on objectives and operational practices Teams with a greater lever of responsibility: self-coordination

Motivation Today Mainly focused on the economic aspect Contractual stability/certainty Economic incentives

Management 3.0 360° of people care: wellbeing Self-entrepreneurship inside the company Incentives not exclusively economic: More decisional freedom Job rotation Schedule flexibility Greater involvement in the decisional process 62

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Objectives Today Short term Economic Individual Mainly Top Down

Management 3.0 Short and medium term Not just economic, but also addressed to all the stakeholders Individual team and company objectives Increasingly Bottom Up approach

Decisions Today In the hands of a few people Higher level of bureaucratisation (more approval needed) Information Today Difficult to be obtained In the hands of a few people Not transparent and easy to understand for everybody

Management 3.0 All the involved characters are responsible Rapidity, autonomy and an increasingly spread delegation. Bosses go one step behind. Management 3.0 Easy to access A wide spread of required information at every company level Fully transparent and not manipulated

Control Today Hierarchically Top Down Boss-collaborator relationship Lots of intermediate checks

Management 3.0 More self-responsible people 360° comparison which involves all the stakeholders More freedom on how to get results with one final check.

Individual interviews of top managers The following people were interviewed during the research: • •

Simone Binda, Binda group managing director Andrea Pontremoli, Dallara Automobili CEO and general manager 63

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• • • • •

Paolo Cederle, Unicredit Group CEO business integrated solutions Alberto Capponi, chief financial officer Angelini Group Goffredo Luraschi, Mapa Spontex Italia managing director Massimo Pizzocri, EPSON Italy managing director, EPSON Europe vice president consumer sales Giampiero Bighiani, Festo Italia general manager

The interviews were deliberately left free in order not to direct the answers, as done in the human resources management 3.0 workshop, and it primarily focused on the question: which are the main challenges for the future? The following are interview excerpts highlighting key elements. Simone Binda, Binda group managing director • Capability of looking beyond your own role, rapidity, teamwork Nowadays and especially for the future, we have to get used to thinking as if we are in a rough sea and have to direct an orchestra from a raft instead of from a comfortable ship. In our company reality, the fixed, sanctioned roles we had some years ago don’t exist anymore. Markets and activities are more and more complex and it’s necessary for people to be inclined to teamwork and to amalgamate roles. It doesn’t mean that «everybody does everything», but every role is supposed to have a greater level of entrepreneurship; everybody should increase their ability of seeing beyond their own task and a high accountability level is required. Another key point is rapidity, intended as capability of quickly transforming and engaging the entire structure into analysis, change and improvement processes. All the activities should be carried out in a more rapid and improved way. The «everything now» logic is more and more common, as the dizzying growth of e-commerce demonstrates: every product or service should be available online immediately, round the clock, seven days per week, 365 days per year. To obtain all of this, the requirement is simplification and speed because a very deep analysis often implies loosing too much energy and excessively extending timeframes to the point where projects become obsolete. • Environment that helps you find self-motivation. Motivation is the capability of finding stimulus to do things, both the easy and the difficult, in both good and bad times, and it has to be personal. I’m a real supporter of the value of the group, to be precise, the more than proportional increase of individuals’ value when united. But the group has to be composed of people who have a strong motivation and are able to hand it down, creating an easy environment which allows everyone, managers included, to find moti64

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vation, enjoy challenges and not to be discouraged when encountering obstacles or possible failures. • More stimulators in the creative process The role of the hierarchic boss who only exercises control no longer makes sense. The boss should have a wider vision of the ongoing processes and activities. There will be more and more need for organisers and orchestra conductors and less need for solo artists. If we want to use another metaphor, we can think about the coach, who helps you to respect the rules and moves the team towards the objective. There should be more and more coaches, i.e. more and more stimulators of the creative process, intended as an improving process and a process for the research of new horizons and methodologies. In order to improve, it is necessary to have an overall view to ensure that what we are accomplishing is synergistic with a common goal, instead of dystonic or even counter-productive. • Values have always determined how people are chosen Still today, selection is a very difficult process. Competence is important, but so are personal attitudes and alignment to the company style, and it’s not always possible to identify all this during an interview. There are some people who dominate interviews and others that are maybe more interesting, but aren’t able to promote themselves during an interview. In any case, it isn’t easy to understand if an interviewee is the ideal candidate in the course of a fast meeting. But there are some new instruments which reveal something more than a formal interview: through social networks, many people disclose information which used to be well hidden, and which now helps to get to know the candidate more «intimately». In our case, values have always mattered a lot in the choice of people, maybe because of our entrepreneurial origin which contributes to maintain the central role of these elements in the company’s life. Moreover values have been handed down during the years with a great perseverance. And it’s not a coincidence that our company’s choices are still guided today by the values of the company founders. • Healthy professional growth Ambition towards career is a healthy form of motivation, provided that it is connected to a real desire for professional growth and not just a mere competition against your own colleagues. To work in a company which wants to grow, it is necessary to be ambitious and be able to transform this impulse into a propelling element of project management. But sometimes it becomes a limit for the talent retention, as in “horizontal” organisations with inadequate opportunities for internal growth. 65

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• Strategic process as teamwork Excluding «paternal» companies where the entrepreneur usually autonomously develops the business idea and the company’s path, the strategic process must be teamwork. This process, which is vital for company evolution, becomes faster, more reactive and should be more frequent. But I don’t expect any big revolution. We will always have to be more creative because there’s going to be a market contraction and there will only be room for people able to implement a continuous innovation. The strategic processes of many companies also pass through unforeseeable circumstances. There could be errors which overturn the strategy, there could be incidents and sometimes the strategic process is a casual one, like the chaos theory. • Knowing things as they really are I am in favour of information disclosure, with the exception of trade secrets. Knowing things as they are generates less anxiety. The objectives have to be clear to everybody. It is important that you are able and that you are allowed to give everybody as much information as possible. For example, even the switchboard operator or receptionist play an important role: they represent the company’s first point of contact with potential customers or partners, and they have to know the reason why their positive or negative behaviour could influence the company’s result. It is necessary to create serenity, a conscious serenity typical of a scrupulous family man, without any tricks. • Feeling good in the place where we spend a lot of time When I visited Ferrari, one of the aspects I was particularly moved by was the emphasis and the pride used to tell us about the importance of the microclimate necessary to preserve all the plants in the engine assembly factory. I understood that the idea of adding these plants generated a lot more than the simple ornamental significance. The sense of membership is extremely high among people working in Ferrari. I imagine that it’s particularly due to the brand pride, but I also expect that some elements of care, towards both people and the working environment, contribute to nourishing this feeling. There is no doubt that feeling good in the working environment helps to generate ideas: it’s easy to imagine that if we put a creative person inside a black cube, however good they may be, they don’t have much chance of finding stimuli to generate brilliant ideas. At the same time, a calm and positive environment helps to increase the motivation of people living inside it. No wonder innovation legends such as Google and Facebook have built their headquarters with this logic in mind. 66

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The working environment must reflect the path the company wants to take: a squalid or run-down office, in terms of furniture or atmosphere, surely doesn’t predispose the research of fascinating products. • Meritocracy I’m a strong supporter of meritocracy. We try to pursue it and it’s one of our company pillars for growth and development in the future years. Figure 4.1: Binda's management model

Paolo Cederle, Unicredit Group CEO business integrated solutions • The customer wants to create the service Even in the relationship with the bank, we identify more and more with the typical attitude of people using Internet 2.0; it’s you that builds the service you need. This means that the bank has to change too, not only in the frontlines which have direct customer contact, but also in the so called «operative machine» which doesn’t interface with the final customer, but whose functioning has a critical impact on the service quality. We have to build an organisation with the following characteristics: agility, flexibility, time to market, transparency and innovation day by day. 67

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• Sharing costs, processes and competence in a transparent way Transparency doesn’t mean that we only need to show the costs to our business colleagues, this is trivial and as such would be a structural problem. Transparency means that, in our context, we need to share the processes, costs, initiatives and competence in a transparent way, with our internal colleagues who have a relationship with our clients and with the clients themselves. • Organisational structure as adaptive organisation Good proclamations should be transformed into an organisation and managerial style. We got our system of organisation from outside of the banking market and therefore, in UniCredit business integrated solutions, we have implemented an organisational model which is still unique in the world market today. I met Filippo Passerini, CEO at Procter&Gamble, who eight years ago created an operative machine model similar to the one we have constructed. We were inspired by their model, and then we adapted it because we have different particularities. The world has changed compared to eight years ago, but the model adopted by Passerini is still cutting-edge today, also for the needs of a bank which are completely different; as an example, logistics are very important for P&G, but if the logistics break down in a particular area in New York, they will probably lose the market in that area and maybe they’ll never recuperate it. If the three hundred and fifty people responsible for our investment bank back office activity, the operational activities in some way comparable to logistics inside a manufacturing company, break down for a day, losses would be massive and would cause a crisis to the entire bank. We have adopted this organisational model which is becoming the benchmark for banks, many of which are international groups who are asking us for comparisons on this. Last week, at the end of a meeting with us, a prime international bank stated: «You have already done what we would like to do to in the next three years». This certainly reassures and pleases us, but we can’t stop. UniCredit business integrated solutions has an organisational chart which reaches eight levels in some areas and this is sometimes difficult to change because it is composed of twelve thousand people in eleven different countries. It is difficult to foresee a completely flat organisational model, but the management and feedback model the market asks for must be very different from the past. It should be quicker, more agile, faster and more flexible than what an extremely structured organisation often permits. We are reflecting on how to obtain a real adaptive organisation, so that once the framework is given, the organisation will self-adapt, not only in terms of organisational chart, but in particular in terms of offered services, process-

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es, interrelations between the different components of the service and the different organisational areas. We are thinking on how management has to evolve, and in particular on how to get people involved in this new rebuilding. Everybody should become a protagonist for part of the service. The example we often make is that the average age of the twelve thousand people forming the company is forty-seven years, and it is progressively increasing. Instead, in Romania, in the little town of Iasi close to the border of Moldavia, we have more than two hundred colleagues with an average age of under thirty. Geographically, they are far from headquarters, but willing to participate and have an above average education and skill level; lots of them have a double degree, some have a masters and all of them are able to talk three or four languages; we absolutely have to find a way to concretely and fully involve these colleagues in the building of our Group and our services. The same applies to the colleagues in the Italian and German branches: they are older and perhaps have less education, but have lots of experience at their disposal and the same desire to help UniCredit become stronger. It isn’t a matter of processes, but of creating an environment which everybody may take place in, an environment able to adapt to the arising needs, able to promptly react to critical situations and problems. The adaptive flat organisation; beyond the organisational chart. • Flexibility, agility, time to market, innovation In a world changing so rapidly, it is necessary to create companies with characteristics giving them the ability to rapidly adjust to it. We have identified them as flexibility, agility, time to market, transparency and innovation, and obviously in addition to these, control and cost reduction, therefore efficiency, since we manage a huge part of the operative machine in UniCredit. These are the characteristics which are needed inside the organisational model, the new management style and in the way people participate in the creation of service for the customer and therefore in company culture. • Motivation as the possibility to influence company evolution In my opinion, motivation will be strictly connected to the possibility of really influencing a company’s existence and evolution. A company should evolve continuously: the world is changing every day, customer behaviour is changing every day and the customers are playing a more and more significant role in the construction of service. Also, as far as their own activity is concerned, people motivation will always be more connected to the fact that they could realistically influence the service to the final customer or the evolution of their own structure. To give an example, inside our group there is the peculiarity of Fineco which represents 69

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an absolute success case. It continues to grow in double figures and it has impressive customer satisfaction despite selling the same products of a traditional bank. It is the way in which they built the method of interaction with the client and the attention to detail which makes the difference. It is the desire to improve and do that little bit better that represents true motivation. In my opinion, feeling that the company gives everyone the chance to make a difference will be the most important motivational, but above all operational, factor for the future. Obviously this requires a management which completely differs from the one of ten years ago. • Manager as creator and facilitator of an adaptive organisation A manager will be more and more the person who creates the conditions which give everybody the possibility to act. An adaptive organisation isn’t something you can define on an organisational chart or on a piece of paper and then just change it. Adaptive organisation means that every single function has the possibility to adapt itself, otherwise it wouldn’t be an Adaptive organisation. Therefore, a boss will have the role of giving everybody the possibility to adapt and create this value which changes day after day. • Flexibility, agility, speed I would like to choose flexible, agile and rapid people as my travel companions. These are the same characteristics we would like to have in our organisation. Competence will always be important, but competence without these characteristics will block this process. The characteristics of specific competence will support each other, allowing the company to be an adaptive organisation. • Decision as mobility, collaboration and cloud I was certain that there wasn’t an organisational model more hierarchical than the american army. My idea may have been confirmed by movies. Instead, I was impressed by a meeting with a colonel, a leadership professor from west point military academy, and his story about how reward methods for officials are changing within the army. Every time officials have to launch an attack, they are obliged to listen and discuss the tactics with their subordinates and then take a decision. Even if they make a mistake, they are rewarded if they have adopted a new technique after listening to all the suggestions and have taken into consideration all the possible factors.

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When I asked him about the possible loss of human lives, he answered: «There is no alternative because with the information the enemy possesses today, if I adopt a strategy I’ve already used before, I have already lost». This is true for us too. If I sell a product today which is the same as yesterday, I’ve already lost, because not only has the competition already adapted to the customer’s needs, but also the customer wants to create their own product. So, teamwork, decision creation, and information creation are becoming a «must», also for the american army. Not just teamwork, but also decision composition and information composition are no longer sequential like before, they are in a cloud. It’s the concept of the internet transferred to the physical world, real, traditional and non-virtual, therefore the concepts of cloud, of information creation and of collaboration are themes which will always be more and more real, even in the traditional, physical world. During another meeting with some american companies (such as Amazon, Google, etc.), one of the things that impressed me the most was their common thought, their common belief in the concept that the world is relentlessly moving towards cloud, mobility and collaboration. But while we think of these concepts as «add on», they consider them as «embedded» in everything they do. And this, in my opinion, is what makes the difference. So, everything should be influenced by these three concepts: mobility, collaboration and cloud. Cloud is no longer just a technological concept; it is a way of working. • Structured information at the right time By definition, information will circulate. The problem isn’t all that related to circulation, I believe instead that the success of winning companies compared to the others will be due to their capability of making both structured and unstructured information available in the right place and at the right time. It is the theme of big data access and management added to all the other already highlighted topics. With a world changing more and more rapidly, the information life cycle is very short and should be continuously renewed. It is necessary to unify structured information with unstructured information and to have access to the greatest possible amount of information. Once again, this has to be done in a non-traditional way because otherwise there wouldn’t be enough time, but we have to access the right information at the right time. We have to find new paradigms for information exploitation. • Dynamic working environment according to what you need We are working on what we call «smart working», a working environment which eliminates the old concepts of fixed workspace, but which is also dy71

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namic according to what you need in that moment. The reduction of the individual space is compensated by general interest environments which are huge and fully livable. We have reflection rooms, dialogue rooms, discussion rooms, etc. A lot is offered, but it is the individual who benefits and then combines the available choices in the way he needs them in that particular moment. I have to create a framework which facilitates the individual, the person, the team, the department to distribute or create a service for the customer which changes every day. • Creating an adaptive organisation where people feel like protagonists If I imagine how the bank will be in twenty years, the first really important thing is to create a services organisation which would be able to evolve and adapt as much as possible. Secondly, it is necessary to build a company culture where everybody feels like they are a protagonist, not in the sense that everybody defines the strategies because this is impossible, but due to the fact that each little piece of the value chain is becoming more and more important. Perhaps it would be better to talk about the value cloud from now on. The third challenge is to develop managers who enable all of this instead of being an inhibitor. The fourth challenge is creating some processes which permit all of this, but as a last step. • Hierarchy and information access Once I was chatting with an American professor, we were talking about young people and discussing the fact that they are often accused of having no sense of hierarchy. He stated: «It isn’t true because I feel they are very respectful of hierarchy, but they perceive it in a different way. When I exhibit the chart with the exam results, I feel particularly irritated by receiving e-mails from my students asking for their marks. I answer by telling them to look at the chart, but if they write an e-mail, they expect an answer via e-mail». And he states that it isn’t a problem of lacking the concept of hierarchy, on the contrary, they are very respectful of it, but the information access, the way of getting to it, is different, it is separate from the concept of hierarchy. It is more direct, immediate, rapid and without filters. I did an experiment with my son, I told him to imagine himself as a young graduate enrolled in a company, dealing with a problem. And to imagine that his boss, or the boss of his boss, doesn’t have the solution to the problem and that instead, the solution is in the hands of someone next to his boss. And I asked him: «What would you do?» He answered: «You’re not expecting me to ask my boss, who then asks his boss, and so on are you? And then the chain comes down again?» And I thought: «Yes, why?» Normally the compa72

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ny functions this way. But young people don’t perceive any lack of respect towards their boss if they ask the person who possesses the required information directly. They are rapidly and flexibly solving a problem instead. In that moment. I thought about the colleagues working in the eleven countries of the company I manage: how many chains do they have to face in order to give value to our services? How many processes built on my world logic do they have to respect? But in particular, how much value do we lose operating in this way? Therefore the problem is transferring the concept. It’s a bit like the Americans, the cloud isn’t just a way of managing information technology, for them it’s a way of thinking. Figure 4.2: Unicredit group business integrated solutions' management model

Andrea Pontremoli, Dallara Automobili CEO and general manager • To manage in chaos We live in a period of time in which two things are prevailing, one is the speed in which things are happening, the other is uncertainty. Uncertainty is increasing and therefore there could be some variables which are impossible to predict. In mathematics the sum of these two things is called chaos. The true challenge of the manager is to manage in chaos. It means being able to take decisions without having all the information, without even having all the ele73

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ments of context and trying to prefigure which ones are the contexts and what are the variables that could affect these contexts. Since nobody can predict the future, we are in the lucky condition of trying creating it. The manager of the future is somebody that has an idea of the future in mind, whether right or wrong he will work on it and build the future. • «Someone» who evaluates me and helps me to find my place in the future The concept of hierarchical boss is disappearing, at least in companies as big as us. When we start working in matrix, the concept of boss becomes quite uncertain. In my opinion, a boss is somebody to rely on who essentially does three things: • • •

evaluates me and is able to define what I’ve done well, what I haven’t done well and what I’ve yet to do. helps me to build my professionalism, my growth; is the person I compare myself with in order to define my future. has to be able to look ahead and understand what my place is in the future.

Such a boss is considered the hierarchical boss, the ideal operational boss. • Sharing the idea of future Strategy will become less and less top down than what we are used to and doesn’t think about how the future could be and then decide. Strategy actually represents the decisions I take now, which could affect my future; if I have an idea of future, it would be easier for me to take the decisions today which could build my future. But this strategy needs to be shared, particularly as far as the idea of future is concerned, in order to obtain other elements which could help me to make the right decisions; I will never possess all the elements I need, they won’t be completely correct, but the fact of drawing them together, the fact of sharing the idea of future and the fact of doing it with a group of people surely helps. More and more companies which are reaching success have leaders who tell the future they want. The talent of a leader is to paint you a future you want to be in. • Passion for working We almost exclusively hire recent graduates. Rightly or wrongly, this is our choice. I have no interest in taking on know-how I don’t have, I prefer creating it through fresh minds. If we wouldn’t have done it like this, we wouldn’t have created the simulator, we wouldn’t have done many other things. Something essential, maybe even the most essential thing, is passion for this kind of job. 74

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It is necessary to have a strong methodology in order to learn and therefore I choose candidates depending on the university or school they attended, because some are stronger than others in terms of teaching methods. So this is also a way of selecting. The Formula Sae is recruiting method for us. We invite universities from all over the world and every university builds its own race car to compete with. There are seven types of tests, from the test on the innovative concept of the car to the costs and clearly, if you build a low cost, high performance car, you will be repaid until you get to the point where you race it, when it has to obtain the fastest lap time. Then there are the acceleration, braking and safety tests. The great thing is that this year we have fifty judges who are leaders in their field: Ferrari, Dallara, Mercedes Formula 1, Continental. These people make themselves available for four days at the nearby Paletti Speedway in Varano de Melegari in order to evaluate these products created by university students. This year we have stopped registrations because we are located in Varano which doesn’t even have two thousand inhabitants and two thousand enrolled engineers would invade the valley. They come from eighty-one universities from all over the world, from India, Pakistan, Germany, England and Israel. I have the certainty that whoever comes here surely has a passion otherwise they wouldn’t spend time and money to create cars and to study innovative concepts. Moreover, we show them Dallara, we have to like each other like a couple does, we tell them what we do and how we do it, and normally we collect a huge number of CVs from people who want to work for Dallara. And if I need characters that help me to build the future, I also need leaders, and each of these universities has its team leader elected by team members, which is important evidence that they are leaders. In addition, we usually organise a session dedicated to business model definition; after creating a car, each university team presents the business model used to create its car and we, the judges, play the role of investors. We have money at our disposal and they have to convince us that their project can be successful, so market research is done, they explain where the product may be placed and where it could be sold, and even the way they are dressed changes becoming more formal as people empathise with a reality they have only imagined before. • Knowing that what you do contributes to something bigger than you Motivation is the core of everything. It is how you get ordinary people to do extraordinary things. It really is the element that drives you. A great leader, a great boss, also a great company organisational plan, can all either favour mo-

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tivation or not. A good boss brings the best out of people, a bad boss brings the worst out of people, and people are always the same. Knowing that what you do contributes to a bigger picture generates motivation. A good leader is able to paint a future where people want to be. At this point, it will be the people themselves who will guide you toward that future and maybe you don’t even know how. It will be up to the people to find the how and thanks to their motivation they will be able to produce ideas, energies and strength and will group together with other people. This way they bring you toward what you have painted and what they have shared. I’ve always seen this happening throughout my career, since I was the manager of a small company of fifteen people to the time when I was the boss of 25,000, as the dynamic is always the same. • Sharing information not data Skillful people are able to distinguish between what is information and what is data. Semantics can help us, explaining the difference between significance and meaning and I always translate it in simple way: data is usually only understood by who created it, whereas information can also be understood by people who haven’t created it. If I say eighteen, I give you a data which means absolutely nothing because it is out of any context; instead, if I say 18 euros per hour, I give you an information; we are overloaded by data, information is much less. The important thing to be shared is not the data, which can even be hidden, it’s information which really generates value for me, because if me and you who have different jobs share two pieces of information, we may create something which doesn’t exist yet due to the fact that we have understood each other. Vice versa, if we only share data, we might not be able to extract anything. • Coherent social working environment The working environment is crucial, both the physical and social. It is the working environment which makes the difference; we changed from a closed office model to an open space. What is important is generating a coherent social model which enables people to feel good. • Diversity helps you to grow faster Each one of us should deal with the world seen in a global way with different cultures. There are some who don’t hire women in their company, but if society is composed 50 percent by men and 50 percent by women you will lose opportunities and if you don’t put different cultures in your company, you lose opportunities.

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Diversity makes a company grow faster because it makes you question yourself. In western cultures we are used to building certainties, lifelong certainties which then also become advantageous positions. • Speed is not velocity Know-how, knowing how to be and knowledge are important components to obtain something. Being able to evaluate someone means being able to group all these elements, which compose people’s personality, together. Over the years, managers have simplified evaluating methods. For example, I evaluate you on the amount of time you dedicate to something or on the result you bring me, but the result doesn’t count if you don’t have a direction, it doesn’t count if you don’t know how you obtained it; I make 10 million euros but I steal it, you had to travel 100 km/h but it’s a shame you went round and round because I wanted you to go to Milan. There’s a difference between speed and velocity, speed is how many km/h you travel, velocity is how many km/h you travel in a certain direction. It is always the purpose which helps me to evaluate what you have done. Punctual evaluation of a result is a simplification which helps you, but the most fundamental point is that you have shared the purpose with the people and only then can you get the best from them. It is more important to know how to explain the reason why rather than how things happen. • Objectives and timing: 3, 3, 30, 300 Objectives are related to timing, you must have four types of objectives: - three months, operational objectives, because you have to generate value for those who believed in you the stakeholder; - three years, for your investments, if I buy a computer I expect that it will generate a higher value within three years. When you create a company, you must define the objectives for the next thirty years. What makes us different is the fact that we would like to define three hundred year objectives, which means something that would go beyond yourself and that you do to add value to the society in which you live and it is only this way, only in thinking this way, that you can motivate people to work with you since they are doing something which goes beyond themselves. It is the same as what we do for our children to give them a better future than us; if you do it for the society you know that you aren’t doing it exclusively for your child, but that you have done it for your child who could live in a better environment than yours. It is necessary to be able to define some form of timing and neither the three year nor the three hundred year may be the correct one for you as every77

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one has their own dynamics, strengths and meaning. It’s obvious that when you define three hundred year objectives someone will laugh at it. This way of thinking was born during a board meeting with Cucinelli where there’s a monk who is used to thinking this way: if I have to restructure my monastery, the amount of money I spend now is nothing in a three thousand year perspective. If you deal with three hundred year objectives, you think in a different dimension and this can help you to reflect about the social and therefore, when you talk about social responsibility it is also a matter of interest. A competitive company won’t exist in an environment which isn’t competitive. You can’t be the best in producing mineral water while living in the desert without roads and planes, who would you sell it to? This is the jump which we have to make, which takes you to sharing, to competitiveness intended in its ancient meaning. We have seen it in the young people who come here to Varano every year for the formula sae. We had Indians coming here with wrecks and the front nose made of polystyrene so the germans gave them a carbon fibre nose as a gift and when I told them well done, they answered me: «imagine the satisfaction of winning against them after putting them in conditions to play». If I put you at the same level as me we can play, if you raise the bar you generate value. Figure 4.3: Dallara's management model

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Alberto Capponi, chief financial officer Angelini group • Professional relationship In my opinion, the management contribution inside a company should go back to being set on professional criteria. What does a professional relationship mean? In my opinion it essentially means two things: to have a technical base of specific abilities and to adjoin your way of using this technical ability, which is your behaviour, your ethics, to how you deal with the structure. Once we used to say «this man has a professional behaviour», which is something I don’t hear anymore. And what does professional mean? Having a certain level of awareness which can be exercised in the proper way. Today we lose lots of time evaluating the organisational charts and the reporting lines which should be directed and functional, but I don’t hear anybody defining the organisation members as «professional people». We must go back to the culture of professionalism. Professionalism with a capital P and obviously defined in the best possible way. • Transverse competence In my opinion we have lived a sort of specialisation nightmare. A manager should be specialised, this is true. It means that if you have a specific competence in a sector, or if you want to enter a sector, you must have a specialised point of view, it is a requirement. But today that’s not enough, today you should have transverse competence. I remember an old boss of mine who always used to say: «if you want to go up, you should be generic with a capital G». He meant that, given that your level of knowledge has to be very high, in a world like this you must grow on a transversal level. Everyone who has done business in the last twenty/thirty years were specialists, but at the same time they have had huge transversal competence. We are the second biggest manufacturing country in Europe. At the base of the success of many Italian companies with knowhow, there is exactly this: our small and mid-sized entrepreneur is a great specialist in what they do, but they also have cross competence when they enter the market. And us, as companies of bigger dimensions or even multinationals, can no longer escape this concept. Everyone should face their own problem with an extremely high level of specific competence, but they mustn’t barricade themselves in the specificity of what they do, they have to look outside otherwise they become cut off from the company. I’m not interested in having a person who is extremely good at their job, if they can’t integrate and don’t understand what there is beyond.

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• A company is a living organism and, as such, doesn’t stop The third point which made me think a lot, and which in my opinion is fundamental, is the time factor. I think that one of the limits we have had recently, is that we evaluate corporate life as truly scanned by time. I have the balance sheet, the quarter review, the monthly budget and the triennial strategic plan, all beautiful useful things, and none of us could think of not closing the annual balance, not doing the triennial strategic plan or abandoning a monthly control plan, but at the bottom of all this there is a concept: the company, which should be seen as a continuous «becoming», it’s a continuous evolving flow. In my opinion, the main error concerns the fact of having to excessively fractionate the time flow. Theoretically, we examine a company, we take pictures of it and we measure it, but the concept is a concept of a company continuously «becoming». We mustn’t forget that the company is an organism and, as such, doesn’t stop. • Continuous company development The management model must ensure continuous company development. The big problems that occur at the organisational level, often at the banking or financial level, can be seen as offspring of the temporarily narrowed concept of the company vision, that is to say, of a management which has a blinkered awareness of what corporate life is, and we can’t allow this. Management must ensure the continuous development of its company. Management is a temporary element which takes care of this trend for a certain period of time, but the river keeps on flowing. This is the only way we can think correctly about the company flow otherwise we only have a series of watertight compartments. • Professional boss-collaborator relationship I don’t believe that the hierarchical/functional boss role will change much in future and the activities of the hierarchical boss will always be more or less the same. There will be problems in some companies where this relationship won’t be professional, that is to say, where you don’t use the leverage in the reciprocal professionalism between the boss and his/her collaborators. So the role of the boss is a summary of all these elements: of course control, leadership, motivation and organisation, but the bottom line is that we can’t think about company organisation which only works only on paper without the fuel of professionalism. • Strategy as strategic people moves Thirty years ago, if you had asked me what is the fundamental element in a company, I would have answered «organisation» and I was firmly convinced 80

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that strategies came from organisation. Today, if I was asked the same question, I would answer «people». And then people have to be inserted into an organisation, they mustn’t be left free, strategy comes from people. Strategic thought continues to be a top down process, but it is a top down process which is strongly influenced by a bottom up approach. • A company which gives the possibility to motivate It is clear that a company should motivate people, there’s no doubt that it can’t impose motivation on people who don’t have their own motivation. So the company, and whoever manages it, must do their best to motivate the people inside it, from the simplest to the most complex things. I believe that when we talk about company stakeholder, nowadays the human factor is the primary stakeholder, and as such, he can’t feel motivated or good inside the company. But there must be bilateral contribution, the person who enters the company, who lives inside the company, also has to be able to motivate themselves, to self-motivate. It is no longer possible to think of a company which is composed by unmotivated people who are not aware of their role and carry it out in the absence of absolute professional rigour. • The correct transverse information A company can’t reveal what is happening on the inside, their plans, where it is going and all its difficulties with the right balance. As we know, reading data is difficult, we can’t move from one extreme to the other but it is a duty to make correct, filtered and well calibrated information available to people. As on the outside, I think it’s no longer possible to have hidden company numbers, but obviously there is a required level of discretion concerning market, transparency and competition. Information should be across-theboard. It should obviously be handled with care, as there is nothing more dangerous than giving information to people who are unable to manage it. • Recognising merit We have to think of an «incentive» system which I wouldn’t even call an «incentive» anymore, but simply a «reward» system, a correct remuneration structure. It is essential that merit is recognised at every level. If the company wants to give the right amount of credit to people for the creation of value or positive dynamic in corporate life, it is necessary to avoid certain mistakes. The most dramatic one is that of a short time horizon, of a lack of adequacy between the compensation and the economic balance of the company. In my opinion it isn’t really a matter of a discrepancy between top management and operative levels, but instead it refers to the incorrect definition of the participation in the value creation process at all levels. I think that compensation cages are dangerous and should be avoided. They are factors for 81

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possible company damage and are rhetorical answers to short term problems. Labour is a stakeholder and as such, it should have its own «correct motivation and participation». • Correct representation of what the role is and what the company expects A hiring mistake is obviously a big damage for the company, and it is also damaging for the hired person. I don’t think there is an unconditionally right or wrong method, we test the technical and psychological capabilities and more, but the fundamental principle is always that of a right representation of what the role is and what the company expects. On the other hand, the person waiting to be hired has to provide a genuine and professional representation of what they expect to be able to offer the company. • People follow their own almost natural paths Inside the company there should be a way which enables people to follow their own almost natural paths. It is then obvious that every path has its difficulties: it is impossible to predetermine if a person is able to follow this path and reach 800 or 1,200 meters, or even higher. This has to be seen and tested along the way. We have to start from the premise that the company organisation should provide for career development and theoretically adopt an internal development system, turning to external hiring as little as possible especially at a top management level. • The importance of company culture I strongly believe in company culture. A company culture is composed by a mix of many things. I come from a multinational and I have been part of a family-run company for thirteen years and I know that it requires lots of time to assimilate the company culture. This is a fundamental value in a company. It is what provides a sort of membership pride and what makes you feel as «naturally part» of that organisation in which you are able to give your best. In that company which knows and demands certain behaviour from you, you are inclined and actually happy to provide that certain type of contribution. All of this isn’t created overnight; you need a lot of time. • From the short to the long term In Italy, we «wrongly read» the concept of company as if it was a foreign body with specific activities and dedicated to the development of some short-term objectives. I don’t believe that those companies which are born and die achieving only a short-term goal, as happens nowadays particularly in the Asian mar82

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kets, can be considered as a behavioural and flexibility model, despite their short-term successes. They can certainly answer some short-term needs, but I don’t think they can represent the skeleton of a strong market economy. Figure 4.4: Angelini's management model

Goffredo Luraschi, Mapa Spontex Italy managing director • Make people part of the project Companies which remain the same as they are today will unlikely still be here in five years. We are surely already moving rapidly towards a different management. The old company bosses, the historic ones, are now something which only exists in books. This change is a relentless trend towards a new management which will bring a greater involvement of people. Collaborators must be a more and more active part. This is mission of today’s boss: trying to make people feel part of the project. • Information transparency A unilateral top down approach won’t exist anymore, it will be transversal; information will rule from the top management to collaborators. Information will be more and more shared and this is the key of the new management mod83

Management Innovation Road Map

el. The management of information towards collaborators is crucial: the more involved you feel and the more you know what’s happening at all levels, the more motivated you will be. A collaborator who knows the level of the contribution of their work to the company and who knows why certain things will have a positive or negative impact on the company results, will be more motivated, or at least less frustrated by something which remains in a non-sense bubble. From this point of view, I believe that some important steps have already been made. • Knowing why I do something and what impact my work has On an extreme level, why are people so motivated and work to exhaustion when collaborating for the town festival? Because they are doing something which excites them and they feel part of it, they know its final purpose; this is the definition of knowing that you are part of an organisation. This doesn’t always happen at work and sometimes people feel that they are part of a mechanism whose significance they don’t fully understand. While they remain in this limbo, they will not be very motivated. • More and more team play In some specific tasks, especially in more commercial roles, individualism continues to be an almost essential characteristic, as the salesman who lives outside the company is in a different dimension compared to that of headquarters men. Anyway, in this case too, he represents an essential part of a common project. There’s no possibility to play your own game and bat freely anymore. The game is always a team game and the manager is more and more responsible for coordinating and managing the different characters, like a team. • Value importance: speed, care, passion, grit and game I can tell the values which will guide our next years: that of speed together with that of care. Speed, because if you aren’t reactive enough, you won’t survive more than a season so everything must be done quickly, but it should be combined with care (detailed care) and therefore one value has no sense without the other. Doing things in a shoddy way gets you nowhere, therefore doing things quickly and well, like the one-time governess used to do, is the basis of a company success in my opinion. Moreover, passion and grit are the two elements which hold teams together. When this holy fire animates you, you don’t need to be motivated, you self-motivate, you have your inner fire which gives you the energy. Another value which has a strong impact on the company is knowing how to have fun. Among our company values, we have that of playing; if you do what you do with a smile, with the joy of doing it, with passion and with the desire of having fun, then it is likely that your job won’t weigh you down and that your col84

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leagues appear better than how they actually are. It is an approach that surely brings positive energies with it. • Increasingly objective reward systems and meritocracy Salary and reward systems aren’t what really motivate people, but they could absolutely play a relevant role in demotivating people if they are considered as inadequate or performance isn’t recognised. Reward systems should be increasingly connected to objective results, so that meritocracy is and will be more and more recognisable. Before, a show-off could brag about an excellent sales performance, whether it was true or not, as it wasn’t easily traceable in the field, but now performance results are extremely evident at all levels of profit and loss. It means that if yesterday it was sufficient to make sales charts, and then maybe get distracted and lost in making incredible discounts, today there is a level of information and performance control which prevents that and which was completely unthinkable some time ago. • Boss as inspiration and guide A very important part of the boss’s role is that of guidance and inspiration, and it can’t be avoided or ignored. To have a boss who inspires you, who by setting an example gives you a hint in the right direction, is crucial in every company, from sport to corporate. This role of being an example, of having the ability to pull your own team, is crucial and isn’t news, but it is something that persists and will continue to persist. • Permeable roles and transversal competence There will be less and less vertical organisations. The organisational structure will be more and more slender, lean, flexible and there will be more and more shared competence. It is difficult to imagine that specialisation will still rule inside the company. What you are expected to know how to do isn’t just your job, but also that of your neighbouring department; boundaries are so evanescent, organisations are so slender that everybody should have more and more shared and flexible competence. The power of knowledge and not divulging information used to be common practice. If in the past you could use the proverb «knowledge is power», nowadays it is clear that this limits the results. If you are the only one who knows something, it is true that you increase your power or your impact, but at the same time it’s also true that the others can’t help you. Therefore hierarchy management should be more devoted to transparency, sharing and to a top down-bottom up information flow. Once, it was usual to keep a certain distance as it was dictated by roles, I am the boss,

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and you are the collaborator. Now, managers must have great ability in managing relations. • Intuition supported by data To allow intuition to guide us without losing control is a great skill; it is a compromise between mind and guts. Following our instinct while spicing it with a great dose of common sense would actually represent the perfect magic recipe, since often the best bosses are those who have this type of perception: anticipating what could be achieved when you get the data. Being able to integrate our intuition with something concrete is fundamental in order not to lead the company in the wrong direction. Figure 4.5: Spontex's management model

Massimo Pizzocri, EPSON Italy managing director, EPSON Europe vice president consumer sales • From sales to collaboration In order to face this subject, I would like to preamble about the capability of working today while constantly projecting the future. What I mean is that ideas should be projected to a long-term horizon because the reality that we will face tomorrow represents a direct development of what we are living today, but only a long-term vision offers more chances to act in a coherent and effective way.

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Naturally, the longer the period of time, the higher the probabilities are that we will have to change something. Nowadays we are all used to change, but we will have to manage it more and more frequently and particularly together with our clients. This trend, which has already started to become apparent, will become a common practice in my opinion. I’ll better explain. If sometime ago we had to satisfy some needs, because selling was a synonym of «supplying products or services», later, to remain competitive, we went through a new phase, in my opinion a more interesting one, which was the one of targeted solutions to our customer problems, that is «selling solutions». I believe that this isn’t enough anymore. The right approach, to be chosen by customers, is «helping them to grow», by supplying them with the competence to face opportunities and markets which are often new and very different from those they are used to. Traditional markets and applications are no longer sufficient, we need to open new spaces. It is difficult to forecast, but I think that the companies which will succeed in the next years are those which will manage to go along with their customers on different markets and paths. If this is the challenge of companies, management will have to behave accordingly. Selling and management skills won’t be enough anymore, we will have to increase the ability to collaborate. For some it will be a complex transition, because accompanying customers along a new path requires a great dose of altruism, of long term vision and also the capability of identifying strategic customers. Obviously, all of this should be complimented with daily management. Some companies have a clear strategy while others have an effective tactic. The ideal manager must be able to constantly balance strategy and tactics. It is necessary to have a clear idea of where to go and to be able to tactically adapt to continuous market changes. It will be a continuous, stimulating challenge. • Choosing the travel companions: we are all in the same boat A very important and delicate phase will be choosing the people you will work with. The scope should be widened to consider not only colleagues, but also customers and suppliers. Management will have the main responsibility of choosing the «travel companions» and the company should increasingly share and collaborate: we can sum up this approach with the phrase «we are all in the same boat». It could mean that the hierarchical structure, in its strictest sense, may not be suitable anymore. Obviously a helmsman will be needed, but the best way to stay on route will be a more widespread and shared effort. The real challenge will be the ability to channel the energies of the greatest part of the crew without losing timeliness.

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• What will the weather be like tomorrow? We would all like to have a telescope and look very far away into the sky, where meteorological events take shape, in order to know what the weather will be like tomorrow and, outside the metaphor, to identify information and trends which could be useful for our future. And for daily life, we would like to have a microscope to focus on what is not apparent to the naked eye. The truth is that everything must be reconciled with the increasing lack of time and resources. The manager of the future must be able to make faster and faster decisions and therefore, instead of a telescope or a microscope, he should use the simpler binoculars to observe the horizon and a magnifying glass to focus on details. They will have to train to decide in undefined scenarios. Especially in Italy where the industrial scene is made up of many small and medium sized companies, if we would always wait for the exact data, statistically very reliable data, we will be devoted to stagnation. In my opinion this is another characteristic we will have to look for in managers: the capability of making fast decisions, with only some carefully selected data and with a flair for analysing and managing risk. In my opinion, an old and infallible method could be useful to reduce the risk of failure: sharing and listening. Data must be shared, we have no alternative, if we are all in the same boat everybody should be able to understand what the weather will be like tomorrow and to provide information to keep the boat on course. • Controlling without interfering Each valid crew member invests a certain amount of energy for essentially personal reasons. Management has the role of organising the team and involving each member so that everybody is able to contribute in the most efficient way. Obviously it isn’t easy. To be able to get the entire team committed to making a constant effort in a long endurance race, it is necessary to plan some check points which represent verification and sharing moments: clarifying the route, reminding people of the rules, verifying resources, correcting mistakes, sharing achievements, persisting in activity repetition (if necessary). The subject of control is even more crucial for big organisations because they have to combine it with the complexity caused by the lack of territorial proximity. Companies with international customers and structures have to face the problem upstream, keeping two anchors: company processes have to be as simple and standardised as possible and information has to be unambiguous. It is also crucial that whoever operates has the objectives and decision making areas exceptionally clear in their mind.

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Due to these reasons, it is necessary to precisely document and declare objectives, plans and results; companies can’t run the risk of overlooking this activity. There are different control models. Personally, I prefer «controlling without (too much) interfering», like a football referee: very close to the action because he has to understand what’s happening, but without interfering in it. Management should create the best conditions to build a competitive advantage and to let play those who have to score. If necessary, a manager has to promptly stop the game and penalise anyone who fouls. But the best matches are those which let the fantasy and passion explode in the people on the field who choose to play and play to win. Delegation doesn’t transfer power, but it has to enable a greater speed and precision in making useful decisions in order to reach objectives and pick opportunities. • Creating winning conditions Management must take charge of creating a winning «situation», therefore it has to act on the context where people operate and not on the motivation of the people. If we are all in the same boat, the premise is that the individual chose to be an active member of that crew. Management clearly explains conditions, resources and objectives. All the company’s resources should be dedicated to achieving the company purpose, which isn’t motivating people, but creating a winning situation which incentivises and unites people by reflex. If a company is successful and sustainable in the long-run, eventually people will perceive themselves as an essential part of the company. • Measuring value creation Short time sustainability is a necessary condition for most companies. Whoever doesn’t make profit must create the conditions for change. The objective mustn’t be just to make profit in the short term, but to continue to do so tomorrow, after tomorrow and in the future. To measure value creation, management has to define some criterion in advance, indicating if the company has reached its objectives, the qualitative ones too (KPI). It is important that these indicators belong to two different categories: some have to act as a compass showing the route coherence, others -more traditional ones- have to measure the health situation of the company therefore acting as a thermometer. The compass has to indicate if you are keeping the right route and, for example, if clients will continue to choose you tomorrow. The thermometer instead, promptly warns you if some vital parameters have changed. Both instruments are essential and it is necessary to intervene 89

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when they show alarming signals. Easy journeys don’t exist, having only a thermometer or a compass can be dangerous: the ideal situation is that the manager keeps the short term situation under control, but at the same time acts with awareness of the fact that what counts is creating value for the future. Investing in the definition of the route and of some successful criterion helps us to reach the target and to objectively measure if some deviations have occurred. • Trust relationship Each journey is different and each company has its own route. I want to think of management 3.0 as a recipe. And the ingredients are those highlighted in the previous paragraphs, but the correct quantities have to be customised. I add another ingredient: trust. Relationship, reliability, competence, availability, so a trust relationship, are the conditions needed to operate well. Trust has to be conquered through the everyday actions and relationships between entrepreneurs, management, collaborators, suppliers and customers. Figure 4.6: Epson's Italy management model

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Giampiero Bighiani, Festo Italia general manager • Manager as a coach My dream, my vision is that a manager would be a coach. The idea of «manager as a coach» is top for me! I’ve taken part in many people management courses, but my favourite one went through the concepts of leading, mentorship and coaching. The three phases are very different. Leading is very similar to directing, mentoring is similar to «look at how you do it» and coaching uses the pushing effect: I push you and try to give you that level of motivation, that level of empowerment to make sure that you act. This is the dream for me. I believed that situational leadership was something easily applied, but I noticed that there are people who start alone and operate if you can give them the right motivation and engagement…therefore I really believe in this vision. •

Vision should come from the top, strategy should be developed with people, everyone should have their own BSC It is clear that the vision has to come from the top and it is particularly true in companies like ours, global, multinational where the vision must be created from people who define the direction. I would like it if that direction came like a comet. Then, from the vision, from the dream and how to get that dream, there are two important effects: the bottom and the top. In my opinion everyone should be involved in the creation of a strategic map in order to make a vision more tangible, otherwise it can’t work. So for me, strategy must be something built, people must be able to have their say, but they need a person who tells them: «well, now we have decided to go this way and we want you with us». Another dream I have refers to the guiding instrument, (there are lots of guiding instruments and the one we use is the balanced scorecard). The dream I have is that everyone has their own little BSC in mind, which balances them in four important situations: finance, customers-market, processes and competence-people. If everybody can have this little instrument and mechanism to go…you’ve already done a lot! • Having few but clear KPIs The real problem is summarising control elements in a few, clear KPIs. Today our problem is that we have many control systems, but we aren’t able to give a good measure of these KPIs. We aren’t able to measure them, so we look at all of them, but we aren’t able to summarise them understanding which are the important things. In our company, we are installing some traffic lights in every department. Managing

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to synthetise elements in a few things, which indicate if today is a green, yellow or red day, has extreme importance for us. The real problem is giving a good measure to KPI and succeeding to use them in everyday life. • Control is in everyone’s hands Control instruments are useful if used every day. If used only once a month, once a year, every six months, when «the horses have already gone», they are completely useless. Control systems must be built inside the company, together with the people who will use them. Control is in everyone’s hands, every day. This is also a dream, it isn’t a simple thing. • We say everything We are an atypical company, we say too much, everything. We publish the BSC at all levels. Whoever enters our company sees everything. It’s only the information of collaborators which isn’t public, all the rest is well-known. Sometimes we even insert data connected with: personal daily client visits, daily inserted orders, we do it to help our collaborators. It is extremely dangerous to give collaborators a lot of information without making a synthesis and so without telling them what it is for. I see a future which is increasingly open and this is important. Some American companies even publish people’s knowledge and skill level. This is not for reward purposes, but in order to say: «I know that you know, I can come and ask you.» • Values make a company speed change Values create groups, a sense of belonging, and you don’t question them: either you have them or you maneuver yourself to obtain them. We have just coined five values and the process has been the following: fifteen thousand people have been asked for their opinion, then, with a step process lasting two years, the owners have stated that these are the values to reach the vision. Today, to keep them tangible, we have some department ambassadors, who are trying to substantiate how we adopt values today and how we didn’t do it before. In my opinion, values are part of those elements, those tools, those assets, which could change the speed of a company, as long as they are applied together. You can’t exclusively take what you prefer and say: «we are determined on this, I’m not interested in the other four!» .You have to take the complete set! The greatest challenge for a manager in a company like ours is letting people understand how and where, and where not, value has to be applied.

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• An environment where people are able to give their best In our Employee Satisfaction Survey, everyone said that environment is a hygienic factor and so it is great to have it, but you don’t realise it because you live it. They said it represents 25 percent of the motivational factor. Environment counts a lot. Unfortunately, more than a half of the collaborators don’t live the environment, since they live the client one. When they come back to us, they understand the environment value. We are always trying to renovate it, to keep it clean and to change it depending on the organisational chart. The organisational chart has to reflect the environment. And organisation has to mirror the strategy. Therefore we are trying to provide an environment where people can truly give their best. • The company individual is stronger than the individual alone What I notice is that my colleagues have great luck. We are in Italy and Italians have something unique, it is difficult to turn them into team, to make them understand that the single individual can’t do anything and that the company individual is stronger than the individual alone. This is a real problem for italian managers. Germany, France and England don’t have this problem or at least it’s difficult to find a company where two hundred individuals act alone. There, you have companies where more than a half of the people constitute one individual. This is our biggest problem. We should study the Italian morphology, the Italian mind, culture…in order to understand why we aren’t able to do that. Figure 4.6: Festo's Italy management model

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4.2

Management model 3.0: the main pillars

In order not to excessively complicate the new management model and at the same time not trivialising it, our research results led us to identify seven macro pillars: decisions, coordination/control, objectives, motivation, information, culture, learning/growth. The diagram used to build the new management model, as shown in Fig. 4.7, is based on these seven macro dimensions of the new management model and for each of them, it compares the old management style with a new work hypothesis. The main idea is to gradually switch from the traditional model to the new one. Figure 4.7: Management model dimensions Management model dimensions

Old management model

New management model

DECISIONS

Taken by a few people Top down approach Strong hierarchy and bureaucracy

Shared responsibility Shared corporate intelligence Top down & bottom up approach

Strong role of bosses

People & team increasingly self-managed

OBJECTIVES

Top down approach Strong short term orientation

Top down & bottom Up approach Increased focus on the long term

MOTIVATION

Extrinsic & based on rewards Intrinsic and based on and benefits involvement and performance quality

COORDINATION & CONTROL

INFORMATION

Secrecy Reserved for a few people People have to look for it

Total transparency Available to all stakeholders Spontaneously provided

CULTURE

Paternalism Internal competitiveness Individualism

Strong meritocracy Collaboration Team

LEARNING/ GROWTH

Left to individuals Focused on one or a few Competencies Learning as a unique individual experience

Planned Widened to more Functional areas of competence Organisational learning derived from more experiences

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DECISIONS • Bureaucracy vs self-organisation Bureaucracy and bad management often go hand in hand. People usually define strict norms, regulations and methods to compensate for the lack of competence and intelligence. The sociologist Max Weber stated that companies are built in one of the following ways: the traditional domination, which fundamentally bases itself on adopting traditional norms and regulations that have worked well so far; the charismatic domination, based on a leader's charisma; the legal domination, which bases itself on establishing a clear system of norms and practices. In Weber's opinion, the third is the most rational and efficient method to manage an organisation. The legal domination places bureaucracy in the centre, avoiding the risk of an approach based on idiosyncrasy and individuality. However, as every management principle, if over-adopted, it could create depersonalisation of the work, disengagement and inefficiency due to the lack of continuous improvement and innovation. In our opinion, the bureaucracy principle works well in companies which aren't too mature, where the competence and communication levels are poor and the required innovation level is low. In companies where innovation, communication, competence and client service are considered a must, a bureaucracy excess is simply catastrophic. In these cases, what could work is a self-organisation principle (a self-organising system). The self-organising concept is strictly connected to the concepts of balance and instability. Balance is a condition where all the forces of a system tend to cancel each other out leading to stability, not change. In her book Leadership and the New Science, Margaret Wheatley states: «I don't believe it is a desirable state. Quite the contrary. I’ve observed the search for organizational equilibrium as a sure path to institutional death...». In thermodynamics, balance corresponds to the final state of a system's evolution, the point where it has exhausted its ability to change. Living systems don't look for balance, simply because they, as open systems, live in symbiosis with the surrounding environment. The studies about dissipating systems (self-organising systems) run by the nobel prize Ilya Prigogine have demonstrated that open systems, like companies, import energy from the environment and export entropy. Those systems maintain a condition of continuous instability, so that they can change and grow. They take part in a continuous exchange with the external environment to constantly renovate themselves. Instability is the necessary condition to make a system grow. Open systems use instability to avoid deterioration. When facing high disturbance levels, open systems re-define themselves in a new, more evolved form. Open systems answer to «disturbances» by or95

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ganising in a new way. Disorder usually plays a critic role in generating something new, in generating a higher order structure. In the traditional management model it was commonly thought that the definition of clear boundaries would represent the best way to maintain competitive advantage. However, in a world of self-organising systems, boundaries tend to change continuously in response to the surrounding environment. All those companies which have based their competitive advantage on distinctive competence, instead of on products or existing business units, represent a clear example of organisations with a strong internal stability and a continuous opening towards the external world. A company which bases its own competitive advantage on distinctive competencies identifies itself with its own competence portfolio instead of with its products portfolio. These organisations are constantly listening to the soft signals of the market in order to grab new opportunities and open new markets. As Gary Hamel states: «Companies focused on core competencies are able to invent new markets, quickly enter emerging markets and dramatically shift patterns of customer choice in established markets». Similar structures enable high autonomy, fluctuation and change levels internally. Tolerating that, they are able to preserve their internal stability, continuing to evolve and therefore assuring themselves longevity. As the researcher Erich Jantsch states: «The natural dynamics of simple dissipative structures teaches the optimistic principle of which we tend to despair in the human world: The more freedom in self organization, the more order!» COORDINATION-CONTROL • Hierarchy vs widespread corporate intelligence A hierarchy (from Greek hieros: holy and archè: government) is a system of graduation and organisation of things. Referring to business, the term hierarchy implicitly incorporates three different elements: position hierarchy (when a person holds sway over other people thanks their hierarchical position); knowledge hierarchy (top management has the main knowledge); action hierarchy (top level decisions define the subsequent actions). In the traditional management model, those three elements were perfectly integrated, whoever was at the top level was also the more competent and therefore guided the decisional process. But in modern organisations, competencies are scattered inside different functions and people are often encouraged to decide beyond their specific role's responsibility. If a certain hierarchy level is fundamental to put a complex organisation into operation, hierarchy, as we know it, faces a few problems: The incompetent hierarchy: Hierarchy takes for granted that the boss possesses the greatest competence. In the majority of complex organisations this is no longer possible and therefore, the company runs the risk of taking the most 96

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important decisions without considering who has the highest level of competence in the matter. The uninformed hierarchy: Hierarchy prevents information from moving through the different hierarchical levels. This leads to wrong decision making. The intrusive hierarchy: Many managers are worried about losing their power and tend to decide also for their collaborators. This makes people frustrated and disengaged. In the new management model, the boss-leader also has to possess the ability to release collective energy. People have talent, energy, intelligence and creativity, but the main part of these qualities isn't always used. In a learning organisation, the leader informs and shares the mission with the other individuals. Personal mission and objectives blend with the company mission, and when the two objectives coincide, they generate a powerful synergy. Willingness to release energy, talent, and capability in order to obtain increasingly challenging objectives is created inside people. OBJECTIVES • Alignment vs obliquity The alignment principle is well known and often adopted by many companies. There are many managerial practices, management by objectives, key performance indicators, strategic planning, which use this alignment process as a way to understand how objectives should be set and defined within a modern company. The alignment concept is strictly connected to hierarchy, and it means that divisional, functional and individual aims should all be aligned in a unique set of organisational objectives. Alignment, especially if forced, can involve some problems: Different objectives In the majority of Knowledge Companies it is impossible to have perfectly aligned objectives. Let's consider a researcher in Intel, Apple, Google, Siemens, Epson: what incites him/her to do his/her best every day? Are we sure that it’s the desire of exploring new knowledge or of creating new technology? Obviously the greatest part of their time will be devoted to developing new knowledge which can’t give economic returns in the short term. Therefore it doesn’t make sense to state that the objectives should be perfectly aligned with those of other divisions or those of commercial colleagues. Short-term results, long-term objectives The shareholder pressure for obtaining short-term results (semester, trimester, month) pushes many managers to make decisions which are not coherent with the long-term objectives, threatening a real alignment. 97

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Shareholders vs stakeholders Another problem companies should face is the fact that the traditional management model not only tends to reward short-term results, but also tends to pander especially to shareholders' interests, to the detriment of all the other stakeholders. The concept of obliquity in business appears for the first time in a Financial Times article in 2004, by the British economist John Kay: «Strange as it may seem, overcoming geographic obstacles, winning decisive battles or meeting global business targets are the type of goals often best achieved when pursued indirectly. This is the idea of obliquity. Oblique approaches are most effective in difficult terrain, or where outcomes depend on interactions with other people.» In 1994 James Collins and Jerry Porras published their best seller Built to Last. These authors studied eighteen companies they defined as «visionary companies» for six years. They compared them with other companies in the same industry which instead had only obtained average performances in that period of time. The visionary companies have been chosen on the following parameters: recognised as leaders in their sectors, founded before 1950, with extraordinary longterm business performance. Their research underlined the fact that the visionary companies pursued more aims and, among those, the profit maximisation was only one of them and not necessarily the primary one. Having said that, these companies have obtained much better long-term business results compared with those of their direct competitors. In their book Firms of Endearment, Rajendra Sisodia, David Wolfe and Jagdish Sheth analysed the long-term performances of a group of companies including Whole Foods, Harley-Davidson and Costco and they discovered that those companies were more focused in adding value for clients rather than reaching short-term economic-financial results. These companies demonstrated to have, as an indirect (oblique) result, an average investment return of 1026 percent for their shareholders in a period of ten years until June 2006, compared with the 122 percent for their direct competitors. HCL's motto Employees First - Customers Second represents a great example of obliquity. «We will do everything needed to improve the engagement level of people because we believe that engaged people could offer our clients a legendary service which will make us obtain extraordinary results.» The obliquity concept needs at least three grassroots elements: • • •

a clear and strong relationship between the indirect and final objective; risks, barriers or perplexity in pursuing the direct objective; strong sharing of final objectives among the stakeholders. 98

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MOTIVATION • Extrinsic vs intrinsic When we talk about the concepts of extrinsic and intrinsic, we are talking about motivation. The word motivation comes from Latin motus, and it identifies a movement. Therefore, motivation defines all the reasons that compel us to action. To understand motivation, it is necessary to know the psychological processes that cause motivation to appear, develop or disappear. In the opinion of Sigmund Freud, as soon as you feel well and experience a well-being sensation, it means that your psychic energy is low. The occurrence of a need usually generates a psychic energy production, which is what we call tension. This tension generated from the psychic energy thrust will continue and will increase so much that it will encourage us to act in order to satisfy that need. Coming into action, people can weaken that feeling of tension and therefore the psychic energy can return to its original level whilst generating a feeling of satisfaction and pleasure at the same time. One of the first researchers who developed a motivation theory was Frederick W. Taylor. At the beginning of the 20th century, he defined the principles of scientific management, aimed at maximising productivity and motivating collaborators as much as possible. This theory is based on three concepts: Vertical division of labour: it refers to the principle of «everyone according to their intelligence/talent». Workers do manual labour, engineers do intellectual labour. Taylor's human view is tremendously deterministic and considers that some people are intelligent, motivated and suitable to carry on intellectual jobs, while others are lazy and unmotivated and only able to do manual labour and it is due to their nature. Horizontal division of labour: it refers to the division of tasks and minor assignments to be carried out with extremely simple actions. Instead of allocating a complex task to an individual, it is preferred to allocate many minor assignments to several people according to their manual skills. Salary defined according to performance: in Taylor's opinion workers are little inclined to work by their own nature. To stimulate them to produce, it is therefore necessary to use a unique motivation: money. Even if this theory had a great success, particularly in the first half of the 20th century, it presents some limits which are increasingly evident today. With an excessive labour division, people become unmotivated because they are deprived of one of the main components of motivation: significance. A worker is nothing more than a link in a chain, their contribution has been emptied of its significance, reduced to a repetitive gesture which makes them responsible for only an insignificant part of the job. The direct consequence is that, since they aren’t asked to think, they are deprived of responsibilities, don't take part in the productive process im-

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provement and take even less part in the creative reflection which leads to customer satisfaction. It is difficult to talk about motivation without mentioning Abraham Maslow's «needs pyramid». For Maslow, needs can be gathered together in five big categories and ordered in hierarchies: • • • • •

Physiological Need Safety Need Belonging Need Esteem Need Self-Actualisation Need

Maslow's Hierarchy of Needs When physiological needs are satisfied, people try to satisfy those of security, then belonging, esteem and self-actualisation. From Maslow’s research we can learn two fundamental lessons: 1. At the time of acting, people's behaviour is guided by the most intensely perceived need. 2. A satisfied need won't stimulate people as much as an unsatisfied need. When a person evolves and progresses, their motivation moves from the field of possessing to the field of being. Other researchers arrived to the conclusion that those needs on the top of the pyramid employ a more dynamic and crucial action than others, and that from those needs originates the real source of motivation. An important contribution came from Clayton Alderfer in 1972. Figure 4.8: Maslow's hierarchy of needs

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In Alderfer's opinion motivation isn't a hierarchical pyramid: it isn't necessary to satisfy one need before accessing another and it is possible to be stimulated by different needs at the same time. We suggest a dynamic model of needs satisfaction, see Fig. 4.9, which arises from the Total Reward System concept. Figure 4.9: Dynamic system of needs satisfaction Dyna m ic syst e m of ne e ds sat isfa c t ion Re m une rat ion

HARD

Be ne fit s

Fixed remuneration

Health coverage

Variable remuneration

Retirement plan Savings plans

Stock Option

Other benefits Career development

Organisational climate

Learning opportunities

Quality of work

Training

Work/life balance

SOFT Work e nvironm e nt

Grow t h

The real motivation is interior (intrinsic motivation), it’s powered by the heart and mind of the individual, drawing from the needs in each particular moment of life. This means that a need is dynamic, it can change in the course of life as a consequence of particular circumstances and everyone could be motivated by the joint satisfaction of more than one need. Bosses/leaders have to learn to adopt the marketing one-to-one concept. Just like companies can't think of satisfying all their customers in the same way, leaders have to learn to manage their collaborators personally. Moreover, the more a collaborator perceives that the company’s aims, projects and purposes coincide with their own, the more engaged they will be, making their energy available to the company and the customer. New bosses/ leaders are those who can mobilise not only competencies, but also a company's emotional and even spiritual resources. INFORMATION-DATA • Secrecy vs transparency The traditional management model implies that people within a company don't possess all the information needed to work well. This is due to the fact 101

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that many managers believe that avoiding sharing some information is the key to defend their power, in addition to hide disparities due to a lack of meritocracy. In many small-medium companies, people aren’t allowed to know either the mission or the vision, and either the values or the company's economic and financial data. People are therefore obliged to assume them, but without a proper related communication, everyone legitimately forms their own ideas. These often generate decisions and actions which are not in line with the business effort, or integrated with those of other co-workers and therefore the consequence is an enormous competitive inefficiency. In the new management model the information, all the information, should be made transparent. A complete transparency of information allows people to be more engaged for at least three reasons: 1. First: the new management model considers increasingly competent people who are pushed to decide and take their own responsibilities. But, if you want to act and take your own responsibilities, you must possess enough information to be able to choose between alternative decisions and actions. The chance to eliminate alternatives determines a time and energy economy, enriches people's work, partly relieves the supervision requirements from management, encourages delegation and gives the managers the chance to devote more time to strategic problems. 2. Second: One of the deepest needs of human beings is to understand why, to know why, the purpose, how things run. This is fundamental to allow people to act properly. If we think about religion’s, philosophy's, history's and science's efforts to explain life experience, we realise that this impulse has an extreme power. Oppressed by an authoritarian society and thankful for having an occupation, people had to adapt themselves to work in bureaucratic organisations, characterised by an extreme labour subdivision and run with the “command and control” logic. A little at a time, social development, dignity and human rights recognition and access to global information thanks to mass media and the internet, have made these systems barely tolerable and inefficient when facing the new business challenges. In the new management model, companies will have to share mission, vision and values with their members, this way contributing to satisfy the fundamental need people to have a goal, understand why and the purpose not only of the company, but also of their job.

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3. Third: being informed means feeling included, respected, taken into consideration and being made responsible for some activities. Figure 4.10: Management switch: from traditional to new management

LEARNING/GROWTH • Individual vs organisational Learning is important and everyone knows it. Maybe many people ask themselves «why is lifelong learning so important?» Lifelong learning is fundamental to release our potential, whether obvious or hidden, because it gives us the chance to fully develop our abilities. Starting from this assumption, we would like to explain our certainties related to the learning field: Learning is a continuous process There is a huge amount of literature which bands the learning process together with the need of giving significance to the surrounding world. George Kelly, one of the most influential psychologists in the learning field, believes that our actions are influenced by the way in which we see and understand the world. Kelly refuses the idea that human beings restrict themselves to passively reacting to what happens around them. He affirms that we use our experience to elaborate a list of «constructs» (mental models), which help us in structuring our way of looking at reality and predicting what is going to happen. Moreover, we are continuously testing these mental models to prove their validity by making modifications, either consciously or not, to our «constructs» system. In other words, by continuously acting based our previous experience, we are constantly putting our assumptions to the test and therefore we continue to learn.

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Learning is an active process Even the best teacher in the world can't oblige you to learn. Everyone has an active role to play and is in great part responsible for his or her own learning. Our interest is focused on learning instead of on teaching or knowledge. Knowing something doesn't mean having learnt it. Learning is strictly connected with the concept of action, of know-how: I've learnt something when I'm able to do it. Teaching stresses the active and purposeful role of the teacher. Fundamentally, the teacher has to transfer knowledge to the student, who plays the role of «empty receptacle», which should be filled up by someone with more knowledge and experience. Learning stresses the active role of the student. Everyone among us decides whether or not to learn, and what to learn. Learning is a choice, the most important choice in our life, whoever decides to stop learning has already marked his or her own destiny. Each one of us must begin to reflect on what are the reasons that push us to learn. Having precise reasons which push us to learn is fundamental. Motivation helps us to define realistic and significant objectives. On the contrary, if the reason why you are trying to learn something isn’t clear, it will be extremely difficult for you to keep focused on it. People decide to learn according to reactive or proactive motivations. Reactive motivations imply a reaction to some events and the need to develop new competencies in order to face a change or an innovation. Proactive motivations push people to take initiatives to prevent events, planning the learning process. Every learning decision tends to involve both proactive and reactive motivations. The proactive choice of learning makes people feel responsible for, and in charge of, creating their future. On the contrary, if reactive motivations are dominating, people are more likely to feel under pressure, without choice and lacking control in the learning process. In her book «Adults Learning», Jenny Rogers affirms that the choice of learning something is influenced by two kinds of factors: • •

on one hand, there are extrinsic motivations to learning: people choose to learn something not for the pleasure to do so, but because this is a first step towards something else; on the other hand, there are intrinsic motivations to learning: we want to learn something because we are sure that we will find that experience positive in itself. One who decides to learn something because he/she considers it intrinsically interesting and important is more likely to appreciate the experience and therefore more likely to persist when facing difficulties.

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Reflecting in order to grow We are becoming increasingly aware of the importance of learning from practice, from what happens to us on a daily basis. Understanding begins with reflection, and reflecting means retracing your own steps, re-examining, thinking of what has been done and how it has been done. Reflecting is to look from a wider angle of view. In our daily activity, to reflect means to re-examine what we have done in order to discover significances and lessons learnt that improve future acts. People constantly re-examine what they have done and develop a strong evolutionary push towards new horizons, visions and reflections. Every time we separate ourselves from what we are doing to critically evaluate those activities, we are making reflections about them. Mary Fitzgerald affirms that it is through reflection that we are able to analyse and critically interpret our work. We could make reflections in progress (reflection in action) or in retrospect (reflection on action). Reflection gives us the possibility to critically look at our behaviour, the behaviour of others and at the social and organisational environment in which we operate. To reflect means: • • •

questioning all the assumptions related to what we know and how we know it; asking yourself which motives are self-served by certainties, rules and traditions; discovering the ways in which we could reinforce those certainties, rules and traditions.

Reflecting on our behaviour could help us to develop the required level of selfawareness, while reflecting on what is happening around us could help us identify problems and things which have to be changed. Reflection is fundamental for learning. It is a hard process which drives us to become efficient students and critics always ready to call into question the way in which things are done. Reflection is strictly connected to action, whoever doesn't act can't reflect, can't improve and can't generate competitive advantages for the company. Whoever doesn't act is useless. Intelligence is something concrete, strictly deep-rooted in doing, in doing it well and then improving what has been done well, and in understanding the interconnections and dynamics of the events. Only those who act, who have participated, can understand, reflect, improve and act. But doing it alone isn't enough. Intelligence can be measured on the basis of the slowest coach of a train. Many times have we decided to change our bank or supermarket due to the actions of a single person: the secretary, the cashier or the manager. The train moves at the speed of the slowest coach and if the locomotive goes too fast, the coaches will become detached and it will go on travelling alone. It is incredible how often, maybe too often, 105

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I've noticed an enormous detachment between the top management and the rest of a company. The majority of managers don’t know how to spread or transfer knowledge. They are often unable to communicate the company vision, values or business strategies and spread the required competencies necessary to achieve the defined objectives. Learning is a collective matter, a company matter. It shouldn't only be developed, but also spread throughout the entire company. The creation and diffusion of learning are two independent processes which complement each other. CULTURE • Competencies vs values For a long time managers have undervalued the impact of culture on people’s behaviour and consequently their results. Managers have most of the responsibility for defining and creating a company's culture and for choosing who should or shouldn’t come aboard. Too many times we confuse competence with values and culture. When we talk about culture, we refer to the set of common certainties, values, stories, rituals and myths as well as the language which creates a common identity and a sense of community. Culture is a sort of «social glue» which keeps all the members of an organisation united. It’s a glue with a complex composition whose production is a constant and slow process. Culture is produced day after day by all the people who work together, even unconsciously. It is interesting to observe that a group's or a company's culture starts developing immediately, through the track set by the leader (primary entrenchment mechanisms), to be secondarily reinforced in the course of time by more formalised and structured operating systems (secondary reinforcement mechanisms). The primary entrenchment mechanisms, which the culture takes shape through, are connected with different factors. For example they are connected with all the elements leaders usually pay attention to, what they evaluate and regularly observe: accurate costs control, attention to investment returns, respect for rules, etc. Another factor could be connected with the way in which leaders usually react to critical situations: great rationality and weighting, impulsiveness, etc. In addition, the parameters used for selection and career advancement contribute to the culture definition: they are related to competence, orientation to values, meritocracy, seniority, etc. The secondary reinforcement mechanisms are connected to the definition of structure, systems, organisational procedures, location planning (open space, leisure areas, number and dimensions of meeting rooms, etc.), rites and rituals (from the Christmas meeting to recurring festivities, to new employed 106

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welcome or retirees goodbye ceremonies), up to the formal statement of the company's philosophy, values and beliefs. You breathe culture in every moment, there are some elements which are evident and others which aren't so obvious and more difficult to codify. Schein identifies three organisational cultural levels: artefacts, espoused beliefs and values, and basic underlying assumptions. Artefacts represent the set of organisational structures and processes; they are the visible and behavioural elements in a culture, but, on their own, can't help to identify the basic underlying assumptions which led to selecting solutions. One explanation of the artefacts reason could be found in espoused values and beliefs, intended as the set of the formalised and declared strategies, objectives and philosophy. For example, if in artefacts we observe the presence of areas and structures dedicated to learning, and in the declared values we talk about the importance of people development, we could find a full coherence between what is declared and what is effectively accomplished (artefact). On the contrary, if we state that it is essential to develop the team spirit, but the objectives allocation system and the performance evaluation system cause people to focus only on their functional and individual results, we can't observe any correlation between what is declared and what is effectively done. This leads to a clear contradiction which, in turn, creates disorientation and confusion. What should we believe in? How can we understand which is the prevailing culture in this circumstance? In these cases an additional examination is required, an additional in-depth analysis of basic underlying assumptions. These are the set of unconscious and taken for granted beliefs, base thoughts, perceptions, which usually influence choices and adopted criteria. Essentially we are talking about mental models which rule our way of thinking and acting. The reason for incoherence between artefacts and declared values is precisely located in the set of underlying assumptions shared by whoever manages and rules the organisation. But is there one culture which is better than the others? In reality no. Of course we could feel more in tune with one culture rather than another, but a culture's virtue only depends on the ability of underlying assumptions to create a type of strategy and organisation which proves to be functional in the environment in which the company operates. Therefore, only long-term results could tell us if a culture and its development are effectively «winning».

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Figure 4.11: The new management model 3.0

DECISIONS

LEARNING/GROWTH More time for reflection

More responsabiity to people who are doing the job

Try end error Learning from doing

More involvement Top-down and bottom-up

Auto responsability

Targeted to all the stakeholders

M anagement 3.0

Oriented to long term

Meritocracy

E UR T L CU

Top-down and bottom-up

Total transparency of information

Collaboration Quality of work Involvement

MOTIVATION

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N IO T A

OBJECTIVES

Self directed team

5.

The new competencies of the manager 3.0

“Truth is not in the middle, and not in one extreme; but in both extremes.” Charles Simeon

5.1

Leadership vs management

There is a fundamental difference between leadership and management. The leader and those who follow represent one of the oldest, most natural and most effective human relationships. The manager and those who are managed are later products with a history that is neither romantic nor inspiring. Leadership is of the spirit, compounded by personality and vision – its practise is an art. Leadership is the art of getting others to want to do something that you are convinced should be done. You simply cannot be a leader without followers. As R. Goffee and G. Jones state in their book Why should anyone be led by you?: «In reality, leadership is always a social construct that is recreated by the relationships between leaders and those they aspire to lead. Effective leaders are not simply amalgams of desirable traits; they are actively and reciprocally engaged in a complex series of relationships that require cultivation and nurture. Like all social creations, this web of relationships is fragile and requires constant re-creation.» Leadership is an active process; it is seeking challenge and changing the status quo. Leadership is non-hierarchical. A lot of leadership literature is overly concerned with those at the top level of companies. In fact, I would go so far as to say that the persistent misconception that people who occupy top level positions in organisations are leaders has probably damaged our capacity to understand leadership more than anything else. It has blinded us to the true nature of leadership. While I recognise that there is a relationship between hierarchy and leadership, I view this relationship as contingent. Being given a particular organisational title 109

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project leader, team leader, director, CEO – may confer some hierarchical authority, but it certainly does not make a leader. Hierarchy alone is neither a necessary nor sufficient condition for the exercise of leadership. Management is of the mind, more a matter of accurate calculation, statistics, methods and routines – its practise is a science. Early theories on managing adopted a rational view which dominated business schools for nearly two-thirds of this century. Managers, according to this perspective, were meant to act rationally and plan, organise, direct and control. The role required patience, a tolerance of discontinuity and a deep interest in other people's performances. As J. Hunt says in his book Managing people at work: «Managing is getting things done, with and through people. It is essentially a series of interpersonal relationships which often extend over many years. Communicating occupies most of the time. Much of this communicating is listening, getting the facts and, on the basis of information, making a decision.» There is a strong perception that businesses are over-managed and under-led and as a result it is important to reflect on the distinction between management and leadership. For most of us, the word «leader» tends to evoke an image of someone who is inspiring, visionary, courageous and charismatic: someone worth following. On the other hand, the word “manager” suggests quite a different image: steady, rational, analytical, orderly and controlling – someone you follow because you have to. The distinction between management and leadership is clear and evident. Management is strictly related to: improving efficiency, cutting costs, establishing stability, making things run smoothly, solving problems and controlling organisation processes. Leadership is fundamentally linked to: starting up new entrepreneurial ventures, development of new products lines, business transformation and dealing with crisis. These clear distinctions between leader and manager, between leadership and management, bring us to divide the business world into two clear categories: leaders or managers. On the contrary, I like to think of management and leadership as being at different ends of the same continuum, distinctive but in harmony with each other, both indispensable for business success. In my opinion, leadership and management both have a critically important place. It just happens that leadership has first place. One of the underlying problems that concerns me about modern management is that, to a certain extent, it relies on skills and ideas that have outlived their relevance in many cases. As a result, too much of modern management has become disconnected from the employees, who in turn become disconnected in varying degrees from the customers. You would think that modern managers, with their breadth of education and experience, would have the insight to recognise this remoteness, but all too often they don’t. The desire for power, implicit or 110

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explicit, is driven by varying degrees of self-interest, self-conceit and systemic selfishness. I strongly believe that it is now time to reinvent management and leadership, which is to say that we must learn to reconcile management and leadership. 5.2

Manager 3.0: reconciling leadership and management

As we have just seen, the business world was divided and still is divided into two macro-categories: the managers and the leaders. The leaders, as shown in Fig. 5.1, were the visionaries, people with great ideas, charismatic and able to pull the other people and to be followed by them. The managers were less creative, more methodical and planners. They had to have the competence to be able to transform the dreams of the leaders into reality. The leaders were few, often just one, while the managers were numerous. Moreover, this distinction has often led leaders and managers to gloat about the fact that as leaders, they weren’t asked to develop people, let alone the collaborators, because they already had followers and as managers, they weren’t asked to develop visions and brilliant ideas because this was the job of the leader. The result of this situation is that the family companies were constantly looking for managers and the multinational firms were constantly looking for leaders. As Steven R. Covey says in his book The 8th habit: from effectiveness to greatness: «…both management and leadership are vital-and that either one without the other is insufficient. At times in my life, I’ve fallen into the trap of over emphasizing leadership and neglecting the importance of management…Nevertheless, I’ve been powerfully reminded of the vital part that management plays. I learned (painfully) that you can’t lead things.» In the era of management 3.0 there are no longer managers and leaders, or even better, in this case it is necessary to learn to delete the tyranny of the OR and pass to the competitive advantage of the AND: it is necessary to be leader and manager at the same time. It is no longer thinkable to have managers that are just good executors, the arm is not enough, it is necessary to have a brain and a lot of passion. It is not thinkable to have leaders who are unable to manage and develop people.

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Figure 5.1: Leadership vs management

Leadership vs. Management Management is about dealing with complexity

Leadership is about coping with change 

Is getting a group of people to productively complete work in the right way    

5.3



Is having the assigned work completed 

Defining the vision and the path Communicating Sharing and involving Developing “energy”

  

Planning Organising Motivating Controlling

What a manager had to and still has to DO

The debate about which are the competencies, or rather what a manager should do to allow employees to work at their best, is of central importance for the construction of the new management model. It's important to remember that managers, at least until now, are not elected by their supporters and don’t have their position by virtue of a popular consensus. They are not necessarily excellent people or born leaders. Most of them are not people equipped with a particular charisma; they’re not Caesar, Kennedy, Roosevelt, Obama, etc. A great deal has been written about these powerful charismatic figures. Unfortunately, although studying them is «fascinating», the knowledge gained is not useful to those of us that, despite being intelligent and competent, can’t rely on our own guidance skills by virtue of the extraordinary power we wield over others. We need to replace charisma with competence. Studies that compare the personalities of effective and ineffective managers are much more relevant to the new type of management model that we want to create. Unfortunately, what has been written about it doesn’t tell us very much for two reasons. First of all, there can be effective managers with different personalities and characteristics. It follows that the psychometric searches offer low quality

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and poorly differentiated data and don’t result in a clear identification since one type of boss is statistically associated with other types. Secondly, if there were specific character traits found exclusively in effective managers, people who don’t have them would have little chance of becoming an effective manager unless they changed their personality, a very difficult task. If personality traits do not distinguish the best managers from the others, perhaps there could be some uniformity in their behaviour. So, what are these fundamental factors? One possibility is to ask people to describe the behaviour, and not the character traits, of people they worked for who were particularly respected as bosses, people considered to be effective and people for whom it was good to work. Professor Renato Tagiuri taught in programs for senior managers at Harvard business school for more than forty years. Participants in these programs are managers with about twenty years of experience working in large companies around the world and with an average age of forty four years old. The participants, all responsible for numerous employees, wanted to know if it was possible to identify a list of behaviours to better manage employees. So then came the idea to ask, on the basis of their vast experience, what their boss had to do in order to enable them to do their best. This research, based on more than twelve thousand managers, highlighted what the behaviours are of those who are considered to be effective bosses. These behaviours are described below, see Fig.5.2, and compared with a survey conducted by Google on twelve thousand employees. The behaviours listed above can be considered as conditions or prerequisites to enable employees to do their best work. If a manager is unable to behave in the manner described, employees will have more difficulties in being engaged. If, on the other hand, the behaviour of a manager realises these conditions for the benefit of his employees, they will have opportunity to do their best with greater satisfaction and, indirectly, make him an effective manager. And it is important to emphasise that we are not talking about manager's traits, but about behaviours. It is not a matter of having a certain personality, but of acting in certain ways, which should be possible for almost everyone.

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Figure 5.2: Manager's behaviours Harvard University Google’s rules for good management (Prof. Renato Tagiuri) Clarify the mission, purposes or objectives of Be a good coach your employees’ assignments Empower your team and don't miDescribe assignments clearly. cromanage Listen to your employees' views They may have ideas or approaches that are Express interest in team members' sucbetter than yours, but pass on whatever use- cess and personal well-being ful knowledge you have Don't be a sissy: be productive and reMake sure the resources necessary to carry sults-oriented out assignments are available. including the employee's abilities and skills, information, Be a good communicator and listen to other people, equipment, funds, authority your team and time Make the standards or guidelines by which Help your employees with career develyou will evaluate performance very clear, opment what you consider important and how much you expect including ethical standards Have a clear vision and strategy for the team Reward effort and offer incentives and beneHave the technical skills so you can help fits advise the team Give prompt feedback on employees' performance: praise a good job and offer assistance if an employees has done a poorly Care for your employees, but avoid forming personal friendships with them Merit your employees' trust. Admit your errors, don't tell lies, and if you cannot keep a commitment, explain why Make the decisions that are yours to make

5.4

What a leader had to and still has to DO

Defining leadership and consequently the leaders' behaviours can be difficult. A myriad of books, seminars and articles define with vigour their version of leadership. An analysis of these definitions, though, reveals that leadership can be a vague, overreaching and grey concept.

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However, there are some commonalities in the various schools of thought. Most people seem to agree on the following. Leaders have a vision that they communicate to their followers. Leaders have passion. Leaders create meaning. We could say that the ultimate goal of the leader is to bring order and to generate chaos. If leaders disappear from within the company, generally the result is to have a company based on old positions that tend to reproduce the behaviour of the past and the company becomes unable to follow new paths and embark on new adventures. The main task of the leader is to create chaos in a system which is too neat, too tired, too obsolete and almost always too similar to that of its competitors. The leaders have the task of projecting and ferrying people to new worlds and unexplored horizons, of quickly making today’s schemes that guarantee success become obsolete and of constantly questioning the advantageous position which guarantees the company’s profitability in the long term. The sense of leadership is to embark on new journeys toward unexplored worlds. Leaders are creators of order and generators of chaos. It is the task of the leaders, and not of just one leader, to help the organisation to combine order and chaos. The leader is not alone, and we agree with J. Thomas Wren, who states that «leadership is an interactive process in which leaders and followers engage in mutual interaction in a complex environment to achieve mutual goals.» Wren further makes the point that leadership is neither a position or title, nor the actions of an identifiable leader. Fundamentally, leadership is an influence relationship between leaders and followers, within a leadership system. A complete approach to leadership recognises all the elements in the system, not just the actions of the leader. An effective leadership system does not restrict influence only to the leader, but rather incorporates a dynamic collection of interrelated and interdependent processes and subsystems, which work in concert to create the real influence of leadership. I must admit to having concerns with the word «follower». In fact some synonyms for the word follower are servant, disciple, adherent, admirer and devotee. Of course the problem is not with the word, but with the passive meaning given to the concept of followers. However, the truth is that in the modern model of leadership, followers don’t necessarily follow and leaders don’t always lead. At different times and in different situations, their roles are interchangeable.

Create MEANING and generate CHAOS AND CHALLENGES.

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Define a vision and a sense of meaning The creation of a sense of meaning or a vision for an organisation or company is one of the critical elements of leadership. I believe that creating a vision or a sense of purpose is the most important function of leadership. Creating a sense of meaning or vision is not the same as creating a plan. It is something much more important and fundamental. It is the creation of direction: a clear, credible, relevant and understandable future that inspires individuals to act collectively to reach the destination. A vision is fantastic adventure that we want to see realised. A clear vision provides direction and establishes purpose. When their vision is challenged by outside forces, they have the structural strength to defend it. A clear vision is not always completely agreed on by all followers; it doesn’t have to be. The vision belongs to the leader, and the followers work with the leader to find the best way to get to it. A good vision establishes a beacon of light that both the leader and the followers can latch onto and use to guide them from the day-to-day work. A vision is a picture of an ideal state of what the leader wants the organisation to be sometime in the future. Creating a vision is strictly linked to generating a sense of meaning. The leader can’t be limited to making products and taking decisions. Leaders must first of all give meaning: create a cause and you'll have a business. The main task of a leader is to give an answer to a fundamental question: Who do we want to be? Not what do we sell? What are our products? Who are our customers? But, first of all, who do we want to be and why we do what we do? Who do we want to be? It means that we must first clarify the way in which one conceives the world, the way in which we conceive employees, customers, suppliers and all stakeholders. As Rob Goffee and Gareth Jones say in their book Why should anyone be led by you?: «Make no mistake: leadership is about results. Great leadership has the potential to excite people to extraordinary levels of achievement. But it is not only about performance; it is also about meaning. This is an important point - and one that is often overlooked by contemporary leadership literature. Leaders at all levels make a difference to performance. They do so because they make performance meaningful.» An effective and meaningful sense of meaning will emotionally connect with individuals, with their heart and with their soul, and then they will put their mind and muscle into making it happen. A sense of meaning, what Simon Sinek calls the WHY, is not just about logic, it is about emotion, passion, enthusiasm and optimism and it is about what can be done, not just about what must be done. The leadership is mostly

Leaders make performance MEANINGFUL.

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made of dreams and feelings, feelings are passion and values (enthusiasm, love of life, engagement, fun, adventure, desire to change). Leadership is the process by which leaders are instructed to create a history and a legacy of dreams and excellence. We are witnessing the end of the era of the company based on products, services and solutions. We are already in the era of experiences, emotions and dreams: the dream & mean society is already a reality. Imagination, dreams, myths and rituals will affect everything from our purchasing decisions to how we work with others. The companies will grow strong on the basis of their dreams and their history. Companies need to understand that the products are less important than their dreams. If we want to define the dream using the company’s vocabulary, it would be better to call it vision, but the vision is nothing more than a dream. Unfortunately, most of us have lost the ability to dream, the ability to fly high. The greatest danger for many of us is not setting ourselves a high target which we can’t reach, but setting the target too low and almost always attaining it. In the new world there will always be more and more necessity to dream, to imagine what has never been, to defy the impossible. The dream and the values are the heart of a company. They inspire people to engage in their work. Thanks to them, you should want to belong to your organisation. As stated by Jonas Ridderstrale and Kjell Nordstrom in their book Funky business: «True leaders are CSOs - Chief Storytelling Officers. They provide the focus, inspiration and meaning that the organization has been crying out for.» Passion As mentioned, passion to me is synonymous with intrinsic motivation. Passion is the result of our choices, as Simon Sinek says: «Working hard for something we don't care about is called stress, working hard for something we love is called passion.» So when we talk about passionate leaders, we are really talking about leaders who are themselves inspired by the vision they have. Passion is the energy that we put in so that what we want to achieve can be truly realised. You can feel and you can see passion. A person who acts out of passion has a face that glows, eyes that sparkle and develops more of a resistance to stress and fatigue than normal. If there is a fire in your body, it is inevitable that there are sparks flying from your pores. Passion is the fuel that drives us to the finish line. Passion is the reason that drives us to do anything. Without passion we are destined to have a mediocre life with no great emotions and motivations pushing us to achieve something really important to us. Passion is a crucial element for success in professional and personal life for all of us. In fact, it helps us to overcome adversity, failure and problems. 117

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It help us to develop a constructive attitude, the belief we can do it, a willingness to accept increasingly difficult challenges, all combined with the certainty of finding a path, a road, whatever it takes to bypass obstacles and problems. But also not to give up and not to feel defeated, but instead to see difficult situations as moments of stimulus, to test our skills and continue to improve and improve. To live without passion is to live with the absence of emotions, doing things with no real purpose, wandering around in an empty space drifting from events and situations. Leaders are people who are united by the triad: Passion - Vision - Results. In this triad, the three elements are the forces that work, integrating in the same direction. As stated by Elena Tosca, professor of management at LIUC- Cattaneo university: «We can see the passion as the cornerstone of the present situation: the fire that fuels the actions and decisions. The vision is the future, that to which people direct their energy and their passion. The performance is the linking element in the achievement of the vision, passion leads people to do, to learn, to develop ideas and skills to attain the desired results. The achievement of the results provides a further boost to the passion and allows you to see more clearly the path towards the vision. In this perspective, leadership can be seen as the ability to connect between the passion for the vision to increase the results.» If we think of a leader we can also identify two types of passion: the intrinsic passion and the extrinsic passion. The first is connected to the concept of leadership of competence. A true leader is committed to continuously develop their skills and expertise in a particular field. Whether in sports, art or business, the leader wants to develop leadership skills in their field. Their own professional and personal growth is more important than the rest. The second is closely connected to the first and concerns the achievement of results. The leader is measured by the results achieved from the effort to develop leadership skills. They can be financial results or based on performance. The continuous search for new business opportunities, the frantic desire to grow, the irrepressible pursuit of primacy and tangible recognition. If we extend the concept of leadership and move from the individual to the organisation, we can see how leading companies are those that are guided by passion. With the same procedures, processes, organisational structures, operating systems and compensation policies, passion seems to be the distinctive element that determines the competitive advantage of an organisation. The level of passion and enthusiasm that people put into their daily work moves outwards, to the customers first and foremost, and then to the market at large. For these companies there is a strong belief that it is one thing to be successful, but another to stand out in a distinctive manner. The first is fairly easy to achieve, but the second is more difficult because you can’t buy or import the passion, you have to build it. It is not a management tool. It is a cultural factor that needs to develop and spread throughout the organisation. Passion is the hid118

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den force that gives birth to and feeds the strongest emotions. Even in business there must be emotions. The organisation is not a sterile and barren place, but a community of people, and as such, must live emotions. If people can be guided and inspired by their personal passions, organisations can be guided and driven by collective passions. 5.5

Manager 3.0: more than a manager and more than a leader

Before defining what the new manager 3.0 has to do in order to enable the employees to work at their best and be fully engaged, we still have to analyse the contributions that servant leadership, stewardship and system thinking give to the construction of the new manager 3.0 profile. Manager 3.0: choosing service over self-interest In his book Stewardship Peter Block says: «Stewardship is to hold something in trust for another. Historically, stewardship was a means to protect a kingdom while those rightfully in charge were away or, more often, to govern for the sake of an underage king. The underage king for us is the next generation. We choose service over self-interest most powerfully when we build the capacity of the next generation to govern themselves.» Stewardship is the willingness to be accountable for the well-being of the organisation by putting yourself at its serBOSSES are no longer cusvice, rather than in control. tomers, they are SUPPLIERS. Simply put, it’s accountability without control. Block states: «When we choose service over self-interest, we say we are willing to be deeply accountable without choosing to control the world around us.» The word «service» is part of the many words like control, boss, hierarchy, verification, and power, which, for too many years, have been accompanied by a negative meaning. The way in which most organisations are managed is a clear testimony for the victory of self-interest over service logic. Stewardship questions the belief that accountability and control go hand in hand. Because stewardship implies accountability but centres on service rather than control, it is a way to impact the degree of ownership and responsibility each person feels for the organisation’s results. Ownership and responsibility have to be strongly felt at every level for a partnership to succeed, values to be experienced, and customers to be served well. People are accountable to those they serve. Service is aimed at customers

STEWARDSHIP

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and subordinates. Evaluation, feedback and the definition of role and responsibility come out of dialogue with customers and subordinates. Bosses are no longer customers, they are suppliers. This produces real, hard-nosed accountability and exemplifies the distinction between leadership and stewardship. Leadership, as we have defined, is in service of those you lead, but the leader service took the form of giving direction and meaning. Stewardship serves through the form of giving a basic structure and supporting self-direction. We can say we have experienced a service logic when: There is a balance of power People need to act on the basis of their choices. Acts of submission, the yes man or woman, do not serve those around us or the organisation. To force people works even less. We also give a disservice when we decide for others, even if it’s the right choice. Attention is equally directed to all the stakeholders. All are involved in defining the purpose and meaning of what we do. The value of people is diminished when we think and decide for them. Leaders must become responsible for developing more leaders and not followers who just wait for the vision of a leader. Adequate distribution of rewards When an organisation is successful, the rewards must be equally distributed to all hierarchical levels. To choose stewardship requires a profound change in mentality. Leadership as we know it, where the leader defines the vision, mission and values and is the main guarantor of results, is very similar to the concept of patriarchy. Patriarchy is not just a leadership style; it’s a system of principles. The main principle on which patriarchy is based is to organise the necessary efforts to meet clearly defined objectives and everyone should focus their effort to maintain control and enforce the rules. Stewardship is not based on patriarchy, but on partnership. Being a partner means that power must be distributed equally among the partners. Stewardship, where the act of service is the main responsibility, requires a balance of power between the involved parties to be acceptable. The partnership, in order to be acceptable, needs three elements: Joint creation of meaning All stakeholders have the duty and the right to define mission, vision and values and to participate in their realisation. Patriarchy is the exact opposite as the management generally defines the mission, vision and values and communicates them through a top-down process. Often this communication is softened with the term sharing, but there is little to share because everything has already been decided. 120

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Partnership means that everyone, at every level, through continuous dialogue, is responsible for defining the mission and vision of the organisation and for their department or function. Figure 5.3: Stewardship contract

STEWARDSHIP CONTRACT Maximise the choice for those closest to the work Reintegrate the managing and the doing of the work Let measurements and controls serve the core workers Yeld on consistency across groups, and support local solutions Service is everything De-glorify management as a job title End secrecy Redistribute wealth

Shared responsibility Everyone is responsible for the current situation and future performance. As stated by Peter Block «Partners each have emotional responsibility for their own present and their own future. Bosses are no longer responsible for the morale, learning, or career of employees. Bosses resign their caretaking role.» Absolute honesty Honesty is fundamental to the partnership. Honesty indicates the human quality of communicating and acting in a sincere, fair and transparent way. This includes refraining from bad deeds towards others, both in absolute terms and in relation to their condition, the practicing profession and the environment in which we live. Honesty is opposed to the more common negative values in human relationships, such as hypocrisy, lies and secrecy. In such a new organisation, the main question is: «What do managers do in this empowered organisation?» As Peter Block says, «…the answer to the question …is that supervisory and management positions will survive to the extent that they provide value added to the core work teams, who are their customers. Remembering that value added needs to be defined by the customer, it is through a dialogue with the work team that supervisors will discover what they have to offer that the team cannot or will not do for itself.»

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If we buy this concept, we do an injustice to our managers by telling them that coach and mentor is their new role. Something more than coaching is required to justify a value added position. The management class was once justified on the basis of the need for more control, alignment and consistency. As we move toward service and responsibility, we no longer need this class of job let alone the fact that we can no longer afford the luxury of this class system. Promising anxious supervisors a full-time permanent job as coach, when in reality it is a transitional role, is a form of manipulation. We think that managers have to find the courage to answer the question themselves through dialogue with those that report to them. Manager 3.0: a servant leader The servant leadership and the servant leader can seem, at least at first glance, a contradiction in themselves. Is it possible to be leader and servant at the same time? Robert Greenleaf, one of the first inspirers of the servant leadership, was able to create a cohabitation of these two concepts: «Servant leadership is a management style in which leading and serving are in harmony, and thoughtful interaction with the environment. A servant-leader is someone who has a strong wish to serve as well as a strong ability to lead and, most importantly, is able to combine both in such a way that they strengthen each other positively.» He goes on to say «The servant-leader is servant first…It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead.» And states: «Strong natural servants will assume leadership only if they see it as a way in which they can serve.» The servant leader is at the service of people. The mission of the servant leader is to identify the employees’ needs and to do everything possible to satisfy them. The servant leader has to integrate the competence of leading with that of serving. Or put another way: serving by leading and leading by serving. While the old paradigm of leadership was based on a logic of power, the servant leadership is based on a logic of service: to give rather than to control. Manager 3.0: a system thinker A systemic point of view is adopted when we are far enough to be able to see the continual and reciprocal relationships that interact in order to create the behaviour models of the observed system. The systemic perspective helps us to see the forest for the trees. The adoption of a systemic perspective is less used when we are trapped in an event. If we see a city from the top of a skyscraper, or we observe the valley from a mountain, then we can have an idea about the meaning of «to be far enough.» The details are softened, diagrams of interrelation appear and time 122

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seems to have stopped. On the contrary, if you have ever been stuck in a city traffic jam, you know what it means to be trapped in an event. The first one is intrinsically big, powerful and expansive; the second is stressful and limiting. The metaphors of the forest and the panoramic view of the city shouldn’t be interpreted as the ability to see the forest and its interrelation instead of the single trees, but as the ability to see the forest for the trees. Figure 5.4: To see the forest for the trees

One of the main benefits of the systemic approach is to be binocular, and according to your needs, developing the ability to put into focus either the big picture or the single parts without losing sight of the link which connects one to the other. This way of positioning yourself in respect to the problem is one of the main advantages of the systemic approach. If on the one hand, we must be far enough from the daily activity to see the forest and develop a vision of the whole, on the other hand we must not lose contact with the practicality in order not to break the close bond that must exist between the vision, strategy and operational activities. If our ability is exclusively to see from far, there is the risk of turning into sort of philosophers. On the contrary, if we are too involved in the daily activity, it would be difficult to see the problems in their spatial and temporal dimensions. The systems perspective shows that there are multiple levels of explanation in any complex system: systemic structure (generative), patterns of behaviour (responsive), event (reactive). In some senses, all are equally «true». But their usefulness is quite different. Event explanations - «who did what to whom» - doom their holders to reactive 123

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stance. Event explanations are the most common in contemporary culture, and that is exactly why reactive management prevails. The patterns of behaviour explanation focuses on seeing longer-term trends and assessing their implications. This way of seeing the world begins to break the grip of short-term reactiveness. At least it suggests how, over the longer term, we can respond to shifting trends. The third level of explanation, the structural explanation, is the least common and most powerful. It focuses on answering the question, «What causes the patterns of behaviour?» To think in a systemic way means to develop several competencies that allow us to see the existing interrelations between the elements of a system, obtaining the models or schemes of behaviour rather than analysing the specific events themselves. The new manager 3.0 has to develop a new way to perceive the reality, gathering the schemes and the models that support complex situations and are the main cause of the system’s evolution. Focusing excessively on single variables doesn’t often allow us to see the way in which the variables interact between themselves, the origin of the observed behaviours. The essence of the new manager 3.0 can be found in change to the way we read reality, explain our mental models, and in the deepening of the original structures that determine the future results. Systems thinking competency How do you recognise the structures that determine business results? How do you switch from a static to a dynamic view of the processes? How do you develop a common language that allows us to discuss and share strategies, highlighting the inconsistencies? If the essence of systems thinking is to see the circularity of the structures rather than linear chains of cause-effect relationships, and to understand the processes of change rather than debating on static images of reality, it is crucial to understand what skills we need to develop to in order to interpret the path of change. The new manager 3.0 must develop two main skills in order to become a «systems thinker»: • •

see the circularity of the phenomena (closed loop thinking); feel responsible for the system (internal thinking);

See the circularity of the phenomena With a question like «what are the factors that influence inventory?» generally the answer is in the form of a long list of variables: time of coverage, sales forecast, desired inventory, purchasing policies, delivery time, goods on order. This way of thinking and representing the explanatory factors for problems as a list of individual variables seems to be the way many people think. Who among us hasn’t tried to make the most important points of a business or company meeting clear by summing them up in a «shopping list»? 124

The new competencies of the manager 3.0

• • • • • •

Revenues Early retirement Experience Project completion times Overtime costs Number of employees

If we focus for a moment on the way this system works, it’s not difficult to see how these factors influence each other, creating a system of interdependence where each element can be the cause and effect of other elements, as shown in Fig. 5.5. This way of thinking, bringing out the circular relationships of cause and effect, is one of the distinctive features of systems thinking. Figure 5.5: Cause and effect diagram O

Revenues O

S

Labor cost S

Early retirement

B Work force

O

Experience

Overtime cost S

O

R Project completion times

O

The general way to deal with complex problems is to divide them in order to make them more understandable. Unfortunately, this way of dealing with complex issues forces us to reflect on the individual events, making us forget that more benefit would have been obtained by a better understanding of the deeper patterns that go beyond the individual events and are the true architects of the system behaviour. Moreover, almost all of our daily experiences, as they occur, appear to be like an open ring and don’t seem to result from continuous processes that 125

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influence each other as a systemic perspective would have us believe. Events are seen as one way, we are hungry, we eat; the hunger disappears. It almost seems like we are only able to control the individual events, someone else governs what happens along the way. To live is to respond. This is primarily due to the asymmetry of the time required by the action to get results which then produce new information, generating a new action. It is much faster for an action to produce a result than that result to come back and influence the action. Consequently, it is easy to conclude that our role is to «fix» and not to make sure that adjustments give a high probability that the problem will not happen again. Seeing the circles of causality allows us to better understand how reality affects our actions and how these actions affect reality. Only by seizing the circularity of the phenomena do we arrive at a deep understanding of the forces that give rise to the observed dynamics. The best way to identify the structures that form the basis of a system is to clarify the analysed issues by trying to understand how the variables in play can be connected in a circular fashion, helping us to comprehend what might be the evolution of the phenomenon. You have to try to explain the «story» behind the problem. Feel responsible for the system Imagine the following situation: a person holding the end of a spring with the left hand and the bottom of the spring resting on the palm of the right hand. Suddenly, the right hand is taken away. The question we ask is: «what is the cause of the observed behaviour?» There wouldn’t be such behaviour if there were no laws of gravity. We also moved the right hand on which the lower part of the spring was resting. Both observations are correct, but if you use a glass in the same experiment, do we observe different behaviour? The answer is simple; the spring behaves this way because it is a spring. This simple example is used to introduce one of the basic principles of systems thinking, which connects the structure to the behaviour of systems. If we decide to identify the removal of the support as the cause of the spring’s behaviour, as managers we will try to provide that support when such an event occurs. But, as a manager, we have the possibility to modify processes and to change policies and organisational structures to ensure that the system readily responds readily to exogenous stress. This means changing the way of seeing the cause of the observed behaviour, no longer as an external force that we can’t control, but rather as a set of processes, policies and organisational structures that we can manage and modify. Systemic thinking means seeing the system (the spring) as the cause of the dynamic behaviour and not as the effect. To see the set of policies and processes that make up its structure as the major cause of the evolution of a phe126

The new competencies of the manager 3.0

nomenon enables us to focus more on how to create our own future rather than on trying to predict it. Each system has a structure that shows the way in which the elements interact with each other creating its dynamic behaviour. When facing problems, many times have we provided an immediate answer thinking it was the solution: decreased sales - we employ new sellers, increase the delivery time - we increase the production capacity, moving straight from the problem to what ,at first glance, may seem to the best solution. This kind of reactive behaviour, from problem to solution, is dominant in the managerial culture of our day, and brings us back to the way of thinking based on events and on the poor attitude of analysing and reflecting on the deeper causes at the origin of those problems. Only through the identification of structures that highlight the circular ties of cause and effect is it possible to arrive at a deep understanding of the patterns and mechanisms that govern the observed dynamics and the levers that are able to improve behaviour over time. Feeling responsible for the system means to abandon what Peter Senge describes as «the enemy is out there» syndrome. Senge states: «There is in each of us a propensity to find someone or something outside ourselves to blame when things go wrong…The “enemy is out there” syndrome is actually a by-product of “I am my position”, and the non-systemic ways of looking at the world that it fosters. When we focus only on our position, we do not see how our own actions extend beyond the boundary of that position. When those actions have consequences that come back to hurt us, we misperceive these new problems as externally caused…“The enemy is out there”, however, is almost always an incomplete story. “Out there” and ‘in here’ are usually part of a single system. This learning disability makes it almost impossible to detect the leverage which we can use “in here” on problems that straddle the boundary between us and “out there”». 5.6

What the manager 3.0 MUST DO

The new managers 3.0 will also have to be leaders and the new leaders must also be managers. Obviously each one of us will be unbalanced, but this mustn’t scare us. The formula, as always, is a product, the main point is not to have factors equal to zero: MANAGER 3.0 = (MANAGEMENT * LEADERSHIP * STEWARDSHIP * SERVANT LEADERSHIP * SYSTEMS THINKING) Before presenting what the new manager 3.0 has to do, we want to explain what we discovered during our research. Interviews and focus groups, conducted during our research, revealed that even though there has been a lot of 127

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research focused on identifying what kind of competence, skills or capabilities a manager must have, from a practical point of view, there hasn't always been a useful guide to the manager’s behaviour. Our research also demonstrates that for many years, in master classes and business courses, we have been asking the wrong question: «Which are the competencies/skills/characteristics of a good manager?» The answer to this question included competencies, skills and characteristics such as courageous, entrepreneur, good coach, mentor, charismatic, intuitive, etc., terms that did not permit us to clearly identify the concrete ways to act in order to enable people to work at their best. In addition, the question was self-centred, not taking into account the point of view of employees. The new manager 3.0 must learn to see the world through the employees' eyes. During our research we have used a different question that takes into consideration the employees' point of view: «Suppose that, starting from tomorrow morning, you will have a new boss and this new boss will ask you: what should I do in order to enable you to do your best and to be fully engaged?» This question completely reverses the concept of management from «Getting work done through others» to «Enabling your employees to do their best». That's the reason why, in order to avoid misunderstandings, we never used the terms characteristics, capabilities, skills or competencies during our research, but instead always spoke about behaviours. The following list of behaviours comes from our research and seems, year after year, to have reached a good level of reliability. 1. Helps employees understand how the task is part of a broader context 2. Listens to the opinions of the employees (They may have ideas that are better than yours, but pass on what useful relevant knowledge you have) 3. Provides immediate feedback on performance and behaviour 4. Defines the criteria on which employees will be evaluated 5. Takes decisions for his/her own responsibilities 6. Recognises and rewards the results, not the efforts 7. Knows how to manage his/her own emotions and those of the employees 8. Provides employees with opportunities and challenges 9. Provides employees with all the resources necessary to carry out the assignment 10. Allows employees to carry on with their job in a completely independent way 11. Keeps himself/herself constantly updated in order to have the ability to dialogue with the employees 12. Knows people’s needs and, if possible, fulfils them 13. Grasps the interconnections between the elements involved and understands their dynamic behaviour 128

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Helps employees understand how the task is part of a broader context A lot of managers think that the exercise to help employees understand how his/her job is part of something bigger is basically a loss of time or is a top executive’s job. I don't think so. I am strongly convinced that everyone has to think and to act and that everyone has to build a Strategic Map of their organisation, department, function or research centre. The Strategic Map is the missing link between the daily work and the why we do what we do. As we have already seen in chapter 1 the strategic map must clarify what kind of needs we satisfy to our external or internal customers (mission), why they'd buy what we do and not turn to other (distinctive elements), the way in which we intend to work and relate with customers (golden rules), which is our dream (vision) and what we have to do in order to close the gap between the mission and the vision (strategic intents). Obviously we must not fall into the trap to build alone the map and to share it at a later time. The false sharing doesn't work, the main utility of the map comes from the fact of having built together with collaborators. Listens to the opinions of the employees There is no doubt that there will always be someone who must take the strategic decisions. The most important thing is to take a decision that encloses the intelligence, the experience and the competence of all those people that can give some value for that specific choice. The manager 3.0 will not try to impose his reason, but he will search for the final reason, involving all the useful characters in the resolution of the problem. The reason will be the most adequate and the one that considers the maximum number of competencies. The manager 3.0 will be able to see the thousand rebounds of the ball. He begins from the partial solution that he has in his mind and he asks everyone to challenge that knowledge, that reason, that partial solution. He cannot wait to build the best possible picture, the one that has a 360° view. He also can’t wait to see if the other perspectives, that he barely knows, will produce the factors that he doesn’t see, in order to achieve the final reason. The manager 3.0 must create environments and opportunities in the way that people create productive and useful conversations. It is necessary to build a new way to communicate, creating a climate in which people feel free to discuss what they really think and feel. The new managers must be able to speak and to listen in equal measures. Dialogue allows a deep mutual understanding to be reached, the common meaning of opinions to be found, and a sort of «mental model of the group» to be created.

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Provides immediate feedback on performance and behaviour Feedback is fundamental to help people to grow. The new managers must observe the behaviours of their collaborators with attention and they must quickly intervene both to praise and to modify the ones who are not in line with the values. Defines the criteria on which employees will be evaluated The evaluation of other people is a process that begins in social life. Every time we meet someone we spontaneously, quickly, silently evaluate them in a conscious or unconscious way. The same process happens in the work environment. Apart from the spontaneous and inevitable evaluations, in an organisation based on efforts and efficiency, the evaluation of performances is one of the main responsibilities that belong to whoever manages people. Takes decisions for his/her own responsibilities The managers must not confuse the concept of delegation with what it is not delegable. The macro-strategy, the organisation, the management of a crisis, the moments of representation are not delegable, the other things are delegable. If the manager takes a decision in his competence, the collaborator can quickly operate. The decision taken by the manager is a fundamental element of information. On the contrary, if the manager doesn’t decide, the collaborator doesn’t know in which direction to operate, he hesitates to act and he dedicates time and energy to guess and to defend himself. Obviously it is not possible for him to do his best. Recognises and rewards the results, not the efforts The reward system has a fundamental position, in fact, if it is appropriately structured, managed, based as much as possible on the agreed results and connected to the performance evaluation, it is a powerful stimulus and it guides the behaviour of people. When there is no connection between the results and the rewards, it is difficult to drive the behaviour in the desired direction. Knows how to manage his/her own emotions and those of the employees The manager 3.0 must create positive feelings in the people that he/she manages. The managers 3.0 are resonant managers, they know how to give motivation and get results, they are able to give life to resonant relationships with the people they have around them. resonant managers are in tune with those around them.

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This results in people working in sync with each other, in tune with each other’s thoughts and emotions. Managers who can create resonance are people who either intuitively understand or have worked hard to develop emotional intelligence. In addition to knowing and managing themselves well, emotionally intelligent managers can manage other people’s emotions and build strong, trusting relationships. They know that emotions are contagious, and that their own emotions are powerful drives for their people's mood and performance. Resonant managers know how to manage the emotions, and how to read the individuals and groups with precision. They are in sync with the people, bringing them to focus on a common cause, they build the sense of affiliation and they create a climate that allows everyone to have the passion, the energy and the desire to go together towards a positive direction. They are optimistic and realistic at the same time. Provides employees with opportunities and challenges We have known our limits ever since we were children. The limits continually tell us that we can’t have and we can’t make certain things and we can end up with the belief that we don’t have the ability to have what we want. Most of us are convinced that we are not able to satisfy our desires and this is one of the strongest blocks to the ability of creating what we really want. We all grow up expecting the ordinary. Most of us assume that people behave in normal ways and we treat the collaborators using this logic, so consequently the low expectations lead to low performances. Seeing that the low expectation becomes a prophecy that transforms into reality by itself, the improvement of the behaviours could start from the turnover of the expectations. The collaborators will respect the expectations as being normal. If you expect high performances, and you show this expectation in your interactions with them, they will begin to give you proof of how much they can do. You insist and they will show you all of their potential soon. Provides employees with all the resources necessary to carry out the assignment All too often, the managers forget that among the necessary resources to develop an assignment it is necessary to have the competence. We don’t put the skis on our children and launch them down a mountain. Besides buying the skis and poles, we have placed him by our side, we have allowed him to take ski lessons, we have enabled him to gradually overcome really difficult situations. The same behaviour must be assumed with the collaborators.

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Allows employees to carry on with their job in a completely independent way Allowing employees to carry on with their job means the new managers 3.0 must take a step back. Employees must be left free to do the job without being continuously interrupted and controlled. Most managers confuse the «why» with the «how». To identify the task in a larger context, i.e. the «why», is the objective of the managers, and the «how» must be left to the collaborators, even if this can cause some errors. If the managers also do the «how», it is possible that they could be faster, but they demotivate the collaborators without leaving them the space for participation in the «how»: there is my contribution to that product, service or result. Keeps himself/herself constantly updated in order to have the ability to dialogue with the employees The manager 3.0 must be a manager of competency, first of all. But deep competency is only reached with hard discipline, with hard constant and continuous training. Discipline is the demonstration of will power. Discipline is one of the fundamental elements of the superior performer in the development of competency. The superior performer self-regulates, and self-imposes discipline that is totally respected. Then, the constant updating allows the boss and the collaborator to speak the same language. Knows people’s needs and, if possible, fulfils them Each one of us has needs and, as we know, our motivations also depend on the satisfaction of our dominant need in a specific moment of time. The manager 3.0 must know the needs of the collaborators and do everything possible to fulfil those needs. Grasps the interconnections between the elements involved and understand their dynamic behaviour The manager 3.0 must learn to see whole pattern of change and not the individual elements that compose the system. We tend to focus on snapshots of isolated parts of the system, and wonder why our deepest problems never seem to get solved. The essence of this way of thinking lies in a shift of mind: • •

seeing interrelationships rather than linear cause-effect chains; seeing processes of change rather than snapshots.

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5.7

The last challenge of the manager 3.0: release energy and manage company intelligence

People possess talent, energy, intelligence and creativity, but most of these qualities are not always used. Human energy is like the energy of light. When it is widespread, such as light bulbs, the result is an effect of average quality. But when the same energy is focused and concentrated in one direction, like a laser beam, it has the power to go through any obstacle. Similarly, while the common person spreads his energies on a broad spectrum of activity, the genius is able to take full advantage by concentrating on a single target, reaching much higher results than those obtained by the others. The principle of concentration of power can also be applied within a company. The company's success is directly related to the amount of energy that employees are willing to invest, and the ability to concentrate and direct it to a unique and challenging objective. Most of us do not have the slightest idea of what we can produce in a given period of time until we are put to the test. We use an infinitesimal portion of our brainpower and we are not even aware of it. Then we run into the right stimulus and mobilise our intellectual potential. When we are involved in an engaging project, our mind is literally absorbed. Wherever we are, in the office, at home, in the car, our attention is attracted by things, by the people and events that connect to our project. Everything we see and do becomes connected to the project. Imagine that a company is able to find a way of organising and mobilising the attention of people around the objective of significantly improving performance, to accelerate sharply. Suppose that the collective intelligence of the people working with you has been properly stimulated, to the point that improved performance is now not only a goal but a real mission. If the employees are each able to see the world through the lens of their improvement project, everything they see can become a rich potential resource for the realisation of a creative work. Once you understand and appreciate the principle of organisation energy concentration, the next question to ask is: «How do I use that energy to transform my own business?» The answer is: by transforming employees into partners and involving them in the decision-making process. Employees must fully participate in the definition of their duties and responsibilities and the continuous improvement of working conditions. The majority of employees have creative energy and intellectual potential far greater than their role requires. If we can bring out a part of this creative energy and direct it towards the improvement of current and future planning, the results could be outstanding. The new manager will be able to release the energy and facilitate the process that transforms the energy into ideas and action. The manager 3.0 will be the primary guarantor of idea development and organisational intelligence. 133

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Managing ideas does not mean to bring all ideas down from the top, but on the contrary, it means creating the conditions for new ideas to arise anywhere. The manager 3.0 will facilitate this growth process by managing the organisational and economic conditions so that people produce an explosion of brilliant ideas that add value to the company. This means taking care of organisational intelligence and seeing the organisation as a community of people who should never stop learning, growing and working at the same time as improving the present and creating the future.

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Appendix A: What is the Management Model of your organisation? In this appendix we provide some archetypes of management models to help the reader position his/her organisation. In order to do the positioning it is essential to begin by defining the score inherent to the seven elements that define the management model: decisions, goals, information, coordination, motivation, learning, and culture. OLD MANAGAMENT MODEL

0

20 40 60 80 100

DECISIONS In the hands of few people Top Down Bureaucracy

NEW MANAGEMENT MODEL Shared responsibility Bottom Up Wide spread intelligence

OBJECTIVES False sharing with only short term objectives

Bottom Up approach with short and long term objectives

INFORMATION Secrecy

Transparency

COORDINATION/ CONTROL Managerial role

Self-managed teams

MOTIVATION Extrinsic based on rewards and benefits

Intrinsic based on participation and performance

LEARNING No experimentation Individual

Widespread experimentation Organisational

CULTURE Paternalism

Meritocracy

TOTAL (per column)

Ʃ column results

For each of the seven dimensions, a value from 0 to 100 must be assigned depending on whether the corporate culture is oriented more towards the behaviours of column one or those indicated in the last column. After doing the current positioning, the reader must add up each individual column and then add together the values obtained from each column to get the total value which will be between 0 and 700. 135

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Score from 0 - 150 = Hierarchical model Score from 151-300 = Planning model Score from 301-600 = Change model Score from 601-700 = Learning model The result obtained by adding the values of the individual columns relating to the seven dimensions identifies the type of management model that is currently used by your organisation.

TO IMPROVE TO DO

Hierarchical Model

Planning Model

Changing Model

TO INNOVATE

Learning Model

Old Management Model

New Management Model

Σ of the results for each column relating to the 7 elements of the Management Model Obviously, although there is no perfect management model, but the path should set the learning model in its sights, passing through the hierarchical model, planning model and changing model. Hierarchical model The hierarchical model is the classic model for most small companies. Decisions are made by a few people, usually the owners, information is scarce, and people often don’t know the key business data (turnover, profit, cost, market share). The function of coordination and control are in the hands of a few, either the owners themselves or people they trust. The extrinsic motivation is solely based on the «logic of the seal»: whoever does the right «trick» gets a prize. The objectives are mainly based on short-term goals and are almost exclusively focused on providing benefits to shareholders. The orientation of the people in the hierarchical model is the “doing”.

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Appendix A

Planning model Decisions in the planning model, even those strategically unimportant, are still made by few, but there is more freedom in how to carry out the work. The information is still scarce, but people have greater freedom of being able to find it, the concept is that of «he who seeks finds». The functions of coordination and control are beginning to be delegated to the front lines. Motivation is mainly extrinsic, based on rewards and incentives, even if you are starting to push people to think about what they do and not just «doing». The goals are still primarily focused on the short-term even if you do see glimmers of interest from other stakeholders and not just from your shareholders. The orientation of the people in the planning model is still that of «doing», but with some opportunities for reflection that lead to a culture of continuous improvement. Changing model Only strategically important decisions are in the hands of the few in the changing model, and everyone is free to decide within their own responsibility and role. The information circulates freely, you don’t have to seek it, people are informed of the essential facts and business data. People perform the function of coordination and control independently, but under the supervision of the hierarchal bosses. Motivation is both extrinsic (rewards, bonuses, incentives) and intrinsic, based on the possibility of autonomy in carrying out their work. The goals are both short-term and medium-term, and encompass a broader vision of the organisation that includes all stakeholders. In the changing model, the culture is both that of «doing» and reflecting. People are focused on continuous improvement and change. Learning model Competence and cooperation prevail in the learning model. Decisions involve all the characters who can contribute qualitatively with their expertise to the making of decisions, irrespective of the role they occupy. Information flows freely and is readily available. The organisational structure is constantly challenged in order to find the best strategy/structure compromise. Motivation is primarily intrinsic (quality of work, cooperation between people, the constant search for challenge). The objectives are short to medium term and take into account all stakeholders. The Culture in the Learning Model is that of innovation and continuous experimentation aimed at finding a sustainable competitive advantage over time.

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Appendix B: self-assessment for becoming a manager 3.0 The present assessment is one of the results from the research management 3.0, conducted by CeRCA-Research Centre on Change Management & Organisational Learning of LIUC-università Cattaneo. The Assessment reports the list of the behaviours that the manager 3.0 must DO in order to enable employees to work at their best and to be fully engaged. What does the manager 3.0 have TO DO in order to enable employees to work at their best and to be fully engaged? 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Helps employees understand how the task is part of a broader context Listens to the opinions of the employees Provides immediate feedback on performance and behaviour Defines the criteria on which employees will be evaluated Takes decisions for his/her own responsibilities Recognises and rewards the results, not the efforts Knows how to manage his/her own emotions and those of the employees Provides employees with opportunities and challenges Provides employees with all the resources necessary to carry out the assignment Allows employees to carry on with their job in a completely independent way Keeps himself/herself constantly updated in order to have the ability to dialogue with the employees Knows people’s needs and, if possible, fulfils them Grasps the interconnections between the elements involved and understand their dynamic behaviour

138

Appendix B

The reader has to do an evaluation for each of the 13 behaviours, giving a value from 1 to 4: (1) never; (2) seldom; (3) often; (4) always. MANAGER 3.0 SELF ASSESSMENT What the Manager 3.0 has TO DO in order to enable employees to work at their best and to be fully engaged?

Rating scale

Helps employees understand how the task is part of a broader context

1 2 3

4

Listens to the opinions of the employees. Provides immediate feedback on performance and behaviour Defines the criteria on which employees will be evaluated Takes decisions for his/her own responsibilities Recognises and rewards the results, not the efforts Knows how to manage his/her own emotions and those of the employees Provides employees with opportunities and challenges Provides employees with all the resources necessary to carry out the assignment Allows employees to carry on with their job in a completely independent way Keeps himself/herself constantly updated in order to have dialogue with the employees Knows people’s needs and, if possible, fulfils them Grasps the interconnections between the elements involved and understand their dynamic behaviour

Once the reader has done the assessment for the individual behaviours, he/she can place the assessment on the chart and check the deviation from the ideal position (4).

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Figure 1: Gap analysis between the current profile and the profile of the manager 3.0

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References

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About the author

Vittorio D'Amato is professor of leadership & management at LIUC - università Cattaneo. He is the founder and director of CeRCA-research centre on change & organisational learning at LIUC - università Cattaneo. He is director of the second level master's degree EMBA (Executive Master in Business Administration), responsable of the master's degree in business and management specialisation pathway in human resources management, director of the second level master's degree in mechatronics & management - MEMA, and scientific president of the second level master’s degree in human resources management & organisational learning - HUREMOL at LIUC - università Cattaneo. Vittorio is also the promoter and responsible for the ALPaccelerated leadership program at LIUC-università Cattaneo. He has written nine books and more than twenty articles. Vittorio is the founder and president of AIADS - italian association of system dynamic analysis. The association, founded in 1987, is a non-profit organisation which aims to develop and spread systems thinking, dialogue, mental model and organisational learning. Vittorio is the president of AKRON srl, a consulting and training company with a mission to help clients build management and business models that really enable people to do their best and be fully engaged. Vittorio advises companies in Italy and Europe and consults and speaks around the world on topics such as management innovation, change management, organisational learning and systems thinking, leadership and making strategy happen. In 2010, Vittorio was announced as the first ever recipient of CFMT's (training centre on service management) «excellence in teaching award».

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To contact Vittorio D'Amato: Prof. Vittorio D'Amato Director CeRCA-research centre on change & organisational learning LIUC-università Cattaneo Corso Matteotti 22 - Castellanza (VA) - ITALY Phone: 0039-331-573484 mail: [email protected] www.vittoriodamato.com

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Praise for Management Innovation Road Map

“D’Amato deftly weaves research and ideas from management, strategy and leadership into an integrated whole. His clarion call toward management 3.0 will inspire every business person to get out of his or her silo and into adopting a much wider view of what his or her business is and can be, what it seeks to accomplish, and how to get things done. With many of today’s governments and economies in disarray, business has an opportunity – indeed, a responsibility – to take the lead in making tomorrow’s world a better one for our children and grandchildren. D’Amato’s vision points the way.” John Mullins, associate professor of management practice, London business school “Management innovation road map” by prof. Vittorio D'Amato is a truly inspirational book, providing eye-opening recipes that should be part of the toolkit of every manager facing today's challenges.” Massimo Gotti, world-wide systems sales director, Sepura “In this important book, Vittorio D’Amato provides a fresh and insightful perspective on the new landscape of management. He paints a fascinating picture of the new approach to managing, which he calls management 3.0. This approach blends much of state-of-the art thinking around greater empowerment and flexibility with a commitment to systems thinking and a greater emphasises on the emotions and feelings of employees.” Julian Birkinshaw, professor of strategic and international management, deputy dean programmes, London business school “If you wish to improve your performance, or the one of your managers/company, make this book become part of the Leadership Principle of your Company.” Giampiero Bighiani, general manager, Festo industrial automation Italy

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“In a period of uncertainty and major changes like what we are living in, it is quite important not to loose the fundamentals in a successful entrepreneurial activity. In this book Prof. D'Amato is providing a great help in this sense: the importance to have a clear understanding of the business model and the management model and how crucial is not to confuse those two elements.” Alberto Capponi, chief financial officer gruppo Angelini “I came to this opinion whilst working on my journey and I found in Prof. D’Amato’s writing some reflections of my personal experience. I agree with several of his ideas about the new Management 3.0.” Massimo Pizzocri, Managing director EPSON Italy and vice president consumer sales EPSON Europe “With Management Innovation Roadmap, Vittorio D’Amato has written a great book in which he firmly places people at the heart of organisations and management innovation. He brings together a wealth of perspectives from different theories, companies and management thinkers to present a coherent picture of his vision of the organisation of the future; one in which people and profit thrive hand-in-hand. His clear writing style and ample models and illustrations make for an insightful yet highly accessible and enjoyable book.” Freek Vermeuleen, associate professor of strategy and entrepreneurship, London business school

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Management and leadership, as we know them have come to an end. We can’t wait any longer, most organizations use management models at least 50 years old and no longer suited to the new challenges. Reinventing management and leadership is crucial, as the competitive advantage is not achieved only with a good business model but also with a valid management model. A business model without a management model is pure theory, as well as a model of management without a business model is losing. The book after having faced and declined the difference between business model and management model proposes a new management model (management 3.0) and what the new manager 3.0 has TO DO in order to enable employees to do their best and to be fully engaged.

Management innovation roadmap

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Vittorio D’Amato

Management innovation roadmap What the new manager 3.0 has to do in order to enable employees to do their best and to be fully engaged

Vittorio D’Amato is professor of leadership & management and director of CeRCA - research centre on change & organisational learning at LIUC Università Cattaneo. He is the founder and president of AIADS- italian association of system dynamic analysis. He is considered one of the foremost experts on the issues of leadership, management, business acceleration, organizational learning, systems thinking and change management.

Preface by Vittorio D’Amato

www.egeaonline.it

Julian Birkinshaw

biblioteca dell’economia d’azienda