Session 2 – High Performance in the Digital Age:

What are the metrics organizations should be watching most closely?

Moderator: Jean-Francois Manzoni, President IMD

Speakers: Adrian Wooldridge, Political editor and ‘Bagehot’ columnist, The Economist

Julian Nida-Rümelin, Professor for Philosophy and Political Theory, Ludwig-Maximilians University of Munich

Stephanie Chasserio, associate Professor, Skema Business School

Andeas Rosenfelder, Head of feature section, Die Welt/Welt am Sonntag.

Digitalization fundamentally changes the nature of work and leadership. That’s a huge advantage for those people that get it. But it also challenges human responsibility: Remote work has many benefits, but it comes with human side-effects. Digital lowers the cost of information searches and extends its reach, but instant feedback challenges critical reflection.

One is tempted to suggest that digital needs work on the system.

Differences between Europe and Asia and the US

In Europe, the digital transformation is more human centred than perhaps in China or Silicon Valley. This allows humans to be empowered, not weakened. In line with humanistic self-responsibility, we are responsible for what happens with us as we use digital tools. Software engineers, for example, need to be aware of their responsibility. Ethical processes need to be embedded in agile project structures.

Ideologies of digital

 Digital development follows two ideologies. The first assumes that autonomous software systems are themselves actors and become agents with attached mental states – not now, but in the future. That’s a threat. How do we treat these new agents with mental states?

Secondly, the claim is that the human brain is no different than an algorithmically governed machine. This means that we are not free and cannot be responsible, so we are no different from machines. That’s scary and a step backwards from the benefits of Humanism, when the state and church separated and self-responsibility was born. Human development that leads to a more humane future needs structures in place that don’t muddle responsibility between humans and machines. We need structures in which we can realize human responsibility, and public responsibility for digital communications infrastructure. It cannot be that a few monopolists control the entire infrastructure.

Work life balance and remote work

We have long wanted a good work-life balance. Remote work presented itself as a great solution. Now, for the last two years, many people are in remote work and experience many bad side effects. Digital work is intensive. People add tasks with no breaks in between. It’s called intensification. More productive time with more cognitive workload. People are tired. And some managers are not compatible with distance management. Control and support become an unhealthy mix. In fact, some people overcompensate for the lack of social time with more meetings than before Covid. Women are particularly challenged to manage children, household, and work duties at home. The result is increased worry, stress, anger and sadness. We need to find a balance between remote and onsite work. People want to come back to work onsite but not entirely. Early regulation, for example in France, goes for a balanced combination – remote and face-to-face time. That seems to be accepted by most organizations.

Meritocracy

Meritocracy is how we got from low performance to high performance societies. The 19^th century revolutions replaced lineage, hereditary ascription, and venality with achievement, promise, competence. Meritocracy is a very precious thing. But it can be destroyed. Paradoxically, knowledge workers should be allocated work on basis of merit. But, looking across knowledge workforces, such as, NY Times, Google, or Facebook, the vocal ideologists views are “Merit is a sham, individual ability a fiction, jobs should be allocated on the basis of ascribed characteristics such as gender, ethnicity, or sexual preferences”. A huge revolt is taking place within the digital knowledge workforce, at the heart of the digital economy. Individual performance competes with the promotion of certain groups of people. This happens at a time in the Western economy when China is rediscovering its meritocratic traditions. We are rejecting the tool of high performance at the time when others reinstall it. That helps to shift power away from the west to the east.

Digital journalists and volume metrics

The world as a journalist has become digital. Not only the writing itself but with instant feedback about the writing. Paradoxically, we observe an extreme, accelerated culture transformation (digital high performance) and simultaneously experience the collapse of space and time. But, at the same time, cultural institutions need time to develop. We are moving into a world where space and time don’t exist anymore. Reflection on this is very interesting but the lifestyle of a culture journalist has changed completely. From reading newspapers in coffee shops to a constant flow of meetings, chats, real time metrics on reading and conversion rates. Digital real time economics lead to constant information, algorithms in charge, and feedback to take control. That spells the end of critical journalism.

It looks as if you are a high-performance journalist if you have a lot of clicks. And a high-performance academic if you have a lot of publications. Both may be destroying the very essence of the calling, to explain the world and advance knowledge. That’s just satisfying the beast, which is the wrong measurement. We need to get this under control.

Digital revolution has been hijacked

The digital revolution was meant to make us more human, to interact, globally, to destroy large institutions and so free ourselves.. Today, we find a structure that is only helpful for commercial interest, with monopolized markets in the digital sector. Are we freer today? It comes down to the question of who is the master and who the servant. We can be the masters when we act as individuals and as a society.

Digital needs work on the system. We, the people, need to be the masters – not the servants of digital technologies. As individuals we need to be more disciplined. As society, we need to work on regulation. As organizations, we can reinvent performance management. Perhaps, the attitude about performance and metrics needs a transformation.

Personally, I love my golf, and my digital gadgets that offer me feedback. Golf is technically very difficult. Reaching high performance takes time, dedication, and effort. I have gone that way and learned to develop high awareness. I focus my attention on one thing at the time because that enables my body to learn fast. My tech device offers me the feedback I need on one key metric. I use that feedback to raise my awareness and focus my attention. That combination pays off. I have used a digital metric to become better without goals, incentives, or pressure It’s all about fun and the performance that matters to me, the individual.

May I suggest that today’s working world should play more golf to get rid of traditional control and interfering managerial systems and so embrace performance as a joyful side product of what we do. My advice is to decentralize performance, its measurement and management to people that feel responsible at the client front and use digital to support fast learning.

About the Author:

Lukas Michel is a 5x Author, CEO and founder of the global AGILITYINSIGHTS network of management experts.

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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What have we learned at the Forum that is most exciting, concerning, surprising?

Moderator
Isabella Mader CEO, Excellence Institute

Conference chair

Eduardo P. Braun

Commentators
Andreas Rosenfelder Head of feature section, Die Welt/Welt am Sonntag
Ade McCormack Digital leadership expert
Stefan Pickl Professor; Chair for Operations Research, Department of Computer Science, Bundeswehr University Munich
Gabriela Allmi Director Europe, Higher Education, Harvard Business School Publishing France SAS

“The conference was very inspiring.”

“What did people say?”

This is the sobering moment to admit: in fact we don’t remember most of it.

One of the recurring themes at the Drucker Forum is learning. How do we make sure we don’t forget (Maud Bailly)? How do we create new knowledge (John Hagel)? How to ensure implementation?

The Post Scriptum session of the Drucker Forum is such an exercise. Let’s debrief our own mind, jot down notes, reflect and revisit, as we face up to the new challenges ahead.

During the unconference, one of the questions was “How can the Drucker Forum make a difference?” Maybe it is in each of us making a difference when we leave the Forum and tackle our challenges where we are in the world?

Now, what did we learn from this year’s Drucker Forum?

Gabriela Allmi recounted the most moving moments – because these are the things that everyone will remember. The conference started with “Vive la difference!” and ended with “Viva la vida” by Coldplay. Those two sentences can be a good synthesis of what makes us human. Another aspect of being human is to keep on asking questions. Let’s try to answer the question “What is growth?” – when applied to ourselves?

What is the human aspect of digital humanism? Andreas Rosenfelder argued that humans can learn from paradoxes, something machines normally don’t. On one panel with differing views about high performance in the digital age, Adrian Wooldridge suggested learning from low-performance cultures, where talent was the main value and not performance. A high-achievement culture learning from a low-performance culture is just such a creative use of paradox. Another example: escapism. Chafing at the confinement of the real world, humans first “emigrated” to the digital realm because we like to be autonomous subjects. During the Covid crisis, the escapist urge is to stop living so much in the digital world and migrate back to the analogue one. The Drucker Forum is one such perfect escape: as more than one person put it, meeting in real life adds something to ideas that wouldn’t emerge from an audience sitting in a videoconference and participating remotely.

Conference chair Eduardo Braun blended the first ideas together, urging us to keep asking questions but to refrain from perfectionism: “Don’t try to ask the best question. Let’s just have many, the best ones will stand out anyway.”

Ade McCormack argued that today’s uncertainty and volatility are simply a warm-up for what is to come. The synthetic certainty of the industrial era is followed by a world of hyper-uncertainty that forces us to redefine talent to what robots can’t do and to rethink performance, since a faster, cheaper, smarter Titanic will still sink. Performance in hyper-uncertainty likely points to community and collaboration.

Authenticity became almost an imperative, with the danger that our determination to live our perfect self creates microaggressions for others. Don’t confuse authenticity with selfishness, warned McCormack: consider a “graceful organization” instead, practicing respect.

Immanuel Kant contributed the categorical imperative while looking for the universal answer to the lack of respect he saw in society. Stefan Pickl argued that a universal answer may not be needed because there is no single universal solution for any given complex situation. It may be better to ask for different questions and answers and individual perspectives to make sure we learn in the spirit of Peter Drucker.

The Forum discussions kept coming back to ethics. But, as Isabella Mader asked: which ethics? The European notion of Kantian ethics and the categorical imperative (of applied reciprocity)? A kinship ethic as we see in most of Asia and Africa, or a utilitarian one like in the US? Or some other version? How will the world agree which one to use as the foundational principle for ethics in artificial intelligence (AI)? Bringing about a consensus and negotiating international treaties can take decades – so let’s start them now.

A contribution from the audience came from Robin Heilig, who was surprised and happy that leaders were talking about the importance of love and passion. As a civil servant his friends had warned him to be careful, to be cautious, to moderate his passion. His takeaway from the Forum was that he would continue not to be cautious with his passion, saying that this had served him well for the past 20 years.

How can we ensure that learnings are implemented?

Allowing for vulnerability and love may indeed ensure that whatever we do will be done well, Gabriela Allmi suggested. “Viva la vida”, as the re-telling of the French Revolution, but this time from the heart, could be the way forward in leadership.

McCormack recommended viewing one’s career as a path to self-mastery. Curiosity was what drew our ancestors out of their caves; the same quality will be key to our progress now.

Allow for contradiction, escapes and human (!) autonomy. Andreas Rosenfelder: “Machines can never be free, only humans can. Let’s keep that in mind.”

Eduardo Braun first heard about loving your colleagues at work in a conversation with Herb Kelleher: “In that sense loving is helping others become the best version of themselves.”

Aligning with Gabriela Allmi, Stefan Pickl then revised his Forum synthesis from the dialectic principle to “Viva la vida”. As performed by Coldplay at the group’s famous Sao Paulo concert in 2017, the song featured a breathtaking lightshow created by thousands of glowing mobile devices held up by the audience – a stunning visual representation of collective emotional spirit. A similar spirit emerged from the Global Peter Drucker Forum 2021 in Vienna as participants sang lustily along to “Viva la vida”.

The much-missed Clayton Christensen enjoined us to consider how we will measure our lives. In this spirit, we may wish to redefine what we mean by performance – a discussion that we urge you to continue at next year’s Forum under the theme “Performance That Matters”.

About the Author:

Isabella Mader is CEO of the Excellence Institute, Executive Advisor for the Global Peter Drucker Forum and lecturer at universities in the fields of information and knowledge management, IT- strategy and collaboration.

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Workshop by

Beatriz Arantes

Workspace Futures Senior Design Researcher and Environmental Psychologist Steelcase

Given such a dynamic VUCA and COVID world, businesses and organizations needed to rapidly swerve to a distributed and remote workforce while simultaneously giving considerable thought to the future role of the office. What will be the “new normal” or what will be the best-fit hybrid work model?  However, given the compelling research of Beatriz Arantes, her colleagues and other experts in the field of Environmental Psychology, possibly the greater focus should be on better understanding “Why Coming Together Matters.”

Ms. Arantes explored the nature of human interactions in organizations and how meaningful, authentic and “sticky” interactions can hold organizations together — their “social glue.” This clearly points to the significance of culture, and as Peter Drucker stated, “Culture—no matter how defined—is singularly persistent.”

To explore the significance of culture one might look at the seminal work of Edgar Schein. The Culture Iceberg Image

is used where above the water line is the explicit culture: artifacts, practices, spaces, roles, objectives, planned meeting. And what happens below the water line, below immediate consciousness are the tacit things: norms, rituals, behavior patterns, expectations, and unplanned encounters. And even deeper down are latent aspects of culture: values, beliefs, assumptions, subconscious, discoveries, emergent —  things that only through interaction, conversations and arguments we can discover and make to emerge.

So “coming together really does matter” because it helps individuals, teams and organizations to more easily go below the water line. A 2021 Microsoft study about interactions during the COVID lockdown provided some very important insights:

1. formal business groups and informal communities became less interconnected and more siloed,

2. share of collaboration time with cross-functional groups dropped twenty-five percent,

3. separate groups became more intra-connected and insular, and 4. Microsoft’s organizational structure became less dynamic.

Over time, as valuable and important networks shrink, there is a real risk to the loss of effective collaboration across teams, particularly when innovation depends on interdisciplinary thinking and diversity. So one can see that when time is not invested in speaking with one another, outside of explicit meetings, the result is a lack in social connections and trust  — both necessary to have those transparent, important and difficult conversations that can bridge the gap of understanding. Data does point to the fact that team members really do have to be “intentional” about how they come together and actively expand their collaborative connection circles. The research by Thomas Allen at MIT — The Allen Curve has also shown that those persons who sat closest together were the ones who interacted the most — proximity and intention do matter.

There are very important things that do not necessarily come together explicitly, and in a recent McKinsey Study employees were asked why they would leave their company and look for another job: 1. having caring and trusting employees, 2. flexible work schedule, 3. valued by manager, 4. sense of belonging, 5. valued by organization, and 6. potential for advancement. These are known as cultural “sticky interactions” orthose that can better allow for teams and individuals to be successful and are “below the water line” cultural elements.

Coming together really matters — over time, and without active contact, relationships tend to “unstick” and have a tendency to drift apart. And the implications for leaders — a clear opportunity to be very intentional about what are the initiatives, the efforts, the mechanisms that bring people together and create “sticky bonds” between individuals, within teams, between teams and within the whole organization.

A number of points were noted as one considers how best to achieve meaningful interactions/relationships:

1. identifying one’s network (people, teams, ecosystem, support network),

2. understand the interactions that make those connections important,

3. defining the “moment of magic”, the one that makes the glue,

4. recalling the previous interactions and moments with that person/group that enabled that moment to happen, and

5. listing the interactions would you like to continue having post COVID, which ones are more important, and which ones might you consider eliminating.

There are a number of focus areas in caring for one’s organization and community:

1. culture — people and behaviors,

2. reinforcing/building rituals/processes (policies and knowledge and build that into the work day),

3. providing the tools (digital and analog), and

4. work space — what does it look like (allowing for choice and control) and having informal areas that allows sticky behaviors to happen.

When you literally make space for things then you allow for a little bit of the stuff from below the waterline to more easily bubble up to the top and become a visible, viable and become a vibrant part of the organization’s culture — a win-win.

As leaders there is clear benefit for yourself, your teams and your organization in identifying what those key interactions are that need to be acknowledged and supported — they are part of what makes one’s organizational culture both compelling and successful.

About the Author:

Mark Béliczky is President and CEO of ProHome LLC and is Chartered Manager and a Fellow at the Strategic Management Forum, and a member of the American Academy of Management and the Peter Drucker Society Europe. He holds a faculty position at Georgetown University, and lectures at other universities in the US and Europe.

https://www.linkedin.com/in/beliczkyseniorexecutive/

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Workshop: Employee Ownership and Governance: How Putting More Power in Employee Hands Affects Performance in Turbulent Times

Moderator: Christian Rangen CEO & Co-Founder, Strategy Tools and Engage // Innovate. Faculty, strategy & transformation 

Toshio Gotō Research Professor, Japan University of Economics 

Christian Stadler Professor of Strategic Management Warwick Business School

Radoslaw Kedzia Vice President of Huawei CEE & Nordic Region

Moon Jérin Co-Founder- Chief Marketing Officer at Vlinder, Industry Associate at UCL CBT

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum

I have always found the most inspiring roundtable talks to be those where the speakers have diverse perspectives on an issue that is critical, even existential. That was the case for the digital workshop on 10 Nov at the 13^th annual Peter Drucker forum.

The official title was “Employee Ownership and Governance: How Putting More Power in Employee Hands Affects Performance in Turbulent Times”. The existential question is: What is the impact when employees have strong influence in decision-making? The answer from the workshop is resoundingly positive: It helps organizations thrive, from both financial and human dimensions.

Underlying themes of the conversation reflect deep changes needed in order to wisely benefit from employee power:

• Redefine the role of business in society to achieve sustainable, long-term, people-oriented values
• Rethink corporate structure and governance to make the new values real and actionable
• Recognize and enable the new mindset of seeking purpose, to ensure that top talent is energized and engaged

Evolving from shareholder to stakeholder value: the talk is not yet walked in most cases

It came up early in the discussion that the top leaders of organizations are not necessarily the strongest vectors for change and building value in today’s turbulent times. Incidentally, this corresponds to my own data over many years of surveys about the organization in the digital age where one of the top obstacles has been and still is senior management, rated in 2021 as a “serious concern holding us back” by 18% of the organizations and another 35% calling it a “manageable concern requiring special effort”. https://www.netjmc.com/senior-management-holding-us-back/

A widely publicized attempt to reform organizations starting from the top was carried out in 2019 by CEOs of major corporations, members of the Business Roundtable, who redefined the corporate mission to give it a stakeholder orientation after years of shareholder dominance. They stated that companies needed to invest in employees and deliver value to customers, protect the environment and deal ethically with their suppliers. However there were few specifics in the statement. The real impact of this initiative is debatable, as doubts emerge whether or not member companies have lived up to their joint mission statement.

In 2020 US Conference Board did a study with 1316 CEOs from 44 countries around the world that confirmed that the corporate mission was still lacking in relevant focus: Over 60 percent agreed that “redefining the corporate mission for the benefit of all stakeholders, including customers, employees, suppliers, communities and shareholders” is a post-corona major issue.

I prefer a stronger term than “issue” which I consider to be an easy way to avoid confronting problems head on. Issues are concerns with agreement and disagreement, and that’s not the case here. We have a clearly defined problem and need to look at how we can re-orient the focus of business from shareholder to stakeholder and to the employee in particular.

Several approaches were proposed in the workshop discussion. They are not options to choose from, but rather approaches that potentially fit together and can help organizations reach higher goals beyond what we traditionally call “doing business”.

Involve more voices at the table when defining strategy

As cited by one member of the workshop, “companies are made by and for people”. The people dimension has long been neglected in decision-making in most companies and countries. We need to reach the higher levels in the Maslow hierarchy of needs: sense of belonging, recognition and self-actualization.

Part of the answer is to include employees in strategy discussions and process. Strategy and implementation are usually separate but if we open up and involve people, the separation is no longer there. People can think “what do I have to do in my spot, in the role I’m in, to make the strategy operational?”.

Ensure that people have a sense of real ownership

From a tangible, monetary approach, employees can be shareholders, actual owners of shares in the company. From an intangible, but equally, if not even more powerful approach, employees can be direct participants in the governance structure. This may be from being part of decision-making bodies as well as having employees elect board members.

Organizations that genuinely involve employees reap benefits through better organizational performance. An example discussed was that of Huawei, a company that is owned and governed by the employees through their Representative Commission, its highest decision-making body.

Enable the purpose mindset

The search for purpose has emerged more than ever before because of the pandemic. It may be that people are reflecting about the why behind their work. Many have had a new vision of their work since, often based at home, they have reconnected with family more, and avoided long commutes. Some may have simply rethought what they want from their lives.

They may have decided to re-orient their work lives, which is not easy inside companies organized by functions and operational units. Most organizations do not encourage people to learn new skills in new environments or disciplines. You may call it reskilling or upskilling but whatever the term, giving people the freedom and opportunity to evolve is a means of keeping them motivated and committed.

Involvement, ownership and purpose

These three short words sum up the focal points of the deep and fast-moving discussion about putting more power in employee hands. I only wish we could have continued the conversation longer! I’d like to close this brief summary by combining two quotes from Peter Drucker. The first, and theme of this 13^th annual conference is “Management is about human beings” from The New Realities, published in 1989. The second is “The task of management in the knowledge-based organization is not to make everybody a boss. It is to make everybody a contributor” from Post-Capitalist Society, published in 1994.

The two quotes meld beautifully.Instilling a means of involvement, a sense of ownership and a context to live one’s purpose will result in people becoming genuine contributors, which will in turn ensure their organization thrives in turbulent times.

About the Author:

Jane McConnell, author of The Gig Mindset Advantage: A Bold New Breed of Employee, has conducted 12 years of research on organizations in the digital age, and has worked as a digital strategy advisor with large global organizations for 18 years. She can be reached via her website https://www.netjmc.com and @netjmc on Twitter.

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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The 13^th Global Peter Drucker Forum again raised business critical questions such as: “Can big businesses be humanized” and “How fast should you transform your business. The answers were: “YES you can humanize a big company “, and “you need to CHANGE your perception on how fast a strategic change of your business will be”.

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum

Parallel Panel #7 – Can Big Business be (Re)humanized?

Moderator
Amy Bernstein Editor, Harvard Business Review & VP Harvard Business Publishing

Speakers
Hubert Joly Senior Lecturer Harvard Business School; former CEO, Best Buy
Claudio Fernández-Aráoz Executive Fellow for Executive Education, HBS
Maurice Lévy Chairman of the Supervisory Board, Publicis Groupe
Patricia Pomies Chief Operating Officer, Globant

Parallel Panel #9 – Leading People through Change – Hoch much? How fast?

Moderator
Jenny Darroch Dean, Farmer School of Business, Miami University in Oxford

Speakers
Roger L. Martin Strategy advisor; former Dean, Rotman School of Management
Sara Mathew Non-executive Chair, Freddie Mac; former CEO Dun & Bradstreet
Elsbeth Johnson Senior Lecturer MIT’s Sloan School of Management, Managing Director, SystemShift
Michael Watkins Professor of Leadership and Organizational Change at the Institute of Management Development and Co-Founder of Genesis Advisers

Can big businesses truly be humanized

The focus of this year’s Drucker Forum was on the leader him- or herself. Many top leaders are indoctrinated by the old- stereotyped picture of a leader- the hero, who knows it all and will guide his or her people on what to do and how do it. In a VUCA world, 80% of leaders, according to Hubert Joly, understand and want to adopt the new humanized leadership model, better suited for the current dynamic economy, but find it very hard to do. According to Joly, leaders’ true purpose is to transform from only being great business leaders to also become great human leaders. Today’s leaders must lead with, not only the brain, but also with their heart and soul. Therefore, leaders need to start with themselves and ask: “what is my true purpose as a leader?”. Getting some coaching help could be one way of managing this transformation, as mentioned in last year’s Forum.

Another factor that plays an important role in humanizing businesses is who the board select as the next CEO. According to Maurice Levy, board rooms are haunted by Milton Friedman and his maximizing shareholders’ value mantra as the ultimate duty of any board. Whilst boards recognize this may not be useful anymore, they struggle to discard it.  Perhaps if boards started seeing and accepting the importance of an CEO as a great human leader, as well as a great business leader, they might recognize that better performance comes from better human qualities.

How fast should leaders push the transformation of their businesses

The panel shared the view that many leaders should “slow down” the transformation to achieve true strategic change of their business. The hunt for quick wins, could according to Dr. Elsbeth Johnson play some role to demonstrate success, but is not in any way a proof for true long-term change, which demands a true shift in mindset and of the technical system. Instead, leaders should view a transformation more long-term and understand that for a real change to happen, behavior need to change, supported by changes in structure, compensation and more. This reminds me about the excellent model developed by Schein and Schein (2017) in their book ‘The Corporate Culture Survival Guide’ in which they discuss cultural transformation from three perspectives: social culture (behavior), technical culture (the design), and the macro culture (influences from outside, for example fads such as Holacracy, Lean, and more).

In fact, the leader should during a transformation focus on ‘outcomes’ and ask the right questions to their people in the organization, rather than take on the role of the central agent for change. Johnson referred this phenomenon to ‘Magic Delusion’ in which the leader over values his or her own role and contribution to change. The risk then is that the change process will stop as soon as that leader has left the company. Other risks are the; ‘Drama delusion, the Activity delusion, and the Agency delusion. With the Drama delusion Johnson means that the change needs to be perceived as fast and action packed but is then also very risky. With Activity delusion she refers to the risk of focusing on quick wins, rather than on a long-term change. Finally, with Agency delusion she means the same as Schein and Schein (2017) stated, namely that a change in people and their behavior is not enough for a change. Instead, a change requires also changes in the technical system.

An excellent example on a leadership team that BOTH has humanized their company and successfully managed a long-term transformation, from being a cash cow to start being a winner in the digital age, is the leadership team at GE Appliances (GEA).

The team did 4 simple things:

a) Defined a leading goal

b) Promoted and role modelled a new set of beliefs (culture)

c) Reinvented the organizational structure and how different units were to be aligned with each other

d) Redefined the compensation system

The transformation of GE Appliances was not falling into any of Johnson’s ‘delusion traps.’

Let us start with the first one, ‘Magic delusion’. The transformation was and is not conducted by Kevin Nolan, the CEO himself. Instead, he got advice from Mr. Liang at Haier, and he consulted his senior leadership team and asked them to suggest solutions for working more ‘user focused’ and to become a winner in the North American market. Nolan trusted his senior leaders, so that important decisions were made based on senior leaders’ involvement and competences. Further, Nolan also avoided the ‘Agency delusion’, as GEA, after Nolan’s alignment with senior leaders, performed technical changes of management processes, structure, and compensation system, which in turn required a new behavior as well from leaders, between units, and between people on different levels. Regarding the ‘Drama delusion’, GEA did several of the big changes already during the first 12 months. However, the leadership team perceived the risk to stay ‘AS-IS’ as larger than to perform the changes during the first year- and they had key stakeholders with them. So even if many changes were done during a short time period, the team was not looking for quick wins (the ‘Activity delusion’) as they believed they had to change to stay relevant in the digital age. Their focus was, and still is, long-term and their transformation journey has not stopped. Neither will it, as the external environment continuous to change.

For more information about GE Appliances transformation, please read:

https://www.druckerforum.org/blog/must-there-be-a-human-imperative-at-the-core-of-organizations-by-annika-steiber/

Or

https://www.forbes.com/sites/benjaminlaker/2021/09/17/here-are-the-four-simple-steps-that-transformed-ge-appliances/?sh=25eb50d763ff

About the Author:

Dr. Annika Steiber is a Professor, Best-Selling Author, Speaker, Founder, Investor and the Director of the Rendanheyi Silicon Valley Center. She is the author of eight management books.

On the upper levels of management as well as in management literature, one will frequently hear the almost ritual complaint about the growing sluggishness of organizations, their lack of agility. As proof, the argument will point to their difficulty to implement necessary radical transformations. Routinely, this will lead to a call for the “bull-dozing” of organizational layers and the radical streamlining of chains of command.

The bull-dozing rationale

The thrust of the underlying reasoning will run as follows: it is not the ever-increasing creativity of management theory and the multiplication of ever more abstract organizational models creating ever more injunctions and hierarchical layers that are to blame for the growing bureaucratization of modern corporations. No, the culprits are the structural complexities of modern corporations as well as the multiple organizational layers and the entrenched intermediaries they produce. Hence the necessity to do away with them and radically simplify organizational structures and chains of command.

This paper will not pretend that the structural complexity of present-day organizations is unproblematic per se or is not partly linked to the bureaucratization of modern corporations. Things have to be done about this trend. Neither will it argue that in many organizations some reduction of organizational layers would not be commendable, as all intermediaries are not equally important or indispensable. However, that is a matter to be dealt with on a case-to-case basis, not by general, decontextualized solutions.

The mental model of transparency

Instead, let us discuss the general, uncontextualized nature of the proposed solution for making “agile” organizations by drastically reducing structure and intermediaries and question the “mental model” this “solution” implicitly builds one: the myth or ideal of the “transparent organization” which itself is based on two premises.

The first says secrecy and non-communication are bad by nature, whereas communication and information sharing are good, as they provide the lifeblood of organizational togetherness.

The second holds that hierarchical layers and intermediaries in organizations are useless filters, only distorting or interrupting the information and communication flows through which the common purpose can be shared, explained, and made meaningful for members of the organization at all levels.

The transparency myth

The idea of the transparent organization builds on the idea that organizations are coherent and homogenous entities, where all participants share a core-purpose, pursue naturally aligning interests and have similar, if not identical understandings of what is going on. The mere spelling out of these implicit premises of the “transparent organization” underscore how unrealistic the whole idea is. It ignores the fundamental heterogeneity of organizations.

Networks of work-contexts

Organizations must be understood as loosely connected networks of work-contexts, in which the organization’s core-purpose takes on distinct colors and meanings. Within them, the diverging interests of the participants are arbitrated on a day-to-day basis in order to construct their difficult but indispensable cooperation. This produces a concrete context of meaning generating a distinct mode of functioning. In going about their tasks, the people in the different places where the actual work is accomplished (whether this be work-shops, project groups, a research department, administrative units of corporate headquarters, etc.) create separate contexts of cooperation the functioning of which does not emerge by itself. It has to be constructed or maintained from day to day. This cannot be done from the top. It is the indispensable job of these “intermediaries” or “middle-managers” who should better be valued as “context managers”. All top management can do is to prevent the various work-contexts to diverge too much in their trajectories, and that itself is a big, often superhuman job. For the rest, it has to leave it up to the context managers to create and maintain the conditions for effective cooperation within the various work-contexts.

Cooperative trade offs

Managing work-contexts is about creating the necessary cooperation between the different participants, which means creating the conditions for the emergence of the local trade-offs between their divergent, often contradictory “interests”. No enduring cooperation will be possible without such trade-offs. They produce the “rules of the game” being played among the participants and define their respective prerogatives, duties and also privileges. No effective functioning is possible without them.

Favoring the emergence and respect of such local “rules of the game” is the foremost job of any context manager: he or she has to construct and maintain a local, contextual governance. And this is the point where the job might put him or her at odds with managerial injunctions created for larger sectors his or her work-context Is part of. This can happen in many ways.

Understanding the rules of the game

Local “rules of the game” and their underlying trade-offs are subtle things. They are implicit and can only be accepted as long as they remain so. Everybody knows how things are but can pretend otherwise. When forced out in the open and put in writing, their implications become obvious, putting their legitimacy and very existence at risk. The implicit and ambiguous nature of “rules of the game” are necessary ingredients of the governance of work-contexts. Force clarity and transparence on them, and you might endanger their very existence and with it, the cooperation they help to achieve.

Also, the rules of the game are always local and contextual: at least some part of them will be specific to a given work-context and could not apply elsewhere. They are therefore always potentially at odds with the many legitimate efforts of the upper levels of management to rationalize and to keep things comparable in order to benchmark. The legitimate nature of these efforts cannot be contested on a general level, even though a good deal of them might be questioned as to their timing and to their overemphasis on standardization and comparability. Whatever, context managers will always observe these efforts with vigilance, if not distrust, lest their implications and impact destabilize his or her capacity to construct and manage the specific trade-offs on which the effective functioning of his or her context depends.

Criticisms of context managers

There are legitimate reasons for the often criticized “conservatism” of context managers. Even if they are in complete agreement with the projected transformations that present-day organizations are increasingly engaged in, they need time to implement the many brilliant schemes and initiatives implied by these transformations. This is a necessarily complex process whereby work contexts and their managers first gain a practical understanding of the medium-term impact of the prescriptions to be implemented, and collectively succeed in “digesting” them by inventing the new rules of the game enabling them to translate the projected change into enduring contextualized practice.

This is necessarily a difficult collective learning process. Both interactive and iterative by nature, it needs engaged leadership. Context managers can only exercise such leadership if they have the resources and leeway to, whenever necessary, bend the transformative prescriptions so as to adjust for the local trade-offs which will make them acceptable and practicable for all participants. Without such leadership, without such active engagement in the creation of the renewed trade-offs between the participants of a given work-context, there will be no effective implementation.

The need for context managers

No organization can thrive without engaged context managers. They are the only ones capable of breaking down and translating the core purpose of the organization as well as its overall transformative project into digestible, meaningful and implementable pieces of organizational practice. Whether this will happen, depends on their active engagement but also on the resources and leeway they are allowed to have.

Managerial hubris

The myth of the “transparent organization” is just one more example of the managerial hubris so characteristic of managerial thinking, both in consulting and in the upper echelons of corporations. It shows once more that management theory and practice has decided to ignore the basic uncertainty rooted in the freedom human beings enjoy when they decide whether to engage in collective action. The “transparent organization” is the attempt to respond to top management’s fear of the uncertainty of the behavior of those on whom it depends to keep them informed about what is going on operationally. The “transparent” “agile” organization with its drastically reduced hierarchical lines and organizational layers is about regaining control. It stands and falls on the pretense that top management has all the solutions, if only it is correctly informed. However, that can only be true in a fantasy world.

The fragility of organizations

Organizations are solutions for the problem of collective action. They are the best solutions we can think of, but they are fragile. Management has to live up to that fragility and to its implication, the political nature of the act of managing. Cooperation and control cannot be achieved through automatic devices, nor can they be taken for granted. Creating them is a political activity. Autonomy and effective leeway are the necessary ingredients for such an activity. That is true for all managers, at whatever level they practice their art. And above all this is true for the context managers, without whom no organization could function.

About the Author:

Erhard Friedberg is Professor Emeritus of sociology and former director of the Master of Public Affairs at Sciences Po, Paris

After the shock of the first lockdown in 2020, the world has experienced an erratic, difficult and long return to an almost normal situation, with no certainty of being completely out of the crisis. In other words, uncertainty, with its share of surprises, is with us for a long time.

One might have thought that the violence of the shock, which clearly showed the limits of our management tools, would lead to a profound rethink. It did not. After the shock, and despite the persistence of large dark clouds over their heads, organizations and states have gone back to designing action plans on the basis of expert forecasts, without which they seem incapable of conceiving their actions.

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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The persistence of predictive tools despite their limitations

For years, we have been invited to “embrace uncertainty”. Despite this, and the evidence of repeated prediction accidents, successive surprises, and radically unexpected changes, almost all decision-making tools have remained anchored in a positivist and predictive paradigm.

These tools are based on a model that consists in identifying a future issue, defining a goal related to that issue (a vision), and then determining the means to achieve that goal. The underlying mental model is that the more important the identified issue is, the more ambitious the action must be, and the more resources must be used. This model underlies all major plans for transforming organizations and states. Any modest action is considered vain and futile. Faced with the magnitude of certain issues, such as climate change, the dominant thinking is that a revolution is needed, with big ideas, ambitious plans and grandiose gestures. But as history shows, revolutions are usually synonymous with disaster, and more harm than good. The repeated failures of major transformation plans, both corporate and political, confirm this.

The three mistakes of predictive management tools

The “revolutionary” approach is a costly dead-end because it makes three errors :

– An ontological error, concerning the nature of the world: that of thinking that the world is a mechanism whose springs we know, and which evolves in a linear way. It would be enough to press this or that “button” to obtain the desired effect.

– An epistemological error, concerning what we can know: having more and more data allows us to anticipate the evolution of the world. A shot of “big data” or an in-depth survey, and we would know what to do.

– A sociological error, on decision-making: that of conceiving it as a solitary and purely intellectual exercise. Let’s gather very intelligent people around a table and our problems will be solved!

These three errors create a fatal conceit, to use the words of the economist Friedrich Hayek, which translates into an arrogant, even hubristic posture of excessive confidence in our ability to control the world. This posture is the cause of its own failure with its share of human suffering and unsolved problems.

One example among a thousand illustrates the impasse that this posture constitutes: the war on drugs in the United States was launched with great fanfare by President Richard Nixon in 1970. Despite the colossal means, about ten billion dollars a year merely in direct expenses, the UN finally officially recognized in 2016 that this war was a failure with disastrous social consequences. Has it stopped after that? It hasn’t.

An alternative approach: small wins

As Richard Straub, President of the Peter Drucker Forum, reminded recently in Harvard Business Review, rather than this arrogant posture, it is better to adopt a totally different mindset inspired by the thinking of Peter Drucker, the “father” of management thinking – a posture marked by humility, such that change should rather be considered as incremental, anchored in continuity; an observation that the turbulence we are currently experiencing only makes more obvious.

A posture of humility, whereby we accept that we are not able to predict the future and that we cannot change a system in a mechanical and authoritarian way, does not mean giving up on change, quite the contrary. It is even the condition for being able to change.

A rich current in sociology, political science and organizational theory has indeed long defended the idea of an incremental approach to change, by small steps and on a local scale. This current has shown how the most complex problems are best solved by organizing a series of small wins that are accessible to individuals, whoever they are and wherever they are. Their succession constitutes a solid foundation that builds up gradually, limiting risks, dissuading opponents and rallying the undecided in favor of change.

Two imperatives for acting with uncertainty

This alternative requires two imperatives to succeed:

– prudence: first and foremost, one must survive in the face of uncertainty and surprises, and therefore organize oneself to avoid certain undesirable futures. It is also necessary to respect what already exists and to proceed in a humble way by avoiding revolutionary radicalism.

– progress: protection is not enough; we must also prosper thanks to uncertainty and the opportunities it opens. It is a question of creating the future we want, and not simply letting it happen; this is the entrepreneurial dimension of transformation.

There is a tension between the two, but it is a creative tension; it is that of any living organism. It must be constantly recreated: an excessively cautious approach leads to immobility, which means death, while a revolutionary approach leads to excesses, undermining the cause.

Rethinking management tools now

As Peter Drucker said, “it is precisely because change is a constant that its foundations must be particularly solid”. And what this foundation must be based on is people. In an uncertain world, changing profoundly, we must abandon the vision of Plato and Saint-Simon, that of the world as a machine piloted by a few great geniuses and underlings carry out the orders. No, we must start with people, training them to think new things, and showing them that they can change the world around them. We must give them the means to act and transform their environment. This is why the key to transforming the world lies in education, what French philosopher Paul Valéry evoked when he wrote: “…the aim is to make you men ready to face what has never been.”

An uncertain world calls for a rethinking of management tools, and in particular the mental models on which they are built. This is a task for researchers and teachers, of course, but also for managers themselves. We must start this work now, and not wait for the next catastrophe.

This article was first published on HBR France and is part of the blog post series on HBR related to the Drucker Forum: https://www.hbrfrance.fr/chroniques-experts/2021/11/40540-bienvenue-en-incertitude-comment-reinventer-les-outils-du-management-pour-eviter-la-prochaine-catastrophe/

About the Author: Philippe Silberzahn is a professor at EMLYON Business School in France and a recognized expert in innovation and entrepreneurship. As a consultant, keynote speaker and management educator, he works with the leadership teams of large organizations engaged in transformation efforts when confronted to uncertainty and disruptions in their markets.

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Moderator
Johan Roos Chief Strategy Officer, Hult International Business School

Speakers
Santiago Iñiguez de Onzoño Executive President, IE University
Patricia Pomies Chief Operating Officer, Globant
Rosanna Sibora Vice President Digital Products & Innovation, Universal Music Group

Setting the Stage

When the pandemic hit, few companies were prepared for the unpredictability of the threats and related challenges that it brought. The completely unexpected need to switch the internal operating system to fully digital within days ruthlessly exposed the flaws and booby traps hidden in many organizations. Operations were not prepared. Staff was not prepared. Management was not prepared. Governance was not prepared. Media discontinuities, paper files, compulsory attendance, undocumented workarounds, and micromanagement became visible as what they are: the legacy debt of an anachronistic business culture that suddenly turned into a very real threat to the business. In many companies, home office was more an incentive-like working model for a small number of employees. All of a sudden, this exotic mode of working turned into the new normal, creating a bunch of unsolved problems for the routines of a legacy business operating system. Managers and employees were thrown into the deep end of a new digital reality where established cultural habits and soft practices lost their impact.

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum

Technology – Driver or Threat

Looking back on these early days, it is obvious that the problem had different layers. On the one hand is the problem of how to deal with technology. Often digital technologies are seen as purely an IT matter, leading to a lack of knowledge and understanding in the rest of the company. Also dangerous is the glib assumption that “technology or digital tools will solve the problem and make change happen”, overestimating their impact on deep-rooted procedures and habits, as well as their ability to solve the problem of missing leadership. All this can leave an organization digitally unprepared when a pandemic hits. In today’s world technology cannot be delegated, since everyone needs to have the knowledge, the ownership and the skills to make use of it.

Leadership? Leadership!

On the other hand, there are big issues in management and leadership. The pandemic created a situation of great uncertainty, compacting corporate working routines. From one day to the next people became isolated and invisible behind their computer screens at home. They lost the office as the familiar locus for social interaction with peers, managers and leaders.

This presented a huge problem for leaders, as it is difficult to create a safe social space using narrow band communication through digital channels. Capabilities like empathy, listening and awareness of what happens in the team on a daily basis are easily lost in digital operations, yet are must-haves in situations like the pandemic, with teams and leaders daily dealing with uncertainty, anxiety and stress. Such situations call for the full range of human-centered leadership skills, trust and psychological safety – and not for more micromanagement. Unsurprisingly, the pandemic quickly exposed the many organizations lacking these leadership skills and cultures, greatly contributing to record levels of employee turnover throughout the US, for example.

Understanding the Human Side of Business

The session panelists described the different leadership challenges they were facing, and what they did about it in their respective organizations. During the pandemic, the boundaries between private and professional life blurred. While challenging, this situation also offered the chance to better understand employees and to connect emotionally on a much deeper level than in the office: Seeing their living rooms and getting to know their children and families, leaders could build a new depth of connectedness within the team, develop fresh leadership abilities and stronger social skills.

Expanding on these individual leadership skills, leadership development also took a giant leap forward. It is no longer sufficient to manage known risks and to lead people through best practices with superior knowledge. Uncertainty, i.e. not having superior knowledge, characterizes the new business environment in which leadership has to prove its worth. Leadership, and leadership development then, is all about people and continued learning to understand the nature of new challenges and deal creatively and effectively with them. In addition, this has to happen at all levels of an organization, requiring more leaders everywhere. Discovering and developing new leaders can start small, by combining the need for more learning, training and leadership. Globant, for instance, successfully instituted communities of practice to share good practices among peers. These communities set the stage for individuals who were gifted trainers, and who were good at leading others without having formal authority over them. Talented new leaders rapidly emerged from these communities, equipped with exactly the skill sets required for the new business challenges: Leading others without having formal authority, proactively rising to new challenges and easily adjusting to new technology.

Leadership Development 2.0

Bringing newly-forged leadership talent like this into formal leadership development programs quickly exposes their flaws. Existing programs are too focused on management and leading with formal authority. Reforming leadership education in business schools and development programs inside organizations might sound revolutionary– but it is no less than a necessity for the times ahead.

Future leadership development needs to put much more focus on building interpersonal skills, encouraging entrepreneurial opportunism and continuous learning. The path of leadership can only be an individual journey of exploration, constantly taking advantage of new opportunities to grow and learn in real-world challenges. This setup has a far more experimental nature than in the past, and no pre-cut-out career paths. It requires patience and mentors who really care. After all, you cannot become a good leader unless you have a deep liking for people. Nor can one develop leaders without liking them – they are people too.

Today, we need good leaders more than ever.

About the Author: Janka Krings-Klebe and Jörg Schreiner are founders and managing partners of co-shift GmbH, helping companies to transform into business ecosystems. Their latest book is “Future Legends – Business in Hyper-Dynamic Markets“ (Tredition 2017). Both also contributed to “The Power of Ecosystems“ (Thinkers50 2021).

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum