You know the situation. You have seemingly done nothing different, but suddenly notice that your leadership is less effective, your culture signals infections, and your management system keeps you busy rather than serving your business. It is very likely that these are the early symptoms of a systemic crisis that is about to hit your organization. That crisis is a natural part of your growth cycle. Your organization simply is ready for the transition to the next phase of its development. The task is to build the resilience that enables your organization to continue to grow. 

The growth life cycle model. Greiner’s (1998) widely cited original model, published in 1972 and expanded upon in 1997, suggested that the life cycle of an organization follows five distinct stages. Each has an evolutionary growth phase and a revolutionary crisis phase that must be overcome before the organization can advance and continue to grow.

Entrepreneurial organizations have a design and management style that promotes innovation, creativity, and speed. Direct personal engagement between the founders and employees provides motivation and adequate management direction informally. Success and growth create the crisis of leadership, which must be resolved to continue successful growth.

The company has grown in scope and complexity thanks to entrepreneurial success. Functional organizations are created with professional managers to oversee specific functions or divisions under directive leadership by senior executives. The second crisis of autonomy mounts as functional or divisional managers compete for resources and recognition while being controlled by the directives from the cadre of senior executives. 

Decentralized organizations delegate accountability to managers of sub-units, plants, markets, or geographies. This independence and freedom to act encourages unit managers to employ people-centric methodologies and improves responsiveness to the customer or market. Business unit managers develop and implement processes and systems to measure performance and report to headquarters. Top management at the home office begins to sense a loss of effective oversight, and the crisis of control has arrived.

Segment organizations require coordination by top management through a sophisticated control mechanism. Complex webs of processes, procedures and policies evolve, intended keep headquarters executives informed on what is going on in the segments, so they can step in with corrective actions if the segment wanders from the corporate strategy. Burdensome approval processes degrade responsiveness and stifle innovation. The crisis of red tape arises with increasing size and complexity as the home office attempts to coordinate the various segments through processes and procedures.

Complexity increases, leading to the development of matrix and network organizations that require interaction among the members to collaborate and get things done. Members in the emerging alliances or ecosystems may be external organizations. Consequently, the crisis of sovereignty will emerge.

Three stopes to resilience and growth

Our research on 400 organization over 10 years has revealed three generic steps leaders can adopt to build resilience and continue to grow. Understanding the underlying attributes of the organization in its current growth stage is the first step. Identifying strengths that can be leveraged and weaknesses to be strengthened is the second step. Taking focused action, taking advantage of strengths, eliminating weaknesses, and building essential capabilities becomes the key third step to advance to the next growth state. 

Four transition strategies 

We have identified four transition strategies to help managers build essential capabilities to overcome the limiting crisis and advance down the path to growth. These are: people first, people-centric management, dynamic operations, and agile organization. These general strategies are not mutually exclusive. They should be blended and adapted to meet the unique needs of the organization. To guide the organization through the transition dedicated structures, systems and capabilities help to resolve the natural tension between evolution and revolution.

The need for resilience.

The digital economy accelerates the pace of change and organizational development. Organizations advance through growth life cycle stages quicker and experience crisis more often. Using the life cycle framework, managers can identify potential roadblocks and build resilience with people-centric, agile and dynamic capabilities before crisis hits. With advance warning of impending problems, executives can implement strategies to help navigate the impending storm before it hits. Embedding people-centric dynamic capabilities into the organization enables it to absorb the disruptive shock, react quickly, and emerge with stronger resilience to weather the storm.

Be ready for the transition

Business leaders should be aware of which stage their organization is in, the characteristics of the current stage, and the characteristics of the next stage. Successfully and seamlessly navigating an organization from one stage to another is a challenge for even the most talented leaders. To successfully move from one to the next, top executives and entrepreneurs should be aware of what actions must be taken in advance to make a seamless transition. Leaders should proactively prepare for these transitions by laying the foundations or infrastructure needed to prevent a crisis that inhibits further growth. A clear understanding and appreciation of the growth framework helps managers proactively manage the development of their organization.

Bibliography: Greiner, L. E. (1998). Evolution and Revolution as Organizations Grow. Harvard Business Review: Mai-June.

About the Authors: 

Lukas Michel is the founder of Management Insights, Switzerland, and author of several management books. 

Herb Nold is a Professor of Business Administration at Polk State College, USA, and author. 

Their latest book: THE TRANSITION OF ORGANIZATIONS: Managing for growth at each stage of the organization’s life-cycle. LID Publishing, 2023, London.

Let’s think of management as the art, science, and craft to get work done. As most of us perform some kind of work, and most work requires more than one individual to complete, we need to care about management. It touches everyone, everywhere, anytime.

Typically, when it comes to performance, discussion centers around employees, context and the culture needed to perform at peak. This attitude reflects traditional management:  everybody else, who do the work need to be more efficient, be higher performing – not me.

It’s time we inwardly reflect on the performance of management. But management is like taste. One only notices it when its gone. Nobody wants superior management if everything went well. Superior management is a given. Equally, poor management is always attributed to a poor manager. It’s personalized. That why it makes sense to think about the performance of management itself – the science, the art, the craft.

We know from diagnosing hundreds of organizations world-wide that the problem is not usually with managers. It’s with management. The evidence is mounting that in today’s hyper-dynamic and disruptive business environment, traditional management based on control, change, projects, and engagement has seen better days.

Two trends – digitalization and the changing nature of work – fundamentally alter the way we manage people and organizations. New external challenges and more knowledge with people at the client front expedite the trend. Traditional management cannot cope with a digital context. That opens the conversation about better management as a competitive advantage. Traditional competitive advantages vanish fast in the digital economy. What is left in organizations is management – how work is being done. That leaves organizations with a huge opportunity to turn their management into a competitive advantage.

Competitive advantage has long been the yardstick for success and the performance of management. The diagnostic data from 400 companies of all kinds from around the globe clearly shows a strong relationship between management and outcomes. Better-managed organizations make a difference. They are considerably more agile, people-centric, and ready for a dynamic market environment. And they are better off competing with 21% higher performance, 25% higher innovation, and 28% higher growth.

To be a true differentiator, management needs to fulfil the criteria of a competitive advantage. In line with strategic management professor Jay B Barney’s resource-based view of the firm and the VRIN criteria for competitive advantage (valuable, rare, inimitable and non-substitutable), our research has identified a model with six features to signal whether management qualifies as a competitive advantage. The standards represent steps with increasing demands, greater impact, and higher sustainability:

• A viruses-free, collaborative, connected, and purposeful work environment for people to get work done.
• A strategy with agile capabilities that safeguards performance, innovation, and growth for the organization to create value in a dynamic context.
• People-centric management with principles for self-responsible people who make the client offering specific.
• People who play the inner game to experience flow, which makes performance hard to copy.
• An operating system with dynamic capabilities that prevent short cuts.
• A toolbox with diagnostic systems for interactive leadership that is deeply embedded in culture.

Six questions offer the measurement of management as a competitive advantage:

Does the work environment enable people to get work done? Culture, purpose, relationships, and collaboration size up the work environment. An engaging work environment is a competitive advantage because it enables people to get work done.

Does your organization keep promises and create value? Performance, innovation, growth, and success determines organizational outcomes and reveal whether management creates value. Keeping promises is a competitive advantage because it establishes trust with clients, which is of greatest value.

Does your management create unique value? Review whether management applies a control-based (traditional management) or an enabling-based (people-centric management) approach to leading people. A people-centric management approach is a competitive advantage because it mobilizes resources in ways that make the client offering specific.

Do people use their talent to exceed expectations? Awareness, trust, choice, and focus of attention are the means for people to experience flow, perform at their peak and learn. Achieving flow more often – the state of high performance – is a competitive advantage that is hard to copy.

Is your operating system read for VUCA? Review the operating system to evaluate whether it is designed for a traditional or a dynamic environment. A dynamic operating system is a competitive advantage, as it prevents shortcuts.

Is your toolbox deeply embedded in culture? Do systems and leadership have interactive and diagnostic features? Their usage tells us whether the toolbox is rooted in the culture and is a competitive advantage.

What can you do to reach the standards?

• Work environment: Remove the interference and offer the opportunity.
• Strategy and results: Develop agile capabilities and clear expectations.
• Management: Engage in people-centric principles for people to mobilize their resources.
• People: Enable people to play the inner game for them to unfold their potential.
• Operating System: Insist on dynamic features in support of people to master higher challenges.
• Toolbox: Maintain a diagnostic toolbox for people to capture new opportunities and grow.

With these six features, management turns into a competitive advantage. Companies that have established agile, people-centric and dynamic capabilities outperform others by a huge margin. And, once developed, these capabilities permeate the entire organization – deeply embedded into the culture of the organization. They are a true competitive advantage that is hard to copy. That’s why every manager needs to worry about management.

About the Author:

Lukas Michel is the founder and CEO of Management Insights AG, Switzerland (management-insights.ch). He is the author of The Performance Triangle, Management Design, People-Centric Management, Agile by Choice, Diagnostic Mentoring and his newest book, Better Management.

There is a diagnostic tool for managers to review six principles that make up management as a competitive advantage. Learn more to set your standards: https://management-insights.ch/en/diagnostics/better-management

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.
#DruckerForum

The third session at the 2019 Global Drucker Forum in Vienna on “Ecosystem Insights – Rethinking the Organisation” offers early signs. Five ecosystems with creativity, platforms, and a network at their core offer a filter that separates the signals from the noise. Ecosystems stretch beyond the boundaries of traditional organisations and force leaders to adapt management to fit it to the needs of the specific context. This offers the opportunity to rethink management and organisation beyond tradition.

Drucker Forum 2019

This article is one in the “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems” taking place on November 21 & 22, 2019 in Vienna, Austria.
#GPDF19 #ecosystems

Traditional management, invented early last Century based on the negative assumption about people with command and control as its dominant principles, delivers what it was designed for: Efficiency and exploitation. It is obvious, people got lost in management science and practice.

Ecosystems require a more open, innovation-oriented approach to structure, capabilities, systems, culture, change, and leadership. Digital is the trigger: Digital forces flattened companies. Teams, collaboration, and networks are the themes that emerge.

Have we reached the point where positive assumptions about people drives management?

Structure: Creativity unfolds when power leaves the room

Pixar Animation Studios has a perfect structure filter: Film making is the ultimate of freedom in creativity. Creativity is problem solving and a group effort. New ideas come through co-creation. To bring out the best in people, one has to remove power from the room: Sometimes magic happens when Ego leaves the room.

Terra Numerata maintains a platform that connects partners in consulting that was designed on the creativity argument. Co-design engages the diverse knowledge of people and offers its stakeholders more than they would have if they would operate alone.

Klöckner is a company that combines digital of the traditional with an open systems platform. As such, it invites clients and competitors to collaborate on that platform. Traditional hierarchy and connectedness coexist with communications as the means to return agility to large organisations.

With this, creativity, co-creation, and communications shape ecosystem structures rather than traditional hierarchy and power systems.

Capabilities: Start with self-responsibility as the mindset

At Pixar, good practice is contrary to the dominant control mind-set: It starts with the assumption that everyone wants to do well. People want to grow. As a consequence, there is no need for leaders to motivate.

For Tencent it is important to free people to focus on what they do best. Self-responsibility is the foundation for motivation and purpose its means.

Tupperware connects women with party holders as their ecosystem. The business model empowers women economically. It brings them confidence, connectedness, influence and economic value as otherwise they would not trust themselves.

Finally, people are seen what they are: self-responsible individuals.

Systems: Remove the fear with a design for people

For Pixar, removing fear is the answer of how to get full engagement from people in a way where leadership and systems need to establish a safe place to be: Does the least powerful person feel safe to talk? Normal values, expectations and words do not matter; it’s the action that matters. The challenge with systems is that we don’t recognise the things we don’t see. We overvalue the things we see. Systems need a design that balances the invisible with the tangible.

May I add: Design systems for the people that use them to do work.

Culture: Team, collaboration, and ownership

The Terra Numerata ecosystem model is built on transparency, trust, and collaboration. Klöckner uses collaboration tools to connect people in virtual groups that solve problems and create new ideas. At Tupperware, peer presentations encourage support and help with teams. People need to feel ownership of the company and their work. At Pixar, people have a vested interest in each other’s success. They help each other.

It takes the right systems and connected leadership to create that kind of a collaborative culture.

Change: Change systems not people

When Disney acquired Pixar, it was important to keep the studios separate. This required high confidence in the depth of management. A couple of rules were introduced to share, borrow, steal without going through traditional channels. A merger would have slowed things down. It was important to adapt systems but keep people separate.

When growth hit Tencent with the need to transform into a social network company, systems were slow due to approvals and cross-unit collaboration. To get around that, it created an ecosystem platform, broke up into 20 units, empowered small teams, reengineered bonus systems, and revenue sharing.

It obvious, changing systems is what alters the behaviours, decisions, and actions of people.

Leadership: Develop leaders and diversity

It is a general management job to develop leaders. And when it comes to leadership, the needs of people are most critical. Moreover, diversity is essential in ecosystems: As a leader, I have experience, but there are experiences that I don’t have. Accept that there are experiences that we don’t see.

Have people made it back into management?

Julian Birkinsaw who summarised the Global Drucker Forum as follows: “There are no new management ideas under the sun. What has changed is the practice of management.“

Here is what I have learned from the session: The thinking has definitely passed the tipping point to agile that separates us from the bureaucratic past. 21st Century organisations are at the cross-roads: remain stuck in power & hierarchy or turn thinking into action and create value through network relationships and people-centric leadership. The signals are strong that we have overcome traditional management based on the negative assumptions so we can put people back into management theory and practice.

About the Author:

Lukas Michel is CEO of Agility Insights AG, Switzerland, founder of the AGILITYINSIGHTS.NET, and author of 2 books “The Performance Triangle” and “Management Design”.

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, which took place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems

#GPDFrapporteur

Straub correctly, in our view, suggested that the ecosystems are not new quoting numerous theorists whose ideas were shaped primarily during the last century. However, we suggest that organizational ecosystems have always existed and just given a name in the last 50 or so years.

What has changed since the end of the last century is the speed at which conditions change primarily due to advancements in technology; the internet, AI, social media, and more. Traditional measures like profits, market share, ROI, stock price, etc. are outcomes from innovative ideas generated by people within the ecosystem.

Drucker Forum 2019

This article is one in the “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems” taking place on November 21 & 22, 2019 in Vienna, Austria.
#GPDF19 #ecosystems

Rapid response to change requires executives to first identify and understand the underlying conditions within the ecosystem that enable people, who power the ecosystem, to generate innovative ideas with desirable outcomes. Senior executives frequently say that “people are our most valuable asset” but how does the CEO know what is going on in the minds of people operating within the ecosystem? In order to avoid an expensive and aimless wandering from consultant to consultant CEOs should take a diagnostic approach to evaluating the ecosystem. Think of it as a doctor. We suspect, you would not have much confidence in the doctor’s diagnosis if the doctor started prescribing pills before taking your blood pressure or listening to your heart, yet, this is exactly what business executives do when diagnosing the culture and people within the ecosystem.

Over the past two decades we have observed that top tier companies have strong foundations in responsiveness, alignment, capabilities, motivation, and cleverness which we believe are the underlying people-centric conditions for success. The trick for executives in diagnosing interferences or viruses within the ecosystem is to ask the “right” questions…. like a doctor. Here are some starter questions;

• Responsiveness – Is the organization flexible and able to react to changes in the environment?
• Alignment – Is the direction of the organization clear? Does the structure fit the strategy? Is it shared broadly and are employees aligned to support the strategies?
• Capabilities – Does the organization have the competencies and skills needed to deliver on promises?
• Motivation – Are employees throughout the organization inspired to perform above and beyond expectations?
• Cleverness – Are employees empowered to be creative and use their creativity to meet expectations or demands from clients or customers within boundaries that do not stifle creativity?

If you don’t ask the right questions, you won’t get the right answer. Begin by asking these questions throughout your ecosystem then use the “5-why’s” approach to find out what ails your organization. Then you can take targeted action to eliminate the virus. Executives will not know where the answers will take them but the people within the ecosystem instinctively know what management must do so ask … and ask … and ask … then LISTEN!

About the Authors:

Herb Nold is professor of business administration at Polk State College in Winter Haven/Lakeland, Florida and has authored numerous research papers and a book chapter on the subject of organizational culture, change, and agility.

Lukas Michel is CEO of Agility Insights AG, Switzerland, founder of the AGILITYINSIGHTS.NET, and author of 2 books “The Performance Triangle” and “Management Design”.

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems

David Hurst’s article, then positioned management as a means to cultivate prosperity. He ends by quoting Clay Christensen ‘Management is the most noble of professions if practiced well’ suggesting management as an occupation that helps others learn, grow, take responsibility and contribute to team success. This is more about good management. And the scientific evidence is overwhelming: good management matters!

But how do we know? As a manager, I would be interested in finding my own response or at least have some questions that help me understand.

What if we could measure management to determine whether managers have done the job to cultivate an organization which has the capacity to capture new challenges, is able to change its focus, and can innovate, grow and create prosperity? It would elevate the conversation about management to describe management as a distinct capability and producing competitive advantage in organizations!

How? Here are some options and a suggestion of how to get to the ‘know’.

Measuring managerial performance is simple. Take ROE, growth, or any other output measure that you like. It offers clarity on performance related to what you measure. Is it inclusive? No, but it measures what you have decided to measure.

Managerial effectiveness is no different. Simple measure like ROA are adequate to judge whether managerial action results in something productive. But, this does not provide any understanding of management.

ROM (Return on Management) offers measurement of individual managerial efficiency based on a personal investment in attention, time and energy. This approach, development by Robert Simons and Antonio Dávila ‘How High Is Your Return on Management?’ offers many practices managers can apply to increase their individual efficiency. But this is not about assessing management as an organizational capability either.

This leaves us with quality. Stakeholders can be asked for their opinion. But this would require an infrastructure to collect responses.

The quality and process movements have provided us with rigid ways of measuring, among many operational things, managerial quality. My concern: Do we want management as a capability to be measured by a detailed set of metrics that have been derived from the heritage of past successes in a comparably stable economy. As a leader, I would not want to be constrained by metrics from the past.

Today’s world is dynamic. Unexpected events disrupt what we do and we struggle to create a better world. Unlike the dynamic context we now operate in, management, invented in the early 20^th century for a comparably stable environment, is little changed. We believe that it is time to transform management to be the ultimate capability and technology for the 21^st century. But for this, management needs a different design –a design with agile features for a dynamic context. As such, management may as well be one of the few remaining competitive advantages.

The building blocks of any competitive advantage are the capabilities that organizations build from their resources. Why then not look at management as the capability that enables distinct competitive capabilities? By doing so, management turns itself into a competitive advantage. The dynamic capabilities literatures suggest ‘capability assessments’ as a means to better understand how well capabilities perform in a dynamic setting.

Hence, we now combine the idea of assessing capabilities with a well know concept. Looking at management as a competitive advantage opens the opportunity for a different kind of assessment. The VRIN criteria (initially proposed by Barney 1991, with his extensions to VRIO) offer the ultimate test for a capability to count as a competitive advantage: Valuable. Rare. Inimitable. Nonsubstitutable. VRIO then adds organization to the idea. So, why not apply this concept to management?

Here is an application (somewhat loosely interpreted the concepts), and a test for management with 5 questions:

• Valuable? Does your management create value and get work done? Does it support people to get work done and create value?
• Rare? Does your management have a design that is unique, meaning organization and context specific?
• Inimitable? Is your management hard to copy?
• Nonsubsitutable? Is there no alternative to your management?
• Organization? Is your management practice deeply embedded in your organization’s policies and procedures?

Valuable: Does management create value? In every organization, management is performed through some sort of an operating system. Rules, routines, and tools help managers and people to get work done. A ‘virus’ free operating system has the potential to unlock the talent and promote meaningful work. Does your operating perform do what it was intended for?

Rare: Does your operating system meet the needs of your context and organization? Every organization is unique. Every context is different. Your operating system needs to fit your specific challenges and those challenges, accepted by your leaders and the organization.

Inimitable: Is your management and your operating system hard to copy? The harder the unique management approach is to copy the higher is its competitive advantage. As such, it turns into a distinctive organizational capability.

Nonsubstitutable: Is there no alternative to management? Do members of the organization have no alternatives to applying (and no way to short-cut) management by using the specific operating system? We all know managers and employees that have their own way of doing things – deviating from standard operating procedures with short-cuts. Accepting such behavior is destructive for every organization’s culture as it undermines the unique characteristics of its operating system. The better the operating system supports its users to apply good management, the more it creates a unique competitive advantage for the organization.

Organization: Are your routines, rules and tools deeply embedded in the organization’s governance system and culture? The deeper the operating system is rooted in unique ways of how decisions are made, how performance is delivered, and how behaviors are demonstrated, the more it creates a competitive advantage.

These are intended to serve as observation points to focus leaders’ awareness on the need to design, development and implementation good management.

David Hurst, in his blog, clearly pointed out that ‘prosperity and inclusive growth are wicked problems’. Simple answers are not the solution to higher complexity and a dynamic environment. Answering these 5 questions regularly increases the understanding of how to transform management into a distinct competitive advantage. Good management, in return, ‘makes the most of human potential – the inclusive way to higher prosperity’.

About the author:

Lukas Michel is CEO of the AGILITYINSIGHTS.NET and author of Management Design and The Performance Triangle (Both LID Publishing, 2015 and 2013).

This blog summarizes ‘Measuring Management: Motivations, Concerns, and a Way Forward’. Download at www.agilityinsights.com.

During the past 25 years, the speed of change has accelerated and employee engagement has dropped. For most businesses, the managerial context has fundamentally changed from the way we have become accustomed to doing business. Moreover, fresh technologies, mobile talent, and globalization have demanded dynamic capabilities comprising people-centric management and leadership with a high ability to act for agile, fast and robust organizational responses.

The 2014 Global Drucker Forum concluded that ‘The Great Transformation’ is on its way. The management of people has returned to the center of the business landscape. There was not one speaker that did not emphasize the need of a more people-centric approach. Engagement, self-responsibility and purpose were among the features outlined in great detail. It was felt that Peter Drucker’s people-centric approach, with a different image of human mankind and the rich heritage in past centuries of European Humanism, finally finds its way into management practice. It is viewed as the solution to superior innovation and growth.

We need the transformation not because of a sudden need for soft skills or to cater solely to the needs of Generation Y. We need it because of new knowledge work with outcomes that cannot be easily controlled nor commanded. The different nature of knowledge work calls for an update of the firm’s ‘operating system’. Most corporations still operate on an operating system ‘Windows 3.11’ while the world uses iOS and Android: ‘new work’ calls for very different ways to collaborate, communicate, interact and get work done.

In addition to bringing people into the center, transformation calls for management with a higher agility to act to better cope with a dynamic environment: early sensing of opportunities, fast decisions and flexible responses are needed paired with the ability to withstand external shocks. Speed, agility and resilience are the managerial and organization capabilities needed to enable the new way to operate.

Many recipes, tips and practices of the past are unsuited to guide the businesses of the future. Some speakers at the forum argued that most traditional management tools and routines have produced unintended consequences or have fallen by the wayside entirely. Organizations built for the new way to operate have new capabilities in place that simultaneously help people to perform at their peak and facilitate speed, agility and resilience. They have designed their toolbox for both their talent and to cope with the challenges of a dynamic environment.

The new toolbox promotes features such as a stronger engagement, diversity, collaboration, collective intelligence, delegated decision-making, flexible work hours, communities, access to networks, knowledge building, transparency, open culture, mobile work and more -a Swiss pocket knife with many tools for different purposes.

Democracy promotes many of these capabilities. Why then not organize corporations as democracies?

Democracy is defined by the “power” of “people”. It is a rather demanding call that requires ultimate respect when used in politics and even more so when it is related to work and corporations. Subsidiarity is one of the principles of democracy: it demands autonomy, self-organization, participation and collective decision-making.

Peter Drucker once said “In the knowledge era, every employee is an executive”. This implies autonomous action and an image of human mankind based on a deep sense of self-responsibility. Self-organization needs skills and time –it implies leadership!

In the purest sense, democratic decision-making in firms requires management participation, financial ownership and social participation. Practical examples demonstrate different ways to participate and different forms of ownership. However, participation by itself does not automatically warrant a superior leadership culture.

Democracy means that more people are involved in decision-making; decisions are made by voting or require consensus. But the swarm is not always right. Recent research is clear: just having a group of smart people does not necessarily lead to better than individuals decisions. Moreover, voting does not always lead to better outcomes.

Leaders in favor of democratic decision-making may now ask: is it suited for big or small decisions? The response is clear. It is primarily for the big decisions. Why otherwise would one want to benefit from collective intelligence? Small decisions don’t require democratic decision-making procedures. Leaving democracy to small decisions is faking democracy. This then leads to the questions of what CEO decisions are: Strategy? Alignment? People? Reputation? They are all big decisions and are in conflict with democratic decision-making. This leaves the combination of democratic approaches and leadership in charge through consensus decision-making. Consensus is known to lead to superior innovation.

Does democracy humanize work? A closer look at ‘people-centric’ requirements leads to Timothy Gallwey’s ‘Inner Game’ principles of work with awareness, choice and trust as the levers of superior learning and performance. The ‘Inner Game’ demands self-responsibility to be valued as the most important determinant of motivation. It represents the capacity with which individuals deal with the challenges of the ’Outer Game’. For an entrepreneur and leader, this means creating a work environment that unlocks the potential of its talent.

Such a work environment humanizes work. This, however, requires enabling management more than democratic procedures -management with an operating environment for better navigation in a turbulent environment.

In comparison, only visible results of early adopters of ‘democratic organizations’ will indicate whether democracy truly humanizes work.

As a Swiss, I have learned that a well-functioning direct democracy is an ongoing construction site. The same holds for the operating system of corporations. Their toolbox and capabilities need to be reinvented over and over to meet the changing needs of people and the environment. Large legacy organizations struggle with their path dependency and the fact that this means changes on running the “machine”.

The debate around democratization of work is a controversial conversation –it may have the potential to add to the question of what superior management means and what it requires. Democratic capabilities and tools have the potential of bringing humans back to work to enable organizations better deal with the challenges of a dynamic environment. But they are not the only solution to a better working life and better companies.

About the Author:

Lukas Michel, Author, Speaker, Mentor – www.AgilityInsights.com

In the West it has been our enduring crisis: an overleveraged financial economy, huge debts and imbalances, increasing inequalities, and resistant high unemployment rates. At the same time we see stock markets at all-time highs and CEOs earning obscene  amounts of money. This is what Henry Mintzberg is referring to and what is threatening to undermine our basic institutions like democracy, market economy, rule of law, and civil society.

A different global society

Additionally, the crisis in the West together with Asia’s and specifically China’s positive economic track record has led to the replacement of the liberal democratic nation state as the role model for the global society by the state capitalistic system.

In fact, the new model is a combination of state-capitalism – where the state is seen as an important actor in the otherwise corporate world – and shareholder value thinking – where the purpose of a business to make money is seen as an overall good for society – which is highly attractive for elites everywhere in the world. Authoritarian regimes, together with an oligarchic private ownership, patriarchic societies, the rule of elites instead of law, and an oppressed civil society, are again in advance. This has resulted in the rise of an unprecedented rich ruling class from China to Russia, Saudi Arabia to Brazil, and Nigeria to Angola.

Hence, the West’s self-inflicted crisis is also backfiring on it from the outside its boundaries and a different form of global society is emerging.

Economic and social crisis inside, less influence and reduced power in the rest of the world, what can the West do to not destroy its basic institutions?

Assuming that the emerging global society is a self-organizing social system, solutions along the political left-right scheme become meaningless. No single government or multinational corporation has enough power to control the system. It is the interplay of decisions and actions taken by governments, supra-national institutions, civil society organizations, national and multinational companies and the like which is shaping the future of our planet.

Looking for high-level parameters capable of influencing the global society, Peter Drucker has given us a hint. Long ago he realized that knowledge societies are societies of organizations with the single organization as a key element. And behind each of these interdependent organizations are people whose practice is put to work by an “operating system”. And this, of course, is …

… the Art of Management.

While the choice of the management system is independent of the type or the activities of an organization, it is a value-decision that articulates fundamental principles, ideas and values of what we think an organization and hence society is all about.

With the global triumph of mainstream management thinking, principles center almost solely along financial values and financial engineering. To overcome its implicit logic of “winner takes all” we need a managerial operating system, which helps managers to deal with the increasing volatility, uncertainty, complexity and ambiguity of our emerging global society.

We think such a system can only be based on an appreciation of the individual and a sustainable use of our planet.

A European Humanistic Management Movement

Europe has come a long way to arrive at its “humanistic worldview”. From ancient Greece to the Renaissance, the Enlightenment, the Protestant Reformation right up to the modern peace project called the European Union. European Humanism with Kant and Rousseau brought forward the concept of self-responsibility as the human trait that determines motivation and meaning.

The appreciation of the self-responsible individual as a manager, employee, customer or any other stakeholder is the solution for a higher ability of organizations to act in a turbulent environment.

Only a people-centered management based on humanistic values allows drawing on the ingenuity and creativity of the human beings.

In any organization values are articulated as operational principles, which guide its decisions and actions. For a European Humanistic Management Movement we think the following constituting principles can be put forward:

1. The raison-d’être of any organization is value creation for society (public value) and not maximizing the value of the own organization.
2. The operating system and toolbox, guiding decisions and actions, follow systems and design thinking rather than a pre-dominant financial focus.
3. Organizations shall be adapted to people rather than people to organizations.
4. Configuring everyone’s toolbox to cope with the challenges of a dynamic environment is an ongoing management task.

Values, routines and tools constitute the operating system of an organization. As such, the modern toolbox has a design where principles allow for choice, routines raise the awareness for what matters most, tools help people to remain focused on creating public value and leadership interactions build trust. It is this toolbox that simultaneously caters to the humanistic values and at the same time to addresses the challenges of a turbulent environment.

With this, the choice on the right design of the operating system becomes one of the most important leadership decisions and at the same time it is the central “lever” for shaping the global society. The self-responsible individual is incompatible with a pure shareholder-value driven approach, but is needed to cope with challenges of an emerging global society and disruptions of new technologies.

Executives of private and public organizations have the power to transform the operating system of their organizations as a badly needed evolution to prevent yet another revolution. This can help rebalance society in ways to promote value for the common good and not to further undermine the basic institutions of democracy, market economy, rule of law, and civil society.

About the authors: 

Hans Stoisser, entrepreneur, management consultant and author with a longtime experience in emerging countries. His book “Der Schwarze Tiger – was wir von Afrika lernen können” will be published in September (Kösel Verlag).

Lukas Michel, author of the two books The Performance Triangle and Management Design, mentor for executive teams and associate of the European Drucker Society.