Management – a Necessary Evil?

Classic pyramid-style management structure

by stevew on January 15, 2010

Following on from my last post about the kind of company I want to build, I got to thinking about how to make the new business a remarkable place to work.  Putting myself in the shoes of perspective employees, I started thinking about the kind of company I would want to work in, if I was looking for a job.  As a thought experiment, I asked myself the question “why I don’t just get a job?”, rather than getting involved in all this start-up nonsense?

Putting aside financial motives for one minute, here are some of my objections to getting a “regular” job:

  1. The thought of being expected to turn up at an office somewhere, day after day, probably with a lengthy commute both ways.
  2. The prospect of putting in long hours “in order to get on”.
  3. The chance of finding myself in a pathologically broken organisation and not being able to change things.
  4. The idea of not being in control of my own destiny.
  5. The inevitable tedium of seemingly pointless administrative activities that always seem to be demanded in so many organisations.
  6. The prospect of sitting for hours in long, ineffective meetings.
  7. The thought of having to play corporate politics.
  8. The prospect of not being able to make a significant difference through my day-to-day work.

(In case some readers are wondering, this reflects things I see wrong with corporate life in general, not necessarily my most recent employment experience!)

So, then the question arises - how to establish an organisation and culture that consciously avoids these pitfalls? - and I’ve come to realise that one of the biggest issues within organisations is Management.  Management as we know it today is all about getting people to do the stuff we need them to do, through an intricate system of rewards, punishment, persuasion, motivation, manipulation and such like.  But at root of this is the assumption that left to their own devices, people cannot be trusted to get stuff done without all these external influences. 

I think this assumption is just plain wrong, and by implication, much of the management structure we have in place in our organisations today is therefore redundant.  I must confess I didn’t reach this conclusion alone.  It all started for me when I read a book called Maverick by a Brazilian businessman Ricardo Semler.  Semler was highly successful in the eighties and nineties in developing his father’s engineering business, not through traditional management techniques, but in large part by introducing an unprecedented level of democracy into the management of the organisation.  I can strongly recommend the book, and its sequel, The Seven-Day Weekend: Changing the Way Work Works, but the following video, entitled Leading By Omission (recorded in 2005 at the MIT Sloan School of Management) provides an excellent summary of his thinking around management in 21st Century organisations.

NB I’m afraid it’s 48 minutes long, but you can fast-forward to 4:20 to skip the intro and some mic problems, and you can stop at around 40:40 if you want when the Q&A starts.  In any case, it’s worth taking the time to watch.

Semler likens traditional management to a military style of command-and-control but I see it more as a hangover from the Industrial Age, where large numbers of less skilled workers were doing pre-defined tasks which needed constant, careful supervision.  However, in the 21st Century, particularly in the West, our long-term wellbeing and ultimately our survival is tied up in our ability to be innovative and creative much more than in our capacity to be efficient producers.  (See this excellent TED video for some more thoughts on the importance of creativity in the 21st Century).

The crux of Semler’s approach is that, given the right environment, people CAN be trusted to do what is best for the business, without external influences.  A corollary of this is that eventually, just like Semler, founders like me become superfluous – what a great outcome for someone who has no desire to be King!

In short, individuals in a business can and should be treated like GROWN ADULTSWhat does this mean practically for this business? 

  • There will be no standard working day at Cornerstone – staff will get to set their own hours.
  • By implication, there will be no requirement to be in attendance at the company’s office from one day to the next.
  • There will be no job titles, beyond what an individual needs to do business with a customer.
  • There will be no hierarchy, beyond that which staff establish themselves for the effective running of the business.
  • There will be no “secrets” – all company data, including financial figures and remuneration will be freely available within the organisation.
  • Based on the free availability of information, staff will get to set their own salaries. 

Now that I’ve written it down, it all sounds rather radical.  But I did say I wanted to build a different kind of business, so I guess I better put my money where my mouth is.  In that vein, I’ve just created my first internal wiki article: Companywide Remuneration.  Sadly, there’s only one member of staff and his current salary is a big fat zero!  Life at the top, eh?

What do you think about Semler’s approach to management? – is his firm SEMCO just a South American cultural anomaly or do you know of other firms that have successfully transitioned to (or even started as) truly democratic workplaces?

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{ 17 comments… read them below or add one }

Christian Bjerre January 16, 2010 at 2:43 pm

Steve, good and relevant points to consider when doing a startup. I have not read the book by Semler, but will definitely put it on my list of books to read.

Before I dwell into a more specific comment on this post, let me point you to a book, which contains a good model about organistations; how they live, grow and die. Adizes: Corporate Lifecycles: How and Why Corporations Grow and Die and What to Do about it (link: http://www.amazon.co.uk/Corporate-Lifecycles-Corporations-Grow-about/dp/0131744267/, don’t buy the updated version, too much sales talk for his business). His book is highly relevant to all companies, but especially for start-ups with the founder still being around. I am sure that a democratic view and trust in employeess will make the transitions easier and more manageable.

Let me add a personal comment on your 8 items about why not getting a “regular” job. I fully agree that they are some of the things you have to dread with a regular job. Nothing worse than commuting 30+ min each way just to sit in a cubicle for 8+ hours…

This is more or less like the Joel test: Answer the questions in the list. If you say “yes” to three or more questions, it’s time to do something about it. What many people do not realize is that they have a significant impact on many of the otherwise “big” things on the list. You don’t want to drown into the world of the void? Then address each of the items where you said “yes” one-by-one. When you just stay put and goes to work every day, then you will slowly lull yourself into “this is the way the system works”.

Doing a start-up and rethinking the corporate environment for the new company is radical, but is the best for many people, if they dare. You’re scoring well, Steve.

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stevew January 22, 2010 at 2:54 pm

Christian – thanks for the feedback – I will get a copy of the book. After I posted the article, I worried that I was doing my ex-colleagues a disservice – there are plenty of good reasons to stay in a regular job, but of course that wasn’t the point. I plan to redress this in my next article. Appreciate the encouragement too.

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Anders Kirkeby January 18, 2010 at 9:38 am

Sounds good! I’ve previously worked in a setup where the first five of the last list of bullet points where more or less the case. That seemed to work quite well. But I wonder how such a structure can be scaled. I think it will work just fine with the right people in reasonably well jelled small teams.

Of course with an employee count of 1 this is not a problem just yet. But I do wonder if your “radical” approach can be scaled through a structure of self-contained cells. There would probably have to be some fairly well-defined and specific structures and services binding the cells together to make such an approach effective enough to survive calls to increase efficiency through a more conventional organisational structure.

Anyway, sounds promising! Bringing on the right kind of people will be extremely important – more so than in a more conventional structure.

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stevew January 22, 2010 at 3:07 pm

Anders – you’re absolutely right – scaling is a big consideration – but I think that is an issue for software development teams in general. In an engineering context, Semler managed to scale the approach to 3000 people, so it must doable.

It’s interesting what you say about bringing on the right people – implying that bringing on less than optimal people can be tolerated under a more conventional structure. (I don’t necessarily disagree.) That of course begs the question – is this a good thing? (Indeed, have conventional structures developed in part in response to the need to manage “the average employee”). I think it’s fair to say that bringing on the right people is crucial in any start-up, but I agree the sensitivity is even greater in a democratic management structure.

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Anders Kirkeby January 22, 2010 at 6:06 pm

Steve – I guess the economic downturn makes it easier to be a bit more picky about who to bring on. Over the last few years I think a lot of companies have found meagre pickings when they needed to hire new people.

Anyway, after posting my last reply I read a highly relevant little article in the January edition of ACM Communications (doi:10.1145/1629175.1629190). A little story about how the right environment and process turned a fairly useless non-productive team member into a productive participant. Let me know if would like a copy.

Thomas January 21, 2010 at 9:16 pm

I agree to much top down structure can be bad for companies trying to foster creativity; however, I think that structure does have its place and if used properly can help a business grow and thrive. Take for instance the need for a project manager which you can liken to a general contractor. Their responsibility is to see that all projects are completed correctly in a timely fashion and without them I would be hard pressed to think anything would get done.
Moving more towards what you are saying if the project manger/general contractor rules with an iron fist there will be a definite stifling of creativity, low moral, and an overall miserable workplace.
Your point is well taken, thanks for the knowledge and keep it coming!
.-= Thomas´s last blog ..Reach Out and Get Those Links! =-.

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stevew January 21, 2010 at 9:29 pm

Thanks for the feedback Thomas. I think I’m going to develop this whole idea some more in my next post – the need for different skillsets, e.g., project management, in a business is (in my view) not the same as needing hierarchy or rigid structure. I completely agree with the premise, though – having worked in an environment lacking those skills, I fully appreciate the need for them.

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NickB January 22, 2010 at 2:26 pm

A very interesting and thought provoking piece, a lot of which I agree with. I think that the approach is somewhat Marxist; however, please don’t take that as a criticism – the premise that everybody is equally valued isn’t a bad one, but, from my experience, there are some fundamental issues to be aware of.

The six points you bring out have one fundamental issue (as Marxism does): they don’t take into consideration the different ways in which people are motivated. There are a number of things that motivate people: titles, power, prestige, money, being part of a team and many others depending on the person. Your proposal takes away most of those motivators. Bearing in mind that money is only a short term motivator, when this happens, what do people have to strive for? The good of the company? That will only motivate certain people.

Having said that, on a few occasions I have seen this work brilliantly. As Anders has said, the selection of the team is critical. The people must truly believe in the principles, not just consent to them. If you can get the right team, the right balance and the right product, the results will be the type of thing they write about in Time Magazine.

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stevew January 22, 2010 at 2:47 pm

Thanks for the thoughts Nick – your comments forced me to think long and hard about my own philosophy around business and employment. I don’t really agree that the approach in alignment with Marxist principles – from my limited understanding of Marx’s worldview, the assumption is that under capitalism the working class are exploited by the ruling classes – I don’t believe that is a true reflection of Western corporate life in general (although there are obviously places where it is the case). My fundamental premise is that in most cases classic hierarchical management structures do more harm than good, by moving the decision-making power away from those with the best information, and as such should be avoided like the plague.

You make a very valid point about motivation – people’s motivations are all different and really need careful thought – but a lot of the examples you draw are from today’s dysfunctional organisations where things like title, power and prestige take the place of true motivators. (A subject I hope to cover some more in my next post).

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Ricardo February 5, 2010 at 6:58 am

Agree 100% with your objections to getting a “regular” job and also with Semler’s approach.
People are more productive when given the freedom to manage their own time, and are not forced into a non-sense schedule. Some people might argue that this not for everyone and I would agree with that, just as I believe that working from 8 – 5, M – F, is not for everyone either and yet most corporations don’t consider this at all and expect everyone in their payroll to do this.

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stevew February 19, 2010 at 8:58 pm

Ricardo – many thanks for the feedback – much appreciated. As they say here, the proof of the pudding is in the eating – time will tell how well things work in practice, but I believe you sometimes have to be radical to do something really new. Time will tell….!

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