By James Bellini of The Talent Foundation
Editor’s comment: The usual splurge of 2014 predictions and forecasts dominated our scanning over the holiday period. Most are bullish about prospects in the coming year with many forecasting increasing technology disruptions in almost every industry and the inexorable and accelerating replacement of full-time workers by machines and part-time, virtual networks. This is a real elephant in the room and one every commercial organisation, not-for-profit and government should pay serious attention to both in terms of maximizing opportunities and minimizing competitive risk. On a personal front, think through what the disruptions below could mean to you and determine how you should ensure your own future. Then let us know if we can help you and your organization better roadmap your futures.
There is a growing literature around the realities of a globalising business environment. In his book, The World is Flat, Pulitzer Prize-winner and New York Times columnist Thomas Friedman recounts a journey to Bangalore when he realized globalization has changed core economic concepts.
What is changing?
Hong Kong entrepreneurs Victor and William Fung – who together run a 100-year-old global sourcing firm that supplies high-volume, time-sensitive consumer goods from an extensive worldwide network of suppliers and distributors — tread a similar path in their tome Competing In A Flat World. It describes their realisation that to succeed in this new era they had to create a completely new kind of enterprise, where the traditional hierarchy has to be replaced by an extended, networked operational infrastructure that delivers optimum speed and flexibility. As one reviewer put it, the book offers ‘an extraordinary glimpse into a new kind of organizational architecture, one built around the notion of orchestrating resources you don’t control and doing so in a way that builds both trust and agility’.
Of course, the call to abandon old-style pyramid organisations is nothing new. Management author/philosopher Charles Handy was writing back in the 1980s about a ‘shamrock’ business model in his thought-provoking The Age of Unreason. For Handy the shamrock leaf shape represented an organization with a core workforce plus two connected lobes – external freelance contractors and flex workers – that together form a whole. And countless business gurus since then have preached about the need to transition from managerial hierarchies to flatter models.
But the truth is that, despite the sermons, too many senior managers confess to flat-earth beliefs but do the opposite in practice. Anecdotal evidence tells me the typical business organisation, especially a large one, is still a closet hierarchy posing as a switched-on, 21st century paragon of a ‘pancake’ enterprise with its circle of interconnected professionals. Even Yahoo! – as switched-on as they come – recently banned its executives from home-working, citing the need ‘to be one Yahoo!, physically together’.
So long as this is the stark reality, what are the prospects for an approach to enlightened talent management driven by the ‘flat-world’ dynamic highlighted by the Fung brothers?
Enter the man from zappos.com, the online shoes and clothing shop based in Las Vegas. The company’s charismatic founder Tony Hsieh – son of Taiwanese immigrants – has introduced a radical organisational structure designed to unleash the innovatory talents of his employees. The model is called holacracy and it replaces the traditional top-down hierarchical order with a flatter structure where power is distributed more evenly between teams or ‘circles’ based on functions rather than job titles.
Under holacratic principles staff can belong to a number of different circles, taking on tasks that play to their strengths. Decisions are taken by the circles, which meet regularly to set goals and agree on the best way to achieve them. Rules and goals are allowed to evolve and adapt to outside events.
Mr Hsieh decided to adopt holacracy in response to the rapid growth of his company, to a point where Amazon happily stumped up $1.2 billion for it in July 2009. He was inspired to take this radical organisational step by the way cities become more innovative as they become bigger. ‘Research shows that every time a city doubles, innovation or productivity per resident grows by 15 per cent’, he says. ‘But when companies get bigger, innovation or productivity per employee usually goes down. We’re trying to structure Zappos more like a city and less like a bureaucratic organisation’.
Tony Hsieh has a point. As he puts it, ‘in a city, people and businesses are self-organising. Holacracy enables employees to act more like entrepreneurs and self-direct their work, instead of reporting to a manager who tells them what to do, even if they don’t have a clue’.
But then again, is holacracy anything new? Anat Lechner at Stern School of Business thinks not: she likens it to the Kibbutz collective model in her native Israel, where a flatter structure encourages interdisciplinary working and innovation.
Whether it is new or not, whether shamrocks are better than pancakes or flat worlds an optical illusion, one thing is certain. In this digital, connected age, where innovation and self-direction lie at the heart of the successful workplace, managing talent can no longer be left to die-hard old-school methods best consigned to the dustbin of organisational history.