Shifting from Management to Leadership

Balancing Organizational Power

Leadership Matters

Not long ago, I was working with a Software Project Manager, Lenka, who asked for some advice. She was looking for an online tool to help her “Manage resources and monitor task completion”. By “resources” she meant people, and by “task”, of course, she meant work.

After a few minutes of discussion, it dawned on both of us that we had very different underlying beliefs about how to get the best from a project team. Lenka saw project management as administrative – chasing the team and monitoring them from a distance - whereas I saw it as leadership – supporting and improving the team to achieve great results.

Of course, administrative management is always going to be necessary, but many companies go overboard with it. There is all too often an excess of management and a lack of leadership. Management alone may have been enough in the past. It no longer is. This book will explain why leadership matters.

Management Styles

Throughout my career, I have come across only four different styles of management: Micro-Management, Bureaucratic, Hands-Off, and Leadership. Of the four styles, I have noticed Leadership to be the most effective in keeping customers and employees satisfied and in continually beating the competition. Later in this chapter we will see why.

Leadership, though, is the most difficult style of management. The other three styles are much easier, and therefore much more common. The price for being so much easier is that they are far less effective. To see this in practice, let’s look at four companies I have worked with, each one emphasizing one of the four management styles:

Micro-Management

It has been said that one of the big difference between mediocre and great managers is the ability to delegate effectively. Many mangers have a hard time delegating. They worry about people making mistakes and doing a less than perfect job. They worry about losing control of the project, and having little impact on its success. So, they break projects down into tiny tasks that reduce the potential for mistakes, and they breathe down people’s necks, inspecting and controlling them the whole way while those tasks are completed.

Several years ago I worked for Tibco, as a consultant to Cedel bank in Luxembourg. After several meetings with banking experts to determine software requirements, I spent the weekend sketching out a redesign for their core inter-bank settlement system, and spent the next twelve days implementing it. At the next meeting, the senior manager of Cedel’s development group explained “Today, we are going to divide up the tasks.” Feeling proud of myself I boasted “I have already implemented the new system!” The managers were furious. “You have not been authorized to do that work. The managers assign work to you, and tell you how to do it!” My code was scrapped, and my tainted design shelved. It was back to the drawing board.

This is classic Micro Management. It puts complete faith in the hierarchy. The process is a simple one: managers make all decisions. The team is there simply to implement small tasks handed down to them, and in ways decided by management. The result is that projects move very slowly, where every single decision is delayed while it is pondered by managers, and team members show no creativity or initiative.

Bureaucratic Management

As well as being ineffective, micro-management takes up a lot of management time. How can managers free up their time, yet still retain control? The answer is to put in place rules, processes, and structures to tell people what to do.

Not long ago, I was a director at a large company we will call WebNet. I was in charge of a team responsible for delivering on all projects scoped for the next year. The company was highly bureaucratic. WebNet was governed by a hierarchy of professional managers there to serve the managers above them, not to help teams with their projects. Rather than breaking work down into project-specific tasks (the micro-management approach), bureaucratic management focuses on adhering to standard processes applicable throughout all projects.

The management role at WebNet was administrative. It involved checking dates against spreadsheets, monitoring people’s working hours, ensuring everybody produced all of the demanded paperwork on time and had it signed off by the right people, and so on.

Projects which had poor designs were given the thumbs-up so long as they followed all the standard procedural steps. Great projects, with innovative designs, were frowned on if they were a few days late with some administrative procedure. Project quality took a back seat. Creativity was stifled, and teams had little or no support.

I made several recommendations on how to reduce this bureaucracy, so that management could have more time free to actually help project teams focus on great designs. Nearly every one was turned down. “This is a hierarchy, not a democracy”, I was told, “Your job is not to have new ideas, but to execute on decisions already made.”

This style of management, then, puts complete faith in the hierarchy and the process. The job of management is to enforce and adhere to strict administrative rules. Team members are slavish rule-followers and paperwork fillers. Project success is measured in terms of how closely managers and their teams follow the administrative rules. Bureaucracy increases, and project quality decreases. Overall, this style of management sees tidy administration as success in itself, rather than as something supporting the completion of high quality, well designed projects.

Hands-Off Management

One of the hot management buzzwords of the 1980s was “empowerment”. This was a reaction to worries that micro-management and bureaucracy slowed projects down and impaired creativity. That is, the belief that having no management is better than having bad management.

Empowerment was meant to cut through unhelpful management interference, and give more power to individuals and teams to decide how to be more effective in their work. In practice, it often meant giving them lots of responsibility with little management support.

At one point, I was part of a project team at a company called Objectware. The owner, Richard Jowitt, told us to replicate a complex and competing product. Whenever we went to Richard for guidance he always replied “just get on with it and let me know when it is finished”. After three years of isolation, we delivered a perfect copy of the competing product. By the time the product shipped, though, the market had shifted and few customers wanted to buy it.

This Hands-Off style puts complete faith in the teams themselves. There is little room for management support and no room for a guiding process for projects. Managers assign initial goals, and teams are left on their own, without helpful assistance from management until those initial goals are met. Project success is determined by how well the team met that initial goal. As we saw with Objectware, this style or management leaves teams without any type of external support throughout the project, and no ability to shift goals and re-steer the project as customer needs change over time.

Leadership

Contrast the above with Alfa Consult that brought me in to lead their project teams. Alfa Consult’s management distinguished the company from competitors by having project teams listen extremely closely to customers to understand their specific needs. Furthermore, they viewed the job of management as removing all obstacles confronting project teams, and continually helping teams to be better skilled in doing their work.

This management by Leadership style enabled teams to be very nimble along the length of a project as customers learned more about their own needs. In short, management was there to help teams, and teams were there to make customers happy. It worked very well. Perhaps most surprising to me at the time was that many of the customers had very large software departments of their own, yet their own teams had long floundered on a variety of projects, and they continually brought in this much smaller consultancy to rescue them. Each time I looked into this, I saw that those departments had one of the three previous management styles. In my opinion, the reason Alfa Consult succeeded was not that they had smarter people than their clients, but that they had a more effective form of management – that is, leadership.

This style essentially reverses the management pyramid. There is supportive and guiding leadership, rather than command-and-control management. Managers are there to identify overall direction, and then help teams in whatever way is necessary to strive towards that direction. Teams focus on satisfying customers, and ask managers to help remove impediments. Furthermore, management helps teams learn how to be more effective over time.

In short, management is there to support teams, rather than control them. By removing non-contributory bureaucratic work, and helping teams make quick decisions, you get more done faster and with fewer people. Perhaps most importantly, the whole organization remains highly focused on delivering results that customers want and value.

Great Leadership

What I learned from these four experiences is that successful projects require great leadership. No surprises there. But what is great leadership? We can see a few clues from my time at Alfa Consult: it means supporting teams, and helping to bring out the best in them.

Leadership, of course, used to be just another name for management, and strong management meant being tough. It meant being loud, firm, and decisive. Orders were bellowed down from above, and were followed without question by those below.

That style of management no longer works. It is no longer ownership of machines or land or management titles that matter most in projects. More than ever it is the willful cooperation of the people on the ground that makes projects succeed. Lots of authoritarian managers don’t get this. Or if they do get it, they wish it wasn’t true. Nowadays, though, the most successful companies have switched from purely command-and-control management, to balancing that with supportive leadership. Your boss is no longer the person you are frightened of, but rather the person who helps you achieve great results. To understand how this came about, we need to dig a little into the history of management, and the way power has shifted in response to an increasingly competition and fast paced business climate.

The Rise of Professional Management

Up until the industrial revolution, businesses were more craft than science. This made things pretty unpredictable, and business owners wanted more control over results. In the late 1800s military generals in Europe demonstrated the effectiveness of strict hierarchies with command and control authority. Inspired by this, business owners brought in scientific management and efficiency experts, and management engineering firms, to help establish standard corporate structures and ways of working. Companies published organizational charts, depicting hierarchies of authority, and procedures manuals, outlining all the work-steps to follow and rules to be obeyed. This made it easy to train, measure, and monitor workers, and get predictable results from them. Management essentially became rule enforcement. This was the start of the era of the professional manager, wherein an administrative hierarchy ran the company like a machine, with processes dictating how the human cogs turned to do the actual work on the shop floor.

Japanese Wake-Up Call

Many companies – particularly in America - thrived under the authority of management control for decades. Then came the big wake up call from Japan after the end of the Second World War. Rather than copying the American approach, Japanese companies focused less on rigid standards under administrative control, and more on improving quality, keeping customers happy, and leading teams to continually look for better ways to work. The results spoke for themselves. Within thirty years, Japan was top of the heap. The tables had turned, and companies in America were now starting to copy Japanese companies just to stay in the game.

Constant Change

The outcome of this international race to excel is that the business world is now far more competitive and is adapting much faster than it ever did before. Companies are going from the top of the heap to out of business in next to no time. New companies are coming out of nowhere and dominating markets at unheard of speeds.

Big, slow, and bloated is out, and lean, fast, and hungry is in. To stay in the game, many companies are struggling with what to do. One tempting approach is to look for a new set of standards to adhere to, or a set of best practices to borrow. “If we can find the secret recipe, we can find some stability again and catch our breath.”

Somehow, “standards” in the West have tended to be viewed as “best practices”. Put your faith in the standards, and you will know you are doing things in the best possible way. In contrast, in Japan, a “standard” isn’t an ideal that you aspire to reach. Standards describe what you are doing already. A standard in Japan is a starting point on which you continually improve. The improved version then becomes the new standard, which you improve on again, and so on. Japanese companies, then, don’t have “best practices”. They don’t stay still; they have continuous and never ending improvement.

Clinging to a new set of standards, then, isn’t going to work for long; it just gives you a new place to stagnate. Nowadays, the only way to be competitive is to keep getting better.

Management with Leadership

If management is about enforcing standards, leadership is about continually shaping them. Some business books tell you that leadership is the future, and that managers are going the way of the dinosaurs. Out with the managers, in with the leaders, they say. It is certainly true that if you have management without leadership, your standards will stagnate. At the same time, if you have leadership without management, you standards risk being unenforceable. Leadership, then, does not mean abandoning management, it means balancing it with other forms of power in the organization.

Authoritarian Power

In 1954, two social psychologists (French and Raven), identified five forms of power that are used in organizations.

Until recently, first land owners and the factory owners held most of the power – since they owned the means of production: the land, the machines, and the capital. Employees could be trained quickly, and if they left, the means of production would stay behind so that the workers could easily be replaced. The attitude of many managers was “the employees need us more than we need them” and often they were right.

The first three forms of power, then, are used by traditional managers in a command and control hierarchy. They are based on the idea that employees have to obey orders handed down to them from the manager, who controls their pay and their promotion prospects:

  1. Legitimate Power: This is where status and authority come from your title. The superior gives the commands, and the subordinates obey. Employees have to do things because their boss tells them to.
  2. Reward Power: Here one person offers a reward that the other person wants. The boss makes demands, and the employee complies to increases their chances of a bonus, a pay increase, or a promotion
  3. Coercive Power: One person gives the commands, and others get punished for not obeying them. The boss threatens people with a salary freeze, or even losing their jobs unless they do as they are told.

Balancing Power

Although the three forms of authoritarian management power can create obedience, they cannot create either loyalty or creativity. The strength of these kinds of power has reduced over the past few decades. There is now much less reliance on physical labor, and a greater need for expertise. In the computer software business in particular, the majority of work involves intellectual effort, particularly deep technical knowledge, high levels of creativity, and an ability to lean and adapt quickly. This means that the primary means of production no longer lies in ownership of factories or land, but in the creative minds of the employees. If these knowledge workers leave the company, they take that means of production with them. This makes highly capable people a far greater asset than ever before. As a result, in many cases, the attitude of employees has shifted to “the employers need us more than we need them” and often they are right.

Authoritarian forms of power, then, are now much weaker than they used to be. Managers cannot use authority to force people to be highly innovative. Commands backed by threats will bring only begrudging compliance; they cannot foster enthusiastic and creative cooperation. It is entirely up to each employee to decide how much of their mental ability they will put into their work. Because of this, the balance of power has shifted more towards to last two forms identified by French and Raven:

  1. Expert Power: Those most skilled to solve a specific problem call the shots to fix that problem. The boss is often the least knowledgeable person about how to best address a given issue, and has to defer to the expert knowledge of others.
  2. Referent Power: Rather than respect being demanded from the boss, it is earned by people through merit. A leader who is an inspiring role model, or a team that shares and respects our values will gain our loyalty and our best cooperation, since we won’t want to let them down.

Shifting Role of Management

Accepting this shift from absolute dictatorship to power sharing and leadership has been painful for managers who cling to legitimate (authoritative) power. Nobody wants to give up power they worked so hard to win. At the same time, this shift has not meant a total loss of power. The increase in expert and referent power has brought with it new opportunities for capable people:

  • Leadership: where those with the recognized ability to lead – rather than dictate – have the whole power of their team behind them. We dig into leadership in greater detail in later chapters.
  • Expertise: where meritocracy ensures that decisions are made by the people best able to make them. Every decision should be made at the lowest possible level at which the expertise exists to make sound judgment. The boss doesn’t always have that expertise and legitimate power is no substitute.

Many managers have great leadership potential. Likewise, many managers were once experts in some business area, and have been forced into management as their only career path. Their expertise could be better used as respected members of project teams. Finally, those who decide to remain as administrative managers still have great value in:

  • Performing important administrative functions in support of teams and leaders
  • Using their political clout to eliminate obstacles that impede team productivity

In summary, leadership isn’t about eliminating management. It is about balancing authority with other forms of power. Of course, an organization with control-obsessed managers will refuse to do this. They will hold on to, or even try to increase their own power within their organization. This strengthens those managers personally, but relying on only authoritarian forms of power limits the power of the organization as a whole. This makes your organization far less powerful, and hence far less effective, than competitors who are fully energized by utilizing all five forms of power.

In the next chapter, we will see that the qualities, beliefs, and practices of great leaders can be learned. We will see how to shift an organization from dictatorial and administrative management to collaborative and effective leadership.

Book

This is part of a book I am writing. More will be unfolding here and on my blog. Ongoing feedback would be much appreciated.