Steve Denning’s book, The Leader’s Guide to Radical Management: Reinventing the Workplace for the 21st Century
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Joe Dager: This is Joe Dager, the host of the Business901 podcast. With me today is Stephen Denning. Stephen is a leading writer who consults with organizations in U.S., Europe, Asia and Australia. He has a recent book called “The Leader’s Guide to Radical Management.” Steve is a great storyteller and after seeing the cover of your new book “Radical Management,” you have to start out by explaining the matches on your cover.
Stephen Denning: Thanks for having me on the show. The matches reflect the fact that studies show that only one in five people are fully engaged in their work. Only one in five people are passionate about their job. Four out of five people are basically treading water. So this is about those four out of five burnt matches and how we can light them, how we can change the workplace so that most people are having fun at work, most people are having a productive work time. A study came out just this week saying that in 2011, 84 percent of people in the U.S. workforce plan to change their job. Astonishing, 84 percent plan to change their job.
So in one hand, it shows you that people are not happy in their job and they want a change. Secondly, when 84 percent of people are not happy in their job, then changing jobs isn’t likely to do much good. It shows the futility in that; we really need to change the workplace. We really need to be running our organizations differently. So that’s the picture on the cover and the fact that we do have a lot of burnt out people in the workforce. It is not their fault; it is the way the organizations are run.
The good news is that, a lot of organizations have figured out how to do this. Organizations have figured out how to get not only high productivity but continuing innovation and deep job satisfaction and client delight. The book is about how those organizations do it and why they do it and the techniques involved in doing it, what the constraints are and the difficulties in making it happen but ultimately, how to make it happen.
Joe: How did you first run across this material for your book. What brought you to that point?
Stephen: I worked in the World Bank for many years, and when I was in my… In the late ’90s, I was Director of Knowledge Management. And in that role, I discovered the power of storytelling. So I wrote a book about leadership storytelling. How storytelling can communicate strange, new, complex ideas and spark people into action. And I spent really the first eight years of the new decade, from 2000 onwards, coaching organizations around the world how to do that, how to use storytelling to get people to embrace new ideas. And there was tremendous success.
In most of the Fortune 500 companies, I was able to go in and show people how to use the power of storytelling, and people would get really excited, programs set up, and CEOs would be thrilled, and senior managers would take it on. I was thinking, “Well, this is really great.” But when I looked around later, I saw that these initiatives didn’t seem to stick.
They would flourish for a while, but then something would happen and they would go wrong, and I looked around and it wasn’t just storytelling. The same thing happened in innovation. It happened in lean manufacturing. It happened in knowledge management, in pretty much every creative activity.
I just mentioned that four out of five people are not fully engaged in their job, so I thought this is crazy. This is really very strange. There must be a different way to run things.
I looked around various firms that are doing this, and I was surprised to find that the most advanced firms that I could find were in the field of software development. I came across Agile and Scrum and these iterative ways of developing software, and I was astounded at how evolved and developed they had gone in having workplaces that had this combination of high productivity and deep job satisfaction and client delight.
I also realized that most people didn’t know what was happening in software development. In general management, literature, very little was known about this. It was regarded as some kind of esoteric, obscure little branch, and had no relevance to management in general. If it even was mentioned in a management textbook, it would be on page 400 in a footnote, but it seemed to me this is central.
If you could actually run organizations this way, there would be huge benefits. I came across organizations that were doing this outside software development, and of course, you had seen similar things happening in Lean manufacturing for some time, and I saw it spreading into really all sorts of different parts of the organization because once an organization had figured out how to do this and they had seen the huge gains that had been made both for the people doing the work and for the organization, then they start to think, “Well, why only in software?”
“Why aren’t we using this in the rest of our business, In marketing, in sales, in legal work, in accounting, in pretty much everything we’re doing in the organization?” Why don’t we run everything this way, and so the book is an account of that. How this better way of managing, a better way of running an organization can be used throughout the organization and really revolutionize the world of work.
Joe: Software is more of a knowledge field. And you can understand, because to iterate knowledge is pretty easy. Can you really take it into a broader perspective into the organization?
Stephen: Well, I would say most work has become knowledge work. There are a few little areas where it isn’t the case. But I mean, 100 years ago, most work was semi-skilled work, but basically, you walk into any organization today, most of the work involves knowledge work and even work which doesn’t appear to be knowledge work. In fact, the challenge for management is, “How do we turn that into knowledge work?” How do we take the routine parts of that and have it done by machines or computers? And how do we apply the brains and the talent and the energies and the ingenuity and the creativity in these people so that they can make a real contribution to the work?
So overall, I mean, a huge proportion of the work is already knowledge work, and the challenge is to make all of it knowledge work. So this software, in a sense, is pure knowledge work. And it is no surprise then that this would be an area where this emerged most fully because in this area, if you don’t manage knowledge work effectively, then nothing happens.
I mean, when you don’t do software properly, I mean, you get a blue screen. There is no argument. Is it working or is it not working? I mean, in other areas, in sales and marketing maybe, you can BS your way through and say, “Well, I don’t know if this will work, it should work.” Something went wrong, but it was pretty much there, but in software, it is either there or it is not there, and it is cruel.
In the ’80s and ’90s…, you would see these huge projects and they wouldn’t work. They were way over budget, they were way behind schedule and many of them were canceled, and even before they were ever completed, the firm simply gave up on them, and so, I mean, they whipped the software developers, they punished them. They sent them on death marches, they made them work overtime and weekends, they got the bosses, and they got new software developers. It didn’t make any difference.
They had to figure out a different way to do it and so Scrum and Agile was born, and yes, it is a better way, but it is a very different way, and it is a very different way of managing, as anyone involved in it can tell you. So this is a challenge. How do you communicate and transform the whole of management, so that they realize that this is in fact not some esoteric thing for Lean manufacturers or software developers, but simply a better way to run organizations when the bulk of the work is in fact knowledge work.
Joe: Do you see a direct correlation then between Lean and radical management?
Stephen: Absolutely. Lean and Agile are two of the forerunners. I mean, there are many other forerunners. I mean, marketing is also a big forerunner of this kind of thinking because the focus has to be on delighting the client, and that is what marketing is all about. Thinking from the client’s point of view and then working backwards from that because traditional management has always had an adversarial relationship with marketing. There is a wonderful book by Al and Laura Ries, “War in the Boardroom,” giving 25 reasons how traditional management crushes great marketing ideas. So yes, marketing’s a source, Lean is a source; Agile is a source, many sources, quality management, Toyota. All of those things are sources. And what happened to us in the last few years, these different sources have come together.
These different sources tended to be viewed as separate subjects. But now this is showing that these different aspects, Lean, Agile, marketing, are really interdependent facets of a different way of managing, a different way of running organizations. So in the book, I give the history, where these things came from. And so in a sense, individually, none of these elements are new. Individually, all of these elements have many years of experience. So that’s the good news, is that we know a great deal about each of the components. What is new is putting them all together. Putting them all together in a comprehensive, integrated way and seeing them as an interdependent set of changes.
It is something that’s fundamentally different, a different way of thinking and speaking and acting in the workplace.
Joe: What stops a manager from saying, “This is a great idea, let’s do it.” Why don’t they grab a hold of this right away? They must be taken back by this a little bit or you wouldn’t have called it “Radical Management,” if you didn’t think that a little bit. There’s got to be a big change in management philosophy to do this, doesn’t there?
Stephen: It is different. It is a change. Smart managers are saying, “Great, let’s do it.” How do we get them on board? How do we implement this? Management has been done in a certain way for 100 years. Organizations have really been run pretty much the same way for the last 50 years, to a large extent for 100 years. There is a whole lot of tradition and people trained in business schools and management textbooks and so there’s a whole lot of inertia that a different way of doing things would be better. But it will happen because the economics will force it. I mean, because organizations run in this way, they are much more productive and make a lot more money and are much more satisfying for the people doing it. Economics will basically put the competitors out of business. If you watch what Apple has done to the music industry or what Southwest Airlines does to the organizations, this way of running an organization, or what Toyota has done to Detroit. This way of running organizations, basically, will put the competitors out of business.
So it will happen. The big question will it happen elegantly and quickly and intelligently, or whether it will happen brutally and simply because people haven’t realized that they’re running the organization in the wrong way.
Joe: As you read your book, you look at user stories and you look at more of the team type of collaboration, but are really saying that the org chart is kind of going out the window?
Stephen: Well, I’m not saying that hierarchy is gone. I’m not saying that authority is gone. But I am saying that the way of looking at an organization as a big set of boxes is anachronistic, is really inappropriate. I mean, you’ve got the big box at the top with the CEO and “I’m the man,” and you’ve got the middle manager whose saying, “Keep off my turf.” You’ve got the direct line supervisor who’s saying, “That’s not my job.” Those bureaucracies, those hierarchical bureaucracies, simply aren’t agile enough to cope with the modern workplace and so they are doomed. This is about teams and networks of teams. Networks of teams where everybody is focused on, “How can we delight the client sooner?” Who is the client? What is value for them? How can we do something that will give them more value or get the same value to them sooner? Have everybody in the organization with a clear line of sight and focus in on that. The boss is not the manager, the boss is the client, and the boss is the customer. In that sense, it’s a radical shift in view and in vision, and the whole, and all of the behavioral, and managing, and changes that come from this different way of looking at the organization.
Joe: When I look at continuous improvement in Lean and Six Sigma companies, one of the first things I see is they take what I call the control point, and they move it internally within the company. What you’re saying, through the methods that you talk about, you’re taking a control point externally and focusing it on the customer, where it should be.
Stephen: Right, exactly. Six Sigma in some ways, these were good programs in that they improved quality. But to the extent that they were embedded in the bureaucracy, it didn’t improve a lot for the workers, and in many cases didn’t improve productivity in the organization. By focusing with that kind of outside-in perspective rather than the supply chain, delivering stuff to the customer. You’re starting from what would, what would the customer, what are the customers problems, what is bothering the customer, what would be a real win for the customer, and how could we help them get there? How could we change what we’re doing to be responsive to that? So it’s a different perspective.
I cited recently on my blog, how did Qatar win the World Cup, win the right to host the World Cup in 2022? It sounds like an impossible challenge because Qatar is a tiny nation. It was faced with competitors like the U.S., Japan, South Korea, Australia, who had overwhelming advantages. They are not a soccer nation, tiny; they had no facilities, basically no facilities. How could they possibly win this bid to hold the World Cup in 2022?
Well, it turns out what they did was they started from what soccer authority, FIFA, wanted. They examined in great detail and very carefully, what is the soccer authority looking for? And they did their utmost to deliver everything, absolutely everything that the soccer authority wanted.
So instead of saying, “Here’s what we bring, here’s what we’ve got.” They started at the other end, and decided to deliver what exactly what the client wanted. And they learned all the languages of the different people in the soccer authority, they learned French, they learned Spanish, they learned English, and so they were able to communicate with every delegation in their own language.
So people were kind of amazed that, “Here’s this little country that’s really doing everything to delight us.” Whereas, these other big companies are coming in and saying, “Well, we’re the U.S. or we’re Australia, so we’re obviously the best for this thing.” Delighting the client actually works better.
It’s a different way of thinking and acting, and focusing the whole organization on, “How can we add more value, and deliver more value sooner to the people that we’re supposed to be helping?”
Joe: You’re delighting the customer, but you’re really looking at being a flat organization where everybody’s kind of communicating with the customer. In a sense that these work teams develop driven by what the customer’s needs are, and then kind of self-organize.
Stephen: And working in short cycles is another key part of it. Working in short cycles so that you can see at the end of each cycle whether, in fact, you’re delighting the customer and getting direct feedback. Did what we do in the last iteration, last fortnight, a month, or whatever it is, did that delight the client? If not, why not, and if it did, how can we do more of it? I do talk about using self-organizing teams. Because you do need to have people who have the initiative and creativity to put themselves in the minds and shoes of the client and start to understand what could possibly delight the client. So it does need ingenuity and creativity, and a bureaucracy is not going to accomplish that. So having self-organizing teams is possible, but self-organizing teams is a risky form of organization if you don’t have checkpoints.
So having short iterative cycles of work enables you to take the risk out of having self-organizing teams. You check at the end of each cycle, “Did we delight the client, have we met their needs?” If they are, then you know the team is working and then you can move onto a new cycle. If you haven’t, then you have a chance to rethink the team. The role of the manager changes from being the boss of the team to being the remover of impediments. Setting the goals for the work cycle, but then identifying any impediments that are getting in the way of delighting clients and setting them out removing them and it is a different function for the manager.
Joe: The manager’s job is to really make the work flow for him, to remove the obstacles so the team can work through the iteration. That should be well defined when they start?
Stephen: I mean, the manager still has a role, and a very difficult role, of actually defining what each iteration of work should look like, what it should accomplish in the light of what is known about the clients. So that’s a tough decision. In many traditional organizations, they are not able to make those kinds of decisions. And so, people stop doing work and then when they get halfway along, they find out well, somebody in the organization doesn’t like it. So you have whole structures over and above the work that are reviewing and second guessing and aggregating, and really just slowing down the work. The real value to the client is being added by the people actually doing the work. I was struck when I was working in the World Bank. A large part of the time was spent actually satisfying reviewers and other various parts of the organization that what we were doing made sense.
It used to take about a year to do a loan. There was a special procedure to do emergency loans, when there was an earthquake or a flood or something like that. Then the rules would be set aside and the team would be appointed. They would be given authority to make decisions and they would get the job done in six weeks. I kept asking the management, “Look, if we could get this done in six weeks in an emergency, why don’t we do that all the time?
Joe: Why does there have to be an emergency?
Stephen: “Why do we need to wait for an emergency when these operations that they put out in six weeks they look pretty good? They look as good as the other operations.” Well, that then people would say, “Then what would the rest of the organization do?” Well, exactly. You have to start looking at the organization differently and sad to say. Look, the value to the customer is being generated by the people doing the work. All of these second-guessers, and reviewers, and supervisors and aggregators, I mean, are basically not adding value. They have to, and they’re a huge part of the cost of the organization and they’re actually slowing things down. Rethinking the organization means actually getting meaningful work for those people, as well as getting out of the way of the people who are actually generating value for the customer and the client.
The organization becomes radically more productive. We can do things much faster than we have ever done before. That’s the way this transformation happens. I mean, a couple of examples in the book, Salesforce.com, a billion dollar company or a smaller one, Total Attorneys, they started out as start-ups and they were very agile and they could do things very rapidly, turn on a dime and then as they grew they introduced management, which is bureaucracy and they started to see the firm steadily slowing and slowing and slowing down.
Then they asked themselves, “What went wrong? Why could we do things so much faster when we were just a small team? Why don’t we go back to doing it in that way?” And so they still have a memory of what it was like. In some of the newer, large organizations, they don’t always have that memory and so it’s something that’s sort of radically new for them. There are plenty of examples now that they can go and visit and see how it’s operating and talk to the managers and talk to the people. It is not, this is not, it is not snake oil, it’s not smoke and mirrors. It is actually happening. It is a better way to run the organization.
Joe: I think you made a good point there earlier, that there are special instances that enable you to do things. One of the things that I’ve seen people do is they go in and they expedite a job and cut the time in half. Then you ask them, “OK, what did you do special for that person to do that?” Then start looking at why can’t you do it all the time, and start looking at it from that perspective. I think, most of the time, the inclusion of the customer in that process is what makes it faster.
Stephen: Right. Getting these second-guessers, these reviewers and supervisors out of the way and having them focused on removing impediments rather than creating impediments.
Joe: Your book actually does kind of give an idea for a company on how to start, doesn’t it? It gives you an outline on how to put some of these principles in place, doesn’t it?
Stephen: It does. It has 70 practices, more than 70 practices that show how to do it and it also has a chapter on how to implement it. The journey of each company will be different. I give a number of examples of the different journeys. In one case it was launched by the CEO, in other cases it was launched by someone in the upper little management, in other cases it was somebody lower down who was able to get the attention of the whole organization and eventually get change throughout the organizations. But it begins typically with one person, one person realizing, “This is, this is a better way to run an organization, why don’t we do it?” Then start persuading colleagues and people higher in the hierarchy and lower in the hierarchy and on the same level and developing momentum and saying, “Let’s try it out.”
Typically the first couple of go’s trying it out there are some hiccups, as you would normally expect, and learning from other organizations, getting help from people who have done it before has been a crucial part. But approaching it in this collaborative spirit, this is you have to in a sense set aside the top down command and control way of communicating and communicate in conversations through stories, through metaphors, through open-ended questions, and having adult to adult conversations, just one person talking to another as we are now, and not a superior talking to an inferior top down but having meaningful conversations.
It begins in a sense with a change of heart, which, a change of heart, a realization that this traditional way of running an organization is not good for the organization, it’s not good for the customers, not good for the people doing the work and when you look at, the widest thing, it’s not good for society as a whole.
So when there has that change of heart in one person, and then that change of heart spreads to other people then you start to see the revolution happening.
Joe: You talked about user stories, the typical stories that occur in Agile. This is one of the things you’ve identified with because you are a great storyteller and you’ve written couple of books about it. But you really believe that you need a story in these processes to work from, don’t you?
Stephen: In the processes themselves yes, I mean, that was one of the things that really struck me about these Agile workplaces, Agile teams, Scrum teams is that you’d, talking to the people and they’d say, “I executed three stories today. I executed four stories. I executed two stories.” They are thinking about the work in terms of making a story come true. The work is not defined as I’m going to produce so many widgets or so many things, or so many services. “I am going to make the following story come true that somebody would be able to go to the website and be able to do the following thing. My job is to make that story come true.” When they’ve made that story come true then they’ve executed a story. I mean, I was astounded to hear people talking like that and I realized that they were thinking and thinking in stories. They were thinking, looking at the work in terms of stories.
That was a big eye-opener for me. The other, of course, from my earlier work, is that how do you communicate this very different way of running an organization to people? All of the leaders in this movement in Agile and Scrum are great storytellers. They’re all brilliant exponents of what I call leadership storytelling. They’re able to give examples and anecdotes and meaningful narratives of how other organizations have done it and what problems there occurred and what successes they had and what it meant for the organization, what it meant for the customers, what it meant for the people.
The spirit and the heart of that can really only be communicated by stories and these, the leaders of the movement are really quite marvelous and their instinctive way in which they communicate with stories.
Joe: It kind of sounds like Disney.
Stephen: Well, it is fun. I mean, I would say at one point in the book that, if you’re not having fun at work, you probably still in the land of traditional management. I’m not saying it’s always a ball and always easy and people are always happy. But if you do not hear laughter in the workplace, if you’re not, people aren’t excited about what they’re doing, then you know the work place is not productive. You know that you’re not getting a high productivity out of the people doing the work. And so it is Disney in that sense, that it is about having fun at work but it’s also very serious. This is about getting things done more quickly and with higher value and getting it done in a more satisfying way. So the workplace becomes something you would actually want to be in rather than something that you want to leave as 84 percent of the people in the U.S. said in the survey I quoted earlier.
Joe: Are measurements still important when you go to this type of work or do you just wing it?
Stephen: Measures are crucial. You need to keep track of how you’re doing. The next section of the book is how you do that, how do you measure whether you’re delighting clients. Fortunately, this has been the whole future ahead of the work done exactly on that. Fred Reichheld, in his wonderful book, “The Ultimate Question,” it has a whole methodology for measuring what the clients are delighted by. We’re building on the shoulders where people have gone before. So keeping track of whether we are delighting clients and if we’re not, then help me, we need to do something about it. And if we are helping, you get more of it, help people to do it sooner. So I say measurements are crucial.
Joe: When I first read the book, having a little bit of background in Agile… I looked at it, and think; they’re explaining Agile in a business sense to me. On the other hand, it goes little deeper than that because it reflects, it takes a tour…
Stephen: This is not something esoteric; it’s not something with strange new vocabulary. It’s something that’s really distilled common sense that has a firm delighting its customer. I mean, why wouldn’t you want that? They have teams of people who are authorized and they’re powered to make that happen but why wouldn’t you want that? And have managers removing impairment? Why wouldn’t you want that? Why wouldn’t you check whether this is, you’re accomplishing that. In that sense I mean, I have tried to translate this into simple language and to business terms and in terms that everyone can make sense and give examples of how it’s happening. Join the dots and show that the deeper meaning of what Agile is all about.
We take Agile to the next level. I mean, look, Agile manifesto 2001 was a wonderful, wonderful advancement, what it had done before. But 10 years have passed since then and we have, in fact, learned to grade the elements. The book has some elements to the Agile manifesto, particularly, in terms of the goals, in terms of delighting clients. That’s an important aspect which isn’t really brought out in the manifesto and also getting the folks in work in the sense. Working software makes sense in software development but doesn’t make all that much sense in general business in terms.
So translating those things into business terms and then showing the meaning of it. What is the meaning of running an organization and how does it compare to running an organization in the traditional way? To some extent, the literature in Agile, it’s kind of assumed that there traditional management will grind along in the rest of the organization. This is really about, saying well, actually no. We need the rest of the organization to get with the program and to start thinking and speaking and acting in this different way.
Joe: Well, I think you said it very well. I think you go back to Waterfall project management, that’s how our organizations are ran. You go from department to department to get things done. In the ’80s and ’90s you always had that internal customer who you were always trying to please. What you’re saying with iterations and self-organizing teams is we’re putting the customers in the boardroom, we’re putting the customer in the factory, and really relating directly to them, which is what it’s all about.
Stephen: Exactly. The customer is the boss. That’s the bottom line. It’s a very different way of thinking about work and organizations and how the world should be run.
Joe: I think that you really do a nice job. Because you tied that into, especially with the PDCA type cycles and continuous improvement… Because the only way you can improve is improving in the eyes of the customer.
You have a Google group up now that you’re talking about and putting this out for people to become part of this conversation.
Stephen: I’ve become involved in a large scale project. We’ll talk about this, really reinventing the workplace, reinventing the Fortune 500, reinventing the government, reinventing the whole sector, reinventing the education. This is really mammoth, a guided project. So in the last six months, I’ve been on a daily basis, I’ve been looking at the news and commenting on that great aspect of the news and what would be involved in making this revolution happen. So when we got to the end of the year, I actually put in some New Year resolutions on my blog. I looked over the past 10 years of what I had accomplished in story-telling and looked ahead and said that’s my aim for the next 10 years, is really to reinvent the workplace and the Fortune 500, Government. And asked would people like to join me in this effort? I was encouraged as many, many people wrote to me and said, “Wow, I would like to help, what can I do?” So I had scores of people on hand and I’ve created an online discussion group on Google group. It’s called “Revolutionizing the world of work.” I set it up a couple of days ago.
Already, 100 people joined and there are already lively discussions going on there about how we can make this revolution happen and how we can help individuals who are in organizations or at outside organization or wherever they are, help make this revolution happen sooner. So if you’re interested, please go to my website stevedenning.com. And you can go from there to the blog and check out the Google group.
Love to have you on board and love to have your input into how we can make this revolution happen sooner because we desperately need it. That’s the world. When we think about 84 percent of people wanting to change their job in 2011, you have really out of the sense of desperational manner than me to make this happen is really tremendous and so I need all the help I can get, so I hope that you’ll join me.
Joe: What’s on the horizon for you? Are you speaking anywhere soon?
Stephen: Talking in Washington and couple of other places, a number of private events. If you follow me on the blog, you’ll be able to keep track of my activities and if there’s a live event in your area, then I’ll be flagging it on the blog. That will be the best way to keep in touch.
Joe: The book is excellent. I want to thank you for your time here Steve. I appreciate it very much. The broadcast will be available on Business901.com website and the Business901 iTunes store. So thank you again, Steve.
Stephen: Thank you, Joe.