Ooh, baby, do you know what that's worth?
Ooh, Heaven is a place on Earth
Permission to Dance
Lauren Dixon has written Trending toward a jobless economy. It’s a good enough post to demand a response but first I need to talk about a recent article that Lauren links to.
The Permissionless Corporation is written by Harvard management scholar Rita McGrath and Tollywood superstar Hindu guru management consultant Ram Charan.
Welcome to what Michael J. Sikorsky has called the permissionless organization—one that uses digital technologies to unleash the creative and collaborative potential of people rather than trapping them in endless reporting and coordination loops. Its structure has far fewer hierarchical layers. One layer is likely to be customer facing, where teams work with customers and clients. There is likely to be a strategic layer, in which teams determine how strategy, budgeting, project governance, and incentives are aligned; set portfolio priorities; and specify how the organization fits into its legal and regulatory environment. There is also likely to be an operational layer that manages offerings. Finally, there will be a layer that coordinates among the project teams.
Examples are drawn from Amazon, Kone, Automattic, Salesforce, and Fidelity Investments*. The article ends with the claim that:
In the permissionless corporation, fast, inexpensive experimentation takes over from slow, involved analysis, enabling organizations to pounce on opportunities as they arise. And at a time when speed and adaptability, rather than predictability and consistency, are the main sources of competitive advantage in a product-centric world, a model that allows people close to the customer to make as many decisions as possible is valuable. Companies with three or four layers, faster problem-solving, and a permissionless mindset will outcompete traditional players with 10 layers and slow decision-making processes. In fact, though it may take time, we anticipate that organizations that operate in the traditional way will eventually cease to exist.
Now I have a veritable buffet of feelings about this article. Who doesn’t want an organization that is customer-centric? Data-driven? Adaptable? Everyone wants that! With a side order of motherhood and apple pie please.
Who wants bureaucracy? No one! And yet for something that allegedly no one wants, there is still a lot of it about.
And “permissionless”. Doesn’t that sound great? As noted Harvard management scholars BTS so memorably proved: We don’t need permission to dance.
*Ahem*
For me, there is a disconnect in the practices outlined in the article and the conclusions drawn. N.B. I don’t think any of the practices are bad in and of themselves, they can even add a lot of value in the right context. Lets go through them.
Amazon’s use of data and removal of hierarchy. First of all, I think using data and metrics is good. The article notes that Amazon is using six sigma - which tells me that Amazon is now a mature company seeking to operate at scale. Six Sigma is a technique focused on removing variation (formalized in the 80s by Motorola). As such, it works well in factories. It is notoriously unhelpful for early stage innovation. I also wonder how many Amazon warehouse workers would say that they work in a “permissionless” environment? I guess that they did not need to seek permission to pee in a bottle and that was an example of their own initiative to deal with the ever more intense metrics-driven work regime**.
Meanwhile the work done at Fidelity Investments sounds like a fairly standard corporate reorganization with a lean focus (renewed focus on the customer, removal of waste, empowering teams) which Toyota popularized in the 80s. It’s by no means easy to do but neither is it revolutionary.
Heaven is a Place on Earth
The comments from Matt Mullenweg of Automattic are perhaps the most revealing:
Mullenweg explains the evolution of the typical office from hidebound bureaucracy to high-performing, technology-mediated operation. He frames it in terms of five levels of the journey from a traditional office environment to a tech-enabled “nirvana,” a (so far) theoretical end state
Nirvana. A theoretical end state. Heaven on earth. So what is this heaven? And will we ever witness it?
There is a persistent fantasy that I encounter, which seems specific to a particular kind of corporate executive with an engineering undergrad degree and an MBA . In this world, the bureaucratic morass of middle management is swept away (perhaps in Golgafrinchan Ark Fleet Ship B) leaving only the data-driven C-Suite geniuses and the happy, motivated front-line staff, working tirelessly to delight the customer. The senior execs never have to lower themselves to talk to the frontline (ugh). Instead, electronic communications, bots, and dashboards relay the data. A perfect splitting of strategy and execution. An organization of people finally as efficient as factory of machines. A delightful fantasy.
So why can’t this happen. Why I am being such a downer? So I’m not saying that bureaucracies are necessarily good (but I do believe they are persistent feature of our world in the same way that hurricanes or volcanoes are). Nor am I saying that empowering staff to help customers is bad. I am just sceptical of a few things:
That strategy and execution can be so easily split in the way this model often implies. All strategies are at least partly wrong but you don’t know where until you try to execute. How do you know that the metrics that you use to manage your business today are the ones that you need tomorrow?
That organizations can maintain customer focus over the long term. As you get bigger and more successful, inevitably your focus becomes more internal. The customer becomes a distant, absent lord that you pledge fealty to (not the frustrated schlub in front of you) while you line your own pocket.
That the removal of all middle management will result in the efficiencies envisaged. Most senior executives are wilfully unaware how confusing their directives are. Someone has to make sense of everything.
Enjoy the Silence
I also want to note what is missing from the article. There is no mention of “agile” or “teal organizations” or “holacracy”. These were supposed to bring us something like the permissionless organization discussed in the article. And yet they manifestly have not. Tony Hsieh is tragically dead and Frederic Laloux seems to be asking people to make videos about climate change (which I genuinely hope works out for him). So they are passed over like embarrassing youthful indiscretions. It is a bit funny that six sigma gets a namecheck and not agile. Time to shelve that scrum master certification and dust off the old black belt.
But back to the article and its claim that all organizations will one day be permissionless. Maybe. We’ve had decades of six sigma, lean, agile, whatever and still there are many organizations who claim to customer-centric but aren’t. Almost certainly we’ll see more automation which may or may not make our lives better. Amazon will continue to be a disruption engine. When it is rumoured to enter an industry, it’s like news of bandits reaching a Town in the Old West. Everyone heads to the hills in their wagons before the mayhem commences. Except the only equivalent to Clint Eastwood is Amazon’s only inevitable imperial over-reach.
IMHO it’s not processes or technology or organizational structure that makes a company focus on customers. It’s having no other choice.
Working 9 to 5
So moving on to Lauren’s jobless economy. At the risk of simply confirming I am the old fart you always knew me to be, I can remember discussions in IBM 20 years ago around a future business model where a small number of senior execs managed a pool of gig economy consultants brought together in “just-in-time” teams to deliver work for clients. There are some basic issues that stop that from working.
You know that feeling on the first day of work where you don’t know anyone? Who can you trust? Who is fun? Who’s a dick? Who is grumpy on the outside but has a heart of gold within? Who is just grumpy all the way through? Who is superficially friendly but really completely unhinged? Well, that first day is every day at work in the gig economy.
Current gig work seems to be effective when the work is relatively straightforward and assignable. With Uber, you just need to be able to drive a car safely. On building sites, contractors come in to do their bit (plumbing, electrics) according to a clear plan and then go. Film and TV sets are full of extras who come in for the day. Flight crews and surgical teams also. For many kinds of work, it’s doable and is already done. Where it works less well is in domains like software startups. You literally do not know what you are building until you have built it. A blueprint would be useless.
Gig platforms are not profitable businesses. After 14 years of operation, Uber still loses money. While these businesses can scale, the issue is that they are vulnerable to competitors so they have to compete on price and hence have low margins. If all you offer is coordination, then coordination is a commodity. What other value can you add?
As much as some corporate executives might yearn to finally dump the dead wood most important asset that is their workforce, I don’t see jobs going away. It is guaranteed that the shape of our economies will continue to morph under automation, demographic stress, technological innovation, and environmental change. But I think we are stuck with the job.
(One for the oldies, one for the kids, we aim for full spectrum entertainment here)
*Incidentally, one thing I’ve noticed is that many management scholars would make terrible journalists. A journalist assumes that their sources are inherently biased and seeks to corroborate and cross-check those sources. I don’t get the impression that McGrath and Charan have gone undercover as warehouse workers or lift mechanics to get at the truth but I am happy to be corrected on that. I actually don’t mind some of McGrath’s work on strategic foresight but I’m a bit underwhelmed by this.
**"“We will not tell the partisans how to dig their own graves, we leave it to their own creative spirit #permissionlessorganization”
The problems in the practice and theory of management lie MUCH DEEPER than McGrath et al can conceive. They are rooted in how we make sense of the world and ourselves and the role that language plays in the process. Mainstream Anglo-American management still clings to a modernist interpretation of the world ('solid modernity' as sociologist Zygmunt Bauman called it). 'Reality' (like data!) is given. We can see it as it is as detached objective observers. Language can achieve a one-to-one denotative relationship between symbols and that reality.
Management experience suggests that this modernist view of us and the world is totally inadequate for making sense of ourselves and the world we live in. What is needed is a view that matches what Bauman called ‘liquid modernity’ (he didn’t like the baggage that the term ‘post-modern’ came with). I think it takes an ecological perspective on how we and organizations function as complex adaptive systems.
We are a biological species. We don’t see reality ‘as it is’, rather we see our surroundings as a landscape of continually changing action possibilities (‘affordances’), based on whatever it is that we are trying to do. Management is a practice. In real time managers are immersed in a stream of events, doing their best to cope, acting forwards into a continuously emerging, unknowable future. Our sensemaking minds (together with our languages) are basically analogical, not analytical.
McGrath et al need to get on the warehouse floor. It's back to the 'rough ground' of practice where we can get some traction and lessons from the far side of experience.
Thanks for this thorough response and the mention, Matt. You've far more clearly outlined the reasons I touched on when discussing whether I thought the jobless economy would actually eventuate. I am fascinated (and not surprised) to learn the concept of a full gig workforce is not slightly new.
I am glad, I think, that the jobless economy is unlikely. I don't think the social cost is worth the potential economic gains (and even then those gains are unlikely to be fairly distributed).