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Top-Down Management? Yes and No

Frans van Gunsteren asked me: How to encourage a completely top-down company to open up and also to integrate bottom-up signals?

The undertone was not to give him some hints for a quick solution, rather Frans was confronted with a massive top-down flow in every small action of the organization; it was a cry of despair when realizing the massive changes that are needed.

How to approach this question?

A person who asks the question is best helped by finding an answer himself

Schein’s basic thought in consulting is that a person who asks the question is best helped by finding an answer himself to his own question, rather then handing him your thoughts as an answer.

So he will ask questions as in this sequence

  • Are you aware that when you are working in any company, its working habits for everybody in the company will be seen and felt as normal, like the fish not being aware of the water. It is a way of doing things that one cannot easily change, it is built over a life-time by everybody working in the company.

  • Why do you want this change? What is the problem that one must tackle?

  • Before you think about a complete change in the way the company operates, are these changes really what you want? Or will small changes do?

  • When you want to assess the way management works now, you must make the fish aware of the water. Therefore have interviews and conversations to find out what people in the company might prefer.

  • If another direction is hinted at, what will the change process look like? One golden rule is that everything to be newly done must conform to current working actions.

Search for useful concepts.

Searching for useful concepts exactly matches Schein’s Organisation Development approach. Such concepts include awareness of what is going on, and also which bring limitations and lack of adaptability to the surface. So what concepts might be helpful?

Auftragstaktik

Let us use the concept of the ‘Auftragstaktik’, a 200 year old concept developed by von Moltke for the German Army. He was aware that winning a large battle is achieved by winning many small battles that work together to a common goal. For a flexible army, one needs a way of command that keeps everyone focused and aligned on the shared goal, and at the same time gives those who are in different battles the autonomy to act depending on the needs of the situation. He organized his army that way. He trained officers and soldiers, and developed a lot of conceptual and practical instructions.

Applicate the concept to companies

Two consultants published their rethinking of the concept. The Dutchman Robert G. Ogilvie wrote the book ‘Military Knowledge and Business Strategy’ and Stephen Bungay wrote ‘The Art of Action, How leaders Close the Gaps between Plans, Actions and Results’. In the Netherlands, the Maurits Institute assigned itself this mission.

Why are Companies not able to adapt?

We see many companies not being able to adapt to changes in the environment. Why is that?

The way these companies are organized is based on wrong assumptions. These wrong assumptions are based on the scientific management principles which the organizational scientist Taylor developed in the early 20th century.

  • It is in principle possible to know everything about being able to plan what to do.

  • Planners and doers should be separated.

  • There is only one right way.

The manager is a programmer of robot workers. The essence of management is to create perfect plans, and tell people precisely what to do and how to do it.

Red Tape

Business management focused on the Anglo-American method of central, hierarchical planning and tight control cycles ("red tape”). This also influenced, of course, the manner in which strategic planning developed in corporations. This kind of planning can be applied within a stable environment.

But when in the sixties and seventies the business environment became more turbulent, it was discovered that this form of bureaucratic strategic long term planning was inadequate to counter the often fast and unpredictable changes in the environment.

False promises

The promises of this scientific approach are false. Man will exercise self-control and self-direction in the service of objectives to which he is committed. The ideal of a perfect plan has proved to be stubborn.

Success depends on flexibility

For the dynamic corporate environment of today, success depends on flexibility, i.e. how quickly managers of the business units and the professionals at the base of the organization are able to respond to the unforeseen, and take the initiative without losing sight of the strategic goals and the essentials. Can Auftragstaktik be a concept for organizing a company facing changing demands?

Independent decision-making

‘Auftragstaktik’, or ‘directive control’ has five principal facets whose overall objective is to achieve dominance in the competition through the successful and independent decision-making of subordinate managers.

  • The first of these is scope for initiative.

  • The second is prudent risk-taking.

  • The third facet concerns the centrality of the top-management’s intent to the entire management and control process.

  • Fourth, superior-subordinate relations must be characterized by mutual trust.

  • Fifth, directive control presupposes subordinate initiative and feedback.

Delegate

Ogilvie states that this concept assumes a willingness to delegate. This places high demands on the organization and can only be done if the following conditions are realized:

  • Be able to formulate goals clearly and keep to the essentials.

  • Have well-trained managers, able to understand the intention of the CEO. 

  • Have managers, able to judge the situation quickly and opt to take the initiative.

  • Be willing to cooperate. 

  • Have a transparent organizational structure.

  • Have a good communication structure. 

  • Possess a shared standardized system by which all interfaces with clients are evaluated.

Tension between alignment to a common goal and autonomy in the execution.

Peter F. Drucker formulated this in 1955 in the Practice of Management: “A decision should always be made at the lowest possible level and as close to the scene of action as possible. Moreover, a decision should always be made at a level ensuring that all activities and objectives affected are fully considered".

Practical

Steven Bungay is most practical in his writing, and hands on a slide tool to use in discussions with managers, and in trainings. He presents his thinking in a lecture with examples about how to close the gaps between Plans, Actions and Results.

The slides..

An Organization Development Approach

How to combine this knowledge with the Edgar Schein’s Organization Development Approach? By asking questions.

  • Some say we are inflexible with regard to the environment? What are the signs of that? Examples of inflexibility?

  • If so, what makes us inflexible? What practices? What management practices? What feedback signalling?

  • What premises in our thinking on organizing, managing and people make us go on acting as we do?

  • Can we challenge these assumptions? Are they fit for the flexibility that is needed to respond to a changing environment?

  • What assumptions about people, organizing and managing might open better options for flexibility?

  • What would an organization look like based on these principles? How would people act? How would management act?

  • Can we create a relatively autonomous organization experiment to experience how it might work in practice?

  • What will that look like? Who will do what? and so on…..

Ton Voogt

February 2016

References and More to read

Steven Bungay, The Art of Action, How Leaders close the Gaps between Plans, Actions and Results, 2010

Steven Bungay, Moltke, Master of Modern Management, The European Financial Review, April 25, 2011.

Robert Ogilvie, The birth of the Auftragstaktik and its meaning for Modern enterprise, Ezine articles, March 2009.

Robert Ogilvie, Military knowledge and Business Strategy, 2009

Edgar Schein, So you want to create a culture? in ’constructiveculture.com’ November 2015

Peter F. Drucker, The practice of Management, 2006

The Maurits Institute in the Netherlands transforms knowledge and experiences from military organizations to business. www.maurits-instituut.nl

© 2017 TonVoogtConsultancy ~ Recent Update 24-08-2017
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