How to Improve Your Organization’s Performance

Performance Can’t Be Improved With One Weird Trick

Introducing his movie’s cast members at a US premiere, Woody Allen once said, “I’m always very lucky to get a great cast. If you cast very talented people, you get out of their way and don’t screw them up, and they make you look like a hero, and then I take credit for it.” In this short tribute to his team Woody Allen demonstrated qualities that distinguish an outstanding leader: positive focus, humility, respect for the team, and a good sense of humour.

Woody Allen did not use words like efficiency, team, leadership, etc. Chances are that he does not know the word holacracy, whatever is the type of team governance prevailing on his movie set. And yet he has been successful in his leadership roles for many decades, without spending a minute on his team setup, while many organizations, including “world leading” and “best employers,” struggle and eventually go under, primarily due to the incompetence of their leaders.

Having worked for and with a number of businesses and business leaders over the last 25 years, I observed three closely related problems negatively impacting individual and organizational capabilities.

Leadership as an incentive

Leadership is a trade. Like a doctor, an engineer, or a plumber. It is not an achievement, not a reward. Unfortunately, this is not the case in traditional corporate environment, where a bright engineer, quite happy and engaged in his avocation, needs to be promoted as a manager if he wants to get better compensated for his talent, have his seniority recognized and, in some extreme cases, survive the “up or out” policy. As the result of this promotion, the organization loses a good specialist and gets stuck with a problematic manager.

The “leadership-as-incentive” approach is not conducive to better organizational efficiency, but it has become ubiquitous in mature organizations. Leadership should be treated as a distinct career path, with diligent selection of qualified personnel, and remuneration and perks consistent with the value the person delivers.

Peter principle

According to the Peter principle, managers are being promoted until they can no longer perform effectively, i.e. until they reach the level of their incompetence. As it is rather difficult to fire a manager for incompetence, the majority of them remain in the positions above their actual competency rendering the entire organization inefficient and providing creative research ideas to management scientists. Moreover, rather than promoting a bright employee, a “charismatic” manager will likely set him up to fail and get fired soonest because he may disrupt the hierarchy and thereby “violate the first commandment of hierarchical life with incompetent leadership: the hierarchy must be preserved.”

Popularized two generations ago, today the Peter principle is often overlooked or considered a Murphy’s Law type of joke. Well, they say that every joke is funny only once, but probably there’s only a grain of joke in this one, as the original text by Laurence J. Peter is still in print, and many managers around us are a living proof of Mr. Peter’s keen wisdom.

Elite reproduction

The Peter principle is aggravated by the negative evolutionary dynamics within the organizational elite, which the managers (or “leaders” as they without fail refer to themselves) of any organization have become. With managerial promotion being the principal career path for all aspiring professionals, a spot on the “leadership team” is something to fight for and to protect. Laurence J. Peter noted that in his book as “the first commandment of hierarchical life with incompetent leadership: the hierarchy must be preserved.”

Although I am convinced that leadership is management of the 21st century, and therefore I deliberately interchange the words “management” and “leadership” in this article, calling oneself a “leader” defies one of the fundamental traits of the true leadership – humility. This is one of the early indicators of leadership degradation.

Elite theory offers a more scientific way to look at this phenomenon. One possible approach is to look at the elite groups as closed-loop systems. Accordingly, a classic example of elite group reproduction – the Olympic team is a system with a positive feedback loop: stronger members stay on, new members must perform on a par or better; this ensures continuous improvement of the team’s “outputs,” as every new generation of athletes will be gauged against a higher standard of performance.
The typical “leadership team,” on the other hand, has a negative feedback loop: more capable (“Level 5”) leaders are ousted and replaced with weaker new ones, pushing down the quality of the elite team. As one manager confessed to me, when the push comes to shove, personal devotion and loyalty trump professionalism.

Engineers and “seasoned” managers like closed-loop systems with negative feedback for their stability, but when used for management elite reproduction, this model inevitably sends the company into a steady downward spiral.

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I do not imply that the three described factors are omnipresent and will inevitably lead all companies to extinction. There are companies that do consistently well and whose leaders are broadly respected and loved by the employees. However, their number is small, and none of them will consciously attribute their success to the adoption of “team governance” or elimination of management structure.

Fighting hierarchies per se is not a viable solution. To me, the term “self-managing team” sounds as realistic as “entirely independent teenager.” Ideas like Holacracy, Podularity – are just a new generation of matrix organizations, stealing the thunder from PMP, PRINCE2, GPM, CBAP, PROPS, Agile, Lean and other numerous methodologies that started flooding the business world in the end of the 20th century, to a large extent fueled by the IT revolution.

Popularity is almost guaranteed to these new ideas because they sound doable, generally harmless, and like all feel-good campaigns, promise immediate positive results, and may score some brownie points with the company “leaders.” For all intents and purposes, these new management fads are identical to “this one weird trick” scams implying that you will lose fat and gain muscle without changing the diet, for a fee.

Fad diets do not work.

In real life, it all starts with people. When a company claims that it has achieved a step change in performance, chances are that it was “lucky to have a great team” in place, well before the change was initiated. In fact, it was lucky to have the next generation of management in place.

If you have read this far, you may be one of them. Congratulations! But you will need quite some courage to stay on course. Contact me or leave a comment if you need help on the way.

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