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- [00:01]
A
Welcome to the New Books Network.
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I'm Dan Hill.
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And I'm Julie Annixter. And this is Real Transformations, where we
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explore business change from the inside out with people who are focused on what makes transformations actually work. Today we're talking to Chuck Snow, who along with Eistein Felstead, co edited and co authored two of the articles that appear in the business book collection of articles entitled Designing Adaptive Organizations. The publisher is Cambridge University Press.
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Chuck is a leading voice in the field of organizational design, demonstrating how a combination of agile processes, AI and digital platforms can power adaptive, sustainable and healthy organizations. He's also professor emeritus of Strategy and Organization at Penn State University where he's taught management to MBA students and executives in more than 35 countries. And I agree with this quote about the book. It's a one stop shop for the latest thinking about organization design. And that's from David Alperts, the president of the International Command and Control Institute. So over to you, Dan.
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B
Yep. So welcome to Real Transformations, Chuck.
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A
Thank you. Glad to be here.
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B
Great. So let's jump in. I want to focus on the article that you and Einstein really wrote called Actor Oriented Organizing. So two things. Briefly tell us what inspired the article and also can you give us a little sense of what's the essence of the article?
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A
Sure. The article is a chapter in a book that E. Stein and I co edited, and it was by invitation from Cambridge University Press for us to edit a book on modern organizing. The backstory of this book is that when I first became a professor researching and teaching organizational management in the 1970s, much of the business press was devoted to how Japanese companies like Sony and Toyota were out competing American companies. And so Business Week and Wall Street Journal would often have editorials saying, what's the matter with you American managers? Why are your companies so behind Japanese companies? What are they doing right that you're doing wrong? And I think this led to kind of at the end of that 1970s decade as what was referred to as the death of bureaucracy, that American companies were being characterized as big aircraft carriers that couldn't turn around and adapt to their environments. In the 1980s, downsizing and delayering, I.e. eliminating middle managers, became the sort of recipe for competitiveness. And there were attempts to unleash market forces both within and outside organizations by telling them to focus only on their core competencies and to outsource everything else. I'm in the midst of all this teaching and research, and I came to think of myself as an enterprise strategist, to coin a term that is, I was interested in how the entire enterprise as a dynamic system adapts to environmental change. Hence the book Designing Adaptive Organizations.
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B
Okay, so on this, maybe it sounds like it's going back to the 1980s, but this just happened. I was reading the New York Times that within the last two years, starting in January of 2024, Bayer has actually eliminated 2/3 of its management positions. 2/3. So we're not talking like slight modifications. I mean, this is extreme delayering big time. So my question for you, you talk about how organizational actors need to self organize. What do you suspect are the kind of managers given that kind of purview, what kind of managers would you suspect Bayer let go? And which ones do they keep? And maybe more importantly, why do they choose those to keep? I mean, what capability did they offer to an agile organization that made them valuable?
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A
Well, we call it actor oriented organizing. And this is an administrative technology. It's a way of doing administration and it's the antidote to hierarchy. And as I said in the from the 1970s on, managers have, and organization designers have been trying to figure out how can we get rid of hierarchy? Well, as we all know, you're never going to get rid of it. It has its place. But flattening it and distributing decision making and so on are antidotes to the peer command and control hierarchy of the past. If you think of a continuum from hierarchy down to self organizing, actor oriented organizing is down towards that. Self organizing end of the continuum describes how managers can self organize. And Bayer is one of the current examples along with Haier and, and a few other companies are being cited as successfully self organizing. So I don't know the details of the Bayer situation, but I'm sure they got rid of a lot of layers of hierarchy and started doing things that are consistent with actor or actor oriented organizing, such as distributed decision making, self leadership, control by, by the teams themselves, and so on.
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B
So that sounds to me like someone who's going to need to be more fluid, more flexible. Okay. With not having under control of the situation. Am I on the right track? Other qualities you want to add?
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A
When economists look at organizations, they say they think the purpose of an organization which is simply a goal or oriented, a goal directed activity system. And they say the two most important things about a goal directed activity system is control and coordination. So that's what organizations need to do. And so yeah, you mentioned control. And it's moving away from control by superior units to control by the units themselves.
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B
Julie, you want to jump in here?
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Yeah, I'M fascinated by this. Lately I've seen some research that says the most important thing to any organization's success is the CEO's mindset. What do you what's your reaction to that? Chuck?
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A
I'm a cynic in that regard, Julie, so you may not like my answer. I'm sort of disgusted by CEO behavior these days, with the goal seeming to be how much of a celebrity they can become and how much greed they display. So I'm sure There's some thoughtful CEOs out there that think about organization design and how they could improve the organization that they have. But I think those people are probably in the minority. So your podcast orientation towards bottom up transformation is just really, really on target in my mind.
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C
Well, I'm so glad. And I have a follow up to that in The in chapter 12 you say that modern organizations are flatter. They're more open to their environment, their context, and their processes are more generative and interactive. Actors who kind of remind me of basketball players continuously generate and coordinate solutions rather than following hierarchically devised plans. And I'm blessed in that I have worked for those kinds of organizations a couple of very profound ones, one being Ian Schrager hotels where he encouraged all of the employees to improv and never to, you know, be too stiff and and several others. And I guess I'm wondering what kind of signals, what are the permission slips? How does an organization get into a position where it can encourage generative and interactive work amongst their teams?
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A
Well, that's an excellent question. You know, most organizations, including those CEOs who read come about from reading an article in the Harvard Business Review or something like that, or their ongoing relationship with a consulting firm, get advised that this is the latest and greatest technique or process. I've seen such situations like that before, but I think in in terms of buying into actor oriented organizing or any other means of moving towards self organizing is is really going to have to be driven by some examples that work. And Dan mentioned Bayer. That's in the literature. Higher. Also in the literature, there's a an organization that you may be aware of called Corporate Rebels. Have you heard of those people? Well, you might take a look at their website. I get kind of a weekly missive from them and they are part teachers, part consultants, part marketers and they go around searching for examples of self organizing and they also teach master classes in self organizing. So they're not an academic organization, but they're kind of close to them. And they have on their Website More than 100 examples of self organizing and sort of tips about how to do it. So I followed them, but you know, they're not considered in the literature because they don't write in peer reviewed journals. So I think there are a lot of examples out there and they would indicate how those examples came about. But I think it's probably somebody who's thoughtful inside the candidate company becoming aware of a new possibility, a new way of organizing and oh, by the way, let's check it out.
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B
I have to jump in there because I can think of one example that maybe runs against the trend you're highlighting. It's a book called the Heart of Business by the former CEO of Best Buy, Hubert Jolie. And he wrote the book because his children, his teenage kids shocked him to death by saying we basically don't believe in capitalism, we don't think it works, we don't think it's humane enough, it's not serving a larger purpose. And he went to reflection, he even went to a monastery, I believe in France, to think about this and what's essentially the solo business. And so he came back and he instituted changes at Best Buy, which maybe weren't everything, but they were a very sincere attempt to renovate the spirit of the place and to probably instill quite honestly, some, some self acting from the executive team on down to look at themselves, take a hard look, change some practices, try to open up the processes more.
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A
Yes, I haven't read his book, but I read an article that he wrote in the olden days. It was probably called Karma Capitalism and I really liked what he said. I think he's made Best Buy more humane as an organization. I'm sure it's still pretty much hierarchically organized, but nevertheless you can make a hierarchical organization treat people better, treat your employees better, think about customer service instead of profit margins and make the company more friendly to customers.
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B
Well, I in fact did market research for them on some renovations on the retail floor and the changes made were instrumentally better outcomes for the customers and their emotional enjoyment of interacting with the company on the retail floor, both the displays and the personnel. So there seems to be at least some measure of progress there. I want to go to another book, very old book, very, very old book. That's a bit of an inspiration for me. It's not just the wealth of nations by Adam Smith, as you would well know. Before that he was a moral philosopher. That was the term of art in those days. In a sense, the term psychology was not in vogue for another three centuries or more. He talks a lot about Mutual sympathy. Basically he's talking about empathy. And I bring it up because in your book or in your article, rather talking about these self acting organizations, you talk about the values of the people involved and you talk about trust. I think implicitly you're talking about mutual respect and mutual self empowerment. But can you talk about the spirit in which you think those teams can and should be operating?
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A
Yeah, very good question. And in the process, I'll tell you about the key ingredients of actor oriented organize. Sure. I wouldn't recommend trying this in an organization that doesn't have thoughtful, open people already in place, at least a critical mass of those people. Because conducting the process of collaboration, you can't use it with an authority structure. So component number one of our framework is actors who have the capabilities and values to self organize. You mentioned values. The people who are most successful in an actor or in its system are those that value their teammates. They like to get group outcomes. They enjoy the process of collaboration. It's not a process of competition or cooperation where you simply work together, even though you have to bite your tongue. It's someone who really enjoys working with their colleagues in the organization, but they also have to have the capabilities to do so. And that is, you know, empathic listening, willingness to entertain ideas that don't fit their paradigm and, you know, just basically be an open, curious person. So if you have a lot of actors in, in the system who convey those values and, and possess those capabilities, then I think, you know, that's step one you can start considering moving forward. The second element of our framework are commons. And this is commons used in the sense of, not the physical commons of, you know, where sheepherders put their sheep and they graze and so on, but rather knowledge commons and information commons and basically resource resources that are shared by all the actors in the organization. Now that it's not a universal truth, because in practice, commons are set up to serve various units of the organization, those that work together and so on. You don't have just big data banks all over the place where everybody can access them. But the idea is that we the actors, since we're in charge of our own fate, we need all the information that's available to us and so that we can make good decisions, not wait for R and D to give us the information or for sales to give us the feedback about what we're doing, but rather just a data bank of information or resources or lists of things or customer experiences or whatever it is that supports our work. We have access to those.
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And you know, of course I've been in corporate life and I've experienced the opposite, which is what I would call hoarding, where information is power. If I have it, you don't have it, and maybe I can win the next turf battle. It seems like a terrible ill that has to be overcome in all of this.
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C
And I just want to jump in and say I don't think it has to be that complicated to overcome it. You know, Google talked about teams that have high trust, high psychological safety. One thing that they have are shared norms. And just to throw out a concrete example, my family's business, which was Annexster, a wire and cable distribution company for the first 30 years, did not have job descriptions. It was a sales oriented company. And salespeople, here's the punchline, had access on their computer screens to standard cost and they could mark up anything they sold according to their own judgment. And everybody could see everything. And guess what? The company grew like a rocket.
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A
Well, that's a great example of what we're talking about. And, and so you've seen it in action. And people tend to be empowered once they gain access to information that they need. They just feel like, hey, now I can do my job. The reason information is power and use that way is to protect yourself in a hierarchy.
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C
And I think there's a characteristic of, you know, on the good and the bad side, and that's the willingness to fail. You know, we talk about innovation and experimentation and distributed control, but if it's not okay to make a mistake and screw up once in a while, if that's not in the water system of the company, no amount of permission is going to work.
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B
Yeah, that's why my favorite acronym of late has been ROM Return on mistakes, because they will be made. But do you learn from them or do you just simply repeat them over and over?
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A
Exactly. The final pieces of the framework, if I may add it a phrase, protocols, processes and infrastructure that enable multi actor collaboration. You can't just, you know, form some teams and tell them, okay, go ahead ladies and gentlemen, get the job done. You need a means of communication across these teams. You need those commons that provide them access to resources that they need. You need to inform people how to approach each other as well as use the commons via protocols, which are just, you know, etiquette or guidelines to behavior or whatever you want to call them. And if that whole ball of wax from the actors with capabilities and values, with access that information and other resources that they need and then a understanding of how to work together when all of that comes together, then. Then you have a chance.
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C
You know, I had the pleasure of working as a consultant at P and G when it was under AG Lafley's leadership. And at the time, I couldn't believe it. They had multiple incubators where people were selected and pulled out of their day jobs to go create new products or services. They had Clay street, they had FutureWorks, and. And it created a spirit in the company. They also adapted a lot of Clay Christensen's thinking and Roger Martin's and ideos. And there was a spirit of design thinking. And anything is possible in even the simplest business transactions there. And I remember Claudia Kochka, who ran Design there once, saying, you know, design think is. Design thinking is really just permission to make mistakes. Now, she probably wouldn't like it if I quoted her like that, but it did sweep through the business world, right, and give people a lot of permission. But it hasn't really gotten institutionalized, has it?
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I think you're correct. You know, that's the opening chapter in our book. You know, Jean Litka's Design Thinking as Applied to Organizing. And she does a beautiful job of laying it all out with all the examples like Adeo and stuff that you mentioned. And she says that design thinking should be more prevalent in organizations that it is than it is. But I'm sort of an outsider to her work and so on. But my guess is that these are not easy concepts to describe and implement. They're valuable, conceptually, very valuable, but I don't know what. Training people how to behave that way, that's a different story.
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Well, I think it's their mindset and their openness to change. Fear is a big player in all of this. So let me ask you a really key question. What we want to get to before we close up here. So you might have some management situations where it's just hard sleddings. You said they're just not ready for this kind of approach. You have some other ones that maybe are on the tipping point and they could be open to change, but maybe they're not there yet. What's the. Maybe the one actionable recommendation or insight you might have that might give that organization that really does have a chance to go to what you're advocating for but isn't readily able to jump there? What might it be that is the ingredient, the one principle you'd want to put in front of them to help that nudge happen?
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Wow, tough question. Sorry, Dan,
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we're our friends for.
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A
All right, well, maybe my answer is more Sort of mainstream in today's world. And that's no one's going to change either as an individual or as an organization until they believe it's a good idea. If you're calling for behavior B to replace behavior A, you've got to convince me that that's going to pay off because I'm going to make a lot of mistakes in my rm. Why? And until that, until that realization and understanding takes place, people and systems are not really ready to change. So I guess where, where actor oriented organizing is most likely to take hold is in an organization that's already pretty thoughtful. They're always looking for ways to improve, you know, whether it's technology or in systems or in how they organize. Maybe many organizations don't realize that the actual phenomenon of organizing can be an advantage. And I think those 100 plus corporate rebels examples, those organizations have come to believe that they're now doing organizing better than they did before. And if that kind of experience and thinking starts to permeate the corporate world a bit more, then the examples might begin to multiply. The organizations that they tend to cite, unlike Bayer and higher, tend to be smaller firms, which, you know, maybe like your family business, Julie. Smaller firms that already, already have kind of a, a willingness to experiment and, and, and they want, they want their employees to feel like they're doing something meaningful, purposeful and so on. So they're open to these kinds of ideas. I don't think I could go down with a sandwich board and stand on a corner having luck. I think it's kind of a pull sort of mechanism.
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C
So my last question is really, I want to test a hypothesis with you. There's been a lot of coverage of Gartner's research on employee engagement of late. And it's something frightening. Like 80 something percent of employees are disengaged. Have you guys seen that? Is this is self organizing actor organizations, Is it the antidote to that? Is it the, is it the path to engagement?
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A
I think so, sure. Because remember, actors who have the capabilities and values to self organize. So when you start mixing those people in, it becomes exciting because they, they can now be on teams where they have all the resources they need to do their own job. So now you're in charge of your own fate. I mean, at least partially so. I would be enthusiastic about my job if I was really being given the opportunity to be successful. Let me put it that way.
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B
Yeah, go ahead, Julie.
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C
You talk about corporate rebels and the examples there and I just want to throw one on the TABLE Dan knows that I'm passionate about NCAA basketball. And this year the UCL UCLA women won the first time in 15 years. And that is a masterclass. Corey Close's coaching of that team and the way that team operated and they talked their young women and they were so articulate about. I am always looking to see who I can make better and what my teammates need and where I can pass the ball. It was the most selfless example of excellent basketball play that I've seen in a long time. Is a great masterclass for this.
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B
Yeah, no, it seems to me you're looking for people who are receptive to curiosity, to improvement, to betterment, and that's a great way to go. And then, yes, as you said, Chuck, you got to cement it with some results so that everyone else can see and believe and sustain it. Because the only other approach, sadly, is this wonderful old cliche that it's not that people see the light so much as they feel the heat. And the heat, the heat ends up being, yeah, we got a trauma here. We're going down for the count if we don't make some changes. And that might be the moment that you open things up. But that's a stressful situation and I sure like the alternative, the more positive alternative, a lot better. But the world is what it is sometimes.
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C
Well, I love that this was one of our first interviews, Dan, because what Chuck is proposing and his co author is really an enterprise solution to transformation. It's an enterprise philosophy and an approach and it has tremendous common sense in it. Not easy to do, but it sounds like from my own experience, I know it really can work. So, Chuck, really great to talk to you today. I really appreciated the time and I can't wait to share the book with others. The book is Designing Adaptive Organizations from Cambridge University Press. Check it out.
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A
Well, thanks for having me.
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B
Okay, well, I think this is a wrap. Thanks all for listening.