An Introduction to 21st Century Organization By Subrata Dey

The Business Scenario Falling revenue. Declining margins Leaving customers Competitors catching up.

The Management Team• The whole industry is suffering.

• Cost cutting will yield result in next quarter and the numbers will go up.

• We are too big to fail. Look at our accomplishments.

• Once the recession ends we will be fine.

The Management Team• The company is underperforming and yet the sense of

urgency is low among highly intelligent and well intentioned people.

• They have performed consistently well that’s why they are holding key positions.

What could be the possible reason?

Complacency!!

Complacency!!

Reasons for Complacency Past Success and Market Dominance

Narrow departmental Goals

Low Overall performance standard

Wrong performance indices

Improper Feedback system

Kill the messenger of bad new

We are just human and are trained to manage

Reasons for Complacency1. Past Success and Market Dominance• Much success in the past brings it’s own problem, for individuals it

creates EGO problem and for firms a Cultural Problem. • Managers begins to believe that they deliver superior product and

services to client and a strong arrogant culture develops.• They fails to value the customer and stakeholders and often behave

in insular and political way.• They tend to stifle initiative and innovations in favour of short term

financial gains.

Reasons for Complacency2. Narrow Departmental Goals• Different units focus more on different departmental goals instead of

the organizational vision. • These targets are often misaligned with organizational vision.• Quantity gets the precedence over Quality.• The core values of the organization are compromised for short term

gains.

Reasons for Complacency3. Low overall Standard• Standards against which manager measure themselves are far from

high. • Profits are up 10% over last year and what is not said is that the profit

is down 30% from peak value.• Global Benchmarks set by leading players are never referred to.

Reasons for Complacency4. Wrong Performance Indices• The internal planning and control system are rigged to make it easy

for everyone to meet the functional goals.• MIS didn’t reflect the changed scenario. Only short term financials

are highlighted and too little information on market, innovation, productivity, customer satisfaction, deliverable quality etc

• Information are circulated to a few people in top management, employees only get the quarterly financial results.

Reasons for Complacency5. Improper Feedback System• Whatever performance feedback manager received came from faulty

internal system. • In some department the feedback is entirely missing. This is quite

absurd for knowledge workers.• Data from customers, stakeholders, suppliers are hardly used.• Promotion and compensation decisions are made in subjective way

and bench mark indices (if any) have little or no role in it.

Reasons for Complacency6. Kill the messenger• When one of the employees went out of the way to collect external

feedback and highlighted the same, he is reprimanded.• In corporate culture such behavior is seen as inappropriate because it

might hurt someone or reduce morale.

Reasons for Complacency7. We are only human• Complacency is supported by very human tendency to deny that

which we do not want to listen.• Managers tend to ignore the problem as life is usually more pleasant

without problems.• Managers are groomed to maintain status quo and deliver

consistently to meet short term financial results.

The Business Scenario Falling revenue. Declining margins Leaving customers Competitors catching up.

Why this crisis?

Why the crisis?• These organizations have done exceedingly well in the past and have

helped to transform society.

• They are run by excellent management team with proven track records. Over the year they have served in outstanding way to deliver superior results to share holders.

• Why the present management is failing to cope with the rapidly changing business environment?

Because Management is not Leadership -Management deals with status quo while Leadership deals with change.

Leadership vs ManagementThe common mistakes

1. People use the terms “management” and “leadership” interchangeably, but there are crucial difference between the two and the vital functions that each role plays.

2. People use the term “leadership” to refer to the people at the very top of hierarchies. They then call people in the layers below them in the organization as “management” and rest all as workers.

3. People often think of “leadership” in terms of personality characteristics, usually as something they call Charisma and since very few people have great charisma they feel only few people can provide leadership.

Leadership vs Management

Leadership vs ManagementManagement is a set of well-known processes like planning, budgeting, structuring and staffing jobs, measuring performance, controlling and solving problems which help an organization to predictably do what it knows, how to do it well. It helps to produce products and services of specified quality on budget, day after day, week after week. This is an enormously difficult task.

Leadership on other hand is associated with taking the organization into the future, finding opportunities that are coming at it faster and faster pace and successfully exploiting those opportunities. Leadership is about vision, empowerment and most of all, about producing useful changes. Leadership is not about attributes, it is about behaviour.

Development of Management During the last century thousands of

large organizations were created for the first time in human history.

For every entrepreneur or business builder, we needed hundreds and thousands of managers to run the business smoothly and efficiently.

Many companies and universities developed management programs and peoples were encouraged to learn management of the job.

Development of Management People were taught how to plan, budget,

organize, staff, control and solve problem.

People were trained to produce products and services as per client's specification of consistent quality, on budget and stipulated time.

In slow paced 20th century- characterized by long period of calm with shorter period of hectic activities this command and control type management have delivered satisfactorily.

The Current Scenario The rate of change in business world has

accelerated and it is not likely to slow down at all.

Formal structures, systems and lack of training with 20-30 years of experience have taught managers to disempower employees who wants to implement change and maintain status quo.

Managers with decade of experience in planning, scheduling, budgeting and controlling are finding it hard to create vision and strategy to deal with changes.

The Current Scenario The firm hires and promotes outstanding

managers and not leaders to cope with changing circumstances.

All these results in the creation of an over managed and under led corporate culture.

Off late managers are attending Leadership development courses for a couple of weeks or even two years.

These courses though helpful, but are highly inadequate to address the current crisis.

Leadership vs Management

Outstanding managers when promoted to leadership positions often failed to adapt to the new role due to decades of management training.

The Current Scenario Falling revenue. Declining margins Leaving customers Competitors catching up

The Current Scenario

Twenty-first Century OrganizationsIn an ever faster moving world, leadership is increasingly needed from more and more people, no matter where they are in hierarchy.

The notion that few extraordinary people at top can provide all the leadership is ridiculous, and it’s a recipe for failure.

Twenty-first Century OrganizationsA typical twentieth- century organization has not operated well in a rapidly changing environment due to it’s

I. Structures II. Corporate CultureIII. Systems & processes

Structures of Twenty-first Century OrganizationsNonbureaucratic with fewer norms: In stiff

bureaucracies young employees are discouraged to lead and are trained about bureaucratic management.

Flatter and Leaner Structure: Highly controlling organizations often destroy leadership by not allowing people to blossom, test themselves and grow. Flatter structure encourages leadership.

Structures of Twenty-first Century Organizations Broad based Empowerment: Constant

empowerment will be required for constantly changing world. Senior managers shall focus on leadership and managerial responsibilities shall be delegated to lower levels.

Management will lead and lower level will manage: Successful 21st century organizations will have to become more like incubators of leadership which encourages and helps employees to develop leadership skills. Without enough leaders firms will not be able to cope with the changing environment.

Structures of Twenty-first Century OrganizationsToday’s high-tech companies and professional service

firms are thriving in intensely competitive and changing environments with flatter structure, little bureaucracy. They are taking calculated risks, have work force that largely manage themselves and senior level people are providing the leadership for client’s project, technological development or customer service.

Structures of Twenty-first Century Organizations

Twenty-first Century OrganizationsA typical twentieth- century organization has not operated well in a rapidly changing environment due to it’s

I. Structures II. Corporate cultureIII. Systems & processes

Culture of Twenty-first Century OrganizationsSmart people miss the mark here when they are insensitive to the cultural issues. Economically oriented financial people and technically oriented engineers can find the topic of social norms and values too soft for their taste, so they ignore culture – at their peril. John P Kotter

Culture of Twenty-first Century Organizations

Culture of Twenty-first Century OrganizationsCorporate cultures of 21st century firms will have to

value candid discussions far more than they do today. Norms associated with political politeness, non

conformational diplomacies and kill-the-messenger-of bad-news will have to change.

From controlling and centralized culture to Empowerment.

From Opaqueness to transparency.

From risk averse to risk tolerant culture.

From micro managing to leading culture.

Twenty-first Century OrganizationsA typical twentieth- century organization has not operated well in a rapidly changing environment due to it’s

I. Structures II. Corporate CultureIII. Systems & processes

Systems of Twenty-first Century OrganizationsPerformance Information System that

are far superior to what we generally see today will be required. Outdated MIS will not work.

Traditional financial data on quarterly basis being circulated to selective people will have to be the thing of the past.

More people, more often will need data on customers, productivity, employees, suppliers, shareholders on real time basis.

Systems of Twenty-first Century OrganizationsThe systems that supply these

information cannot be designed (as are some today) to make organization or one of it’s unit look good.

Creating these systems and norms are certainly difficult, but the task is not impossible.

People will have to look for the problems on real time basis and exploits the opportunities.

Information Paralysis!A typical employee of today’s

firm hardly receives any information regarding their performance, the performance of the team or department as a whole.

Lack of information to large number of employees means absence of initiatives and actions from them.

Potential leaders also feel disempowered without much information.

Information Paralysis!Does limited information to employees affect their performance and morale?

Information Paralysis!• Imagine cricket matches without a live score board on field. • Live Scores will be available only to the team management

comprising of coach and board members. They will send all the instructions to the players as and when required.

• Players will only be informed about the results (win/loss) after the completion of match.

• Individual performances/milestone will not be declared.• Players Grade will be retained or changed after a year on the

basis of their performance through out the year.

Blank score board

Information Paralysis!How can the players respond to the team’s need? Whether players will be able to take any initiative to

raise their game (scoring/economy rate) when required?How a player will feel when he is dropped from the

team or down graded? (Individual scores/performance are never declared) Benchmarks not available to players.

What would be the motivation level and morale of such a team?

How Information Helps!The live score board gives information to

players in real time and they respond accordingly.

Players also celebrate their individual/partners milestone.

These data allow players to compare themselves with their peers.

These information act as the feedback and also allows them to work on their weaknesses and improve their game.

How Information Will Help?The combination of valid data from

internal/external sources, broad communication within the organization and a willingness to deal honestly with the feedback will go a long way towards squashing the complacency.

An increased sense of urgency will in turn, help organizations change more easily and better deal with a rapidly changing environment.

How Information Will Help?These will provide honest and

unvarnished feedback about performance which will help employees to improve and grow.

It will create a healthy competition among employees and different team and will also improve the overall appraisal system (from subjective to quantitative).

These information will provide benchmark for reference (presently non existent) and will motivate people to achieve the same.

How Information Will Help?

Twenty-first Century OrganizationsTruly adaptive firms with adaptive culture and systems are awesome competitive machines. They produce superb products and services faster and better.

Living and winning in that environment can be fun because you feel like you are doing something worthwhile and contributing to the society.

Twenty-first Century OrganizationsHow is your firm Operating?

Blank score board Live score board

Q & A