Written by Jennifer Maerz, contributing editor of Lean Startup Co.
The solution to long-term innovation in companies obviously isn’t having one person come up with all the bright ideas and then translating those ideas to teams that execute them. We’re looking at huge shifts in workplace structures that involve reimagining things like who holds the power to make decisions and how we judge performance, all the way down to how we run meetings to encourage constructive disagreement and a diversity of ideas.
A big part of adopting Lean Startup in an established company involves fundamentally shifting the way organizations manage people and ideas. Mark Raheja, founding partner at August, a consultancy focused on organizational development, will be speaking as part of the enterprise learning track at Lean Startup Week about agility at scale. Mark has created transformational programs for GE, PepsiCo, and American Express while working as a partner at Undercurrent, and he currently works with enterprise and fast-growing companies to crack the riddle of how to organize and operate quickly without breaking.
This interview is part of our “Future of….” series that includes interviews with experts out in the field on the Future of Workspaces, Government, Skill-Sharing, and more in the weeks leading up to Lean Startup Week.
In thinking about the future of management, what modern practices are most vital to today’s leaders?
There are a few big shifts taking place. We tend to describe the industrial era model as being closed, efficient, and controlled. Those aren’t necessarily bad principles of operation; they were very well-suited to the time. Generally, though, we’re talking about shifts from being closed to being open. That can apply to the technologies you use and how you collaborate—whether you’re using cloud-based tools that everyone can be inside of and see all the time, or whether you’re using tools like Slack that have the biases of openness. It also has to do with the way you’re doing work. So do you work out loud with each other? Do you share work in progress or wait until it’s completed? There are a set of practices around each of these principals.
There’s another general stream of our work that has to do with decentralization of authority on some level. It used to be that because everything moved slowly you’d have all the decision-making authority nested at the top of an organization. A very big area of emphasis for us is working with leaders and introducing practices or tools that help make it safe for authority to move from the center to the edge of the hierarchy. There isn’t one thing that does that. There are a whole bunch of different things that do that.
One of those things is getting explicit about decision rights. Actually writing down who has the ability to make what decision. In most organizations that’s not even clear. In the absence of that clarity it just kind of floats to the top. So there’s a lot of work around trying to set teams up with the authority to do whatever work they need to do to accomplish a mission without having to ask for permission.
We actually spend a good amount of time focused on meetings—which can sound boring, but they’re the gateway drug to new ways of working. They’re one of the primary vessels of work that fills up everyone’s time, so how meetings work is a high leverage point to change work habits. We work to make meetings more structured, bring the role of facilitation into them, clarify the purpose of the meeting—are they about decision making? Prioritizing? Setting strategies? We bring structure in a way that tends to be liberating.
When you think about leaders transitioning into different roles, one of the scary things for some of these people has to be the fact that they’re used to having a lot of control, as well as the boost they get from having so much authority.
Definitely. In all the literature around change, often the middle layer gets called out as being this big barrier. While technically it’s true that this is where we can run into challenges, though, I tend to sympathize with people in those roles. They’re in the hardest spot. They’re the ones who some senior leader is making all sorts of promises for about what is going to get done. You also have these people who spend 10-25 years moving up the corporate ladder and they have a lot on the line. They haven’t had the huge payoff that comes at the end of that climb in a large organization, and the systems and processes inside these large organizations are still incentivizing the wrong behaviors or pushing the wrong principles. So you have these leaders who have a lot to lose just by letting go and letting their teams go without their control. Basically we’re asking them to accomplish huge amounts of work and take on a certain amount of risk in transitioning to this new way of working while the reward is unclear. The other thing is they’ve gotten good at traditional management. They’ve been trained to lead in a way that’s starting to go away. So it’s really destabilizing from a psychological perspective; there’s no guarantee that they’re great at the kind of leadership companies need from them today.
So how do you weigh the decision of how much this leader or employee can learn and adjust to the new way of doing things and how much is this a situation where this person is now never going to be a fit?
There will always be people who fall into that latter category, where the motivation just is not there. Or they’re motivated in a separate direction. But our experience is that it’s a relatively small group blocking change.
There’s a tremendous amount of unlocked potential and capacity inside existing teams and leaders. If you can make it safe and you can create the conditions for them to practice and try these new ways of working, they tend to flourish. They embrace it for the most part and everybody wins. You get a more productive organization that is able to work and shift faster and you get more engaged people who love their work.
You said a lot about creating a safe environment. How do you rethink performance reviews in the context of encouraging new practices?
Performance management is one of dozens of systemic barriers to new ways of organizing and working inside big legacy organizations. The biases are kind of insidious. But it’s not just that. It’s how they budget. It’s how they do strategic planning. It’s how they recruit people. If you’re really going to do this transition, all of those things need to be revisited with a fresh pair of eyes.
If you’re diving into performance management specifically, though, you see a lot of situations where it’s optimized for the few or the individual rather than the organization. You actually see people behaving in ways that aren’t for the benefit of the organization because they’re optimizing for themselves. You’ll have two teams that need to collaborate but they’re actually incentivized to do conflicting things. So you have to revisit structure. One thing we tend to emphasize is a general shift towards rewarding teams over rewarding individuals. That way you’re trying to avoid this rogue hero behavior and trying to optimize teams to achieve together.
I’m curious how you see diversity fitting into the future of management. What does it mean for modern teams to reflect diversity when it comes to hiring people of color, people along the gender spectrum, etc. in shaping the company’s POV?
We are very strong advocates for diverse and inclusive work. There’s plenty of data out there about why this is a good idea. Especially because it is right and it feels better but also because it builds more successful organizations. You need a diversity of perspectives and opinions; it’s like a generative force to have more of those present.
The more diverse your organization gets, the harder it will be to come to a consensus as a group. You’ve built in a systematic tendency to disagree, because you come from different perspectives. And that’s partly why we spend so much time with organizations trying to get them to stop trying to agree with each other. It might feel good to agree, but you don’t need that. What you need to agree on is how can we make this a place where new ideas are safe to try and keep moving.
One other thing we tend to emphasize with clients is something we call “rounds,” where you’re going one by one and you’re surfacing questions and reactions from an individual level instead of just letting everybody talk at each other, which biases us. Often in meetings there are a couple of voices that tend to dominate. So some of our work is about creating environments where all perspectives are represented and heard. That’s why structure in a meeting is a good thing. Typically the junior people and the introverts don’t say anything, and these days they tend to have some of the most valuable perspectives.
August is also a lab in and of itself. As you’re trying to promote better management practices for other companies, what have you come up with within August that you’ve found interesting?
We tend to be out on the proverbial edge of the work we’re doing and so we are motivated to push the envelope on these principles. It’s been just over a year [since August was founded] and we’re a radically transparent organization—our Google drive is public. A pocket of it has confidential client information but otherwise every other document we create we host publicly.
We don’t know many organizations operating with this level of transparency. It translates to our documents but also to our salaries and our equity models. We’re constantly learning the nuances of this transparency. So, for example, what’s it like to have our salaries public? Generally we believe there’s a huge systemic plus in us being open about them, but not all team members will be comfortable with that on an individual level. And so it’s interesting, reconciling our ambitions for having an impact on a system level with what is comfortable internally.
Both inside clients and internally we’re finding that there are bigger errors to these changes and you have to creatively find the solutions. We’re trying to stick to the principles and let the future emerge. So far the wheels haven’t fallen off.
Hear more from Mark and other leaders pondering the effects of long-term innovation on the way we do business at Lean Startup Week Oct. 31-Nov. 6 in San Francisco. Take advantage of our special Fall pricing and save up to $350 here.