Why?  At Proteus ideas leading to patents is a big deal so innovation is a part of everyone’s job. As Andrew tells it, in the lobby of the company “there are shelves of big glass jars and everyone’s name in the company is on one of them” and “if you file a patent or have your name on a patent, we give you a little foam brain” and in these jars is where the foam brain goes.  There is visible recognition but no money (additional) involved.  Accordingly, it seems Andrew realizes that ensuring the viability of the business rests upon ensuring the flow and emergence of ideas.

Fertile Ground is Needed

As discussed in Leading the Bottom from the Top, leaders must create the space so that people can freely exercise their capabilities: A workplace—physical, psychological and temporal space—wherein people can freely exercise their capabilities without fear and constraint.  In other words structure, culture and management practice must align with vision as well as support the mission and its corresponding strategy.

Further, at Proteus there is a bias toward action and risk taking.  This means making a mistake does not earn a penalty, for if it did then people would be fearful of putting forth creative ideas.  As Andrew recognizes, “its really important that you don’t penalize failure.”  At Proteus there is a “very strong bias to action over analytics, and for learning from mistakes and moving forward.”

What is being said is that you learn from a mistake and use the knowledge gained to improve (i.e. move forward).  Both learning-as-you-go and going-as-you-learn are complimentary ways of connecting learning to improvement. Because the conduct of business—any business—provides opportunities to learn and to improve each and every day those in authority must provide enable people to seize these opportunities.  Simply you realize progress without learning!

Recognizing What’s Important

Fostering a sense of what Andrew calls “mutuality” is an important element in the culture as well.  According to Andrew building “a very high level of trust, and a very mutually respectful organization where people work with each other and where employees are recognizing each other—rather than management doing it—“ promotes this sense of mutuality.  One activity that Andrew describes involves employees nominating others (individuals, groups or teams) for recognition for “doing things that specifically demonstrate” the company’s values.  In a company meeting, the nominating employees tell the story about how the nominees exemplified the company’s system of values through quality of work, teamwork and/or leadership.

What this does is build a sense of partnerships across the organization—horizontal strength, not vertical power.  Andrew asserted “the best, strongest and most functional organizations are ones where the horizontal relationships are really powerful and where people trust each other, work with each other, support each other, help each other, hold each other’s hands and move forward together.”  This is what truly supports the work of the organization.  Organizations are a network of relationships of people and unless people are enabled to connect in a very human way their work will lose meaning, and it is meaning that motivates.

As explained in an earlier article management mustn’t foster a culture where ‘what’s in it for Me’ colors all activity; where all meaning is expunged from the work of the enterprise.  The organization must be a place where one’s work is a joy and not merely a job!  The leader’s responsibility is to create the context that is conducive to the emergence of a collaborative and entrepreneurial culture; a self-actualizing system not a self-interest based culture.

It seems that there is a sense of partnership throughout the organization.  Partners help each other by serving to their respective needs according to their ability; it is service to others that is internally acknowledged not formally imposed.

Productive Relationships

When the organization’s values resonate with everyone then a unity of mind emerges which fosters consistency, collaboration and shared commitment.  To this end hiring at Proteus is about seeking people that ‘fit’ the culture not just the task of the job.  As Andrew explained, “we don’t hire pegs, we hire people.  We have job descriptions, but we’re looking for very capable authentic personalities…The single most important aspect of the hiring process is the human interaction—the cultural fit and the person’s raw talent…We want people who come to work with their head, their heart and their hands. All of it. You want the whole person walking through the door.”

Clearly Andrew Thompson understands that an organization is a human system not a mechanical system, “where people come to live as well as to work.”  It is a human activity system and as a result culture is capability, for it is enabling to the human spirit.

Andrew’s understanding of leadership is that leaders serve the needs of those performing the work of the organization. As management in authority within Proteus Andrew says his job is not to gain control over people but it “is to get them the resources, whether it’s money or budget, or tools, or training, to get their jobs done.”

The Approach

Jay approaches error correction or problem resolution following the belief that “most mistakes fall into one of three categories: planning, procedures or performance.  Accordingly Jay contends “it’s important to understand what kind of mistake has been made before you try to deal with it.”  In other words it seems that Jay first determines the category of the cause of the mistake.  Is it a planning mistake, a procedural mistake or a performance mistake?

Jay tells of a situation involving the ordering of custom shopping bags for his picture-framing business.   The plot of the story centers on ordering—more accurately double ordering—custom bags.  Jay’s bottom line summary of the situation sums it up fairly well, “It turned out that a second order of bags had been placed only six months after a previous order.”  Given that each order provides about a 3-year supply of bags, this double ordering resulted in considerable inventory on hand.

The Investigation

Jay’s investigation provides the following account:

“I asked the purchasing person how this could have happened, and she told me that our inventory manager had said we were running out. I called the salesman from the bag company who I had been doing business with for many years and asked him if he thought it was odd for us to be reordering so soon. He said he did. As a matter of fact, he said he told the buyer that it was impossible that we needed to reorder so soon and that she should check the stock again. Which she did. Once again, the guy in charge of inventory told her we were running low. They put the order through.”

Following his approach Jay asked: “Was this a planning problem? No. Was this a procedure problem? Yes. The purchasing person was fairly new and someone should have been overseeing what she was doing more carefully. Was it a performance problem? Absolutely. The inventory manager had been careless before. After being told that the order must be a mistake, he should have figured out what was happening.”

So applying the planning-procedure-performance approach Jay concluded that it was not a planning mistake but rather mistakes in procedure and performance.  So whose procedure and whose performance?  After all one does need to find those responsible.

The Solution

Making a short story shorter, Jay talked to both the purchasing and inventory persons in the presence of the operations manager about what to do when a question of this sort arises.  Inevitably both these people proved irresponsible and were replaced.  As Jay concluded “This situation was mostly the result of having the wrong people in important jobs.”  (Can’t help but ask, who hired the wrong people?)

If as Jay claimed, “responsible employees do not have to be told they messed up”, then the solution seems quite clear, don’t hire irresponsible people!  If you have irresponsible employees then you’ve made the (first) mistake!  Was it a planning, procedural or performance mistake?

A System’s Perspective

The above approach is one based on reductionism in that it seeks to break the problem into discrete identifiable parts.  Unfortunately reductionism is not appropriate here as the concern is for the functioning of the whole—the performance of the enterprise—and its affect on the constituent parts, and not merely separate parts locally transacting.

In other words a business organization is a system—a network of constituents in mutual relation—and breaking it apart into separate parts will not afford understanding of the functioning and performance of the whole.  Performance is an emergent property and thus it can’t be understood through reductionism.

Let’s flash back in time to the early stages of a new enterprise where the business hasn’t grown enough to warrant employing others to help do the work—the time before employees. Let’s estimate the probability that this mistake would have occurred if the owner or two or three partners were doing everything.  The probability is near zero.  Why?  Many would say, because they are the owners and they care.  Although the fact that they care can’t be denied—and caring does have an affect—it isn’t the primary cause for the probability being near zero.

What the most likely reason is that (before employees) they would be in possession of all the information that they need.  Further they would have an understanding of how each and every function/activity that comprises the work of the business interrelates—they understand the works as a whole.  In short, they wouldn’t decide to act one way that would negatively impact them carrying out another activity. The decisions would most likely be informed decisions with an understanding of the impact each has on the business as a whole (i.e. the system) and on each of the other functions/activities within the system.

In summary why is it unlikely?  Those doing the work understood the system and their role in it as they perform each of the activities.  Unfortunately, the very popular way of organizing—dividing the work and managing each component as if it is not integral to the whole—is so very wrong.  Yet because everyone does it it is rarely questioned or challenged; it is the way management.

Different Perspective, Different Understanding

With this perspective the first mistake was in the structuring or organizing of the work of the business itself.  It appears that the work of the organization—which begins as a whole—was divided and parceled out as tasks for individuals to carry out.  Evidence of this is the purchasing manager did the purchasing and the inventory manager did inventory; each had their own separate responsibility.  When the purchasing manager was told “when a vendor or anyone else tells us that something doesn’t seem right, we need to look into it” and the response was “when you say we, who are you referring to?” suggests a lack of appreciation for the interdependent nature of each functional activity.  That is, the activities parceled out to at least this employee are not integrated with the (interdependent) activities of others—the work lacks wholeness and jobs lack connectedness.

What we have is divided responsibility, and with divided responsibility no one is responsible for the purchasing-inventory work of the organization.  What would make this even worse would be if employees were required to meet his/her own separate numerical goals specific to his/her individual job.

Different Mistake Identified Means Different Solution

What’s needed is shared responsibility, which is determined by the way the work (of the company) is organized/structured.  Of course the work of the organization has to be divided among many people but the many jobs also have to be integrated.  The work of the company must become whole again.

Not integrating it into a cohesive whole was (quite likely) the first mistake made by those in authority.  It is a mistake of management to organize and structure the work in a way that fragments it.  This sets people up for failure since it increases uncertainty about one’s role and makes it unnecessarily difficult.

Furthermore, the fact that the purchasing person was “fairly new” and apparently not properly trained and prepared was another contributing cause of the over ordering.  Recall, Jay even noted that the “inventory manager had been careless before”! Surely he/she is not responsible for his/her own training!  This is management’s responsibility to ensure that employees have the, support, knowledge and skills necessary to successfully do the work.

So the situation involves: a) not training new employees; and b) structuring the work so that responsibility is divided. Also the solution involved talking to those who made the mistake—with the implication that they were to blame—asking them not to make the mistake again, without looking deeper and further into the system itself seeking systemic causes and rectifying.  The actions taken only ensure that this kind of mistake will happen again, irrespective of the individuals employed to work in the system.   It would be more by luck that things went well!

Management must develop and maintain the system as well as prepare people (with education and training to build knowledge and skills) so that they can be successful in supporting quality in the work of the organization.  Quoting Deming, management works on the system, the people working in the system.  Management must do their job so that others can be successful at doing theirs!

In an interview with Adam Bryant of the New York Times, Doreen Lorenzo, president of Frog Design, offered some insight into leading creative people.   First and foremost is the requirement of the leader embracing chaos, since the creative process is inherently unpredictable and not controllable?  As Doreen noted, “I’m very good at managing the chaos and pulling it together to make something that’s really tangible and creating that environment where people can thrive…Micromanagement is the death of creativity, so you have to create an environment where they can succeed, and where the environment can expand.”  It is this last point, creating the environment, which is central to creativity emerging.

Creative Space by Design

Management in authority must attend to creating a workplace environment through structure, policy and management practice wherein people’s inherent thirst for creativity and innovation can be satisfied and sustained.  This means creating the space—the physical, psychological and temporal space—wherein people can freely exercise their capabilities without fear and constraint.  As Doreen believes, “what creative people want, more than money, or fame or power, is to be listened to.”  People want to be related to as people, not objects.  So the absence of fear and constraint doesn’t mean there is a void or nothingness, rather it means there is caring, respect, understanding and support.  This becomes the basis of a self-actualizing system, one that is capable of actualizing its potential.

Those in authority actualize potential by the psychological and physical space they create, through their choice of organizational design and management practice.  The first step in organizational design is establishing the basis of meaning through a vision that deeply resonates within people.  As Doreen spoke to the vision of Frog Design which is “to change the world, and our people are really passionate about that.”  Meaning is essential to people and thus to the viability of a business.

Creative Work Thru Meaning

As explained in a previous essay, our work should resonate deep within us, connecting us to our humanness.  Thus when management enables the job to become a joy the likelihood of the creative spirit emerging is greatly increased.  We should feel inspirited not dispirited because of our work.  Geoff Vuleta, CEO of Fahrenheit 212, spoke to the importance of meaning to people in a previous essay: “They want to know two things.  They want to know what they should be doing, and they want to know what they’re doing is important.  And you must, therefore, set up an environment in which they totally trust that.”  Therefore responsible leaders give people meaningful work and provide the direction and support so that they know what to do and why it is important to do.   This is not about delegating work it is about enabling potential to become actualized through the work.

Lead People As If

The focus and orientation of management-in-practice is what makes the difference. Consider Douglas McGregor’s Theory X & Theory Y. According to this theory managers are fundamentally different due in large part to the assumptions one makes about the people over which they hold legitimate authority.  Theory X managers believe those they manage avoid work, are not intelligent and have little to no capacity for creativity.  Theory Y managers believe quite the opposite.   Those managed by Theory X’ers tend to be as assumed, abhorring work, not exhibiting intelligence and creativity.  However those managed by Theory Y’ers tend to be as assumed as well, finding work enjoyable and exhibiting both intelligence and creativity.  The lesson here is that if you relate to (and thus manage) people as you assume them to be, they will be as you assume.  Managing/leading as if people are creative will most likely foster the emergence of their creativity.

The critical difference is not in regards to its physical dimensions—though these are quite apparent—but in regards to management’s system of orientation which impacts the businesses’ psychological/cultural dimension.  Accordingly, with misguided and mismanaged growth the organization will become far less vibrant.  There will be trouble in paradise.

Google as Illustration

Let’s consider Google for illustrative purposes.  Recently Eric Schmidt (Google’s CEO) admitted feeling worried when saying, “There was a time when three people at Google could build a world-class product and deliver it, and it is gone. So I think it’s absolutely harder to get things out the door.”  The shift could be occurring within Google.

Those in authority at Google seem to be feeling the pressure just a bit from people leaving, as evidenced by a recently announced 10% across the board raise.  As noted in a recent post if the company is doing well, then everyone should benefit; so this across the board raise encourages a cooperative (win-win) culture that can only contribute to continued collaboration among people to the benefit of the organization.  However if those in authority believe the way to retain people is through monetary inducement—more accurately bribery—then management is ignoring the underlying cause and setting the organization up for failure.  A focus on results—the number of people one retains—rather than what is causing people to seriously consider leaving simply glosses over the real problem.

Schmidt admitted that in part the motivation for providing the 10% increase was a tactic in the war for talent.   Persuading people to stay by offering them a seven-figure bonus has retained 80% of those considering leaving.  However the question is, how long will the pleasure of more money in the present keep the thirst to create and innovate at bay in the future?  How much more will have to be offered and how often?  This is clearly not a sound strategy for employee retention, let alone for sustaining a competitive advantage.

As described in a recent New York Times article Google has seemingly grown itself into a “bureaucracy”, a “big, lumbering incumbent.” Reportedly the number of people required to approve a creative initiative has, in the words of a former Google product manager, ballooned; “Google’s gotten to be a lot bigger and slower-moving of a company.” Seemingly the processes and procedures are a frustration to those in the organization who still have a thirst for entrepreneurial work.

Big Shouldn’t Mean Slow

Does to grow necessarily mean to grow slower, or to grow rigid, or to grow out of ideas, or to grow harmful to the entrepreneurial spirit?  Absolutely not!  It seems reasonable to assume that with more people you increase the diversity of knowledge within the organization and therefore the opportunity for ideas to emerge should increase not decrease. Since creativity emerges with the interplay of different minds, you could expect with more minds exchanging and exploring ideas the more fertile the environment will be for new ideas.

Unavoidably, with an increase in the number of employees and products and services an enterprise takes a more hierarchical form.  This in and of itself is not a bad thing.  The operative word here is not hierarchy but form; that is hierarchy is form not function.  Hierarchy need not diminish capability, though it will if the purpose of the organizing and management structure is to exact greater control through the hierarchy.  Clearly, the focus and orientation of management-in-practice is what makes the difference.

Consequently those in authority must attend to creating a workplace environment—through structure, policy and management practice—wherein the unending thirsts for creativity and innovation can be satisfied and sustained.  By following evolutionary design principles those in authority can sustain the viability and enhance the capability of the enterprise.  But this requires a different understanding of the business of business.

Let’s begin the discussion assuming the enterprise is at its early stages.  As explained in It’s the EconoME, Stupid once an entrepreneurial enterprise realizes sufficient growth in demand for its product/service what arises is the need to employ the services of others to carry out the daily business operations so as to satisfactorily meet the growing demand—the new enterprise becomes a business organization.  As a result the enterprise becomes a bit more complex because one not only must manage the business but now also manage those doing the work of the business.  With so many more hands involved, the work of the enterprise must be brought to order.  This is a critical issue for those leading from the top.

The common practice—not necessarily best practice—is to break up the work of the enterprise into smaller pieces, partitioning it into more manageable parts.  Usually the partitioning occurs based on functional areas allowing those with the same or very similar tasks to perform to comprise a department over which a manager can provide control.

Structurally, the organization is hierarchically configured where the central locus of control—planning and directing the work—is from the top. That is, each one below is answerable or accountable to the next higher level within the organization.

Square Pegs & Round Holes

With the emphasis on control what is often lost in all of this is the fact that the hired knowledge, abilities and potential are people. Yet, many organize and manage as if what was hired are mere instruments of the business. No wonder people become dispirited with both their work and the management of the organization! No wonder the entrepreneurial spirit is often lost!

Underlying the complexity is the fact that different people can and likely do perceive and think differently.  As Shivan S. Subramaniam (CEO, FM Global) noted in a recent interview, “people don’t necessarily do things the way you would do them…not everybody will behave the way you behave.”  A my-way-or-the-highway approach limits potential by disregarding the great advantage that can be realized from leveraging this diversity.  Therefore those at the top must enable those employed by the organization to exercise their knowledge, abilities and potential for the benefit of both the organization and the people of the organization.  Leading effectively enables, it doesn’t disable, potential.

In regards to potential, leaders must create the space so that people can freely exercise their capabilities.  A structure and culture must be provided so that people’s potential will emerge in and through the process of performing the work of the enterprise.  As explained in a previous post every organization self-actualizes: But not every organization self-actualizes its greatest potential.

Many organizations are limited, not in potential but in what those in authority cause to be probable. If management manages as if the organization is a hard mechanical system—relating to people as objects with only instrumental value—then what gets actualized will be far less than the potential that is possible.  As Shivan claimed, “people can always perform a whole lot better than how you think they’re going to perform.  You need to really give them the opportunity to do that.”  Clearly leading the bottom from the top requires approaching business with a different mindset.

Structure Supports Strategy

As mentioned previously, we organize to create order in service to a purpose. So a structure for one purpose will very likely not serve another purpose. For example a learning organization cannot emerge from a structure intended to support a sense of control. Organizational learning will only come from one supporting energy flow—a free flow of helpful energy throughout the system—not the control of it.

It follows if those in authority of the enterprise wish that their organization become a learning organization, then the order/structure in support of learning will be different than the order that currently exists.  In short, a fundamental change in the organizing structures—both formal and informal—are required.

A learning organization is not merely an organization that has a training department nor is it one that has created a corporate university as an appendage.  No doubt people learn from the activities of these, but adding such appendages to an organization’s structure does not make the organization a learning organization, no more than having a quality department makes the organization a quality organization.  Such structural appendages as the primary initiative more often than not just make it more costly.

A Learning Organization

An organization is a human system, and unless the system itself has inherent characteristics representative of nonlinear feedback processes, designed in to the very work of the organization, then the system is not a learning system—no matter the size of the investment in learning through appendages. In learning organizations learning is an integral part of the work and not another activity one has to do—it is seamless to the work itself.  Unless the plan-do-study-act cycle informs the very structure of work throughout the organization—forming an interdependent network of feedback processes among all levels—organizational learning will unlikely be realized.

Only in learning organizations are people encouraged to challenge the way things are, along with the corresponding beliefs and assumptions.  Only in learning organizations do people freely and willingly challenge what they hold in their mind—both individual and collective minds—in performing their work through the process of learning toward improvement.

Different Energies Make a Difference

The energy currents that flow through the system (i.e. the organization) influence people; and the nature of that energy is the difference that makes a difference.  If the energy is negative (e.g. fear), then people will limit, if not avoid, their exposure to risk. They will not freely share thoughts and ideas; they will not be open to new ideas; they will not embrace novelty. They will not challenge the way things are done. Instead, they will cling to the devil they know, neither learning anew or thinking creatively.

It is only when people work in a trusting space—where the energy is both vivifying and inspiriting—that they will take the risk to learn anew and be creative. Further, feeling safe and secure they will be more likely to exercise their capability of reflexive thinking—reflecting upon, challenging long held ideas and appropriately altering beliefs and behavior—in support of the improvement of their work and that of the organization as a whole.

Consequently learning that leads to progress emerges when the organizational culture—the organization’s informal structure—enables employees to be treated as the subjects that they are. As a result there is ‘a vibrancy’ to the organization and its members find the psychological space of work to be inspiriting.

Just like its correlate quality, learning requires the healthy free flow of the human spirit; and the organizing structure and management practice must enable it. Thus when people are enabled to learn as an integral part of their work their job becomes a joy—learning arises naturally.   The following excerpt from It’s the EconoME, Stupid amplifies this point:

S:            Are you saying through the process of learning we cease acting out of our animal nature?

Q:            Yes, we cease being directed by circumstance and the habits of the past.

S:            Can’t animals learn?

Q:            Animals can be trained. I can train my dog to respond in a particular way to a specific command or stimulus; but this is more about conditioning—behavior modification—than it is learning in the sense we have been discussing. Recognizing that animals react in response to the prospect of immediate pain or pleasure in the moment, we can teach animals to behave in a particular way using a stimulus–response process. In this sense we can say the dog has learned to follow commands.

S:            So the notion that people living life by seeking pleasure or avoiding pain in the moment is descriptive of human beings acting out of their animal or lower nature?

Q:  Yes; and where’s the joy in that! Creating situations that would restrict or encourage people to do just this—to order their lives according to the pursuit of pleasure and the avoidance of pain—would limit human potential. It inhibits people from living according to their higher nature, from realizing their uniquely human potential. Learning in the sense that we are speaking about requires the ability to think about and beyond our thoughts; it requires a conscious awareness of our thinking process and the ability to go beyond a thought once held.

As Erich Fromm stated more than 60 years ago, “…true freedom is not the absence of structure – letting the employees go off and do whatever they want – but rather a clear structure that enables people to work within established boundaries in an autonomous and creative way.” Just imagine the progress that could be realized if this was a common way of organizing and managing!

Fades and failures were frequently seen during the 1980′s and early 1990′s when many top-level executives sought to colonize—but not adapt to—the principles of quality management. They wanted the benefits of quality but not its antecedents. Those in authority expected results, without first making the appropriate transformation in their assumptions, beliefs and values.  In effect, thinking and doing were contradictory and predictably, the result was failure.  For the organization’s employees quality became another (management) flavor of the month.  Why is this so common a phenomenon?

From a system perspective, the structure and management of an organization—how the components and functions interrelate with each other and with the context defining larger system—should follow naturally from the beliefs, values and purpose of the enterprise.  Moreover, it should be clear that a discord or incongruence among vision, mission, structure and strategy would be quite unhealthy.  For example organizational viability cannot be sustained with a vision that portrays unity and harmony and a structure (and system of management) that embody competition, independence and control.  That is, if the vision depicts something different from the (lived) experience fostered through the structure of work and process of management then the organization will become increasingly less viable.

Saying one thing while doing another creates an atmosphere of mistrust, which is tantamount to committing suicide.  With mistrust come uncertainty, fear and inevitably chaos.  While fear makes others more controllable, it also diminishes the actualization of potential.  What emerges is not greatness but dis-ease.

In other words you cannot set up a double bind without causing dysfunction of the system.  Two systems of orientation cannot operate within the same organization without decreasing the sense of order—increasing fear—throughout the organization.

Maintaining a split between the mind and body, between the organization’s system of orientation and the organization’s system of work, will rarely, if ever, result in lasting success. In all likelihood this is the cause of every innovative management theory, intended to improve the way we both organize and manage, becoming just a fade.

Unfortunately misplaced concreteness sets in.  Management by the numbers is the approach of choice to make it all manageable. Those in authority—the leadership—come to believe that the numbers are the (real) things.  This is tantamount to believing that the map is actually the territory.  Losing sight of the process—with management becoming more and more superficial—the focus turns to results (i.e. growth in profit).  Driving the organization for results—as if it is a machine—is management’s mantra.

Of course many tout the importance of money advancing the notion that ‘cash is king’.  The fallacy of this thinking is illustrated in the failure of what was once the pillar of egoistic capitalism, General Motors—a corporation wherein the long-view was the wrong view. No doubt cash is a key factor, but it is not the only factor!

So as profits are threatened–as the number on the bottom line becomes smaller–management’s focus and efforts intensify toward the tangible and the measurable.  Attention becomes increasingly limited to profit and costs.  Arithmetically this makes ultimate sense, since cost is a factor in the profit equation.  Moreover it is seen as something that can be directly and objectively affected through goal setting.  In effect, by instituting such measures, management requires people to do more with less—forgetting the fact they couldn’t do more before they were given less.

Unfortunately what is lost in all of this is that the essence of a business has not changed. As explained in It’s the EconoME, Stupid, what once was the reason for the business—providing a product of service—becomes a means to the overarching objective of growth in profit.

What most fail to understand is that the business’s product/service was first an idea.  An idea is the seed from which a business emerges.  Moreover it is the continued emergence of ideas that will sustain a business enterprise over the long term.  This fact is quite often not understood. In fact, many failed organizations run out of ideas before they run out of money.

In essence, diminishing the viability of the organization by inhibiting the flow of creative energy through the organization with control-based management and organizing structures. By running the business as if it is (literally) a moneymaking machine those in authority run the capability out of the business—killing the goose for the golden eggs, as if all that matters is monetary gain.

If we fail to understand, or if we simply chose to ignore, this energic perspective, then we unavoidably will continue to adversely affect our ability to not only sustain the viability of the business enterprise, but (just as importantly) we will block the realization of our human potential.  So, maintaining a healthy flow of energy—the flow of creative human energy—is a strategic business-sustaining imperative. Or to say it another way, a very important strategic principle to never forget is: When a business organization runs out of ideas, it will eventually run out of business.

Yet a mechanistic orientation and a hedonistic theory of human behavior continue to inform popular management theory and practice.   As a result the misuse and abuse of people is epidemic.  So the need to change the why, what and how of business and its management should be felt by most.

Don’t you think it is time for both self-leadership and correspondingly business of a different mind?

Well it seems rather than transforming its management and becoming an organization wherein innovation naturally emerges it has decided to try buying it; it has chosen to become a corporate venture capitalist. According to Reuters, though “it can be a smart way to support an employee with a potential invention while sharing the risk,” success is “more the exception than the rule.”

While this may be viewed as an acceptable short-term strategy—a stopgap measure—it mustn’t be the long-term strategy for ensuring viability.  Venture capital firms would attest that success, if and when it happens, takes a while.  Though this may or may not be a feasible strategy, in the mind of its initiators it obviates the need to change—evidence of a crisis of will.  Seemingly lost among them is the fact that long-term viable organizations are the ones with their own innovative capability, not the ones that seek to outsource it.  Lost also is the fundamental principle for sustaining a competitive advantage, do not outsource a critical core capability.

Creativity Lost

Creativity is not solely the quality of artist. Each and every individual can be creative, if he/she is willing and able to embrace and explore uncertainty without fearing loss.  Accordingly, creativity surfaces in those whose focus of attention is not on protecting the ego or of fearing failure or of losing what is.

Being attached to things inhibits the emergence of creative insight.  Creativity requires a direct knowing that is achieved, in the words of Aldus Huxley,  “only by the annihilation of the self-regarding ego.”  Moreover, according to physicist David Bohm, the ability to directly know is a capability human beings naturally possess, as it is readily observed in infants.

So why is creativity readily observed in most young children yet rare in adults?  The very young haven’t yet developed habits of thought that closes the mind and constrains playfulness.  Young children aren’t fearful of the risk in exploring new ideas, likely because they haven’t developed an attachment to what is.

Creativity is more likely evident in those who are keenly aware of, or in touch with, the possibilities and who selflessly engage in the activity for its own sake—just like children do in play.  In short, when the job is a joy the likelihood of the creative spirit emerging is greatly increased.  Creativity emerges when the mind is open to exploring the possibilities and not restricted by ego-consciousness, organizational culture and/or social context.

Being creative necessitates being a free critical thinker. We must be willing to detach from what habit of thought would provide; we must be willing to resist the allure of its certitude, and to be playful in thinking about the ideas that unfold. Accordingly, being creative requires a willingness to swim in the ocean of possibilities and embrace the waves of ideas floating beyond the shores of the familiar.

Leadership Implications

Leaders of organizations wishing for innovation must facilitate the emergence of a culture wherein normative behavior includes challenging what is—there can be no sacred ideas.  There are no short cuts! It is something that can’t be remedied by simply throwing money at it.  It requires a transformation of the business of business.

Those in authority (a.k.a. the leadership) must create the space in the workplace—physical, psychological and temporal space—wherein people can freely exercise their capabilities without fear or constraint.  But the absence of fear doesn’t mean there is a void it means there is caring, respect, understanding and support.  Those in authority must provide an atmosphere conducive to learning; without learning creativity cannot emerge. Even the best seed won’t develop or flower if thrown on rock.

Because creativity along with its offspring innovation are essential capabilities for the viability of a business, it is counterproductive to provide experiences—educational and workplace—that require people to comply with one prescribed way of thinking. It is also counterproductive to focus all attention on and commitment to getting results, especially short-term results. Quoting Thomas Edison, “Results! Why, man, I have gotten a lot of results. I know several thousand things that won’t work.” All for the sake of supporting an authority’s desire for control, organizations are positioned to fail.

As we live, develop and become acculturated in organizational and societal cultures that hold material gain as supreme, we tend to lose touch with our creative spirit.  Oh most people are in favor of innovation, until of course it threatens their familiar world—fear of innovation usually sets in.

With many business enterprises seeking the same purpose—profit maximization—it is not surprising that they are similarly organized and managed. The age-old issues of who should be in-charge of what and how many one can have direct authority over seem to be operative.  Effectually the organizing structure is a means to bring about order by dividing the labor (or work of the business) into more manageable clusters or compartments.  Accordingly, the organizing structure becomes the instrument for controlling the assorted skills and efforts of people toward the effective and efficient pursuit of profit.

Traditional Structure

Traditionally organizations are structured using a two-dimension coordinate system as the framework for bringing order to the business enterprise. That is, on the vertical axis runs the amount of authority and on the horizontal axis are the categories or specializations of activities or work disciplines. It is a means for dividing the authority and labor (i.e. the work)—the thinking and the doing.

[Facing a highly dynamic business environment, many have become enamored with the notion of being or becoming a flat organization.  Supposedly this makes for a more flexible and adaptable enterprise.  The fact that form means little without function and intent, seems to be overlooked in the application of the same two-dimensional framework.]

When we design the structure of a business enterprise with little to no attention to the nature of the core work of the business and the needed strategy supporting capability, then we inevitably facilitate fragmentation. Not understanding the work as a system along with seeking to control the work, will inevitably lead to dis-integration and a growing inability to learn and to develop knowledge.  Talk about shooting ones’ self in the foot!

Hidden Cost

Consider the following as illustration.  I recently worked with an organization structurally designed in the traditional manner.  Every compartment had its responsibility and each was managed independently, when in fact the work requires interdependence.  Yes silos were evident and collaboration and synergy were obstructed.

Hence if you had dealings with one compartment in the past and you began working with a different compartment, information could not be shared or transferred.  So the new compartment had to re-create the exact same information. This requires far more effort, energy, and unnecessary costs, where a simple keystroke would do the job.

The structure of the organization supported control over of each compartment, as well as the dis-integration of the organization’s work.  The result is greater costs; costs inherent in the very structure, work processes and associated management of the enterprise.  Since these costs are woven into the very design, and thus not captured as such on anyone’s spreadsheet, how would those in authority know?

Now extrapolate this throughout an entire organization and you can easily see the unnecessary costs created all for the sake of management control.  In short, efforts to control can, and often does, lead to increased costs.

Moreover, given that most properties of the organization are emergent—such as the performance of the enterprise—designing and structuring an enterprise in this way will very likely lead to less than optimal performance.

Continuing as if the business of business is profit is both limited in perspective and limiting to capability and performance.  If people are really concerned about the quality of the organization and if knowledge creation is central to viability of the business, then why continue organizing and managing this way?  Wouldn’t it be more prudent to ensure the wholeness of the work of an enterprise?