What Have We Learned About Participation?

Part 2

by Michael Maccoby

Structure and Participation

It is the 1.5 percent difference in genetics that allows us humans to adapt cultures to changing environments, to design or reengineer corporate structures to fit changing strategy, and to develop our ability to think systemically. Although we all have a tendency when threatened to act like chimps, we also have the capability of treating each other with respect and supporting each other as we work for common goals. However, the logic of change must be explained and understood. This is facilitated by participation in a dialogue that raises the difficult emotional questions and resolves them.

Although there will be different emphases in Asia and the West, in both places, complex information age companies must design and redesign three aspects of structure: macrostructure, strategic structure and work process structure. I shall describe each, how they fit together, how they have been changing because of the increase in knowledge required from workers, and their implications for participation.

Macrostructure includes the overall way a company is formed by the architecture of business units, divisions and corporate governance. There are five ways to structure these units: by place or region, product or service, customer or market, function or type of knowledge, and processes. Companies in the past were generally organized as functional bureaucracies of manufacturing, sales, and R&D, coordinated and controlled at the top. Today, organizations like AT&T and ABB use a complex mix of these structures. Despite its split into three companies on the basis of product, AT&T has and probably will continue to reorganize units in all three companies according to markets, products, regions, functions and processes. [The Network Services Division is structured according to processes such as provisioning, maintenance, leadership and human resource management.] ABB's matrix implements the strategy of thinking global through product based business areas and acting locally through regional companies. To gain the full benefit of the matrix, interactivity, trust, open communication, and shared logics must be developed by leadership. Goran Lindahl, executive vice president has taken the lead in creating interactivity as well as supporting innovation. Functional divisions within these business units develop knowledge and competence in areas such as sales, manufacturing, R&D, and finance. How this knowledge is aggregated, directed and employed depends on the strategic structure of the organization.

The strategic structure includes three levels: strategic, operational and doing. To give an example, in the army, the strategic level determines goals and placement of resources. The operational level, e.g. tank commanders, implements these goals by tactical planning and deployment, and the doing level pulls triggers, and programs or fixes machines. In traditional organization, the strategic structure was a hierarchy which was equivalent to the knowledge hierarchy. Strategists were the master craftsmen, operators were journeymen, and doers were apprentices. Strategists knew operators' jobs better than they did and operators could perform doers' jobs. Communication flowed one way with the strategists giving commands to operators and through speeches, trying to inspire the whole organization. Operators gave direct orders to doers. While this concurrence of strategy and knowledge structure still describes to some extent small businesses such as masonry contractors, in complex information age companies, each level owns different kinds of knowledge. Strategists must learn from the operators, and both the operators and strategists need feedback from the doers who are in direct contact with customers and maintain systems. The Toyota system makes use of the doers knowledge by the process of continuous improvement.

AT&T's Workplace of the Future has created a planning structure that brings the doers, represented by their unions together with operational and strategic leaders. Planning councils design an ideal future aligned with the corporate strategy and expressing shared values of both business behavior and employee development, and they craft the processes essential to move toward this goal. Operators and doers together attend courses where they learn about the needs and values of the main stakeholders: employees, customers, and shareholders. They discuss the gaps between the ideal future and their local work organizations and agree on steps to close the gaps. The strategic level uses the planning council to operationalize aspects of strategy. Union representatives are engaged in developing, testing and implementing new processes.

The operational level must implement strategy through processes and motivated people. The more the doers gain knowledge and responsibility, the more value they provide to implementing the strategic process. Although everyone cannot influence all aspects of his or her job, everyone can participate according to his or her level of involvement. While doers in low knowledge jobs such as in assembly work and customer service can productively participate in planning work schedules, solving quality problems, and suggesting incremental improvements, doers who are running complex systems and interacting with other high knowledge doers need to participate further in the planning of the new systems and processes they must use and understand. They may also provide valuable input for the strategists when they describe how customers react to strategic initiatives. (This does not imply that doers in low knowledge jobs could not, if given opportunity and training, become high knowledge doers.)

In the electromechanical age, uniform tasks were fragmented and formatted. Most workers did not have customers. Everyone had a boss whose power rested on position and control of information. In the information age because of new customer demands and advances in technology and processes, work can and should be restructured. Everyone should have a customer, internal or external. Information should be widely shared, and teams should assume management tasks which in the past were done by bosses. In some organizations which have transformed work in this way, the doing and operational levels have begun to merge.

The new, post-Tayloristic work process structure describes the different ways work processes should be designed, depending on the nature of the product or service and the process. The horizontal dimension differentiates standardized and customized products and the vertical dimension moves from processes requiring relatively low knowledge to those processes requiring high knowledge from employees. The four boxes show prototypic work process structures. All of them are found in most large companies. By understanding them, we can determine how best to use TQM, reengineering, sociotechnical design, and cross functional teaming. We can also determine the management function required for each box and the alternatives for how it is carried out, whether by managers or by team members.

In the lower left is the customer-supplier assembly process first described by W. E. Deming as a means to eliminate waste and defects. T. Ohno at Toyota perfected this "pull" system which is the ideal structure for TQM. The first level supervisor at Toyota is responsible for continuous improvement, group harmony, personal development, and resolving problems across boundaries. However in other companies, semi-autonomous teams take over some of those functions. In the lower right is the typical work process structure for information age financial services, the result of the original reengineering of billing operations at Ford and financial services at AT&T's American Transtech. Teams of frontline employees use information technology to answer inquiries, provide services, and directly handle payments by issuing checks. Employees are trained to respond to small variations in customer needs. Participation from the frontline should communicate information about customer response to the company's offerings or processes. The management function is essentially to teach new practices and facilitate teamwork. Teams can learn to do some of this function themselves. Experience shows that change should start with training for new roles and skills, before structure and IT systems are changed.

In the upper left box, the customer-supplier process is typically automated: an electronic switching system, an oil refinery or paper and pulp mill, or a nuclear power plant. While the product is standardized and the production is automated, teams of workers must understand the complex technology and be able to respond quickly to problems before they become threatening to product quality, capital investment and safety. Some of the major industrial accidents such as Three Mile Island nuclear core overheat in 1979, the North Sea Platform Bravo blowout in 1977, and the U.S. mobile offshore drilling unit, Ocean Ranger in 1981 were caused by a misfit between technology and structure. Frontline workers lacked the knowledge and authority to avert disaster. The earliest models of this structure were created under the banner of socio-technical design at Shell, Norsk Hydro, Proctor & Gamble and General Foods. The management function includes technical problem-solving and team facilitation. Some teams have shared this function among team members.

The upper right box describes the most difficult process, where experts from different functional organizations work together with an equally knowledgeable customer as a member of the team. Each circle stands for a different function such as design, development, marketing and operations. This is the most knowledge intensive type of work that I have observed at AT&T, ABB, Cultor a Finnish company producing sweeteners and animal nutrition, Swedbank (Sparbanken Sverige), and MITRE, a systems engineering company in the U.S. It is the type of process used for concurrent engineering to speed up product realization at AT&T or to provide customized telecommunication and information services to large business customers. At ABB of Canada, this type of structure describes the team that works in partnership with large energy using customers such as Hydro Quebec or Cominco, a metal and mining company. At Cultor, it describes a technical and marketing team customizing sweeteners for soft drink and chewing gum companies. At Swedbank, it describes a financial team providing a large customer with payment systems, loans, foreign exchange and perhaps equity financing. For MITRE, it describes system engineers bringing together different parts of the Federal Aviation Administration and airline representatives to improve the capacity of the air traffic control system. The meaning of customer focus for these teams is essentially different from that of lower knowledge work where the aim is to meet customer specifications in terms of quality and cost. The customized-high knowledge teams aim to help the customer succeed by using their services. Together with the customer, they explore opportunities, solve problems, and may develop new products.

This work process does not replace but makes use of functional divisions which provide the experts-developers, technicians, designers, sales engineers ‹ who make up the team. But barriers must be broken and facilitative management is needed. At ABB of Canada and AT&T, this aspect of the management function is normally performed by the account managers who nurture the long-term relationship with the customer organization. However, ideally this process team becomes a heterarchy rather than a hierarchy; aspects of the management function shift according to which team member has the appropriate knowledge. This means that all team members need leadership skills or heterarchical capabilities.

These include aspects of style having to do with interactivity: openness, consensus building, listening and learning from other experts, and willingness to accept leadership responsibility. AT&T Workplace of the Future teams continually evaluate the progress of heterarchical process design projects in terms of the ideal future which includes human considerations (skill development, empowerment) as well as strategic business goals.

To summarize, all four boxes require participation, but that participation differs according to the type of work and level of knowledge required. Furthermore, participation in the management function can be expanded in each box. These prototypic work process structures indicate when it is most appropriate to use the methods of TQM, reengineering, socio-technical design and cross functional teaming.

Raising the Level of Management Thinking

What kind of leadership is needed to lead system change and create appropriate participation? Many managers have reached the top by practicing a way of thinking and forming useful relationships that fit a more stable industrial bureaucratic culture. Now, the culture needs to change. The seeming paradox is that on the one hand, to transform the culture requires new management thinking. On the other hand, unless the culture is transformed, the new thinking will not be adaptive. To resolve this paradox, leaders need to develop their thinking by both redesigning the organization as a social system and implementing this design interactively.

With few exceptions, the descriptions used by most companies to describe ideal management thinking and behavior are too vague and generalized to be of much help for managing change. For example, the new style manager is told to be a coach, but there are many types of coaches, and some are just as directive and autocratic as the old style bureaucratic boss. The best coaches, like the best managers, invariably say that their success depends on motivating individuals to work for the success of the organization and this requires maintaining high standards, two-way communication ‹ listening and explaining ‹ and integrity, walking the talk. This was probably as true in the time of the Roman legion and Viking ships as it is today. The difference is that coaches in sports take for granted the rules of the game they are playing, team size and the roles of the players, while the managers of change in complex, information age organizations have to shape new roles, rules, and responsibilities to fit a changing business environment. And they face subordinates who are fearful of loss and sometimes confused about the vision and what it means for them.

Some of this confusion results from the way managers think about organization. I have discerned four types of management thinking. To some extent, they are stages or levels of thinking because each requires further development of concepts and capabilities beyond the preceding level. The first stage is characterized by the predominance of analytic thinking, comfort with hierarchy, and the Western mechanistic model of organization. The second stage while similar to the first, is also characterized by trying out new ideas and tolerating more ambiguity. The third stage moves to systems thinking and the logic of reciprocity which is the basis of effective participation. The fourth stage requires systems thinking with the purpose of both organizational and human development that includes the larger society. These stages are embodied in four types of managers: 1) The Analyzer, 2) The Energizer, 3) The Synthesizer, 4) The Humanizer. Complex information age organizations require the latter higher, more complex, levels of management thinking.

Analyzers are adapted to the traditional industrial bureaucracy, and are easily confused about systemic change. Analysis implies taking things apart, and the analyzers approach organization, tasks and systems by breaking them down as much as possible into piece parts and formulas. Analyzers want to focus on a part of the organization they can control, with functional expertise they can apply. They want as much autonomy as they can carve out for themselves. They like managerial formulas with clear economic measurements of success: goal setting in terms of revenue, cost and profitability. Although some of them form close relationships with people like themselves, they believe that people can be motivated by satisfying their needs for money and promotion. They pay little attention to intrinsic motivation and the role of values. By changing structure and incentives, they believe they can motivate the behavior they want from subordinates. They have a hard time learning from experience because they lack a systemic view of organization which is essential to make sense of experiences. Rather, they tinker with formulas or look for new management consultants who promise better formulas. They are much of the reason why the majority of projects to reengineer the corporation have failed.

To break out of this bureaucratic gridlock, some ambitious managers, become stage 2, energizers. The main difference from analyzer thinking is that their way of getting people to work together is not merely manipulating material incentives but also inciting a competitive spirit. Energizers measure success not only economically, but also emotionally, in terms of motivating the team to beat the competition. Energizers have a high tolerance for ambiguity (chaos), because it is exciting and favors change. They espouse trust and cooperation, and they like team building exercises, but back in the office, they do not share power. They enjoy brainstorming and are willing to try out new ideas, but they seldom create a system of continuous improvement essential to learning from the doers. Energizers may invite participation from employees, but their experiments tend to fizzle out and their plans don't work out the way they envisage them. Subordinates with their own interests and alliances sabotage or distort these plans. Chimp behavior takes over. Because they have no systematic way to resolve conflict, their high energy teams tend to decompose into hierarchy, and when push comes to shove, their thinking regresses. They become autocratic analyzers.

Only if managers become synthesizers can they fully lead organizational transformation. As Ackoff describes it in his recent book, The Democratic Corporation: Integrating Work, Play, and Learning Oxford University, 1994), the large modern corporation can best be understood as a social (or socio-economic-technical) system in which the demands of different stakeholders (employees, customers, owners, communities) must be aligned to create value and achieve success. The images of the corporation as machine run by a god-like owner or family run by a benevolent father figure do not fit with Western values of independence.

Synthesizers understand that the parts of the organization must be designed to support its strategy. For example, organizational structure may look good on paper, but the test of its adequacy depends on how the people exercise their responsibilities and this in turn may depend not only on factors such as measurements and rewards but also on individual values and how well interactive leadership aligns these values with corporate goals.

From Synthesizer to Humanizer

To some degree, creative entrepreneurs of the past have been paternalistic humanizers. They were protectors like James Proctor of Proctor and Gamble, George Eastman of Kodak, Thomas Watson of IBM who developed their people and built local communities. Some modern managers are becoming humanizers, not out of a paternalistic spirit, but because of government and pressure groups as well as a pragmatic understanding that their business depends on developing material and social infrastructures. The complex corporation requires that the societies in which it functions can provide educated employees, as well as good transportation and communication. When, Percy Barnevik of ABB argues that the West is paying too little attention to the ecological threat from Eastern European factories and power plants, he is promoting not only his business but also the ecology of Northern Europe.

No one would describe business leaders, as a group, as humanizers. They have difficulties enough adapting their own companies to today's highly volatile business environment. However, it is becoming evident that in the information age, complex companies require synthetic thinking and, interactive management. Organization has become work in progress without a stable end state. The ideal future for complex companies is the capacity for adaptation. Twenty years ago, participation was a means to humanizing monotonous work. Today, participation by knowledge workers has become essential to productive teamwork organizational learning, and continual innovation. Increasingly, the most successful leaders will be synthesizers, who because they can see the big picture, become better at analyzing complex problems and implementing innovative strategy. As they transform corporate culture to serve all of its stakeholders, they will find themselves thinking more and more like humanizers, even if the pressures of the competitive marketplace sometimes cause them to regress to lower levels of behavior. Their humanizing tendencies will be responsive to more movements and reinforced by educated union and government officials who recognize that the wealth of a society depends not only on economic growth but also on human development and environmental protection.

What, then, have we learned about participation? In a complex organization, operating principles for participation will also be complex, but these principles allow us to differentiate types of participation, to determine the appropriate participation for different workroles. Today, these principles are unevenly understood, and in many companies dogma replaces logic. Participation has meaning only when it is understood in relationship to other operating principles such as innovation, interactivity, system integration, strategy implementation and organizational learning. However, where leaders of change have used the conceptual framework presented here, they have been able to dispel confusion, break bureaucratic barriers and engage all organizational levels in the continual process of adaptation to the changing business environment.

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