The Age Of Unreason

by Charles Handy

  — The vision must make sense to others. Ideally it should create the ‘Aha Effect’, which I described earlier, as when everyone says ‘Aha – of course, now I see it’, like wit perhaps – what often was thought but ne’er so well expressed. To make sense it must stretch people’s imaginations but still be within the bounds of possibility. To give point to the work of others it must be related to their work and not to some grand design in which they feel they have no point. If ‘vision’ is too grand a word, try ‘goal’ or even ‘manifesto’.

  — The vision must be understandable. No one can communicate a vision that takes two pages to read, or is too full of numbers and jargon. It has to be a vision that sticks in the head. Metaphor and analogy can be keys because they provide us with vivid images with room for interpretation – low definition concepts as opposed to the more precise high definition words of engineering and management.

  — The leader must live the vision. He, or she, must not only believe in it but must be seen to believe in it. It is tempting credulity to proclaim a crusade for the impoverished from a luxury apartment. Effective leaders, we are told, exude energy. Energy comes easily if you love your cause. Effective leaders, again, have integrity. Integrity, being true to yourself, comes naturally if you live for your vision. In other words, the vision cannot be something thought up in the drawing office, to be real it has to come from the deepest parts of you, from an inner system of belief. The total pragmatist cannot be a transforming leader.

  — The leader must remember that it is the work of others. The vision remains a dream without that work of others. A leader with no followers is a voice in the wilderness. Leaders like to choose their teams but most inherit them and must then make them their own. Trust in others is repaid by trust from them. If it is to be their vision too, then their ideas should be heeded.

  These six principles sound simple, obvious even, but in practice they are hard to deliver. Old-fashioned management is easier than the new leadership. Yet, if the new organizations are going to succeed, and they must succeed, our managers must think like leaders. If it happens, and in places it is happening, it will mark yet one more important discontinuity turned to advantage.

  Horizontal tracking

  How many leaders will one organization need? A lot, must be the answer, lots of them, all over the place and not only in the centre. Federal organizations are flat organizations and the cores of their parts will be four or five levels only.

  The consequences are profound. Organizations used to look like a collection of ladders tied together at the top. A career for most people meant climbing the ladders. Success was rewarded by promotion to the next rung. Fast-moving careerists might expect to move up a rung every two years. There were some cross-over points and some general management jobs lower down, but on the whole the analogy holds for the larger organizations of Europe and the USA.

  Ladder-thinking could reach bizarre extremes. I once visited an Indian organization which employed 20,000 people in a big shed in the middle of India making turbine generating equipment. The organization was suffering from bureaucratic arthritis. Nothing could be made to happen. Everyone seemed to have a power of veto over every decision. A quick look at the organization chart revealed that there were, on average, twenty rungs in each ladder in the organization, twenty levels of command. ‘Well, you see,’ they said, ‘we are enormously taken with this British idea of an annual appraisal, but good appraisals need to be rewarded with promotion otherwise Indians lose face, therefore we have had to create all these opportunties for promotion within our factory.’

  Federal organizations do not put 20,000 people in one shed. Wherever possible it will be less than 500 in each individual part, and the ladders will be short. In the core of the shamrock, as we noted in Chapter 4, success will not, cannot, mean promotion because the layers are not there. There is no god beyond the senior partner and he or she is likely to be in their forties.

  What then does a career mean if it isn’t always upwards? For some it will be more of the same only better. For others it will be more variety, a different job at the same level. The Japanese have a nice way of developing their high potential young people. They actually have a fast-track route for them, but instead of it being a vertical fast-track up through the organization, it is a horizontal fast-track, a succession of different jobs, real jobs with tough standards to be met, but all at the same level. The advantages are that not only does the young person get a wider view of the organization he or she gets a chance to test out their talents and skills in a wide variety of roles. Few excel at everything. Fortune favours the one who can early in life divine what they are good at. Japanese systems make it more likely that fortune will smile on the many not the few by giving them so many test beds for talents.

  What works for the young in Japan can work for all ages everywhere. The horizontal fast-track can apply to seniors as well as to juniors. It is a Western notion that people’s abilities and inclinations are formed in their middle to late teens, after which education and experience tend to drive them up one ladder and one ladder only. Too many people discover too late that they picked the wrong ladder. The functional organization, joined to a functional education system, can result in a one-start society. A flatter organization can offer opportunities at all ages to discover new abilities and new interests.

  It is upside-down thinking again, of course; horizontal careers as a good thing. To work, it requires that the organization has faith in the ability of its people to learn and to go on learning; and believes, moreover, that learning is not linear, more of the same, but can be lateral and even discontinuous; that people, even in their forties and fifties, may have talents which even they are not aware of; that our past performance is not always the best guide to our future potential if we change our role.

  Without such upside-down thinking organizations will find themselves with growing numbers of so-called ‘plateaued’ managers, managers who have run out of ladder and have nowhere else to go except out; organizations will spend more money and time than they want to on hiring new faces for new boxes; they will worry about the lack of motivation in some of their more senior executives, about the cultural disharmony that comes with the importing of too many new faces and about their inability to offer meaningful careers to their younger people.

  Federalism is, in my view, a necessary development in the evolution of organizations. It allows individuals to work in organization villages with the advantages of big city facilities. Organizational cities no longer work unless they are broken down into villages. In their big city mode they cannot cope with the variety needed in their products, their processes and their people. On the other hand, the villages on their own have not the resources nor the imagination to grow. Some villages, of course, will be content to survive, happy in their niche, but global markets need global products and large confederations to make them or do them.

  These organizational villages can also be geographical villages. Today, federalism makes it possible to bring the work to the people rather than the people to the work and to link them all together telephonically and electronically instead of in flesh and blood. In the end organizational federalism may well solve the housing problem in Britain.

  It requires a little upside-down thinking, to be sure. At present, organizations in the South of Britain, and in the South of other countries too, are short of the workers and the skills they need. There are too many unemployed or underemployed in the North but they cannot afford to move house to the expensive South and, indeed, do not particularly want to. It is better to be poor in the place you know.

  Instead of paying even higher salaries to attract them down, thus inflating house prices still further, organizations will increasingly see the wisdom of locating some of their work in the North. Once they realize that if they embrace federalism they do not all have to move North, the move will start to happen.

  Nor will it just be from North to South. In the new organizations of the information
society it is people who are the key assets, particularly the brainy people. Organizations always move close to their key assets or raw materials; when it was coal they went to the coalfields, now they will move to where their people want to live and their key people will often want to live near a university city and pleasant country, where there is good education to be had, good communications and a sense of space. More and more it will pay organizations to move their villages to the villages. Federalism allows them to do so and still be a city themselves.

  Federalism is, however, about more than structure, as this chapter has sought to make plain. It involves a change in thinking about people and their capacities, about the way they can be asked to work and the way they are managed. They have in fact to be ‘smart’ as well as ‘federal’. It is this requirement which the next chapter addresses.

  6 The Triple I Organization

  IT WAS WALLY Olins who summed it up for me. A large part of his work, and that of his successful company, involves helping organizations to discover and to express visually their strengths and their purposes. He is, therefore, in an excellent position to observe the way things are changing in organizations, and changing they are. ‘Wealth in the past,’ he observed, ‘used to be based on the ownership of land, then, more recently on the capacity to make things. Increasingly, today, it is based on knowledge and on the ability to use that knowledge.’

  The new formula for success, and for effectiveness, is I3 = AV, where I stands for Intelligence, Information and Ideas, and AV means added value in cash or in kind. In a competitive information society brains on their own are not enough, they need good information to work with and ideas to build on if they are going to make value out of knowledge.

  We are talking, of course, of the core of organizations, of the heart of the place. There will still be mundane jobs in these organizations; mail has to be opened, visitors looked after, offices cleaned, light bulbs replaced and meetings arranged. These things will never all be automated nor do they need budding genuises to do them. But unless the heart of the operation is a Triple I concern there will eventually be no added value to pay for the support services.

  Triple I organizations are different. Not for them the organizational philosophies of the army, or the factory, or the bureacracies of government. They must look instead to some of the places where knowledge has always been key and brains more important than brawn.

  ‘Increasingly,’ I said at a conference of chief executives, ‘your corporations will come to resemble universities or colleges.’

  ‘Then God help us all,’ one of them replied.

  But I was serious, although I went on to agree that universities could with advantage get more like businesses.

  Universities or colleges, my point was, are places where intelligent people are concerned with information and with ideas, the triple i. They use these three i’s, in theory at least, to pursue truth in an atmosphere of learning.

  The new organization, making added value out of knowledge, needs also to be obsessed with the pursuit of truth or, in business language, of quality. To that end the wise organization increasingly uses smart machines, with smart people to work with them. It is interesting to note how often, already, organizations talk of their ‘intellectual property’. Once again, words signal the way things are going.

  The wise organization also knows that their smart people are not to be easily defined as workers or as managers but as individuals, as specialists, as professionals or executives, or as leaders, (the older terms of manager and worker are dropping out of use), and that they and it need also to be obsessed with the pursuit of learning if they are going to keep up with the pace of change.

  The wise organization realizes, too, that intelligent individuals can only be governed by consent and not by command, that obedience cannot be demanded and that a collegiate culture of colleagues and a shared understanding is the only way to make things happen. For intelligent, however, do not read intellectual. The words are quite different. ‘He may be a great intellectual,’ said my daughter of a friend, ‘but intelligent he is not. He cannot run a bath, let alone a business, or even his life.’

  The pursuit of quality, intelligent machines and intelligent people, a culture of individuals in search of learning and government by consent – these things hardly seem to add up to a revolution nor do they describe too many of our universities and colleges. Yet they are, as we shall see, more revolutionary concepts than they sound and if they were to be practised by more organizations then those organizations would be more truly like universities than the universities themselves.

  Quality Is Truth

  Quality for instance, has become the new watchword of many organizations. It is not another gimmick. For too long too many businesses were concerned with the fast buck, or the short-term bottom line of residual profit, or, more technically still, the medium-term earnings per share. Money was all. With that as your goal it made sense to treat people as costs to be minimized, to keep tight controls on everything which might cost money and to reduce as many operations as you could to a predictable routine. It works only if nothing ever changes (and so can be rigidly programmed), if people are unquestioningly obedient (and so can also be rigidly programmed), and if the cheapest is regarded as the best.

  Four decades ago, inspired by two Americans, Juran and Deming, the Japanese began to think differently. In the long-term Deming argued, you stay competitive and in business by being the best there is, not necessarily the cheapest, by taking the customer seriously and giving him or her what they want and need. The product comes before the money. Quality he maintained, however, is only achieved if everyone believes in it, if everyone contributes to it and if everyone is always concerned first of all to improve their own quality at work. You get quality from quality people trusted to work positively for the good of the whole community. Eliminate mass inspection, said Deming, in what came to be his famous ‘fourteen points’, drive out fear, break down barriers, get rid of slogans and targets, encourage people to educate and develop themselves to work in teams, to think for themselves, and to believe that everything can be improved forever.

  In a more competitive world organizations will only survive if they can guarantee quality in their goods or their services. Short-term profit at the expense of quality will lead to short-term lives. In that sense quality is, to my mind, the organizational equivalent of truth. Quality like truth will count, in the end. No one, and no organization, can live a lie for long. Hard to define, impossible to legislate for, quality like truth is an attitude of mind. It is an attitude which is now at last beginning to infect our organizations. Profit is increasingly recognized as what it always should have been, a means and not an end in itself. It is ironic that it is only now that Deming, in his eighties, has become the Western World’s favourite guru, forty years after he started talking this sort of language to the Japanese, who listened and changed.

  Quality, however, does not come easily. It needs the right equipment, the right people and the right environment. The effective organization, today, is learning fast to come to terms with the new machines, the new people it needs and with the new culture of consent. It is a new kind of organization in style and temperament, not an easy one to manage or to lead but one which will be increasingly necessary in the competitive knowledge-based world of the future. I call it the Triple I organization only to underline its difference from the organizations we used to know and, very occasionally, to love, but organizations in which most people were not paid to think but to do. In the Triple I organization everyone is paid to think and to do, including the machines. It makes a difference, a huge difference, to the way you run the place.

  The Intelligent Machines

  It is the age of the smart machine. Computers have revolutionized the work of organizations and will go on doing so. One person and a robot can weld a car. No person and a robot can paint it. I went around a sugar refinery worked, in rather unpleasant conditions, in Belgium, by 270 people. On
e year later I went again. This time it was run by shifts of five people in a carpeted control room with maintenance teams on call.

  These things we know are happening. We take others in our stride; the airline can store away our reservations and our dietary requirements and produce them at the touch of a key, it can let us know, instantly, the possibility of any variations to our travel plans and their cost at the touch of a few other keys; we know that the check-out decks at the supermarket already automatically adjust the stock levels and will soon debit our bank accounts; we expect the telephone directory in every country to be computerized and the personnel records of major companies to be accessible via keyboards; we happily pull our cash out of holes in the wall; we know that sophisticated executives can review their spreadsheets on their desk-top terminals; we read of robots re-stacking the shelves in Japanese supermarkets; we ride, perhaps, in driverless trains at airports or in Lille in Northern France (and soon, everywhere?); we hear of fifth generation computers which can think for themselves (in a way), and of sixth generation ones with living cells. Technology, as such, holds few fears for most people. It is all, or it should be, in pursuit of better quality.

  Smart machines, however, need smart people to work with them, or, sometimes, very dumb people. This book was written at the time when an American warship made a tragic error and shot down an Iranian passenger airline in the Gulf thinking it to be a fighter on the attack. The enquiry made it clear that the computers tracking the plane had made no mistake, but that the relatively young specialists watching the screens in the heat of a battle had misinterpreted the computers’ cues. Perhaps, some said then, the smart computer should be allowed to make its own fire or not fire decisions; it might make them better on its own.