Rethinking everyone's role

As traditional distinctions between

managers and nonmanagers become

increasingly blurred, lead your

organization in creating effective roles.

According to Raymond Smith, the CEO of Bell Atlantic, "Five years ago, 55 percent of our business wasn't subject to competition. Today, that number is only 20 percent." Andy Grove, the CEO of Intel, says that learning to adjust to changes in today's business environment is like driving in a fog behind another car. It's easy going as long as you have the other car's taillights to guide you. But when the leading car turns off the road, you're suddenly stuck without the confidence that comes from finding your own way. The moral? Followers have little future.

Developments like these demand that senior managers spend more time deciphering the increasingly complex forces that shape their businesses. To find the time to figure out sustainable success strategies, they have to hand over some of their traditional responsibilities to the middle-level managers who report to them. And to accept these new responsibilities, these middle managers have to hand off some of their traditional assignments to the employees who report to them.

When thinking through these new responsibilities, it's helpful to classify employees as strategists, developers, and operators, rather than using the more traditional labels of executives, managers, and workers. The strategists are responsible for creating new businesses, the developers are responsible for growing the existing business, and the operators are responsible for running the business.

The traditional distinctions between managers and nonmanagers become increasingly blurred when everyone is responsible for managing some aspect of the business. In this kind of world, it's more useful to think of managers at all levels in terms of the value they contribute to the organization rather than viewing them as one special, separate class of people.

Redefining roles

Managing at the strategic value level today involves four fundamental tasks: first, monitoring and influencing the environment to develop new business opportunities; second, articulating, modeling, and creating ownership for a vision of what the organization aims to accomplish in the future; third, attracting business leaders, matching them with the right assignments, and holding them accountable for results; and fourth, investing, distributing, and balancing resources across the organization's portfolio of businesses.

Hewlett Packard's chairman, Lew Platt, believes his most important role in strategy formulation is building bridges among the company's various operations. "My role is to encourage discussion of the overlaps and gaps among business strategies, the important areas that aren't addressed by the strategies of individual businesses." Platt's strategy sessions are aimed at creating new market opportunities by looking at the entire ecosystem. Most managers are so busy minding their current businesses they find it hard to step out of their boxes and see threats or opportunities. Successful managers in the future will work together to search their environment for the patterns that connect and to develop strategies that take advantage of these patterns. They will also seek to create significant competitive advantage by inventing bridges that create new patterns that didn't previously exist.

In the old organization, only those at the pinnacle of the company's hierarchy engaged in strategic thinking, but in today's new, flatter architecture, that has become the responsibility of the many rather than the few. In the old structure, strategists or planners seldom took any responsibility for implementing their plans. Today, merely thinking strategically will no longer suffice; people are now held accountable for acting strategically as well.

Jack Welch, the CEO of General Electric, counsels, "Get the right people in the right jobs and you've won the game. We spend days and days on assessments, interviewing people, talking to people, picking out stock-option recipients. We allocate money to projects and people to businesses. We don't do any product development, any pricing, anything like that. Our jobs aren't picking colors for refrigerators or designing crisper trays. We set the objectives. People lower down do a lot of figuring out how to get things done. This is not a rudderless ship. The objectives are clearly in focus."

Managing at the development value level today involves three fundamental tasks: first, defining and pre-positioning the capabilities the organization will need to grow and prosper in the future; second, coordinating tactics, programs, and activities linking the organization to its customers, partners, and suppliers; and third, creating an environment where everyone at the operating level knows what to do and has the resources, coaching, and competence to run the day-to-day business effectively.

To improve the organization's agility and flexibility, developers need to stretch their allegiances across functional boundaries, greasing the skids between departments so the organization can respond swiftly and decisively to resolve its problems and pursue its opportunities. Meeting these objectives in a global economy involves connecting managers across barriers of geography, language, and specialization and taking advantage of their different skills, interests, and perspectives. The development manager's new world is uncertain, scary, full of noisy bargaining, and going full speed all the time. Adjusting to their new roles is quite a challenge for middle managers who have traditionally been accustomed to getting orders from above and demanding compliance from below. To make the transition successfully, they need training, support, and coaching from those to whom they report.

Managing at the operationsvalue level today involves three fundamental tasks: first, making the organization's vision operational; second, delivering timely, error-free products and services; and third, making decisions based on what's right for the organization as a whole.

Tommye Joe Davis, a 62-yearold mountain-bred grandmother who manages a Levi Strauss sewing plant with almost 400 people in Murphy, North Carolina, believes that clarity about the organization's vision, not the control of higher-level managers and developers, will guide successful front-line operators in the future. The Murphy plant cross-trains teams of workers to perform 36 tasks instead of one or two, and the teams participate fully in running the plant, from organizing supplies to setting production goals. They also set personnel policy, and as a result, the Levi policy manual at that location has shrunk from 700 pages to 50. "You can't lead by just barking orders," notes Davis. "I used to say, `You do this, you do that.' Now I say, `How do you want to do this?' But it only works if we all have the same vision in our head of what we're trying to do."

In traditional organizations, managers tell employees how to do their jobs and allow them to make decisions, but only when they feel certain that employees will make the same decisions they themselves would make. But in many of today's most successful organizations, managing occurs "after the fact," allowing operators to risk making mistakes because, in the long run, they'll learn and make more right rather than wrong decisions. Few people understand a job better than the person doing it every day. To be successful in their new roles, managers throughout the organization have to embrace alternative forms of control, trading in certainty for speed by giving others the guidelines and freedom to act as they see fit. Nimbleness is the only sure way to maintain control in a fast-changing environment.

New skills needed

According to Walter Wriston, the former chairman of Citicorp who serves on the board of directors of General Electric, JCPenney, and Pfizer, "It takes entirely different skills to be a manager in 1997 than it took 15 years ago." The quickest way to become an old dog today is to stop learning new tricks. Yet, our experience suggests that the tools many senior managers use to explore the world have grown dangerously out of date.

Research indicates that top managers spend 78 percent of their time in fragmented conversations with peers in other units who work nearby. A high percentage of these contacts occur ad hoc, half last less than nine minutes, and most deal with current issues. These findings confirm that many senior managers are too distant from the external influences that shape their company's future. Experience also suggests that senior managers are often more comfortable exercising their old responsibilities rather than taking on new roles as they move up in the organization. For example, a recent issue of Business Week quotes insiders at Ford complaining that Jaques Nasser, the president of worldwide automotive operations, still tinkers with car design. Nasser readily acknowledges that he shortened the front of the 1999 Windstar minivan late in the design process despite the additional costs involved because "it didn't fit my design aesthetic," and that such decisions were part of his former job as head of design development. According to a Ford manager quoted in the article, "Nasser still views product design as his sandbox."

Skills in the following four areas will be critical for senior managers' success in the future.

1) They must be able to see the big picture at all times.

Wayne Gretzky, who plays ice hockey for the New York Rangers, is recognized as one of the best ever to play the game. What singles him out is a genius for never losing sight of the puck. Amid the mayhem, Gretzky can make out the game's underlying pattern and flow and anticipate what's going to happen, faster and in more detail than anyone else in the building.

"To me, everything is happening in slow motion," he once explained. Sometimes, during a game, he makes what seem to be aimless circles on the other side of the rink away from the traffic, and then, as if answering a signal, he darts ahead to a spot where, an instant later, the puck turns up. Gretzky appears to vanish from the ice and then rematerializes, together with the puck, in another part of the rink altogether, usually to the disadvantage of the opposing team. In today's business world, you can't get into the fray and succeed unless you can stay above it as well.

To help achieve a big-picture perspective, Lou Gerstner, IBM's chairman and CEO, spends 40 percent of his time with customers, often chatting CEO to CEO to learn what's going on. He not only listens, he acts on what he hears. When he heard customers complain about IBM's high prices for mainframe software, he quickly ordered pricing cuts of up to 30 percent. In addition to finding out what they want, Gerstner sees his job as a translator, building trust and building bridges with his customers, CEO to CEO. Similarly, John Chambers, Cisco's president and CEO, also spends much of his time visiting customers.

"John religiously comes to visit me here in New York once a quarter," says Colin Crook, the senior technology officer of Citicorp. "Other companies say they listen to the customer, but you don't often get the CEO sitting down with you like that. This guy is really listening to the market."

2) They must learn to learn together.

When Raymond Gilmartin was appointed the CEO of Merck & Co. in 1994, he put together a 12member management committee and took them away for the first in a series of three-day shirt-sleeve retreats. These meetings were designed to break down barriers and build mutual confidence in a traditionally rigid hierarchical company. In these retreats, what went on in the "white space" (during the breaks, dinners, lunches, and over cocktails) was as important as what went on in the meetings. As one of its first tasks, the management committee composed a mission statement affirming that Merck would remain a researchdriven pharmaceutical company and was not interested in diversification. As a result, Merck quickly shut down a generic drug operation and in the next two years sold off more than $1 billion in assets, including Calgon Vestal Laboratories and a managedhealth-care mental health unit.

A nonscientist, Gilmartin has given his top executives considerable autonomy in leading their business units. He's created worldwide business strategy teams, each one focused on a key disease. These teams bring together senior executives from areas as diverse as finance, research, manufacturing, and marketing to mount a coordinated global strategy to attack the disease. They have unfettered access to the management committee, which helps this committee make better research, manufacturing, and marketing decisions. Gilmartin continually encourages employees at all levels to air problems and debate issues without regard for hierarchy and without getting personal. "Where you want the contest is not among people but among ideas," says Gilmartin. "So, it's very important for people to be able to be very open. We want them to be `knowledge navigators' to each other."

3) They must be experts in depth in several areas of their business.

Chrysler encourages the development of broadband-width expertise by giving executives multiple responsibilities. For example, purchasing chief Tom Stallkamp also runs Chrysler's minivan operations. Executive vice president Francois Castaing runs international operations and is also in charge of engine and transmission development.

Lester Thurow, a professor at MIT, notes that financial managers running American steel companies a few years back didn't understand important new technical processes such as continuous casting. As a result, they decided to wait and see how the process worked in other countries before committing to it themselves.

By the time they gained that knowledge, their companies had fallen too far behind to catch up. "You don't have to be a scientist," observes Thurow, "but you must be able to read the material and know how to proceed."

4) They must have very good interpersonal skills.

Abba Eban, the former Israeli foreign minister, commenting on the Group of Seven Nations summit of 1993, observed that although the leaders who attended represented an extraordinary concentration of power and intelligence, their meetings didn't result in much progress. He added that perhaps, it's because each of the leaders was "thinking individually, not collectively." Getting senior managers to work together takes a lot of effort, particularly when they grew up and became successful largely as a result of their own individual initiatives.

Early in their careers, managers spend most of their time dealing with situations where the rules are relatively clear. When they're promoted to senior positions, they find more grey areas, especially when dealing with other people. In their new roles, success springs not only from what they know as technical specialists but also from their connections and relationships with other people. In most companies, contentious issues are smoothed over and avoided 50 percent of the time. Another 30 percent of the time they lead to nonproductive fighting and no resolution. Only in 20 percent of cases is contention truly confronted and resolved.

Designing New Roles for Senior Managers

Designing new roles at the strategic value level starts by identifying the managing work that's unique to each value level in the organization. People accustomed to managing a particular function often think that the outputs of the group that they manage are the same as their own outputs as a senior manager. The challenge is to help them discover what the senior management team as a whole produces. Analyzing these issues is best done by the whole senior management group. A shared understanding of how their business fits with the environment is necessary before individuals can learn to adapt their roles with each other. It's important that redesign methods that foster group learning and role development are consistent with the type of knowledge and skills that the group needs to utilize on an ongoing basis. The redesign process should be congruent with the desired outcome of group functioning. During the process of understanding the business context and the contributions of the management team to the business, expectations will evolve about what work is needed and who is best able to accomplish it. Individual roles are developed by negotiating these expectations.

In September 1997, the Sara Lee Corporation unveiled a major restructuring plan. A spokesperson for the company said it hoped to raise $3 billion by selling its U.S. yarn and textile operations and would use this money to repurchase its stock over the next three years in an attempt to raise the stock's price. Sara Lee was not alone-American companies repurchased more than $170 billion of their own shares in 1996. In addition, between 1980 and 1995, the top 100 U.S. companies got rid of more than 25 percent of their employees.

While such actions may succeed in raising stock prices, they don't create new wealth, take the company into new markets, or create fundamentally new value for customers. Creating new business is senior management's most important responsibility and significant changes in roles, rewards, relationships, and skills are required before they can fulfill this responsibility effectively. Excerpted from a presentation made by John Cotter and Terry Golbeck at the EEC/Ecology of Work Conference on "Innovative Work Organizations Operating in Global Context," held in Dublin, Ireland, May 1997

John Cotter has helped major companies worldwide, design, implement, and manage highperforming organizations in manufacturing white-collar,

professional, and service industries and is author of The 20% Solution: Using Rapid Redesign to Create Tomorrow's Organizations Today (John Wiley and Sons, 1995). Contact John J. Cotter and Associates Inc., at (619) 456-9642 or e-mail at jjcotter@aol.com.

Terry Go/beck is principal of Golbeck ef Associates, Inc., a Canadian consultancy specializing in organization change and design. For over 18,years he has advised

major companies on creating commitment for change and building the competencies necessary to improve business performance. Contact Golbeck at (403) 289-3442 or e-mail at golbeckt@cadvision.com.

Copyright Association for Quality and Participation Jan/Feb 1998
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