Human Resources -- Agents of Change

By Stephen Long

Why we need to rethink top-down management

Growing a business during a recession is the ultimate test of leadership. Many believe that it’s impossible, but consider that while the Nikkei Index plunged almost 40 percent between the fourth quarter of 2008 and the first quarter of 2009, there are some who thrive.

Consider these companies extraordinary performances:

  • Uniqlo, the casual-wear maker and retailer, improved sales by 13 percent from Q1 2008 to Q1 2009.
  • Megane Top Co. Ltd. In the optical industry had revenues that were 25.5 percent above the prior year’s results. Megane Top also experienced a 47 percent increase in its stock market price.
  • Morinaga & Co., Ltd. Operates in food manufacturing, food merchandise and restaurant, as well as in real estate businesses and had revenues of 170.8 billion yen in 2008. This was 2.1 percent more than the prior year’s results.
  • Wacoal Holdings Corp., through its subsidiaries, engages in the design, manufacture, and marketing of women’s intimate apparel, foundation garments, and lingerie experienced more than 4 percent increase in revenues.

The times “they are a changin,” as the song goes. The current recession will form the business climate for the next generation, and executives who harness and convey their power successfully will position their organization for the short term and in the long run. Leaders who wish to grow their businesses under the current economic conditions have two requirements: they need bold ideas, and they have to act fast. Stakes are higher, and the survivors will get into the game early. Late adaptors will miss this bus.

Power Leader
Focuses on Change
Changes the Reality
Assesses Risks
Pragmatist
Apple Tree Organizational Structure

Speed and scope are not the only distinguishing leadership factors, however. An essential leadership component is the use of power versus authority. Distinguishing between “power leaders” and “authority leaders” during a stable economy can be difficult because executives rarely reveal their authentic nature under favorable conditions. But in uncertain times, they cannot hide their true colors. Authority leaders rely on their position to preserve the status quo, whereas power leaders demonstrate their ability to communicate with their workforce and engage with their markets to grow their business. They convince their employees they’re able to meet market demand even during the most challenging times.

Authority Leader
Focuses on Complexity
Clings to Reality
Avoid Risks
Perfectionist
Christmas Tree Organizational Structure

The way in which leaders manage their people has a direct impact on how their team performs. Power leaders create the will to work effectively and collaboratively— not because employees are coerced, but because they are committed. John Kotter, a professor of leadership at the Harvard Business School stated in his book, “Power and Influence: Beyond Formal Authority,” “Without the needed awareness and skill, we risk being overwhelmed by the pathological aspects of modern organizations— the bureaucratic infighting, parochial politics, destructive power struggles, and the like which reduce initiative, innovation, morale, and excellence in all kinds of organizations.” The idea isn’t new either. Warren Bennis, the distinguished professor of leadership at the University of Southern California, significantly contributed to the same discussion 40 years ago in his landmark paper, “Leadership Theory and Administrative Behavior: The Problem of Authority.”

Power leaders distinguish themselves from authority leaders by strengthening relationships with their people and most importantly, altering their relationship with the current reality. Bottom line, power leaders are more able to lead change, create organizational consistency and grow their business.

Focus on Change
Achieving what may seem impossible is about change—leading it and getting other people to accomplish it. Many executives make the mistake of managing complexity by putting each and every detail in its place and controlling all aspects of a complex organization. Authority leaders rely primarily on logic and linear thinking, which leads to reasons how not to do something. Power leaders, however, think creatively and systemically, thereby generating solutions that lead to how to do something.

A greater risk exists to an organization and all of its stakeholders if energy is spent preserving the status quo rather than pursuing change.

A greater risk exists to an organization and all of its stakeholders if energy is spent preserving the status quo rather than pursuing change. People realize that they’re better off achieving those tasks which seem impossible, rather than stewing in stagnant anxiety—and they naturally move collectively toward the goal.

Keep the focus on change, not complexity. Set the direction, find the right people, align them appropriately, and then provide them with the reasons as to why they’re able to achieve these tasks.

Change the Reality
Achieving what seems impossible starts with deciding what these goals exactly are. The executive constructs and shares a future that’s creative yet practical, challenging yet feasible, focused yet flexible. Power leaders fuse two ends of polar opposites by recognizing market forces, client expectations and competitor moves. It becomes clear what seems impossible is actually necessary and mandatory by synthesizing these factors. Within a moment of clarity, the impossible becomes the reality.

People are noticeably apprehensive during a recession, wondering what the economy means to their careers and their families. In order to diminish employees’ concerns, perceptive persuasion is a more efficient means of communication than top-down authoritarian oppression and control, which only enhances resistance and breeds short-term compliance rather than long-term commitment.

Recognize when people spend their energy protecting their current condition rather than moving purposely toward achievement when change is introduced— resistance is a natural reaction, activating a survival mechanism. Get ahead of the curve by overriding people’s short-term fears with long-term stability and profitability.

Organizations employ plenty of intelligent people, but what they lack is a workforce that’s able to see the reality. It’s vital to ferret out emotionally based perceptions that stifle organizations, therefore engaging people in a future that includes them.

Illustration: tightrope walker

Assess the Risks
Fear and anxiety paralyze authority leaders, preventing them from pulling the trigger on even the most obvious opportunities. Executives procrastinate until the decision is made for them by either competitors or the market—or both. The slightest possibility of failure determines that an initiative is not worth the risk. Smart executives, however, move with speed and velocity to take action the moment the reality becomes evident.

How executives apply a risk analysis model is a fundamental component of leadership. Power leaders use data to drive decisions, whereas authority leaders rely on a distorted view of reality based on stereotypes and false assumptions. Sound, valid information is the foundation for every effective decision. The key for executives is recognizing when probabilities of success outweigh a possibility of failure. Be aware of the strengths and limitations of the people who carry out the plan.

Employ a pragmatic approach
Power leaders don’t offer perfect solutions— they offer the most appropriate solutions in the required time period. A half-right decision in a timely manner is better than a perfect decision made too late. The driving factor in decision-making is knowledge, and every interaction is an opportunity to generate information. Organizations that achieve what seems impossible produce new knowledge and then direct that knowledge to the most productive uses. The size of organizations isn’t an obstacle—organizations can be big and fast.

Power leaders use emotional awareness as a tool rather than a barrier to organizational performance. Valleys always follow peaks—it’s part of the human condition. Authority leaders are rarely “business-like” in that emotions such as fear, greed or relief lead to theoretical attitudes and beliefs. Leaders need to accept the reality of emotional cycles and create a framework within it to experience long-term consistency. In contrast to the hard driving autocrat who expects employees not only to work at a fever pitch but also build on it, effective executives keep emotional cycles at a consistent level by keeping the focal point on achieving what seems impossible. Focus and concentration, not emotion, is the driving force of change.

Illustration

Build an apple tree organization
In the past, size has predicated a top-down chain of command, which produces authority leaders—no matter how democratic an executive aspires to be. Authority is built into the system creating an imperceptible crutch for the executive. Throughout history, people have been strongly conditioned to expect and accept hierarchies through our schools, churches and families—we’ve been psychologically, emotionally, culturally and spiritually conditioned. We learn to obey parents, conform to teachers and comply with bosses. We’re rewarded if we adhere to the established guidelines and we’re punished if we don’t. In essence, we live in a Christmas tree world. Organizations are traditionally structured as pyramids— they were first used by the church followed by the military and then adopted by every Western organization since.

In apple tree organizations, power leaders occupy the center of the organization rather than the top with the benefit being that power naturally comes to people who are at the center of relationships. Occupy the trunk of the tree where you’re able to reach up to support the producers and middle mangers or dig down into the roots to access the resources needed to achieve ourt goals. As opposed to Christmas tree organizations, apple tree organizations are democratic and organic. Middle managers are branches moving the resources from the leaders to the producers, working collaboratively and openly with each branch. The producers are at the top where they get all the resources they need to produce consistent high performance results.

Several other differences are evident between the two kinds of organizations. First, power leaders act as a gateway, or an opening, to change by listening to the workforce Authority leaders, on the other hand, have information filtered to them through the many layers of the Christmas tree. They are isolated from the truth, which significantly limits the pace of change. Also, apple tree organizations are filled with healthy, productive, relationships whereas Christmas tree organizations are filled with angry, apathetic and anxious employees. Authority leaders rely on command and control techniques manipulating people’s fears to drive short-term, temporary, erratic results as compared to Power Leaders who apply empathy, intelligence and wisdom to drive long-term, enduring, consistent change.

Conclusion
Organizations attempting to achieve seemingly impossible goals are not doing so as a last ditch effort this route is for strong companies where the employees realize you don’t have to be sick to get better.

The most important priority for power leaders is recognizing followers won’t commit to any initiative through authoritarian means. Executives won’t be able to lead change if they apply the same top-down management style that has inhibited and restricted employees for centuries. Apple tree organizations create changes in processes and systems without instituting an expensive re-engineering effort—in effect, the culture of an organization changes without moving a chair. Redefining excellence and striving for the extraordinary doesn’t include risking the future of the organization—it only requires a shift in mindset of the leaders.

People resist being controlled, or at least the appearance of it. People want to accomplish something meaningful, something that satisfies a purpose. People don’t want to work for an organization—they want to accomplish an important mission, something that gives their life meaning. JI


Stephen Long is a U.S.-based management analyst.
www.levelsixleadership.com

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Comments

An interesting article that makes the apple-tree structure sound appealing. So how do we implement one of these apple-tree structures for our startup? What does it look like? Are reporting lines different, somehow (do they even exist)?

Hi Michael--
Thanks for your comment. The strength of the Apple Tree organization is that no restucturing occurs--not one chair, desk or computer has to move. The key is found in providing leaders with the communication and leadership skills so that they are able to occupy the center of relationships.

Reporting lines do exist and a start-up is the best opportunity to build the Apple Tree structure.

Steve,

For me, the reason to eschew top-down is that it greatly decreases productivity.

Top-down does so by demotivating and demoralizing employees. It does not meet their most basic needs of being heard and being respected. Orders, directives, goals, targets and the like are disrespectful to humans and cause them to apply their natural creativity, innovation, productivity, motivation and commitment to things other than their work. Alternatively, if they choose to use 100% of these faculties on their work they are over 300% more productive.

Best regards, Ben

Hello Steve,

It is encouraging to see someone discussing change management and Kotter's model in the context of Japan, and especially encouraging to see someone challenging the top-down model. As you stated, the changes are inevitable and late adaptors will suffer the consequences. I am, however, disappointed in how the article does not integrate the examples you provided of companies with extraordinary performances. Their success is stated, but little to no evidence is shown as to where, when, and how the apple tree organization, or even change management, is relevant to that success. If the connection can be shown between how the apple tree organization or change management led to the success of these companies, then I believe this would make for a more compelling article that really does show why Japan needs to challenge the top-down model.

As you pointed out, start-ups have the best opportunity to implement a model like the Apple Tree structure because they get to create and set the culture, whereas larger, more established organizations have greater difficulty (sometimes impossible) since they already have a set, established culture.

One thing you forgot to mention was recognizing the urgency to change. Focusing on the change comes after people realize and understand that they NEED to change, not should change. Failing to do so will result in a half-baked attempt that fades away as time progresses. Also, I warn against trying to override short-term fears with long-term stability and profitability. Although it is important, focusing so much on stability can lead to complacency, and those short-term fears are very real. Stability after x months or x years will provide little comfort to someone who is worried about his next paycheck and making ends meet.

Ben makes a very good point. The focus is on the people and meeting their needs. People are an organization's greatest asset, thus time needs to be spent getting to know them by hearing them, respecting them, and ultimately loving them. Take the time to get to know their goals, targets, even hobbies. They may not be directly aligned with yours, but you can find ways to make it a win-win situation by seeing how you can help them achieve their goals. In return, they will help you. A very important aspect that is missing in this article is the point that everyone is different. Managers tend to make the mistake in assuming that what motivates you or a few will motivate the whole. That is a huge mistake, which seems apparent in how you mention overcoming short-term fears with long-term stability and profitability. It is important for managers to also train and re-train as necessary in order to gain a better understanding of what is actually being done by those they are managing. Not to be confused with micromanaging, what I mean is that managers need to take an interest in what is being done along with the fields they are managing to show that they care and know about what is going on. Slacking is easy and accountability means little if no one knows or cares about what you are doing.

Lastly, I would like to mention that although this is something I believe NEEDS to occur, it is also dependent upon context. Japan also presents some very difficult barriers to this, mainly the fact that Japan has a culture that is innately resistant to change. I do believe this is possible soon, if not now, due to the new and upcoming generations, along with the spread of globalization. I do look forward to seeing more articles like this.

Best Regards,
Jongmin (Tim) Moon

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