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Chapter 11
Provide Two Paths to the Top
Link power and knowledge
Broaden technical ladders
Veneers add value
Track the future
Mid-management's new role
New management tactics
Keep the paths parallel
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Chapter 11
Provide Two Paths to the Top
Excerpt from Rethinking
the Corporation
By Robert M. Tomasko
For a parallel hierarchy to add the most value, it must extend
all the way to the top of the superstructure. An inability to
find productive roles for senior individual contributors at the
upper end of the hierarchy is a clear signal that the dual path
idea is not right for your company. Fortunately, an increasing
number of companies are finding this not to be a problem.
The parallel hierarchy in action
A clean, unobtrusive functional look is the hallmark of consumer
products designed by Braun, the German maker of small appliances.
This spare appearance was created by Dieter Rams, the company's
chief designer. It sets Braun's products apart and is one of
the company's most critical capabilities. Its importance to the
company's competitiveness is reflected by Rams's place in the
corporate hierarchy; he reports directly to the company's chairman,
not through a marketing or engineering department. When Braun
was purchased by Gillette, Rams was also given direct access
to the U.S. parent's chief executive. Gillette is a shrewd acquirer;
it made sure it managed Braun so as not to kill off the goose
that helped lay the golden eggs that made the company so worth
buying in the first place.
Here's a second example. During the late 19605, the technology
based conglomerate TRW, Inc., was run by a three person top team.
One member was the chairman and chief executive. A second was
the president and long-in-advance designated heir apparent to
the CEO's spot. The close-knit team's third member was Simon
Ramo, officially designated the corporation's vice-chairman.
Ramo had no direct operating responsibilities; he served as the
technology eyes and ears of TRW. Earlier in his career, when
TRW was still just a metal-bending parts maker, he had been sent
from the company's Cleveland corporate headquarters to California.
His mission: to create a new division for TRW, one that would
be based on electronics and systems engineering technologies.
Several years later, his task completed, he returned to headquarters
to serve as a technological entrepreneur role model for other
rising executives. His example encouraged others to start up
new businesses, such as TRW's now vast consumer credit reporting
service, which sprang from the systems management capabilities
Ramo helped nourish. And his willingness to be outspoken about
broad public issues affecting the company and society in general
helped pave the way for senior professionals such as Pat Choate,
TRW's former vice-president for public policy, to be strong advocates
for massive job retraining programs as essential to the future
competitiveness of the United States.
Ramo also maintained a part-time academic affiliation, in his
case a research associateship at California institute of Technology.
Unlike many professionals in large corporations, Ramo's interests
broadened as his career advanced. Once the chief scientist for
the United States' intercontinental ballistic missile program,
he later applied the systems thinking pioneered there to developing
fresh solutions to social problems. Before retiring from TRW,
he reflected on his experiences managing the technological development
of a $I billion corporation and put in writing many of the key
lessons he learned to serve as a guide to TRW's emerging generations
of technology entrepreneurs.
Ramo's books and corporate title helped provide widespread recognition
for his accomplishments. The "R" in his company's name,
TRW, stands for Ramo. This is an honor received by neither the
president nor the chairman with whom he shared the top management
role in the 1960s.
A third example of the professional hierarchy at work is Microsoft.
Managing competitive capabilities has gotten more complicated
since the 1960s. Microsoft has not found any one individual to
serve as its Simon Ramo, so it has appointed seven people to
fill his role as seer and innovator. Called Microsoft's "architects,"
the seven people serve as a panel of technical high priests to
advise chief executive Bill Gates on matters such as emerging
technologies and overall software development strategy.
One of the group's members, Jeff Harbors, is already independently
wealthy from his awards of stock options, granted during Microsoft's
early days. But he stays on board because he sees the panel as
a way he can still significantly contribute to the company's
future. Gates, Microsoft's founder, has spent his entire career
there. Unpolluted by experiences in more rigid, unitary corporate
hierarchies, he modeled Microsoft's advancement structure after
that of an organization he had some personal acquaintance with-a
law firm. (Gates's father is a prominent Seattle attorney.)
Creating structures that link
power and knowledge
Some senior contributors, like Ramo, are actual business entrepreneurs.
Others, such as Dieter Rams, are high-level keepers of the corporate
conscience; Braun's appliances ail haves consistency behind their
design because Rams has the power to veto any proposed products
that deviate from the established norms.
This influence is not exercised in a vacuum, though. When power
is granted to anyone in a company, it is to advance the needs
of the business, not the personal interests of the power holder.
These contributors must be among the strongest keepers of the
company's ethics. They must also avoid the other common trap
facing those with a grant of power: the tendency to use it only
to stop things from happening. Rams has earned his veto right
because the products he has championed have been so successful
in the marketplace.
In the future it may be possible to find senior positions, now
part of the management hierarchy, that have been moved to the
professional path. Allied-Signal's Lawrence Bossidy envisions
the twenty-first-century corporation as still having a chief
financial officer reporting to the chief executive, but without
the traditional army of controllers, auditors, and accountants
who now report to the chief financial officer. Instead, these
staff positions will be based in the enterprise units and central
service centers that will duster in the company's horizontal
organization. This pattern may well be repeated for the chiefs
of other functional specialities, especially human resources,
information systems, and research and development.
Organizations that acquire early experience in ways to link knowledge
with power will be several steps ahead of their rivals as knowledge
based competition comes to dominate many industries. They will
be companies that realize that career paths are more than just
tools to maintain employee morale.
Corporate superstructures must be rethought so they reflect the
new reality that power needs to be expressed via knowledge and
experience as well as through managerial authority. Both kinds
of leadership are crucial; a key challenge for the vertical organization
is to keep them in balance. This idea has always been true to
some extent; now its acceptance is becoming mandatory. Hospitals
could not serve sick patients without the dual governance provided
by a medical hierarchy and the separate administrative one. Nor
do many universities educate students using faculty members who
will admit to anything but an indirect and loose reporting relationship
with the school's president and administrative hierarchy.
For most of its history while an independent company, the publisher
Time, inc., prided itself on its separation of "church"
from "state." "Church," the editorial side
of the business, reported through its editor in chief directly
to the company's board. The publishing portion of the company
("state"), concerned with more mundane matters like
advertising revenues and production expenses, had a parallel
hierarchy that did not include the oversight of the editorial
departments, as was the common practice in the rest of the more
unitary publishing industry. This power-sharing arrangement was
intended to give editors freedom to cover and analyze news stories
without interference from the company's advertisers or financial
managers. In the long run, it was hoped, this practice would
help attract star journalists whose writing would increase Time
magazine's value to its readers, ultimately making it a more
attractive vehicle for advertisers.
At Business Week, published by a competitor of Time, a
similar practice was applied on a smaller scale. The position
of senior writer was created to provide an opportunity for high
performers whose talents would be underused if they advanced
to the traditional next step of department manager or editor.
This is not a resting place for poor performers; senior writers
include John Byrne, author of several business books and former
editor of the magazine's Management Department. It is also a
good home for Byrne's entrepreneurial inclinations; he helped
originate the magazine's annual rankings of graduate business
school programs, an activity that might otherwise fall between
the cracks on the publication's organization chart.
The operating practices of many Japanese companies also reflect
an awareness that relationships and practical knowledge can be
just as important as managerial expertise. In each work location,
senior executives operate through both the official management
hierarchy and an unofficial de facto hierarchy. Consultations
with the de facto leaders, who have emerged through a combination
of accumulated experience, technical knowledge, and ability to
command the personal respect of the other workers, are often
held before decisions are announced through the official channels.
These private discussions, called nemawashi, are especially
important when business conditions worsen or significant changes
in operating practices need to be made. By laying the structural
groundwork, they make possible much of the consensus and harmony
in Japanese workplaces that is commonly over attributed to national
cultural values.
Broadening traditional technical
ladders
The idea of parallel hierarchies has been most commonly expressed
through the dual career ladders offered by some technology-oriented
companies. Aware that many good engineers and scientists find
management work an anathema, these companies have provided a
sequence of jobs, increasing in pay, title, and responsibility,
that allows their technical staffs to advance without taking
on any traditional supervisory or management responsibilities.
The system that 3M put in place several decades ago to accomplish
this is one of the best developed and the most effective. Without
it, 3M's ubiquitous yellow notepad product, Post-it, might never
have been created. Post-it's developer, Arthur Fry, admits that
without the option to stay in his field and aspire to become
one of 3M's elite "corporate scientists," he would
have left lab work and entered management-or quit and started
his own business-long before the Post-it idea came to him.
Technical ladders are frequently attempted, then neglected, subject
to a once-a-decade revival of interest; most have not lived up
to their promise. A Columbia University study found many of them
were "parking grounds" for technlcians who had failed
as managers, rather than fast tracks for the company's most vitally
needed technical talent. The problem lies with those who create
them more than those who try to scale them. The ladder's
effectiveness is frequently diminished by its lack of parity
with titles and compensation given to equivalent-level managers.
In addition, most technical career paths are criticized for premature
topping off, in cultures that share the American value that everyone
can become president, this truncated route only creates a caste
of second-class citizens.
The problem of stunted advancement results in part from the well
meaning but too narrow motivation behind many of these programs.
Often, their explicit purpose is to maintain the morale of scientists
and engineers and to avoid their turnover. Implicitly, however,
too many have a negative purpose-to keep otherwise ambitious
people out of management jobs for which they lack appropriate
abilities. This is certainly important, but focusing on the negative
purpose tends to limit careful consideration of just how the
occupants of places on the second ladder are supposed to be making
a contribution. For some, avoiding management responsibilities
becomes a way to avoid responsibilities to the company altogether.
Creating dual advancement paths needs to be a business issue,
not just a human resources program. It is also an idea with too
much potential to remain limited to a company's "techies."
A hierarchy of non management jobs should be available for all
professional specialists or knowledge workers.
Empowerment is not a substitute for growth and advancement. Reinforcing
jobs allows considerable opportunity for an individual to grow
in place by adding breadth and depth to his or her skill base.
For many individuals, the advancement opportunities available
in the horizontal organization will be sufficient. But some also
will have the interest and ability to contribute in the vertical
superstructure and in ways other than assuming traditional management
accountabilities.
What would such a career structure look like? It would have more
of an upright rectangular shape than a pyramidal one. Perhaps
it could best be symbolized by a spiral staircase, or double
helix-essentially, two long chains twisted around each other.
Whatever the shape, as with all structures, organizational or
architectural, the way the basic materials are used will determine
many of their properties.
Two ways to add value: bear
loads or serve as a veneer
Architects use materials in two ways-for structural purposes
or as veneer. When used structurally, a material's main role
is to hold the building together, spanning openings or forming
columns. When used as a veneer, it need support only its own
weight, but it adds value to a building in other important ways.
It can modify the building's outward appearance significantly.
It can add a sense of texture and depth that might have been
impossible to achieve otherwise. As a skin over the load-bearing
structure, veneers allow the designer to economically leverage
the materials being used. An all-stone or all-brick house is
much more costly to build than one with a veneer of these materials
over strong but less attractive cinder blocks. As an element
of architectural design, the word "veneer' has none of the
negative connotation it sometimes acquires in day-today usage.
Veneers such as glass can allow light to flow and transform
a dark, inward-oriented structure into one better connected with
its environment. Veneers also give the builder greater flexibility.
Some materials. such as stone, can serve as either veneer or
structural elements. When used structurally to make a wall, stone
must be of a certain size to support the pieces above and must
be arranged in a particular way, with its joints staggered, to
maximize its ability to resist cracking. But the same stone,
when used as a veneer, allows the architect many more size and
placement options; it even can be used primarily for decorative
effect, possibly to create a stone mosaic.
There are close parallels between the contrasting roles of structural
elements and veneers in a building and the functions of managers
and professionals in an organization. Managers must be load-bearing;
their deployment determines how a business structures its accountabilities.
The nature of their work forces them to focus much of their attention
internally. To maximize the strength they provide, their positions
have to be structured to minimize organizational brittleness-by
limiting the number of managers placed directly above other managers
in the structure and by ensuring that each of their levels reflects
a discrete time horizon of relevance to the company.
The requirements on independently contributing professionals
are different. Their roles can be more flexible. They can focus
as much on the world outside the company as on its internal workings.
They can act as windows to new markets and capabilities. These
are all useful functions, but, like veneers, they cannot stand
alone. They need to be plugged firmly into the workings of the
rest of the corporation to pay off for the business. Providing
those connections is a key job of the management structure. While
most corporations have had many years' experience structuring
management positions, relatively few have thought out an appropriate
business logic for this parallel hierarchy. A good starting point
is consideration of the company's future and the role of the
professional hierarchy in planning for that future.
Mapping the business future
on the professional track
What is it about the parallel hierarchy makes it worthwhile from
the company's perspective? What is required if the business is
to gain from each stage of the hierarchy?
For the dual hierarchy to serve the company, two things need
to happen to the work performed by those advancing up the professional
track. Like well-structured management work, it must reflect
expanding time horizons as the person doing it advances. It also
needs to give emphasis to the capabilities that will most strongly
drive the business's future.
The considerations about time frame and future orientation are
similar to those discussed in Chapter
9. There are a number of benefits that can be attained by
having the levels of professional advancement correspond with
the time frames associated with each management level. Thus,
a company with four levels of management might also have four
tiers of advancement possible on its professional track. These
might correspond to the time horizons associated with each management
level. Most of the professional contributors operating in the
one-year or two to three-year horizons would be in the third
phase of their careers (mentors and project managers), whereas
those in the five- and ten-year hierarchal levels would be in
the directors-phase. Professionals in the earlier career stages
would be based in the horizontal organization and most likely
associated with a business process manager. Their time frames
would vary from one day to several months.
Increases in a professional's time horizon may be manifested
in a shift from preoccupation with the needs of today's customers
to concern with what those customers will want to buy in the
future. The lower levels of the professional hierarchy can include
employees with considerable knowledge about current customers
and markets, and the senior ones can be more focused on the business's
potential markets and new customers. London Business School's
Gary Hamel has gone to lengths to bemoan the tendencies of most
companies to "work very hard to delineate the executive
ownership of existing competitive space. But how many,"
he asks, "give equal attention to assigning the responsibility
for finding and then filling in the white spaces that represent
new competitive territory?" This is a role for the company's
senior individual contributors, not its senior managers, who
are busy focusing on the existing businesses.
The mIddle manager's new role
Most of the discussion to this point has been about only one
side of the advancement track, the path for individual contributors.
This is because it is the least developed in most companies.
It is also the place from which the greatest future organizational
leverage will come. Those on the professional track, burdened
with few operational responsibilities, may be very busy trying
to change the corporation, rather than control it. But someone
still has to be in charge, to be seen as in control.
With all the popular attention provided to worker empowerment
and vision-driven leadership from the top, it is not surprising
that middle management's role in the new corporation has been
ignored. Some management watchers act as though middle management
is destined to be replaced by the computer. Tom Peters has called
management hierarchies "merely machines that process and
agglomerate information, each level adding a further degree of
synthesis." Their reason for being recedes, he says, as
"we develop technology-based information processing, and
especially as we link the systems in networks, inside and outside
the corporation."
But, as we pointed out in Chapter
9, hierarchies provide more than information relay and conglomeration.
They serve some valuable psychological purposes, and, when well-constructed,
they keep the future from being lost. As a company builds a horizontal,
process-oriented, organization, the role of those managers above
it may need to significantly change.
How will it change? Those on the management track will not, through
a wave of the magic wand of empowerment, escape responsibility
for the results of the organization units they oversee. If anything,
they will be held more accountable than ever for them; fewer
management layers will make it easier to pinpoint responsibility,
allocate praise, and assign blame. It may sound excessively basic
to talk about a manager being held accountable to the next level
up in the hierarchy for the results of subordinates' work. But
more than one senior executive has tried to attribute the company's
failings to the performance problems of his subordinates. A chief
executive was fired by his board for doing just this; each explanation
he provided for missed results stood up individually but, taken
together, they indicated the CEO did not know what was personally
expected of him. The once popular style of management-by-subordinate
commitment has no place in the new corporation.
At Toyota it is very clear who is responsible for the success
or failure of every new car introduction. it is the chief engineer
assigned to that model. This manager has unusually broad responsibilities
that involve almost everything associated with the development
of "his" car. He is expected to monitor social, political,
and environmental trends. He determines the size and market niche
the model is aimed at. He decides which of Toyota's advanced
manufacturing practices will be used to make it and which members
of its vast supplier network will provide parts. He constantly
travels to meet the car dealers and their customers to obtain
firsthand feedback on what they like and dislike about existing
Toyota models. This information is taken into account when he
returns to Toyota City, 300 miles southwest of Tokyo, to approve
the marketing strategies his experts have developed to sell the
new model.
Jobs with this scope do not exist in Detroit, or in many other
car manufacturing capitals. Toyota's structure is an example
of middle management potency, a sharp contrast to the too-common
pattern of responsibility fragmentation, finger pointing, and
crash catch-up programs.
New middle-management tactics
Although a manager's traditional accountabilities will remain
unchanged in the future, the tactics used to ensure results will,
out of necessity, evolve.
General Electric's chief executive, Jack Welch, is personally
spearheading a campaign to convince his managers that their role
is no longer to control people and to constantly stay "on
top" of all events. Rather, he wants them to focus on guiding,
energizing, and exciting those who work in the organizations
they manage.
The head of NutraSweet, Robert Shapiro, echoes Welch's concerns
and feels he must demand much more from managers than ever before.
He says managers have few opportunities in his company to execute
clear-cut orders from the top of the hierarchy. Instead, he expects
each manager to have a very clear understanding of NutraSweet's
strategy and the capabilities needed to achieve it and then to
improvise as the immediate situation requires.
This increased emphasis on results, rather than methods, is akin
to what some management scholars have described as the best way
to manage professionals: Provide them with "envelope supervision."
This phrase covers two steps: discussing very carefully with
the professionals the minimum information necessary for the manager
to feel comfortable that all is on track without eroding discretion
within the time horizon in which the professional is expected
to contribute, and then establishing with them the limits within
which the individual contributor's discretion may be exercised.
Another management practice, advanced many years ago by former
AT&T executive Robert Greenleaf, still holds great promise
to help the emerging breed of middle managers define their modus
operandi. Called by the theologically oriented name "servant
leadership," it is an approach based on Greenleaf's observation
that often the strongest leadership is provided when the manager
is focused on taking care of subordinates and eliciting from
them what needs to be done. It fits well with the idea that the
horizontal organization is where the real-time action is. One
exponent of this philosophy, business school dean Robert Taylor,
describes the servant leader as one who has, not the answers,
but the right questions. He knows that it is the people in constant
contact with customers and technologies who are usually the best
source for the answers.
A servant leader allows subordinates to feel "they don't
have to go to great lengths making sure they are getting their
fair share of resources or rewards, that they don't continually
have to waste time watching their backs-because they know their
manager is doing these things for them."
This contrasts with the more typical perversion of management
hierarchy in which subordinates feel the necessity to spend hours
preparing for presentations to top management, because the seniors
in the hierarchy act as if they are the consumers of the company's
efforts.
Servant leadership might sound wishy-washy on the surface, but
it has been practiced with great impact at tough-minded companies
like Cypress and Federal Express. Ask a Federal Express employee
how many subordinates report to his manager. You will probably
hear something like: "Sorry, you seem to have it backwards.
My manager works for the twelve of us to help us succeed at our
jobs."
Greenleaf's ideas have more depth to them than the popular injunction
to behave less like a boss and more like a coach. Still, at least
one former practicing coach, Paul "Bear" Bryant of
the University of Alabama's football team, has caught the essence
of this leadership style in a homily that also summarizes his
approach to recognition: "If anything goes bad, I did it.
If anything goes semi good, then we did it. If anything goes
real good, then you did it."
A flaw in some rosy "middle manager of the future"
scenarios is that they carefully specify how the middle manager's
role must change, but they then ignore the changes in management
structure and hierarchies that also need to occur to provide
a firm platform from which the new role is to be played. Both
need careful consideration if the new corporation is going to
behave as if the future really mattered.
KeepIng both tracks roughly
parallel
Dual tracks can go very wrong if their paths diverge. The purpose
of parallel hierarchies is to provide for multiple ways, in multiple
time frames, for contributions to be made to an organization's
success. The corporate superstructure must have coded within
its configuration the knowledge and power necessary to perpetuate
the business. Earlier in this chapter, we gave several examples
of how this was done at the upper end of the hierarchies at Braun,
Microsoft, and TRW This is a process, though, that has to happen
at many points in a company's vertical hierarchy, perhaps analogous
to the steps on a spiral staircase that form the cross-links
that keep the structure together. Mechanisms such as an internal
board of directors meant to guide the development of portions
of a company's business without adding another senior level of
management hierarchy can do this.
Germany's Siemens divided its $45 billion corporation into
sixteen minicorporations, each with its own leadership team and
board of directors. These smaller businesses range from $500
million to $8 billion a year in sales, but the idea can work
just as well for much smaller entities.
In the future, it may become common for the originator of a new
business idea, if he or she is on the professional track, to
organize an internal board, serve as its chair, and "hire"
a manager to oversee the idea's development-all with senior management's
blessing.
When boards such as these are thoughtfully crafted they should
include managers-at the level of, or possibly one level above,
the executive being supervised-and senior individual contributors.
Some may have room for members from outside the corporation,
possibly suppliers, customers, or astute market watchers. The
board idea is too good to limit to the very top of the company.
At the middle level of the parallel hierarchies, it is important
that both sides build and maintain strong relationships by training
together. Management development is too useful to provide only
to managers; career-phase-specific programs should be devised
for all levels in the hierarchy.
Probably the best way to prevent the development of two diverging
cultures is to move people back and forth regularly from one
hierarchy to the other. IBM and Xerox regularly use similar cross-hierarchy
moves. An IBM technical contributor may rotate, with the prior
assistance of a well-planned management skill acquisition program,
to a managerial slot, with the eventual goal of returning to
the professional track with an increased awareness of the management
role, an awareness that can come only from rolling up one's sleeves
and joining in the work.
These kinds of spiraling career progressions will become increasingly
important as unneeded management levels disappear and as advancement
from one level of management to another becomes more of a broad
jump than a continuously progressing hop. These wide gaps, measured
in broadened time horizons of responsibility, may require an
advancement-oriented manager to move first to a professional
contributor position at his or her current level, where the manager
can serve as an assisting understudy to a manager one level up.
A series of successful same-level management slot rotations also
may be required before a candidate is considered for hierarchal
movement.
Many other creative and mutually beneficial career movements
are possible when a parallel hierarchy is a key component of
organizational infrastructure. Other elements of the corporate
infrastructure can also benefit from the kind of rethinking that
has been applied here to provide two paths to the top. Just as
the integrity and strength of a structure derives from the materials
used to make it, the functionality of a structure is often determined
by how well the design of its infrastructure was thought out.
© Robert M. Tomasko 2002
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