Hack:
Overcoming the management hierarchical control mindset—the key to re-inventing management and resolving 20 moonshots.

By Bill Nobles - Retired from Exxon Corporation

June 4, 2010 at 10:40am

freedom

Management control

empowerment

Reinventing management control

reinventing management

Moonshots

Humanize the language of business

Increase trust, reduce fear

Reinvent the means of control

Summary

The assumption that employees must be hierarchically controlled has frustrated organizational innovation for decades. We and five well-known business leaders stumbled upon the solution to this intractable barrier by using “vision-led freedom” to shift primary responsibility for organizational control to employees—and in doing so opened the way to resolving most MIX Moonshot issues.

Problem

The management scholars and practitioners who developed the MIX Moonshot list joined a long list of experts who for decades have struggled with the insidious side effects of hierarchically controlling employees. Many offered “solutions” such as “participative management,” “empowering employees,” “reducing control,” “enhancing organizational agility,” “improving organizational learning,” etc.—but few produced lasting improvements because none addressed the root cause. As hierarchical control limitations increasingly conflicted with the changing demands on management, there was little recognition of its cancer-like effects such as conflicting with employees’ basic human need for freedom; perpetually communicating management distrust; and constraining growth by limiting the ability to learn from mistakes. Most importantly nobody questioned the root cause of all these issues—Is there any fundamental reason that management must control employees? Why can’t employees function with full responsibility, authority, and accountability—i.e. with full freedom?

Solution

Post-retirement research revealed that we and five well-known business leaders had unconsciously stumbled upon the solution by building management systems and cultures which shifted primary responsibility for organizational control to employees. This has potentially profound implications for this forum because this research also found that these trial and error efforts were guided by a fundamentally different management mind-set about people and organizations—a paradigm shift from “hierarchical control” to “vision-led freedom.” Freeing our thinking from the need for hierarchical control opened the way to experimenting how far we could extend ideas like "freedom," "self-responsibility," self-control," and "self-coordination"— which while previously discussed were fundamentally incompatible with hierarchical control. In fact this research explained how hierarchically controlled organizations have rejected such initiatives as threats to management control--much like the human body fights off threatening virus and bacteria.

Practical Impact

Shifting primary responsibility for organizational control to employees produced extraordinary business successes in seven different industries for a variety of reasons. Workplaces full of intrinsic motivators like “freedom,” “trust,” “ownership,” “self-responsibility,” and “personal growth” inspired employees to behave like creative entrepreneurs focused on achieving their company vision for success. The ability to self-control and self-coordinate activities revolutionized the effectiveness of employees working together as teams and units by taking advantage of self-organized spontaneous order. Encouraging and helping everybody to develop their unique potential produced amazing win/win benefits for the business, employees, and society—as Thomas Jefferson observed freedom unleashes "the capacity of man to improve himself." Finally much to our surprise the combination of dispersed power, open access to information, and self-motivation to behave like internal auditors improved organizational control and provided insurance against management corruption.

As the list of moonshots suggests, the mindset shift to "vision-led freedom" also removed the root cause of 20 of the 25 issues on the MIX Moonshot list!

For those skeptical about these impacts, the book "Freedom, Inc." by Brian Carney and Isaac Getz (http://freedomincbook.com/) provides 13 more case studies of freedom-oriented successes including Terri Kelly’s W.L. Gore and Associates.

First Steps

Section Three of our book draft describes a step-by-step strategy for introducing freedom into an organization. It also provides suggestions for maintaining start-up company cultures which have capitalized on freedom while small enough for everybody to know and trust each other.

Credits

Bill Nobles and Paul Staley shared the research producing these findings. We are also deeply indebted to Peter Drucker and Douglas McGregor who produced much of the supporting rationale 50 years ago and came close to discovering freedom's benefits—only to be stopped by their convictions that management must hierarchically control employees.

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August 16, 2010 at 2:39am

Bill Nobles

Raj, that's fine to reference our draft in your hack. I'm busy with other stuff now so will need time to consider your first build.
Bill

October 11, 2010 at 11:09pm

Raj Kumar

Thanks Bill. Somehow this never made it to my Inbox. Seeing it today for the first time. Was wondering what I should do.

Regards/Raj

January 5, 2011 at 12:29pm

Bill Nobles

Raj, I have finished my special study at Rutgers where the Dean of the Management and Labor Relations School and a professor critiqued "Freedom-Based Management," and were sufficiently impressed to sponsor a fellowship further exploring the ideas http://smlr.rutgers.edu/billnobles-fellows
I am available now to discuss the earlier issues you raised regarding IT, so would appreciate your describing your thoughts. I also just posted a new story on MIX you might want to scan.
Also since I don't regularly check MIX, I will appreciate you alerting me at billnobles@optonline.net when you submit your posting.

Regards, Bill

October 11, 2010 at 12:58pm

Dhiraj Gupta

Hello Bill,

Your hack is among the first few I read at MIX. It was informative and very obviously a product of extended effort. I had reason to cross refer your hack and the reference stayed with me. There was a thought that came up.

I admire the way you are committed to realising a possibility - the realization of success with the idea of Freedom. However, is the idea of Freedom the only way to progress Freedom? Perhaps free-flow of Knowledge will also progress Freedom. I have seen that assertion elsewhere on the MIX but it lacked authority. Your opinion will carry weight with me.

Regards,

Dhiraj

January 5, 2011 at 12:38pm

Bill Nobles

Dhiraj, I apologize for being out of touch the past several months and just seeing your posting. I'm not sure I understand your point, but the freedom we advocate is inside organizations where only the leadership has power to choose between hierarchical control and vision-led freedom. If he/she chooses the latter, then knowledge and information will flow freely within that oganization as an element of the freedom culture. OTOH I have difficulty seeing how the free flow of knowledge will attract him/her to freedom unless they stumble upon our draft at http://cid-13d8911780bef9bf.skydrive.live.com/redir.aspx?resid=13D891178...
Let me know if this does not address your issue.
Regards, Bill

October 26, 2010 at 11:20am

Kimberly Hunt

I have been struggling with this problem for years within my organization. How do you gain the momentum to shift to the idea of employee empowerment versus heirarchical control when it has been embedded in the organization for generations? It seems like the culture is so ingrained that by promoting this you are just shooting yourdelf in the foot. Any ideas to break down the walls?

January 5, 2011 at 12:44pm

Bill Nobles

Kimberly, I apologize for being out of touch several months and only now discovering your post. Unfortunately, the answer to your dilemma depends on where you stand in the power structure. If you're not at the top or close enough to influence the top then there is little you can do--without risking a shot in your foot. If you can influence the top, we can share some ideas about how to get started.
Regards, Bill
P.S. I just posted a MIX story you might find interesting.

January 9, 2011 at 8:11am

Jamal Ghamari

Bill, very interesting hack and I think one of the most important ones as far as management 2.0 is concerned. The reason I think so is that there is an ideological philosophy behind conventional management practice that resulted in management left behind almost all social sciences and it does not seem right to me. Look at political science on how it is effective in teaching people how to overcome dictatorships for the benefit of freedom. Or look at macroeconomics and the experience of the free markets again against centralization and dictatorship and for freedom. Management is literally out of date and that's probably because 1) majority of management thinkers and researchers have almost always accepted the ideological philosophy behind Modern Management and 2) mavericks have not exploited all the technical and social possibilities to create movements and to reach the critical mass. I think even mavericks are left behind human social and political knowledge. Are they not serious in causes they are inspired to serve? In my experience as a management lecturer and consultant in a place where freedom is still a dream, there are thousands of obstacles and denials and biases and pessimistic thoughts and discouraging comments and fallacies in front of whoever enthused to initiate a radical change. Beyond all the models and examples of freedom-based management and all the implications of freedom in organizations I have been trying to propose and present, I have reached a point where I need now to engage in the ugly game of power and I am currently focused more on the socially meaningful issues and politically sensitive points. I am observing very closely how democracy movements use both bottom-up and top-down approaches simultaneously and how leaders of freedom movements know the value of social networks and seize every opportunity to build the critical mass. I have been trying to intervene in management trainings and consultancies and of course practices in order to accomplish maybe a few millimeters of progress toward freedom-based management. But Bill, don't you agree that along with case studies and theoretical improvements in the area of freedom-based management, we are also required to think about the effectiveness of our interventions in terms of political and social endeavors and results? That is what I am doing research about and what I am striving to achieve as an intervener. By the way, It is so hard to convey through words the difficulty of being alone as an initiator in the path of freedom in places where there is shamefully little experience of it and even little belief in it.

January 9, 2011 at 9:24am

Bill Nobles

Jamal, thanks for your thoughtful comments. Your last point resonates with partner Paul Staley and me, for whom this has been a lonely 17 year attempt to give something back to the wonderful American experiment that rewarded us so generously while working. I suggest taking a look at the story I posted last week which tries to recast our findings in different way (Vision-led freedom, the key to reigniting management innovation).
Regarding your point "about the effectiveness of our interventions in terms of political and social endeavors and results," we are motivated by belief that the American experiment role model provides the greatest hope for world peace and prosperity, and that the lack of freedom in the workplace has undermined that experiment in many ways such as failing to fairly share the rewards of business success with employees; concentrating power and enabling management corruption that has eroded public confidence in capitalism (i.e. Enron/WorldCom); etc. More importantly we are convinced that a wave of freedom penetrating inside organizations could revitalize and restore confidence in that experiment, and thereby increase the hope for world peace and prosperity.
The issue we have faced is how two unknowns with no platform can attract attention to these important issues--which are counter-intuitive for so many current business and political leaders. My MIX postings are one of our latest attempts. I've also spent the past semester trying to persuade the dean of Rutgers' School of Management and Labor Relations to start researching and publicizing freedom.
Thanks again for your comments, Bill

January 11, 2011 at 1:52am

Jamal Ghamari

Bill, it is good to go through your experience in the area of freedom-based management and to gain insights from it. I am facinated to hear about your wonderful initiative of arranging for an academic platform as for sponsored researches to be conducted and the word "Freedom" to be spread in the management area; this word seems to have been treated as an outcast in the modern management literature anyway. Actually I checked the website of Rutgers' school of management and labor relations and I thought it would be a great idea for me to channel my research into the research program in Rutgers. I am focused on the barriers of freedom-based management in my own country (Iran), although I know it is not politically correct and indeed even politically secured to work on any topic containing the F-word, I mean Freedom, in Iran. Do you think that Rutgers' school of management and labor relations would agree to my research being carried out in Iran? Thanks, Jamal

January 12, 2011 at 8:31am

Bill Nobles

Jamal, you pose an interesting question about linking your research in Iran to Rutgers. My initial reaction was not encouraging because of the difficulties we have faced creating any enthusiasm for our ideas with the Rutgers Dean and business colleagues here in freedom-focused America! All I have persuaded the Rutgers Dean to do is reflected in the Bill Nobles fellowship, the objective of which is to develop additional case studies of successful freedom-oriented companies. ( http://smlr.rutgers.edu/billnobles-fellows ) Until hearing from you I expected the selection board to choose a candidate who would focus on US examples. But if you have Iranian examples, or if you think your Iranian perspective provides unique value in achieving the fellowship objective perhaps you could apply and emphasize those.

Regards, Bill

January 11, 2011 at 8:44am

Ellen Weber

Bill these are wonderful findings here and in other offerings at the MIX, and I think your research is so needed in today's shift of leadership directions. How do you see it blending in with other initiatives stated here in this community.

If you were guiding the discovery here, and helping talented thinkers to pull a bit more in one direction, what would you do first? How would you create a similar shift here at MIX, so that folks discovered new ways to support one another, while advancing new ideas at the same time?

Can you speak a bit to how your discoveries could inform our mutual discoveries here in this talented community? Thanks for this terrific venture, Bill and good luck with its extensions!

January 12, 2011 at 8:05am

Bill Nobles

Ellen, thanks for your comments and thought-provoking questions. I can provide only general answers since I just returned to MIX after a 6 month absence, so perhaps you can help fit these to ongoing activities. Also since I am convinced that Management 2.0 requires a paradigm shift—i.e. a fundamental shift in leadership mindset, I am going to use the aviation history analogy from my recent story posting, “Vision-led Freedom, the key to reigniting management innovation.”

If I were guiding MIX discovery, I would first encourage participants to self-select between three discussion areas: (1) How to improve reciprocating combustion engine technology—i.e. hierarchical control management with its core assumption that management control is essential to sustain order and prevent chaos? (2) How to define and improve a management turbojet technology that shifts to employees as much organizational control responsibility as possible? (3) Other improvement ideas/issues. As an engineer I am confident that our community cannot improve “it” without defining what “it” is. Also from my perspective the moonshot developers unconsciously concentrated on Area 1, probably because nobody asked whether there could be an alternative for hierarchical control. As a result the effort to focus stories and hacks on moonshot issues has unintentionally concentrated MIX discussion on Area 1, and done little to suggest there might be an Area 2.

I could be persuaded to facilitate Area 2 discussion (where my passion lies) if the MIX community agreed to define and document our shared values as Chris Gram recommended. That would provide a structure to deal with the frustrating/low value-added postings I encountered last spring in my first visit to MIX. If I were facilitating Area 2 I would expect most interested participants to start off questioning the practicality of a management turbojet, and would suggest reading and questioning my MIX story and hack as an introduction—along with the summary of Douglas McGregor’s Theory X/Theory Y on my website.[1] These describe a logic for replacing hierarchical control and an alternative for doing so. Then I might suggest self-reflecting on questions like:

- What fundamental reason does management have to hierarchically control you?

- Why can’t you function with full responsibility, full authority, and full accountability—i.e. full freedom?

- What work culture elements would encourage you to freely do your best to help achieve organizational objectives?

- Are your co-workers sufficiently different to change those answers?

- Experts have observed that “much of work itself is inside the mind of the worker.”[2] Can management hierarchically control what you or your colleagues are thinking?

If questions like that don’t open minds to the practicality and necessity of finding a replacement for hierarchical control I might suggest reading our draft of “Freedom-Based Management,” Gary’s MIX posting about W.L. Gore, and “Freedom, Inc.” Hopefully those would open the minds of many to the possibility that a management turbojet is practical, or alternatively persuade some to concentrate on Areas 1 or 3.

From that point I could perhaps stimulate brainstorming and mutual discovery by encouraging participants to re-read the MIX postings on “trust” by Ross Smith and John Mackey from the perspective of searching for a turbojet. This could stimulate interesting discussion since our findings suggest that “trust” is one of several powerful intrinsic motivators stimulated by “vision-led freedom” along with "self responsibility," "accountability," "growth," risk-taking," and “learning from mistakes and failures"—and fundamentally inconsistent with hierarchical control. John argues that “You can't create a high-trust organization without creating a culture based on love and care.” No example company we studied emphasized “love,” but all seemed to reflect “care” by emphasizing shared values/beliefs like “trust,” “respect for human dignity,” “companies are people gathered to pursue a worthy cause that cannot be accomplished alone,” and “teamwork and community.” We could then discuss/debate whether there are minimum critical shared values for a “turbojet” culture?

From there the learning and discovery should spontaneously accelerate and ultimately converge on critical design elements for a management turbojet, or alternatively conclude that our findings are a pipe dream. Regardless of the ultimate outcome, I am convinced this dialogue would address a previously ignored key issue for Management 2.0—does management have any alternative for hierarchical control? And quite honestly when self-selection is framed this way I cannot imagine anybody choosing to concentrate on improving hierarchical control management, and suspect the moonshot developers did so only because they were never offered a choice.

Ellen, I very much appreciate your questions which catalyzed many ideas I had not previously considered. I would value your connecting these to other initiatives in the MIX community. If discussing off-line would help (I find the MIX format awkward), feel free to email me at billnobles@optonline.net

Bill

[1] “Theory X/Theory Y, and draft of “Freedom-Based Management”© available at

http://cid-13d8911780bef9bf.skydrive.live.com/redir.aspx?resid=13D8911780BEF9BF!104

[2] “Shared Capitalism at Work,” Page 232, Edited by Douglas L. Kruse, Richard B. Freeman, and Joseph R. Blasi, National Bureau of Economic Research, 2010

June 6, 2010 at 2:33am

Alex Todd

Overcoming a control mindset by management is clearly an important new management paradigm for the 21st century, as the "creative class" becomes the engine for prosperity and the dominant producer of value in the creative economy. However, I have a few concerns and suggestions:

1. If the objective is to remodel management away from being a control-oriented function, then the antimodel of control is trust, not freedom.
2. The root cause of control is fear, while for trust it is confidence.
3. The overriding condition for achieving the objectives of this hack is a robust means of creating, sustaining and restoring confidence.
4. If it is true, "All management is risk management", then I would counter, "All leadership is trust leadership." (see slide #22 at http://trustenablement.com/Ponemon_RIM_Council-Trust_Measures_%26_Indica...).
5. I believe my hack, "The Trust Extender: Enlarge the circle of trust by empowering stakeholders to trust and reciprocate trust" can help provide the critical, enabling missing link for this hack.

I would also add that control and trust exist on a continuum. Business leaders need to use the appropriate mix of the two to achieve specific objectives. In other words, they are not necessarily "either/or" propositions. Instead, in most cases, the best approach is to control and trust in varying degrees, with trust generally being an aspirational objective. One way to look at it would be to use Maslow's hierarchy of needs as an example, where it might be more appropriate for people/organizations working at lower levels to exercise more control, while those at higher levels to rely more on trust (see slide #11 Maturity Model at http://trustenablement.com/local/GRCT-KPMG.ppsx).

June 6, 2010 at 7:06am

Matt Shlosberg

I love the idea.

Here's some food for thought. I recently came across a study that surveyed over 1,000 CEOs, compared different leadership styles and came up with the conclusion that authoritative style has the best end results. Other styles mentioned were democratic and coaching. Both of these styles rely on the human tendency to lead themselves. While we are now moving from authoritative to democratic and coaching, it's the authoritative approach that works the best so far.

So, here's the question: What processes and/or controls do you have to have in place to make your approach as effective as popular management/leadership approaches? It sounds like in the perfect world you'd like to have none, but what about the real world?

Thanks!

June 7, 2010 at 2:43am

Bill Nobles

Matt, thanks for reviewing the hack and the food for thought! I am curious whether the CEO survey was supported by quantitative company results by the varied leadership styles. The six freedom-oriented companies we studied out-performed the S&P 500 for three decades by factors of 5 to 10. I wonder how many “authoritative” style CEO’s matched those results. “Freedom, Inc.” also discusses 13 other highly successful, freedom-oriented companies from around the world including W.L. Gore.

Regarding “democratic” and “coaching” styles, our research suggests the value of each depends on the implementing leader’s mindset. A people-oriented leader open to the possibility that hierarchical control is unnecessary can find value in either and may evolve in the direction of freedom. But these ideas implemented in a hierarchical control environment are likely to flop. “Coach and control” suffers from the same fundamental limitations as “command and control.” In fact our research suggests that hierarchically controlled organizations reject initiatives like “democracy,” “self-direction,” and “empowerment” as threats to management control—much like the human body mounts defenses against threatening virus and bacteria.

Concerning your question, I need to clarify that “Freedom-Based Management” does not imply lack of control or processes. Freedom-oriented leaders retain control over many organizational elements such as their management system, their vision for success, company finances, and strategic direction—and also ensure that critical business processes are under control. The key point is that they build a management system and culture to accomplish this without controlling employees! For example Paul’s management controlled company finances and gave all employees property rights to at least $25,000 annually to spend as they saw fit, and the right to request more if needed. My management team gave employees property rights to many business processes within which they worked—along with the responsibility to continually improve them.

Finally it’s important to recognize this hack discusses only real world ideas and results. Some may strike you as “unreal” or from a “perfect world,” but that’s because (a) the ideas differ so much from conventional wisdom and (b) nobody before has recognized and connected the “freedom” which we and the founders of HP, Nucor Steel, Herman Miller, Wal-Mart, and Southwest Airlines relied on for decades to produce extraordinary successes.

June 7, 2010 at 4:39am

Bill Nobles

Alex, I share your enthusiasm for “trust,” which in the right organizational environment can be a powerful intrinsic motivator and is a key element of our Freedom-Based Management model. However, within management “trust” is no substitute for “freedom,” seven dimensions of which have special value within organizations:
• Freedom to develop, to grow, to achieve one’s unique potential—a source of tremendous business value.
• Freedom to make mistakes and fail—essential elements of creativity and growth.
• Freedom to question and to investigate.
• Free access to all business information except that which is private.
• Freedom to decide and to act.
• Freedom from boundaries.
• Freedom from arbitrary limitations such as work hours, location, dress, etc.

Also while fear may contribute to some leaders relying on hierarchical control, unawareness of a practical, proven, and more effective alternative is more important today. We hope books like “Freedom-Based Management” and “Freedom, Inc.” can start to fill that void.

Finally “trust” develops naturally within freedom-oriented cultures, but “freedom” would never emerge in an organization where the leader saw a “control/trust” continuum and decided whom to trust using level in the organization as one of the criteria. That sounds like the hierarchical control I experienced while active.

June 7, 2010 at 6:37am

Matt Shlosberg

Bill,

Thanks for the clarification. Now that I think about it, the survey I mentioned actually had a flaw - it compared leadership styles among each other but it didn't compare any of them to other "management" structures such as the ones you propose.

I can definitely see how it can work. I actually posted a hack with an idea similar to yours. Please take a look and let me know what you think. Any thoughts or comments are much appreciated. Here's the link:

http://www.managementexchange.com/content/let-chaos-reign-self-sufficien...

August 12, 2010 at 2:12am

Raj Kumar

Hello Bill,

The results are very attractive but the way to the results appears quite daunting requiring investment of tremendous amount of time and energy . However, it appeared that much of this energy is procedural:
- If there are reliable means in place that assure coordination, feedback and probing of the direction of effort, all without intrusion, then it will substantially promote the roll out of Freedom.
- Associate means to migrate the architecture from the hierarchy based one to a profit center based one which facilitates exchange of experience among similarly engaged communities will simplify the evolution of the enetrprise.

In fact, it appears if the leaders are saved investment of the time and energy then the volition to change will be exercised far more often and successfully.

Will deeply appreciate your feedback.

August 16, 2010 at 12:39pm

Raj Kumar

Hello Bill,

Was hoping to discuss with you that adoption of my work in harnessing IT to provide a compelling means for organizing and driving superior application of Knowledge can considerably ease and simplify the transformation to the managemet model conceived by your hack.

I am convinced your model has tremendous potential for value-add as it is closer to human nature and evolves management along proven lines and concepts.

I hope you will consent to my reference to your draft study: "Freedom-Based Management" http://www.42projects.org/docs/ in my hack. I shall remove it if you feel it is early to refer to it.

Regards,

Raj Kumar

September 4, 2010 at 7:47am

Ellen Weber

Bill, you have really touched on a central problem that holds us back as a nation of innovators that we could become. Thanks for the challenges laid out in this thoughtful post.

I have a question which relates this issue to another factor that my work deals with - humans as talented capital. Would love yo hear your take on that angle of your challenge to increase freedom and trust at work.

1. How could stoking more talents in all ranks of the organization, given the fact that each staff member brings at least 8 unique intelligences to work daily, and most sit unused?

September 17, 2010 at 7:01am

Nayantara Prasad

Hello Bill,

I have freely progressed to build a hack using yours as a starting point. It may be accessed at http://www.managementexchange.com/hack/intrinsic-force-superior-management. It progresses your objectives. I pray it shall meet with your approval.

Regards,

Rohit

September 17, 2010 at 7:26am

Rohit Kashyap

Hello Bill,

I visited with Nayantara while passing through Delhi and blindly used her computer to catch up on MIX. Just realised my error that \i have posted you from her account.

Regards,

Rohit