By Michael Walker, Senior Fellow,The Fraser Institute (Canada)
am very pleasedto have the oppor-tunity to share withthe Atlas networksome of the lessons Ilearned about man-aging an instituteduring my thirty-oneyears in the engineroom of the
(Canada).I think the firstthing that needs tobe said is that the management stylewhich is appropriate to a newly formedinstitute is very different than the mod-el which can be applied when it hasfifty or more employees with threeregional offices and extensive interna-tional connections.In their early stages, most smallenterprises are “cults of personality,”since the organization is closely identi-fied with one individual. This earlyphase is the “Mike’s Grill” stage.Everybody knows Mike and eitherlikes Mike’s food or hates Mike’s foodand patronizes the business according-ly. Of course there may be an equallywell-known Millie or Moe at the till,but it’s the Mike at the grill that drawspeople in.The inside workings of the“Mike’s Grill” stage is essentially thatof a hierarchical autocracy. Everybodyexpects the decisions to be made at thetop and for the most part that is wherethey are made. Communications upand down the line of command keepthe organization on mission and oneor a few people at the top drive theorganization.The real strength of such an orga-nization structure is that it is relativelycheap to operate. Transaction costs interms of meetings, consultations, etc.are minimized and the organizationcan respond quickly to changes in theperception of the CEO as to the oppor-tunities and threats that theorganization faces. There are, howev-er, distinct weaknesses.The first is that it is often difficultfor the person at the top of such a hier-archy to encourage within theorganization the development of indi-viduals who could potentially replacethe CEO. Often the personality sur-rounded by the cult won’t toleratepotential successors, but even if theydo, good people leave because of thelack of upper mobility in such a hierar-chy. Therefore this sort of organizationis vulnerable to succession difficulties.How will “Mike’s Grill” do whenMaurice is at the grill and nobodyknows Maurice?In the think tank world, “difficultleadership transition” has been the rulerather than the exception. In myassessment of the record of think tanksuccession, I concluded that the prob-lem was the nature of theorganizational structure used by theorganizations. That inference, whethercorrect or not, greatly influenced mythinking about how the structure of theFraser Institute should evolve. As a side note, it is also the casethat a small organization may not haveany choice but to stick with the cult of personality model. If the organizationonly has enough resources to pay onehigher-priced individual, then it is alsogoing to have to face the “Mike’s Grill”transition problems. Happily, there aresome spin-offs of a positive sort thatemerge from this situation.For example, at the FraserInstitute, my colleague for seventeenyears, Sally Pipes, grew in ability,capacity, and appetite for indepen-dence to an extent that the Institutecould not afford to retain her. Shecould have run the Fraser Institute byherself. She knew that and eventuallyleft to become the president of the
Pacific Research Institute
(California), where she has been oneof the most successful think tankCEOs in the business.The second weakness of the singlepersonality model is that it is not welladapted for expansions that mayrequire different kinds of centers of excellence or different geographiclocations. As the Fraser Institute has grown,its organizational structure has beenchanged to accommodate the chal-lenges posed by increased size and toactively encourage further growth.One of the earliest changes was theadoption of a collegial model for thedetermination of programs and pro-jects. In such a model the strategicplan in general terms and over a five-year horizon is determined by theCEO while the project detail, includ-ing the development of new programideas, is evolved collaboratively by theresearchers. Collegiality encouragesownership, and ownership induceshigher productivity and more reliableinnovation. While the collegial model allowsmore individual initiative in the selec-tion and execution of projects, its
Some Lessons from the Engine Roomabout Managing an Institute
This market-basedmanagement system...simultaneously makesthe Institute less vulnerable to the loss of the CEO and gives theCEO more opportunityto develop newdepartments and newactivities within theinstitution instead of simply doing the fundraising or micro-managing the activitiesat the departmentallevel.