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Week 3 Reading Reinventing Management Extract1
Week 3 Reading Reinventing Management Extract1
This extract was created exclusively for the participants of the online course (MOOC)
Managing the Company of the Future and may not be distributed or published
elsewhere.
The principle of alignment is deeply rooted in the psyche of most business people.
Many well-known business practices are built on this principle, including Managing
by Objectives, Key Performance Indicators, Strategic Planning, and so on. There are
also several management theories, from agency theory to contingency theory that
use alignment as a way of understanding how goals are determined in the modern
business firm. And entire books are devoted to the concept, including Robert Kaplan
and David Norton’s latest bestseller, Alignment: Using the Balanced Scorecard to
Create Corporate Synergies.1
2
This is an extract from Chapter 5 of Julian Birkinshaw’s book “Reinventing Management” published by Jossey-Bass in 2012.
and they know they would fail to attract top researchers if they put too many
restrictions on them.
Measures and incentives are blunt instruments. The alignment model assumes
that executives can set clear, quantifiable objectives to ensure that every division
contributes effectively to the company’s overall goals, and that these can then be
cascaded down through a set of Key Performance Indicators (KPIs) for each sub-
unit. But we all know how difficult it is to establish KPIs that really work—especially in
settings requiring that employees show creativity and initiative. How would the
researcher above be able to show that the new technology she’s been wor#king on
for years—which may never result in a commercial product—is contributing to the
company’s profitability?
3
This is an extract from Chapter 5 of Julian Birkinshaw’s book “Reinventing Management” published by Jossey-Bass in 2012.
All of which suggests the rowing team metaphor is not really a helpful way of thinking
about how people work together in large organizations. If we want to use a sports
metaphor, a football team is far more apposite, as it has many different types of
players with different skill sets, and it requires considerable amounts of strategic
thinking and individual creativity over the course of a game. But I think the football
team metaphor misses the point as well, because it assumes a very clear-cut and
simple measure of success, namely beating the opposition. In the business world,
the measures of what constitutes success are multi-dimensional and dynamic.
I find it more useful to use the metaphor of the jazz ensemble. Jazz musicians work
together to achieve a worthwhile outcome, blending initiative and creativity with
discipline and structure. Moreover, they also have fuzzy objectives. Do jazz
musicians want to make beautiful music? Do they want to have fun? Do they want to
do something no one else has done before? Do they want to make a lot of money?
Of course, it is some combination of all these things, and the most critically
acclaimed or the happiest musicians are not necessarily the ones who earn the most
money. You can easily see the parallels to the business world.
In sum, many companies find themselves suffering under the tyranny of alignment.
Their ability to create value for their clients, employees, and other stakeholders is
compromised by the obsession with short-term, quantifiable, shareholder-driven
results. And their ability to generate effective collaboration between functions is
compromised by their silo-driven approach to goal setting and the inadequate
measurement and accountability that go along with it.
None of which suggests that alignment is a bad thing per se. Rather, it suggests we
simply have to be more careful in deciding when an alignment-driven approach to
goal setting is appropriate. My view is that there are many contexts where our
existing ideas about alignment work fine, but there are many others—typically those
that require greater creativity and initiative on the part of employees—where that
principle gets firms into trouble.
4
This is an extract from Chapter 5 of Julian Birkinshaw’s book “Reinventing Management” published by Jossey-Bass in 2012.
It is therefore useful to explore the possibility of an alternative principle to alignment,
what has been called obliquity. We have applied the principle of alignment to
direction setting for many decades, and we have accommodated its many limitations.
But these limitations and weaknesses appear to be getting more acute. Some fresh
thinking is needed.
Obliquity is not an easy concept to come to grips with. The other “alternative”
principles of management put forward in this book—emergence, collective wisdom,
intrinsic motivation—are all well established, with large bodies of research to back
them up. But that is not the case with obliquity, so we need to spend a little time
clarifying what the term really means.
In geometry, an oblique angle is simply one that is not a multiple of ninety degrees.
So the word oblique is often used in the English language to refer to any statement,
or line of argument, that goes off at an angle.
The oblique principle was first put forward by British philosopher Richard Wollheim in
the 1960s. He was trying to make sense of the well-known paradox of democracy: as
a voter I may feel that the death penalty is wrong, but I also believe that the view of
the majority should prevail, even though they might support the death penalty.
Wollheim’s solution to this paradox was to distinguish between direct and oblique
moral principles.3 Direct moral principles might include “the death penalty is wrong,”
or “birth control is permissible.” Oblique moral principles would include “what is willed
by the people is right,” or “what is sanctioned by our legal system is acceptable.”
Wollheim’s point was that these two types of principles coexist in a democratic
system, and sometimes lead to paradoxical outcomes. But, more generally, he was
suggesting that in a social system the pathway between our individual beliefs and a
collectively acceptable outcome is often indirect or circuitous. It would be convenient
if all citizens held aligned beliefs about something as important as the death penalty,
5
This is an extract from Chapter 5 of Julian Birkinshaw’s book “Reinventing Management” published by Jossey-Bass in 2012.
but the reality is that this will never happen. So in order to prevent anarchy from
breaking out, society has created institutions that enforce the view of the majority.
The concept of obliquity was first applied to the business context by British
economist John Kay. In an article in the Financial Times he observed:
Using examples such as Boeing, ICI, Wal-Mart, Merck, and Pfizer, Kay showed how
companies with oblique goals often outperformed those with much narrower, or more
financially driven, targets. And, similar to Wollheim, he argued that oblique
approaches were particularly relevant in complex social systems. A small company
in a predictable business environment will often succeed in pursuing its goals
directly—through careful alignment of all its constituent parts. But the more
unpredictable the environment, and the more complex the company, the more
important the oblique principle becomes. Table 1 summarizes this argument.
6
This is an extract from Chapter 5 of Julian Birkinshaw’s book “Reinventing Management” published by Jossey-Bass in 2012.
NOTES
1
George Labovitz and Victor Rosansky, The Power of Alignment: How Great Companies Stay Centered and
Accomplish Extraordinary Things (New York: Wiley & Sons, 1977). Also, Robert S. Kaplan and David P. Norton,
Alignment: Using the Balanced Scorecard to Create Corporate Synergies, (Boston MA: Harvard Business School
Press, 2006).
2
Quote taken from: Simon Caulkin, “No Half Measures,” Labnotes 10 (December 2008): 14-15.
www.management.org/publications.
3
Richard Wollheim, "A Paradox in the Theory of Democracy," in Peter Laslett, W G Runciman, (eds): Essay in
Philosophy, Politics and Society (New York: Barnes and Noble, 1962), pages 71-87.
4
John Kay, “Forget How the Crow Flies,” The Financial Times, January 16, 2004.
7
This is an extract from Chapter 5 of Julian Birkinshaw’s book “Reinventing Management” published by Jossey-Bass in 2012.