By Guest Author Art Gould
When a giant like Google changes management styles, we ought to take notice. After all, one reliable pathway to success is to imitate (or at least closely examine) the top predators and how they function. The gist of the switch was from a triad of three executive peers to a more centralized single top dog. The previous power sharing involved both Eric Schmidt as CEO and the advisory pair - cofounders Sergey Brin and Larry Page. Now, Mr. Page is assuming the CEO position.
With legislation allowing stockholder voting on executive compensation, top-level management might be wondering if the shift toward consolidating responsibility might be the coming trend. Will their company become personality-driven and celebrity led? Is it better or worse to have a single face for stockholders and the public? Does a corporation run better with a popular emperor in the hot seat?
- The Stars
There's no denying the PR value of a star. We all remember Lee Iacocca and we all know the names of the current high profile players. There's Steve Jobs, Warren Buffett, Bill Gates and many others, who may not be immediately involved in the day-to-day, but are certainly respected as drivers of the companies we associate with them. Star power is real.
Of course, in business management, we all learned the double-edged sword quality of management by celebrity. Certainly, these folks have the skill to develop a major corporation, after all that is precisely how we came to know their names. But we were taught the downside of this as well - the lack of broad expertise and the danger of myopia. The very talent and skill that brought them to the top of the heap can lead to a fall when the ground shifts and the heap collapses.
- Virgin Group
Take a clear rock star - Richard Branson. His rise to glory with Virgin Airlines was seen as a direct result of his "take no prisoners" personal aggressiveness. You could no more separate out his need to dominate all that he touches than you could get him to wear a suit and tie in a television interview. There's no doubt this is a man with vision and drive. One can hardly imagine a decentralized decision- making process in his operations.
Looking back, we find that even with his successes, the model didn't translate into other areas. There was a whole slew of also-rans: the Virgin Megastore concept, a joint venture with Blockbuster, Virgin Lightships, Vintage Airtours, Virgin Games, West One Television, and Virgin Euromagnetics. A lot of "virgins" that didn't make the grade. Of course, it's more complicated than that, and Mr. Branson has preferred a joint venture model since then, but the lesson seems to be this: If you are going to be the kind and key decision maker, don't take on more than you can handle and stay away from areas you aren't familiar with.
- GE and HCL
General Electric and HCL Technologies provide a good counter example. GE is known for its diversity and ability to function competitively in many markets. Jack Welch is quoted as saying, "What sets GE apart is a culture that uses diversity as a limitless source of learning opportunities, a storehouse of ideas whose breadth and richness is unmatched in world business." We can take it as a given that along with this "culture of learning" comes multiple inputs to any significant decision as each area of expertise weighs in.
At HCL Technologies, an India-based IT company, the corporate culture springs at least partly from a broader Asian idea of cooperative action. Unlike the stereotypical American cowboy who takes, and assumes risk on their own broad shoulders, the traditional Asian idea is to have multiple (and sometimes extended) policy discussions - rule by committee if you will. HCL takes this to a radical corporate structure that they describe as "inverted" and use the slogan, "Employee first, customer second." For instance, they often poll their employees to get an overall company mindset before making what would traditionally be an executive-alone decision. They use a "Smart Service Desk" where bottom level employees can demand resolution of problems from management and they have a rating system for their own managers (and their manager's managers).
Of course, both systems work. But they work for different reasons. The essential element seems to be which type of decisions are made and by whom.
- Focused service-based organizations. When the critical driver of a business is handling customers in a face-to-face (or, phone to phone) manner, the product is produced and valued over many small interactions. Here is where spreading out decisions among the crowd helps. HCL is driven in just this type of herd fashion. Ideas can rise up organically as a collective of thousands of one-on-one interactions. Here, diversity in the decision-making fits the terrain. Everyone in this model knows the goals of the organization and where they fit. They understand their own place and that job actually is the job of the entire business.
- Many-market organization. For GE, the situation is different. The discrete, but interacting branches mean that expertise is also in boxes and, while principles can be shared across party lines, each sub-category has to be able to make its own decisions within the larger vision. In this model, guidance comes from the top, but practical matters flow up from the middle. Even when there appears to be a single voice, that person is informed by the filtered information that rises up from the expertise below. Make no mistake, these lower-level stakeholders frame issues with their own ideas and influence by bending reality to their own bias. Regardless of the name on the plaque, the decisions are collaborative.
- Single market. It's a bit of a kludge to say that Donald Trump or Warren Buffett only have one product and a clear market, but that is a good way to see why their corporate structures work. With a single goal and clear path, one person's energy and vision can lift a whole enterprise into the top levels. It isn't any different than a sports team with a super-star player. Certainly the team matters, but the star matters more. They elevate the rest of the outfit from obscurity to top tier. It works best when the key decision maker has either the charisma to carry the load or they are just so often correct that any missteps are overlooked. It's actually a very old-school style and has the advantage of boosting stock prices merely because they are on the team. No longer do we name corporations after their star founder (Edison, Ford) but we still believe in identifiable people over generic brands.
So they all work in the right context. And, of course, there is overlap. HCL doesn't just take up any idea without any forethought. They are, in effect, gathering data from empowered employees and acting on the best information available. GE doesn't just let their divisions run wherever they want, there is an overarching vision and if your branch falls too far away from the tree, it is likely you will be sold off. To be a modern leader means to listen to, and trust those who know what you do not.
Art Gould is a division manager with Self Storage Company, which operates a group of websites, including a Colorado Springs self-storage locator.