Leadership in the Networked Enterprise : principles rather than values

(Photo : Mark Richards) (Version Française)

In a previous article, we suggested that a network structure was required to take full advantage of the innovations offered by the Internet in the knowledge economy. This network structure has proved its ability to create value from the multiple streams of information.

After the introduction, here comes the first episode of the series, a one devoted to leadership. The main idea of this post is that in the networked enterprise leadership takes the shape of simple and clear principles, rather than bloated values.

Here’s why and how to put this method of leadership in place.

In the Silo Enterprise …

… Leadership is built around values. These values are waved around like banners and act as magnetic poles, driving the course of the entire company. These values imply a strong belief from the employees.

The problem lies in the observable discrepancy between the company self-perception and the reality. Soon, employees no longer believe in these values and no longer have significant guidances allowing them to stay focused and make the right decision.

Since the 90s and the corporate scandals (Enron etc …) the corporate image has deteriorated sharply. The holy dimension of corporate values has been deeply questioned. The Values = Culture = Commitment equation of the last century has fizzled.

In the Networked Enterprise …

… Leadership is built around clear and simples principles. These are applied by everyone in any circumstances. It’s not about belief but actions. Simplicity clears up ambiguity: it is very easy to align one actions on these principles. Conversely, it is much harder to go against these principles while claiming to serve them.

In the Networked Enterprise, management revolves around a dynamic subsidiarity. The command & control approach is replaced by a much more delegate one due to two major reasons. First, too much control inhibits innovation and operations streamlining (the specter of bureaucracy).

Second, the manager of the 21st century is post-héroïc. The level of technological complexity, structural, organizational, etc. … is so high that it is impossible for the manager in the knowledge economy to master everything, and take responsibility of every single decision.

The consequence is that employees have many choices to make in their routine work. Clear and simple principles enable them to align their actions on a consistent line for general process optimization.

Examples of strong business principles abound. Apple minimalism (“Say No to 1000th Things to make sure you do not get on the wrong track”), Google with flat hierarchy and the 20% dedicated to innovation, HCL (“Employee first, customer second”), 37signals (“Get Real and Be opinionated”), WL Gore (“make money and have fun”). These are admirable leaders and companies.

In praise of simplicity

Michel Crozier is a leader in the french sociological study of organizations. His analysis of the the relationship between simplicity of speech and the subsequent engagement of employees is quite telling :

The more sophisticated the Communication is sophisticated, the more simplistic it sounds. While message sounding simple at first sounds genuine, and it allows people to really take ownership and discuss freely. The fact that the leader engagement is undisputed contributes to the amazing power of a simple message.

Bottom-line : if you want to propose principles for your people to engage, make sure they are as simple as possible. Beware though that “simplicity requires deep thoughts, discipline and patience, things that most companies lack”(37Signals).

Accessible leaders, leading by example

In the silo enterprise, managers seldom exchange directly with employees. They communicate with operations obsessed middle managers where strategy and enthusiasm is filtered out while passing the message over to employees. Besides, there still remains opacity about their activities and the exemplary nature of their actions in terms of  values or business principles are difficult to witness on a daily basis. As Gary Hamel phrases it :

Management 1.0 over-weights the views of senior executives, undervalues unconventional thinking, discourages full transparency, deters initiative, frustrates experimentation and encourages an entirely unwarranted reverence for precedence.

In the Networked Enterprise, leaders know that the principles generate all the more commitment and meaning that they are implemented by managers.

Intel has implemented internal social networks because the average employee of Intel spent one day a week to seek expertise and information to get his work done according to Laurie Buczek, ESN project manager at Intel. The company has provided a list of simple and clear (and transparent) principles to guide employees in their use and CEO Paul Otelini was among the first to regularly publish articles in his blog and respond to employee feedback.

Ben Verwaayen Alcatel / Lucent answers on a regular basis employees questions posted on the intranet application Ask Ben. Vineet Nayar CEO of HCL spend 7 hours a week answering questions from its employees as it walk the talk of his company motto : Employees First, Customer Second. A HCL principle that Fortune has described as “the more modern idea of the world’s management“.

Rework your culture

37Signals is another example of an organisation governed by strong principles, most of which being documented in their book Rework. This leadership 2.0 grants the company with considerable influence and an iconic figure.

The list is long but I like the one of 4 letter dirty words (must, can not easy, just, only, fast) that they banned as they can be perceived as underestimation of the work to be carried out by the people to whom the request is addressed.

Principles for creating value

Nantes Football team of 94/95 became french champion breaking many record in the process, such as the number of goals scored, the number of unbeeaten games etc … During an interview asking him what was the secret of beautiful and ruthless game his team, the coach Jean-Claude Suaudeau simply answered : “One principle :always give the ball to a player in motion.”

It is easy to see how this guiding principle helps more in playing an efficient and beautiful football than something like “give it all to your team” or “run your ass off the park“. In the hundreds of decisions to be taken by players during a match, they have a clear guideline, they can use easily whenever they have to make a choice. And while applying this principle, they definitely feed the culture of the beautiful game.

This is a telling example of simple principles in action.