The most popular blog post for the whole of 2010 at Harvard Business Review was Bob Sutton’s list of the “12 Things Good Bosses Believe.” From one perspective, his list presents an engaging people-centered picture of manager—someone who is sensitive to others’ feelings, who listens carefully to those who disagree, someone who strives to be humble as well as confident. The contrast to a dictatorial command-style manager no doubt helped make the post very popular.
From another perspective, however, there is one shocking, even mind-boggling, omission from the list: there is no mention of the client or the customer (or the stakeholder).
Among the “12 things good bosses believe”, any concern for the people for whom the work is being done is completely absent. Indeed the list suggests that the “good boss” pays less attention to “well-defined and ambitious goals” than to “small wins” and “a little progress every day”. The “good boss” spends no time worrying about whether the customer is satisfied, let alone delighted, by what the organization is doing. Instead, the “good boss” spends time agonizing over such issues as striking “the delicate balance between being too assertive and not assertive enough,” avoiding “imposing my own idiocy” on “my people,” or trying to decide whether “I am acting like an insensitive jerk.” (sic)
The omission of any concern for the customer in the “12 things good bosses believe” reflects the natural habitat of hierarchical bureaucracy. This is a world that operates from an inside-out perspective, pushing products at customers, parsing and manufacturing demand, tweaking the value chain to achieve ever greater efficiencies, and concerned about outputs more than outcomes. Middle managers in this world find themselves in a squeeze between achieving ever greater efficiency and keeping the workers happy. The result is a lot of internal agonizing over such issues as striking “the delicate balance between being too assertive and not assertive enough.” It leads to a preoccupation with style over substance.
Coming from the author of Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management, the “12 things good bosses believe” are presented as “evidence-based” and “rooted in real proof of efficacy.”
The “12 things good bosses believe” however overlook one huge mass of evidence: the comprehensive study of the productivity of 20,000 US companies from 1965 compiled by Deloitte’s Center for the Edge under the title of the Shift Index. Its conclusions? Running organizations as hierarchical bureaucracies has proved to be an utter disaster:
- The rate of return on assets is one-quarter of what it was in 1965.
- The life expectancy of a firm in the Fortune 500 has fallen from around 75 years half a century ago to less than 15 years, and is heading towards 5 years unless something changes.
- The “topple rate” of leading companies is accelerating.
- Only one in five workers is fully engaged in his or her work.
What this evidence shows is that the way of managing reflected in “12 beliefs of a good boss” hovers somewhere between a “dangerous half-truth” and “total nonsense.”
The list is right to castigate the top-down monster as a “bad boss”. That’s the dangerous half-truth reflected in his list. Yes, top-down is bad.
But what the list doesn’t reflect is that the opposite of top-down is not bottom-up: it’s outside-in.
The customer is now the boss
Fifty years ago, large corporations were essentially in control of the marketplace. No longer. The advent of global competition, customers’ access to reliable information and their ability to communicate with each other through social media means that the customer is now in command. The shift goes beyond the firm paying more attention to customer service: it means orienting everyone and everything in the firm on providing more value to customers sooner.
We are in effect now in the age of customer capitalism, as Roger Martin explains in his landmark article, “The Age of Customer Capitalism” (HBR, January 2010). This has occurred because of the monumental transition in the power balance between seller and buyer. As a result, the firm’s goal has to shift to one of delighting clients: i.e. a shift from inside-out perspective (“You take what we make”) to an outside-in perspective (“We seek to understand your problems and will surprise you by solving them”).
What the “12 things good bosses believe” fail to recognize in parsing the difference between the “good boss” and the “bad boss” is that the manager is no longer the real boss at all: the customer is now in charge. The shift goes beyond the firm paying more attention to customer service: it means orienting everyone and everything in the firm on providing more value to customers sooner. In particular, the manager.
A ferocious desire to delight the customer
In the age of customer capitalism, the goal of the firm, and everyone in the firm, particularly the managers, has to be that of delighting clients. The key to an enduring future is to have a customer who is willing to buy goods and services both today and tomorrow. It’s not about a transaction; it’s about forging a relationship. For this to happen, the customer must be more than passively satisfied. The customer must be delighted.
If the manager is spending time agonizing over such issues as striking “the delicate balance between being too assertive and not assertive enough,” avoiding “imposing my own idiocy” on “my people,” and “wondering whether I am acting like an insensitive jerk,” the customer will get the short end of the stick. And these days, when the customer gets the short end of the stick, the firm’s future is in grave jeopardy.
That’s because the customer has information. The customer has choices. If the customer is not delighted, the customer goes elsewhere. The firm dies. As the Shift Index shows, the phenomenon is happening on a wide scale.
In today’s organization, there is no place for managers who spend their time agonizing over whether they are being too assertive or not assertive enough. Instead what is needed are managers and workers who have a ferocious desire to delight the customer. Once that principle is in place, both managers and workers can be focused on accomplishing a common and uplifting goal. As the customer is a demanding boss, with good information about what is going on, and has many other options, there is no room for worrying about “whether I am acting like an insensitive jerk.” The only question is whether the firm is succeeding in delighting the customers.
“12 things good bosses believe”: the Dilbert-style manager
In fact the behavior described in “12 things good bosses believe” describes has a long history. The “good boss” who agonizes over issues like assertiveness and sensitivity emerged because managers found themselves in a squeeze between achieving ever greater efficiency and keeping the workers happy. Dealing with that squeeze led to behaviors that were described Abraham Zaleznik in his classic 1977 HBR article, “Managers and Leaders: Are They Different?”
Managers coped with the squeeze with three particular skill sets and attitudes. First, managers focus attention on procedure and not on substance. Second, managers communicate to subordinates indirectly by signals, rather than clearly stating a position. Third, managers play for time. Amid conflicting rules and procedures of a hierarchical bureaucracy, managers have no way of knowing what the right answer is. Self-protective routines are used, up and down the hierarchy.
Zaleznik’s identification of these behaviors, which were very different from those of genuine leaders, might have led to an inquiry as to whether these were productive behaviors even in 1977. Paradoxically, the article led to the endorsement of those behaviors and to a bifurcation of management from leadership. The role of leaders was to inspire people to embrace change while managers were grimly grinding out execution while struggling to keep the workers happy.
Scott Adams picked up on the ensuing managerial behaviors and continues to depict these antics on a daily basis in his Dilbert cartoon. The behaviors dispirit workers, cripple innovation and frustrate customers.
Dilbert-style management continues to be celebrated
Over 11,000 business books are published every year. I read a lot of business books but I can’t pretend to have read more a tiny portion of those 11,000. But a good proportion of those that do come across my desk continue, like the “12 things good bosses believe” , to celebrate the behavior of the Dilbert-style manager. Business schools continue to teach it as the normal way to manage. Consultants are paid large amounts of money to embed it into organizational systems and procedures.
As a result, Dilbert-style management continues to thrive. Scott Adams gets richer and richer. The Fortune 500 continue on their steep performance decline. The health sector continues on its course to bankrupt the country. The education sector increasingly fails to educate our children for the future.
The world of customer capitalism
Yet in parallel, another world has already emerged. Unlike the world of Abraham Zaleznik’s manager, or Scott Adams’ Dilbert, or the “12 things good bosses believe”, the world of customer capitalism is one where managers bring their own personal passion for delighting clients to the workplace. They are so busy and intent on finding new ways to delight customers more and sooner, they have no time to be worried about whether they are striking “the delicate balance between being too assertive and not assertive enough,” avoiding “imposing my own idiocy” on “my people,” or whether “I am acting like an insensitive jerk.” Managers and workers are united in a common passion to deliver more value to customers.
Firms that are implementing the principles of customer capitalism, like Apple, Amazon and Salesforce.com are experiencing exponential gains in their share price, while traditional firms like GE or Wal-Mart are finding that they have to run harder just to stay in place.
A whole set of books that describe the future is now available. It includes The Power of Pull by John Hagel, John Seely Brown and Lang Davison, or Reorganize for Resilience by Ranjay Gulati, or The New Capitalist Manifesto by Umair Haque, or Leadership in a Wiki World by Rod Collins.
My own book, The Leader’s Guide to Radical Management: Reinventing the Workplace for the 21st Century offers a comprehensive account of the principle and practices of customer capitalism.
To learn more: May 12-13 in Washington DC
If you would like to get together with others who are intent on mastering what’s involved in creating a workplace of continuous innovation and customer delight, please join me, Rod Collins (author of Leadership in a Wiki World, Seth Kahan (author of Getting Change Right) and others for two days on May 12-13 in Washington DC. Cool, innovative and serious fun.
Don’t delay: the early bird discount ends March 31. More details here.