Posted by: Chris | 02/07/2009

Values and Measurements

About a month ago I attended the EIRMA Annual Conference titled A Larger Europe – a Smaller World. While most of the conference dealt with branching out R&D into the growth markets in Europe (Hungary, Russia, Poland) and Asia (China, India), one presentation by Lars Kolind, Chairman of the Board of the Poul Due Jensen Foundation (Grundfos), serial entrepreneur and author of “The Second Cycle – Winning the War against Bureaucracy“, Wharton School Publishing 2006, stood out.

In his talk he promoted the idea that enterprises need to constantly reexamine why they’re organized as they are – do the assumptions that lead to an organizational structure and a way to work still hold up or have they changed.

He illustrated this with the example of the unions who played a very important role in the 1800s and through the first half of the last century.  Now however the relationship between employers and employees has shifted to more of a partnership where any union official knows that if a company would accept the union’s demands it would go out of business. Nevertheless the relationship remains antagonistic as both sides have not adapted to the changed circumstances.

The second example he gave is the hierarchically led enterprise which made sense prior to the information age when companies mostly manufactured products on assembly lines. For the modern enterprise he claimed that hierarchy made no sense anymore. What a modern enterprise, particularly those engaged in knowledge work need is:

  1. A good way to structure, track and execute projects
  2. A good hiring process to find the best
  3. Ways and means so the employees can succeed and have impact; professionally and in the company

I found that deviation from the traditional management system quite intriguing, in particular when I think of how we work in Research at IBM. We work in an open market place. Good researchers can choose to work here or elsewhere. So it is all the more important that we become a horizontally oriented organization where people can move in and out of projects based on their opinion of whether a project will be a success or not.

The other point Lars Kolind raised was that profit as the sole goal for a company fell way too short to excite its employees to give their best. He claimed that fulfilling values are much better goals for companies to aspire to. Employees who embrace a company’s values will work with a purpose that goes way beyond earning a living. They will work harder and better.  He also claimed that value-based companies – who were recognized in the market as such – fetched much higher EPS multiples than the rest.

From my experience, though it is challenging – particularly in tough economic times – it is important to find the right balance between measurements and values.  Values that are not lived consistently will never become the fabric of a companies culture.

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Responses

  1. The bigger a company, the less it will make room for breaking the (huge) assets that took so much time and resources to build.

    This makes it increasingly difficult for BigCo’s to only consider the figures you are referring too.

    Therefore innovation is too often seen as a threat rather than as an opportunity -which is very bad news for BigCo’s in the first place because there are the playground where innovation could (significantly) help (substancial) figures look (much) better.

    That’s the only (sad) reason why startups disrupt encumbants (a game that they obviously would prefer not to play).

  2. now think about this scenario in government agencies, if only there could be space for ideas like this to nurture.

    problem I think is sticking to the status quo of things. sometimes things don’t change just because there are no ideas, but because we don’t see them feasible from the point we stand. we need people that seats outside the bounds for a while, then comes and re-architects, a little at a time, but change is in.

    wished this kind of talks were made available more broadly.


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