Leading Outside the Lines

How to Mobilize the Informal Organization, Energize Your Team, and Get Better Results

Jon R. Katzenbach, Zia Khan

• Publisher: Jossey-Bass
• Year: 2010
• Print ISBN: 9780470589021
• eBook ISBN: 9780470621059
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

An all-new approach to understanding the (in)formal connections of an organization

From the bestselling coauthor of the business classic The Wisdom of Teams comes an all-new exploration of the modern workplace, and how leaders and managers must embrace it for success. Katzenbach and Khan examine how two distinct factions together form the bigger picture for how organizations actually work: the more defined "formal" organization of a company-the management structure, performance metrics, and processes-and the "informal"-the culture, social networks, and ad hoc communities that spring up naturally and can accelerate or hinder how the organization works. With dynamic examples from enterprises around the world, this book takes a timeless organizational approach and creates a powerful paradigm-shifting tool set for applying it.

• Includes self-assessment guidelines for senior leaders, front-line managers, and individual contributors
• Features organizations in business, government, the nonprofit sector, and academia-including the New York City schools system, Aetna, the Marines, United Nations, Orpheus Chamber Orchestra, Home Depot, Bell Canada, and the Houston Police Department

Leading Outside the Lines illustrates how leaders can make the two distinct factions work together to get the best of both.

PART ONE

USING THE INFORMAL TO ENHANCE THE FORMAL

The informal organization can create effects that seem like magic. They’re amazing to watch, but it’s difficult to know how to produce them. These intangible, often emotional aspects of the informal organization exist right alongside the more evident and rational aspects of the formal organization. The key is to understand that the informal delivers its greatest benefits when it is balanced with the formal. Maintaining a balance is harder to do than it may seem, as the balance point constantly shifts. However, by creating and sustaining a balance between the informal and formal elements, organizations can achieve the best of both in ways that provide significant advantages.

In Part One, we offer a quick history of the study of organizational behavior and discuss why an either/or mindset—rationalist or humanist—has usually prevailed. We explore several examples that stem from our personal experiences as well as illustrations from large and small business case studies. While business applications are our focus, we include two nonbusiness groups that illustrate the diversity and timeless origins of the issues—the Orpheus Chamber Orchestra in New York, and the !Kung tribes in Africa. By examining these two organizations, both of which are nonhierarchical and take very different approaches to leadership, we can get a richer understanding of the group dynamics that operate in all companies, business sectors, and cultures.

1

The Logic of the Formal; the Magic of the Informal

Logic only gives man what he needs. . . . Magic gives him what he wants,” author Tom Robbins once wrote.¹ The tension between the mind and the heart and the desire to integrate the two have been grist for the writer’s mill for centuries. Management theorists, by contrast, have focused their efforts on one aspect of this tension or the other and have spent the past hundred years debating each other about which is more important. Our intention in this chapter is to show that it is not a question of either/or but rather of understanding what benefits the formal and informal offer, and why they need to work together.

THE HEAD-HEART DEBATE: A BRIEF HISTORY

The rational school of management dominated business organizations for the first half of the twentieth century. Its roots are in the research of Frederick Taylor, often dubbed the father of scientific management.² Taylor stressed the need for using scientific rigor to select, train, and develop workers. He believed in cooperating with workers to ensure the success of his scientific methodology, dividing work nearly equally between managers and employees as a rational approach to optimizing performance.

Taylor’s principles made sense. Prior to World War II, they were used in many factories, often with surprising improvements in productivity. Taylor advocated that all organizations could use what he called “time and motion studies” to improve efficiency and unlock hidden performance potential. Eventually, Taylor’s ideas about scientific management spread from Henry Ford’s automobile assembly lines all the way to the home.

Later, a different school of thought emerged that took a very different, much more emotional, approach to the practice of management. In 1960, Douglas McGregor published The Human Side of Enterprise, in which he identified two theories of individual work behavior.³ Theory X assumed that people dislike work, prefer to be directed, and are motivated primarily by monetary rewards and punishments. This theory aligned with the rational approach to management. His second theory, Theory Y, assumed that people enjoy work, seek responsibility, and are motivated by purpose, feelings, and fulfillment.

Theory Y echoes the writings of other notable thinkers of the era. In 1954, Abraham Maslow placed self-actualization at the top of his hierarchy of needs.⁴ In essence, this hierarchy refers to how people feel about who they are as individuals, what they do, and why they do it—and often, the people they do it with. Frederick Herzberg, in an almost desperately titled article, “One More Time: How Do You Motivate Employees?” answered his question by arguing that people are emotionally motivated by meeting challenges, taking responsibility, and doing work that they can feel good about performing well.⁵

Advocates of both the rational and emotional approaches have rarely sought to integrate their perspectives—in other words, to see if there was a possibility for “and” instead of “either/or.”⁶ Stanford professor Harold Leavitt, author of many books, including Managerial Psychology and Top Down, from which the following passage is taken, describes how the two camps studying organizational performance in the 1950s viewed each other:

One tiny skirmish of that great battle took place at MIT, where a handful of us were graduate students. We were proud and perhaps arrogant acolytes of McGregor, the pioneering humanizer of Theory Y fame. Our hot little group called itself “the people-people” and inhabited the third floor of MIT’s Building 1. Our systemizing enemy—the hard-headed accounting, finance, and “principles of management” people, along with Taylor’s progeny, the industrial engineers—held down the first floor of the same building.

WE people-people were sometimes required to take first-floor courses, all sorts of systemizing foolishness about such inhuman stuff as financial controls and cost-accounting. As you might guess, those forays into enemy territory served only to shore up our faith in our third floor’s humanizing creed. And as our commitment to that creed grew, so did our scorn for the first floor’s apostasy. Those first-floor guys were blind to Truth down there, intransigent, prejudiced, just plain wrong. They had adding machines where their hearts should have been. They didn’t even comprehend our sacred words: morale, motivation, participation. WE called the first-floor folks “make-a-buck NeandErthals.” They called us “the happiness boys.”⁷

While Leavitt’s story may be a little tongue-in-cheek, it’s not an exaggeration to say that similar battles still take place, and not just among academics but also among leaders at all levels of business organizations. There are serious disagreements about how best to get employees focused on what the leaders believe to be important to improve performance and achieve success in the enterprise.

We have watched and participated in many of these debates, in many companies, and with leaders who inhabit both camps—and a few who understood the importance of both. But our exposure to the head-heart debate goes back much further, to well before either of us got involved in management consulting.

HOW KATZ DISCOVERED THE INFORMAL

Katz graduated from Stanford University in 1954 with a degree in economics, making him, by training at least, a charter member of the formalist club. He spent his college days immersed in economic analysis, structured problem solving, and rational decision making.

The United States was still in the Korean War when Katz graduated. Had he waited to be drafted, Katz would have had no choice about which service he entered, so he decided to apply for the Navy’s Officer Candidate School. He was accepted, graduated, then went on to the Navy’s school for Supply Corps officers.

For a formalist like Katz, the military was fascinating. To this day, he follows developments in the procedures, programs, and rules of engagement that contribute to effective supply operations.

Katz got his first real assignment, as Disbursing and Assistant Supply Officer, aboard the amphibious ship USS Whetstone. His immediate superior, Lt. John Sandrock, had several years of experience in the Supply Corps and fit the stereotypical image of a good naval officer. He was tall, well-groomed, and commanding in every way. He maintained a well-defined arm’s-length relationship with the members of his crew. He enforced rules and regulations to the letter and demanded that his men do the same.

After a year aboard the Whetstone, Katz was transferred to the USS Nicholas, then stationed in Pearl Harbor, where he served alongside Supply Officer Lt. Charlie Stewart. The Nicholas was a bit creaky and rusty, since it was then the oldest active escort destroyer in the Pacific fleet.

Charlie was Mr. Informal, or appeared to be, anyway, and this baffled Katz at first. Unlike Lt. Sandrock, Charlie’s uniforms were, like the ship itself, worn and rumpled. Nor did his conversation suggest much interest in rules and regulations. But he had very close relationships with the sailors under his command. And he ran a remarkable supply operation. In fact, in Charlie’s final year of duty on the Nicholas, the ship was awarded the Navy E Ribbon (E for efficiency) for having the best supply operation in the Pacific Fleet for its type of vessel.

The win was not accidental. Charlie and his crew had been working toward the coveted E for three years. The ship had the tidiest store, its disbursing records were flawless, and the storerooms and inventory were maintained as brilliantly as any Wal-Mart is today. Even the galley was known for the quality of its food and its speedy service. Not an easy trick aboard a creaky, rusty old ship at sea.

Although Katz didn’t apply the term at the time, Charlie’s operation clearly had an informal advantage. Yes, every sailor had the formal aspects of his job down pat. But that was not what distinguished the group—rather, it was the pride they took in their work and the emotional commitment they had to their jobs. “I wouldn’t want to disappoint Charlie,” they often said.

So effective was the supply group that Charlie’s role in it seemed almost unnecessary. After all, the guys were almost entirely self-regulated. Charlie rarely made a suggestion, let alone gave an order. So Katz began to think he was the luckiest guy in the Supply Corps. When Charlie eventually moved on to his next ship and Katz took over the post, as was likely to happen, Katz figured that his job would be easy. He would just follow the rules and procedures already in place and keep things rolling as they had been. How hard could that be?

Of course, Katz had so completely focused on the formal elements of Charlie’s organization that he had not really noticed the informal aspects that Charlie was so good at, thinking them incidental, even irrelevant.

Then came a revelatory moment. It happened during an admiral’s inspection of the Nicholas, which was anchored in Pearl Harbor at the time. The day before the admiral was due to arrive, the captain of the Nicholas assembled his officers to review the procedure for receiving the admiral as he boarded ship. Two of the officers, however, could not attend the meeting. Charlie Stewart was on shore liberty and William Inskeep was on duty.

A key element of the formal reception of an admiral is a “sword salute” that requires that the receiving officers smartly, and in unison, withdraw their swords from their scabbards and snap the handles to the proper position against their chests. The captain particularly wanted to discuss the sword salute with his officers, because they had never actually worn or used their swords, nor had they ever been called upon to execute the salute. So the potential for serious harm existed.

Unfortunately, the two missing officers, Stewart and Inskeep, would be the “officers of the deck” on the day of the admiral’s visit. That meant they would be the officers closest to the admiral as he came on board and the ones to initiate the sword salute.

The day arrived. Stewart and Inskeep took their places. The admiral stepped aboard. Inskeep grabbed the handle of his sword, clumsily yanked the blade out of the scabbard, and started to raise it into position. Charlie Stewart, at the same instant, sharply angled his arm upward and snapped his hand to his forehead in a crisp salute. Inskeep, his sword in motion, glanced at Charlie, wondering what was going on, and in that split second of wandering focus, the tip of his blade poked the brim of the admiral’s cap. Everyone gasped as the cap flew off the admiral’s head and went soaring into the ocean far below.

Charlie’s informal organization had saved the day for him. It turned out that, during the meeting with his officers, the captain had concluded that the sword salute was too complicated and dangerous and had instructed his men to execute the standard hand salute instead. As soon as Charlie returned from his shore leave, his men informed him of the change so he was prepared when the admiral arrived. Inskeep, however, did not have the same kind of close relationship with his men and they had failed to give him a heads-up on the change in procedure. The “it’s not my job, man” attitude prevailed.

The image of the admiral’s hat slowly sinking to the bottom of the sea has become a compelling reminder for Katz that the informal takes care of its own when the formal does not.

It’s interesting that Katz learned the importance of the informal while serving in the military—an organization that surpasses all others for its focus on hierarchy, formality, rules, and regulations. And yet what he came to realize is that the Navy (and other armed forces he has since studied) is so driven by emotion—trust, courage, fear, loyalty—that it could not function at all without an informal complement to its rigorous formal structure.

THE OVERLOOKED INFLUENCE OF EMOTIONS

If Katz had asked Lt. Sandrock—he of the well-pressed uniform and well-thumbed rulebook—if emotional commitment was important to his operation and if the feelings of his crewmen mattered, it is likely that Sandrock would have said, “Yes, but not nearly as much as process and execution.”

Today, when we ask that question of managers and executives, especially in large companies, their answer tends to be about the same as Sandrock’s would surely have been.

Formalists view the world through the lens of rationality—they value logic, analysis, data, and frameworks. They manage through formal processes and programs (usually devised and enforced by a select group of senior executives). These formal elements are promulgated through the organization in protocols and memos and enforced with comprehensive control-and-reward systems. If formalist managers accept that an emotional commitment is important, they tend to believe that it is a by-product of the right rational approach—employees will eventually see the logic of a good plan and will feel good about it.

These mechanisms rarely take emotional issues into account, but that does not mean that people don’t react emotionally to them. They do—it’s just that their reactions are often more negative than positive. As a result, they adopt attitudes and engage in behaviors counter to the plan and to what seems rational to the makers of the plan. Over and over again, we hear executives say that they just don’t understand why their employees are not “on board.” Didn’t they get the memo?

However, rational clarity does not always create the emotional commitment that motivates a desired behavior. And when emotional factors are not taken into account, organizations fall short of their intended goals.

The fundamental issue is that formalist managers do not fully understand or believe in the importance and power of emotions in effecting change. They discount the degree to which ...

Table of contents

• Praise
• Title Page
• Copyright Page
• Dedication
• Introduction
• PART ONE - USING THE INFORMAL TO ENHANCE THE FORMAL
• PART TWO - MOTIVATING INDIVIDUAL PERFORMANCE
• PART THREE - MOBILIZING ORGANIZATIONAL CHANGE
• In Conclusion
• About Our Sources and Methodology
• A Diagnostic Tool: Assessing Your Organizational Quotient
• Notes
• Acknowledgements
• About the Authors
• Index