Everyone should learn how to manage the system, not the people.

It is often the case we are introduced to many management processes, practices and techniques over time. If one takes a 40k foot view of these, how does the landscape look like? What are still relevant for these times?

Jurgen Appelo’s book “Managing for Happiness” offered a very thoughtful perspective to this question. Below are some important take-aways.

Management 1.0

In this style of management, people assume the organization consists of parts and that improvement of the whole requires monitoring, repairing, and replacing those parts. Don’t we still find Management 1.0 everywhere around us?

• “Winner-take-all” organizations rank employees using measurements of individual achievements and give more work to the organization’s “best performers”
• Management 1.0 assumes that the community of employees is better served with competition and politics than with collaboration and a shared purpose?
• Let everyone know that they’re being watched

Treating employees
like adult human beings
might be common sense,
but it is not common practice.

Management 2.0

In a Management 2.0 organization, everyone recognizes that “people are the most valuable assets” and that managers have to become “servant leaders” while steering the organization from “good to great.”

These are certainly interesting ideas, but sadly, managers often use the wrong approach. They correctly understand that improvement of the whole organization is not achieved by merely improving the parts but, at the same time, they prefer to stick to the hierarchy and have a tendency to forget that human beings don’t respond well to top-down control and mandated “improvements.”

One of these good ideas is that managers should have regular one-on-ones with employees. It’s an idea that acknowledges that management is about human beings and that managers must seek ways to help people find their true calling and achieve great results together. Unfortunately, many managers don’t see that they should manage the system around the people, not the people directly, and that they should leave micromanagement to the teams. Instead, they use one-on-ones for individual goal-setting, and they follow up later by asking people for status updates — both of which only reinforce the superior-subordinate relationship that is typical in all command-and-control organizations.

The suggestion to organize 360-degree feedback is also quite reasonable. The issue is that managers are not independent observers. They cannot objectively assess the performance of individual people, and therefore evaluations should be provided from multiple perspectives. Unfortunately, some people don’t realize that the method they use to evaluate performance will influence that performance. And thus HR departments install electronic performance appraisal tools that require people to give anonymous feedback about each other. Trust breaks down completely because managers are allowed to know more about employees than employees are allowed to know about each other, which emphasizes that managers are more important than non-managers.

Managers are allowed
to know more about employees
than employees are allowed
to know about each other.

There’s also not much wrong with the idea behind balanced scorecards. The problem with measurements is that one metric easily leads to sub-optimization (improving one part of the work while diminishing another part), and therefore you need multiple perspectives to have a more holistic view of the organization’s performance. Unfortunately, when managers continue to view the organization as a hierarchy, they usually try to impose goals and metrics on every part of the system. But in complex systems, performance is usually found in the relationships between the parts, and proper goals and metrics can only emerge from intelligent local interaction, not as part of a top-down target-setting framework.

One could go on and on discussing the positive ideas behind servant leadership, total quality management, the theory of constraints, and many more management models. All of them have undoubtedly helped organizations move away from Management 1.0, which is good.

Management 2.0 organizations are at least trying to do the right thing. But they do some of those things the wrong way because they’re still stuck with a hierarchical view of organizations. They adopt good ideas but force-fit them onto a bad architecture. This is primarily why the good ideas rarely stick and why fads and fashions fail to deliver on their promises and will always be replaced one after the other. The only effect consistently achieved across all ideas implemented by bosses is that they reinforce the position of the boss.

Management 3.0

Management 1.0 is doing the wrong thing and that Management 2.0 is doing the right thing in the wrong way. Is Management 3.0 doing the right thing?

Organizations are complex, adaptive systems and that good management means taking care of the system instead of manipulating people.

Everyone should learn how to manage the system,
not the people.

A management practice is a good practice when:

1. it engages people and their interactions;
2. it enables them to improve the system;
3. it helps to delight all clients.

For example, management by walking around is a good practice because it requires management to interact with the teams who are doing actual production work. The goal is to find out how to help improve the system in which the people are doing their work. And it is done in order to understand how value is delivered to customers and other stakeholders.

Management 3.0 is neither a framework nor a method. It is a way of looking at work systems, and it has a few timeless principles. Having a merit money system, exploration days, a salary formula, or a happiness door fits nicely in the Management 3.0 mindset. None of these practices are required, but you could definitely consider them. Or even better, maybe you can invent your own Management 3.0 practices.

Start working out; make the system healthy, and have fun!

Do read the book to catch up with some Management 3.0 practices like personal maps, delegation boards and delegation poker, value stories and culture books, exploration days and internal crowd funding, business guilds and corporate huddles, feedback wraps and unlimited vacation, metric ecosystem and scoreboard index, merit money, moving motivators, and, happiness door.

Introduce better management,
with fewer managers.