Managing by Commitments

Fact
We often blog about Milestone Planner as a commitment tracker:- what have I committed to do for who… But it seems the right time to talk a bit more about management by commitments. It’s not a well known concept, but in the places that I’ve seen it practised, it delivers stunning results. I’m going to drawn on articles by Don Sull, who writes about managing by commitments, not hierarchies.

There is a tight linking here between business methodology and social technology. People who use social software inside of the firewall, and those responsible for managing the external social media activities of a business, will both hopefully find some useful insights, as those situations often expose the problems inherent in hierarchical business structures.

In this CBS News piece, Don Sull outlines the 3 different ways that things get done in complex organisations:

  • By hierarchy
  • By process
  • By commitment

The first shifted out of favour in the 1980’s, although it lingers on! In the 80’s, Six Sigma, TQM and other techniques gave management by process the crown, as it demonstrably out performed management by hierarchy in that era. But just as management by hierarchy creates silos and slows communication across the organisation, management by process creates its own problems.

Management by process originally gained traction in the 1950s in Japan, going on to become a global phenomenon in the 1980s. This view of management sees the organisation as a bundle of processes, and has spawned a sea of different methodologies. They are variations on the same theme, focused on streamlining, removing excess resources and variance, and continuously improving and optimising how the business works.

One of the key problems with management by process is its strength: standardisation (and optimisation), which can get in the way of innovation. Mary Benner, from Wharton, and Michael Tuschman, from Harvard, found that the higher an organisation’s commitment to standardized processes, the lower the level of innovation in that organisation. In a rapidly changing world, what is most critical to your organisation – optimisation, or innovation? Hopefully that one is obvious. Everyone is having to think outside the box, because their box has been moved.

Which brings us to that third approach: managing by commitment. It’s a perspective that looks at an organisation as a network of overlapping, continually evolving promises that people make to each other to get things done. It’s a mindset familiar to anyone who works with social networking platforms. It’s not about groups or divisions, it’s about continually evolving relationships between individuals. It’s an approach that it lends itself well to situations which cannot be standardised: innovation, emergent strategies, and crisis management. It also works well when you need to coordinate among people who don’t report to you: suppliers, distributors, customers, virtual teams and so on. It’s no co-incidence that those applications are where Milestone Planner has its largest number of users.

Sull points to a study conducted a few years ago that says 40 percent of all employees in the United States added most of their value to their organisations through non-routine activities. And about 70 percent of the growth of employees in the U.S. was among people who did this non-routine, non-hierarchical work. He goes on to say:

A lot of the organisations we’ve traditionally thought of as well-managed companies have put emphasis on making and fulfilling these kinds of commitments. It’s a big deal in General Electric and similarly Goldman Sachs… .[Talking about InBev, the largest brewer in the world:] …They’ve built a culture where people are very clear on what they are being asked to commit to, and their progress on their commitments is very transparent and obvious to people throughout the organisation… …they have posted their key five performance commitments for the year and their progress toward them. The charts are right there on the wall with red, yellow and green tracking stickers for everyone to see. They are very careful about bringing in people who are achievement oriented, not driven by power.

Now, we prefer the progress tracking to be in the cloud of course – not everyone is in the office. Don Sull and Charles Spinosa have researched how individuals make commitments within their teams. According to them the most effective commitments have five characteristics:

  • They are public. They’re made publicly and their progress is tracked publicly.
  • They’re active. Parties understand what they are agreeing to and what each party is requesting; people don’t just nod, they really have to take responsibility for the commitment.
  • They are voluntary. The other party has the option to say something other than “yes”; they can refuse or make counteroffers.
  • They are explicit: it has to be clear who is committing. These aren’t committees making promises, they are individuals. And it works best when it is perfectly clear to whom the commitment is made.
  • They’re motivating: the rationale is made clear–why it matters to the individuals and the organisation is made clear.

That’s why, in Milestone Planner, we encourage sharing the plan with a broad group of people: The more public the commitment, the more effective it is. We make Actions and Milestones provisional when they are assigned to someone, until the person accepts them, and the comment/reply feature let’s people actively negotiate and renegotiate the commitment. The aim is to help you keep commitments active and voluntary. It’s that process that enables managing by commitments to work. It is a radically different way of working, and can take a while for people to get their heads around it, but once adopted, it fosters the kind of innovation that hierarchies and process too easily smother. Of course success is not just about the strategy, as Sull says:

Some people think the key to success is nailing the right strategy. But companies in your industry often will have a base strategy very similar to your own. Execution is where the real separation comes between winners and losers. Executing via hierarchies can be too slow in the kind of unstable markets most companies face today. Standardised processes by their very nature don’t lead to the kinds of variation and flexibility you need to execute new types of projects.

Like Sull, we’d say that it’s not a simple case of one model being good, and the rest bad. Hierarchy has a role, as do standardised processes. Most sucessful organisations need a combination of power, processes and commitments. What matters is the kind of work you have to get done, building and tracking the commitments that enable that to happen, while building the supporting processes and structures to enable you to get better at it.

If you’re Toyota, and the bulk of the value you’re adding is in manufacturing a huge number of cars with a low number of defects, then an almost exclusive focus on standardised processes is completely appropriate. The times when you need to be more oriented toward managing by commitments is when you have this kind of emergent work that has to fit within networks rather than within a hierarchy.

It’s the latter kind of work we are seeing in abundance, coupled with a shortage in the ability to manage by commitments. Our aim is to make management by commitments easier, through Milestone Planner. There’s much more we’ll be doing with the commitment graph. This is just the beginning of a conversation.

 

One Response to “Managing by Commitments”

  1. May 30, 2014 at 12:53 pm, New Models of Organisation | SocialOpticSocialOptic said:

    […] reality is that organisations have and are shifting away from that model, and that shift from hierarchy to process to commitment and network management is an ongoing […]

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