The Future of Process Management

Facing a world which is becoming dramatically more complex, it is interesting that CEOs selected creativity as the most important leadership attribute. Creative leaders invite disruptive innovation, encourage others to drop outdated approaches and take balanced risks. They are open-minded and inventive in expanding their management and communication styles, particularly to engage with a new generation of employees, partners and customers.

How can openness to creative input from below help prevent a BP disaster? Because when employees are encouraged to think for themselves and are empowered to make decisions, disasters can be averted and opportunities opened.

A case in point: Mike Williams, a chief electronics technician on the Deep Water Horizon, noticed that chunks of rubber from the annular seal on the blowout protector were coming up the pipe with the drilling mud. It appears that several days prior to the accident, an operator accidentally bumped a joystick controller while the blowout protector was being tested. The result: several meters of drilling pipe were pulled through the activated seal. Upon discovering the rubber, Mike was on the drilling floor when a drilling technician took a handful to a supervisor and asked if its appearance was serious. The answer: "I'll have to kick it upstairs" (meaning, "Ask management"). The answer that came back: "Proceed." If Mike Williams were not in a command-and-control management structure, but instead in a "social network management structure," perhaps the disaster could have been averted.

What is a social network management structure and can it work? Can a corporation exist without an organizational chart? Will employees know what to do if they don't have several layers of management above them to tell them? Will we be able to motivate people to work harder if the CEO doesn't make 300 times the salary of an entry-level engineer? Won't we have absolute chaos if we don't restrict the invention, design and development of new products to a corporate R&D center? Won't we create intense jealously if we do away with the human resources department and instead publish everyone's salary for all to see? Won't we hire hoards of incompetent people if we allow involved teams to interview and hire and manage their peers?

Apparently these questions didn't bother Bill Gore, who founded Gore Industries in 1958 with the idea that he should abandon these traditional assumptions. After a frustrating 17-year career with E. I. du Pont, where his repeated suggestions that polytetrafluoroethylene (PTFE), or Teflon, could be developed into much more than a coating for fry pans, Gore decided to strike out on his own with a new management concept—a social network management structure. The company has

• No organization chart – Instead there is a lattice network.
• Few people have titles – If you call a meeting and people come, you are the boss.
• All employees are encouraged to set aside a half-day per week for "dabble time" – This is a time where an employee can work on pet projects.
• Compensation is based on the success of your inventions – The more you contribute, the more highly regarded you are.

The result: Gore Industries turned a fry-pan coating into GoreTex and hundreds of other products, including the Elixir guitar string, known as the best guitar string in the world. The company has turned in 50 years of unbroken profits and has made Fortune's 100 "Best Companies to Work For" every year since its inception.

Apparently no one told Whole Foods, who has reinvented supermarket management, either. This is how the company operates:

• Instead of the traditional store manager, there are eight independent teams who are responsible for procurement, pricing and advertising for their department.
• Each team interviews and hires its own employees.
• All salaries are published, and CEO John Mackey reduced his salary to $1.00 a year (plus a $33,850.00 bonus) in 2006.
• Mackey also makes sure that 93% of all stock option awards are reserved for non-management people.

The result: Whole Foods has opened 200 stores since its inception in 1980. The stock price has risen 3000% since its IPO. The revenue of $1000/sq. foot (the revenue the store gets per square foot per year) is nearly double that of all other grocers. Interestingly, in this intensely competitive field, Whole Foods has managed to thrive while 152-year-old A&P (Atlantic & Pacific Tea Co.) filed for bankruptcy in the fall of 2010. The company’s old-school management model was surely a contributing factor.

Add to this list of innovators Google, Apple and Cisco. Each of these companies values creativity and individual contribution above all else. Indeed, Eric Schmidt, CEO of Google, says that what motivates the best and the brightest people today is the ability to "make a difference." Steve Jobs calls it "making a dent in the universe."

This different management style was driven home to me recently. As a retired engineer and now a grandfather, I have been interested to watch the career development of my two sons.  My first son is a self-employed entrepreneur who lives in the world of Linux. His crowing achievement was not the award of a million-dollar contract for a piece of hardware and software he developed, but a letter from Linus Torvalds telling him that a piece of code he had written was now a part of the Linux kernel.