The Value of Value Based Management

Value based management as a means to control behaviourMany organisations espouse to implement value-based management. There are several definitions of what value-based management is, but most are not very illuminating. The consensus is that value based management is a tool to achieve organisational consistency, or from a more cynical perspective, values are a device to control behaviour.

Philosophers refer to words such as value an ‘essentially contested concept’, which means that there is no agreement on the definition of value, which has espoused a complex branch of philosophy called axiology.

In practice, value based management leads to a list of abstract nouns that the organisation advocates. But, which of the many hundreds of positively interpreted abstract nouns in the English language do you choose? Which value is more important to your organisation? Do you prefer creativity over punctuality? Or should we have pride in our work or is it dedication we are after? Any word that has positive connotations and ends in -tion, -ism, -ity, -ment, -acy and so on will do. Defining a list of value, which usually is no longer than four, is restrictive and leads to the implicit exclusion of other positive values.

Value-based management is essentially a crude implementation of virtue-based ethics. This approach leads to tensions because most organisations don’t work according to virtues but follow a consequentialist approach; valuing those behaviours that lead to positive outcomes.1

value based management is of little value

In value based management it is assumed that following an arbitrary list of abstract nouns will lead to good business outcomes. These lists of abstract nouns are a cheat-sheet for employees for how to behave and a way for management or colleagues to assess the behaviour of others. The values chosen from the multitude of available abstract nouns are usually decided democratically, without systematic examination of all available options.2

Most businesses are not honest in their chosen values, Enron being an excellent case in point. The never list greed any of the other deadly sins as their real core values. And those so-called deadly sins are not always wrong. Peter Nowak argued convincingly that the seven deadly sins have propelled humanity more for good than bad.

Value-based management is of little value as it ignores the practical outcomes of behaviours. It is also flawed because it arbitrarily highlights some values of others. Surely to be ethical, we should behave in accordance positive values and not just those printed on our coffee mugs.

  1. Consequentialism can be problematic because not all action that leads to the right results can be considered ethical. I have argued in an earlier paper that deontic constraints are required to maintain the goal-oriented nature of business in an ethical environment. 

  2. I prefer to stick to the list defined by Aristotle, more than 2000 years ago: wisdom; prudence; justice; fortitude; courage; liberality; magnificence; magnanimity and temperance. 

Five points of public speaking — What managers can learn from magicians

Five points of public speaking — What managers can learn from magiciansPublic speaking fills many people with fear. Jerry Seinfeld once joked that:

“… people’s number one fear is public speaking. Number two is death. This strong statement means to the average person that if you have to go to a funeral, you are better off in the casket than doing the eulogy”.

For professionals, public speaking is an essential skill which unfortunately not many of them excel at. We all have sat through death by Powerpoint; bombarded with slides and poorly presented disjointed information.

In my opinion, presentation skills are essential to succeed in any organisation—business presentations are a form of theatre. In this post, I will explain how a book popular among magicians—The Five Points of Magic Spanish performer Juan Tamariz—can be used to teach professionals about presentation skills.1 Below are some tips from the book that apply to both magicians and public speaking.

The Five Points of Public Speaking

1. The Eyes

Eye contact is the most important tool to connect with the audience. Don’t only look at the first row. Sweep your gaze like a fan across the spectators, giving everybody some personal attention.

Public speaking - eye contact

2. The Hands

The hands are the most important tool of the magician, and in business presentations, they usually perceived get in the way. But the hands can communicate almost anything. We should use our hands to point out things, present objects and emphasise the communication. Think about how you use your hands other than a means to hold your laser pointer.

3. The Voice

Imagine an elderly lady, who is hard of hearing, sitting at the back of the room. Dedicate the performance to her and project your voice to the last row.

Public speaking - project your voice

4. The Feet

The best place to stand is centre stage, facing the audience. Don’t hide behind the lectern or turn your back to the audience. This positioning is essential to be able to make good eye contact.

5. The Body

Body language is our subconscious means of communication. In theatre, and thus also in public speaking, we need to be aware of this type of communication.

In Conclusion

This post is only a glimpse into the wide array of literature on theatrical performances that can be applied to public speaking. Business people that perform magic have been found to be better public speakers.2 Next time you need to do a presentation, view it as a theatrical performance and follow the five points of public speaking.

One last tip: whatever you do, never imagine your audience naked, at best it will get you distracted.

If you like to know more about magic tricks, read my book Perspectives on Magic.

  1. Russian magician Manual Llaser uses the Five Points principle in corporate training. 

  2. Davids, Meryl. “Tricks of the Trade.” The Journal of Business Strategy 15, no. 3 (1994): 67. 

Organisations do not exist—a Buddhist perspective

One of Cyndi's slides

One of Cyndi’s slides.

Yesterday Cyndi Laurin presented at the World Business Capability Conference about The Four Pillars of Organizational Greatness. One analogy presented by Cyndi used stuck in my mind as it took me back to my days as a philosophy student.

Cyndi asked which part of a car is the most essential. The audience mentioned several options, and then it dawned on me that this analogy is much like a famous line of reasoning in Buddhist philosophy about the self, which I will use to show that there is no such thing as an organisation.

the idea of the firm

The Buddhist view of the firm would be that there is no such entity, illustrated by a debate between King Milinda and the Buddhist monk Nagasena.1 Following the analogy used by the monk, we can compare a firm with a chariot, or in more modern terms a car. None of the individual parts of the car (the wheels, the engine, the radio and so on), are the car. Nor can you say that the combination of the parts is the car. We can not discover a firm at all, only the word that denotes the idea of the business. A business consists of its parts, just like a car does. None of the parts of the firm, however, are the firm. No part is less important than the other—although followers of the Lean philosophy will disagree on this one.

The Buddhist argument extends to management in that a firm is not about its constitute parts, but a firm is a cycle of cause and effect, or in Buddhist terms, Karma. A firm is not about its CEO, the share price, employees, customers or fancy headquarters. A company, just like a person, is defined by the actions it takes and their results.

Following the Buddhist view to its conclusion, there is only one pillar of organisational greatness: the actions taken by the organisation.

  1. Edward Conze, Buddhist Scriptures (London: Penguin Books, 1959), pp. 147–149. 

Reinventing the wheel?—Repetitiveness in business theory

aha-erlebnis - is business theory about reinventing the wheel?I am presenting my work at the World Business Conference in Auckland. One of the things that struck me listening to fellow presenters is the repetitive nature of the presentations. Not that they are bad presentations, but it seems that research is repeating itself. When a presenter throws up the next slide with profound truths many people think “duh, common sense”, others have an ‘aha-erlebnis‘—a moment of sudden insight, and the rest of the audience does not notice as they gently fall asleep due to Powerpoint overload.

Is business theory busy reinventing the wheel or is something else going on?

Some business theories are based on rigorous research while others are intuitive and akin to pop-psychology. What all business theories have in common is that they aim to influence behaviour. Management is about changing or controlling the conduct of employees; marketing seeks to modify the behaviour of customers and strategy is about the conduct of stakeholders and the competition.

Most business theories are unintentionally based on the idea that people are rational. But contemporary economics and marketing have found that our rationality is limited. Our brains stop us from following the normative theories in business. Being in business is a constant struggle between the rational part of our brains and its natural tendencies. Plato described humans as a chariot pulled in different directions by two horses: reason and the emotions. Going to business conferences and hearing the same stories over and over again might be a way to give the horse of reason more power.

Maybe it is not about reinventing the wheel, but perhaps management theory is about keeping the wheel turning. We need to be constantly reminded of the obvious through variations on the theme.

The harder question is to ask whether we need to keep this wheel turning and maybe we should give some more credence to the non-rational dimension in management.

Are SMART objectives smart?

SMART Objectives are a filter through which we see the reality of managementSMART objectives are a seemingly immutable law in management, originally formulated by George Doran in 1981.1 We are told in management seminars that objectives should be, in the words of Doran, Specific, Measurable, Assignable, Realistic and Time-related.  Many varieties have spawned from the minds of managers across geography and time, each focusing on slightly different aspects of the meme. There is no science behind this, as is the case with most popular management memes. The original meme has evolved through successive mutations.

Are SMART Objectives smart?

“What you measure is what you get…”

The term Specific can also be written as: ‘stretching’ or ‘simple’; measurable has mutated into ‘meaningful’, ‘motivational’ and ‘manageable’, Assignable is in most cases turned into ‘achievable’, which is the same as being realistic. Realistic in turn has morphed into ‘relevant’ or ‘resource-based’ and lastly ‘time-related’ has stood the test of time and has not changed much in the various mutations of the original definition. Some have even extended the mnemonic and defined SMARTER objectives.

Many managers seem to struggle with defining SMART objectives, evidenced by the multitude of websites and magazine articles devoted to this topic. The meme—I dare not call it a theory as there is no real research into the effectiveness of this popular business tool—is driven by the idea that we can only manage what we can measure. This approach is driven by the often cited words of former General Electric CEO Jack Welch: “What you measure is what you get…”.

I propose that organisations start using DUMB targets:2

  • Devious
  • Unfair
  • Manipulative
  • Bizarre

Any list of adjectives that can remotely be related to management will do. Just Google “adjectives starting with …” and create your acronym. If you find a good one, please add it to the comments box.

Are SMART Objectives smart?

“Too often we measure everything and understand nothing”

Not everything activity in an organisation is measurable and using SMART targets often obfuscates the fact that business is about human interaction and can not always be placed into a quantitative straight-jacket. How can you specify a SMART target for having empathy for customers? How do you define a measurable objective for having a genuine smile? There is an inherent incompleteness in relying on quantitative measures when managing an organisation that deals with people and people are the very cornerstone of every organisation. It is undeniable that measurement is essential in business. Although quantitative performance measurement is a necessary condition, it is not a sufficient condition for holistic performance measurement. To understand their business, managers must take the responsibility of venturing beyond the figures and dashboard displays.

  1. Doran, G. T. (1981). There’s a S.M.A.R.T. way to write managements’ goals and objectives. Management Review, 70(11), 35–36. 

  2. Others before me have also defined DUMB Targets: See Evan Carmichael, DUMB Goals

The Importance of a Silo Mentality to Deliver Business Value

A silo mentality is one of the most evil things a manager can have. Is this really the case?

Two silos I designed for a South African concrete brick manufacturer.

A silo mentality is one of the evilest things that can happen to a manager. Well, that is what you are lead to believe when attending the average management workshop.

One of the first things people mention when asked what is wrong with their workplace is having a “silo mentality”. Organisational silos are evil, and everybody who tries to build one runs the risk of becoming a pariah. Personally, I think silos are inevitable and valuable—I designed some early in my career as shown in the picture above.

A silo mentality is so prevalent that a small vocabulary has built up around this phenomenon: ‘information silo’, ‘silo thinking’, ‘the silo effect’, ‘functional silo’ and so on. The language around removing silos is quite vigorous and evocative: silos need to be ‘demolished’, ‘blown up’ or ‘torn down’. Surely, any manager using this type of language is serious about his job!

This article proposes a more philosophical approach and gently deconstructs, not demolish or blow up, the concept of silo mentality to show that they are not as evil as many managers believe.

embrace silos to deliver value

There is no proper definition of what a silo mentality is. A recent paper suggests that people with silo mentality are mentally ill.1

Psychodynamically, silos represent the phallic characteristics of male dominance, submission and persecution. They are characterised by intra- and intergroup anxiety followed by the infantile and regressive defensive structures …

On a positive side, a functional silo is a vertically aligned team with experts in their respective fields. Silos shape expert knowledge communities that can reach consensus, make decisions and act efficiently and effectively. By embracing and nurturing functional silos, an agency’s expertise can flourish.2

Pointing at silos to identify why an organisation is not optimally functioning is a way to blame somebody else for your problems. Instead of wielding the silo, managers should practice some introspection and think about how they can improve communication with other experts in their organisation. Don’t blame somebody else for not wanting to cooperate with you, think of ways you can motivate them instead of using strong language and start demolishing, tearing down and blasting their silos.

  1. Cilliers, F., & Greyvenstein, H. (2012). The impact of silo mentality on team identity: An organisational case study. SA Journal of Industrial Psychology, 38(2), 1–9. 

  2. Paulson, J. (2010). Embrace silos to deliver value. DM News, 32(17), 32–32. 

The Entrepreneur and the Academic

The Entrepreneur and the AcademicWalking around Melbourne city one afternoon I decided to have some chips for lunch and ended up in a trendy chippery in Elizabeth Street, munching away on some deep fried potatoes and mayo. The man serving me was the owner, an entrepreneur experienced in the fast food business. Brad, spoke openly and explained how he tries to make a buck in the hyper-competitive world of fast food.

Brad celebrated big successes in this market in the past but emphasised that he had only completed high school and had no formal business qualifications whatsoever.

Some time ago, Brad attended a post graduate management lecture at a local university. First Brad thought that the lecturer was talking gobbledygook, but after a while recognised that the theories presented in this talk match what he does intuitively to run his business.

The entrepreneur is the hero of contemporary capitalism

I told Brad that I occasionally teach marketing at La Trobe University.  Management scientist study entrepreneurs like Brad to figure out how they do business and present this back to colleagues and students as generalised theories, formulas and diagrams. One of the aims of business studies is to unlock the intuitive knowledge of entrepreneurs such as Brad so that other, less talented and more risk averse budding entrepreneurs, can replicate their success.

The Entrepreneur in Society

The entrepreneur is the hero of contemporary capitalism and has been idealised and studied in great detail by scholars around the world, each looking for the holy grail of entrepreneurship. Researchers study entrepreneurs like etymologists study insects. They dissect them, analyse them, observe their behaviour to extract the essence of what it is that makes them successful.

Entrepreneurial biographies are, however, always incomplete and sanitised versions of reality. The spirit of entrepreneurship is a mythical concept in business studies that can only be known through experiencing what it is to be in business, not by studying it

Further reading:

Clear Your head—The Key to Getting Things Done

Clear Your head—The Key to Getting Things DonePreparation:

  1. Have pencil and paper ready.
  2. Make sure you’re in a quiet place without danger to be disturbed before reading on.

This is a simple yet powerful way to get all those plans and ideas that are buzzing around in your brain all day long under control. These thoughts are constantly distracting you, preventing you from making short- and long-term plans.

The truth is: they can’t help it, it’s you that haven’t decided anything about them that will make them keep nagging you. What you need is a reliable external system to get them out of your head.

One of these completely reliable systems is David Allen’s Getting Things Done (GTD) system. But it takes at least a month to read the book and start making this method our own. We don’t have that long right now.

There a huge issue with all those loose ends circling both in your head and heading your direction from the outside world. You will be reminded of the stupidest things at the least expected moment. Even worse: don’t do anything about them, and they will finally just disappear. Too bad, because while most ideas have no future value, some of them are real gems. One of them might even change the world. So make sure you do something with those gems! How? Read on!

Start Writing

Grab that pen and paper that have so patiently been waiting next to you. During the next ten minutes, you will start to write down literally everything that’s in your head. This exercise will range from small actions that need immediate attention up to big future projects whose impact you cannot yet even fathom. It doesn’t matter what it is, once it’s written down it will be out of your head. Things you might encounter:

  1. Cleaning up the backyard
  2. Find a good school for my kid
  3. Improve my job skills
  4. Learn how to use Prezi instead of Powerpoint for presentations
  5. Write an ebook about … (fill in your speciality)
  6. Update your daily administration
  7. Empty your e-mail inbox
  8. Prepare presentation for quarterly meeting next week
  9. Get XYZ project back on track with Isaac and Charlie
  10. And so on, and so on.

Don’t spend any time thinking about those weird things you’re jotting down. What you’re going to do with them later is irrelevant now. By the way, did you notice that most things on the list above, apart from items 6 and 7, are bigger things than just one action? In GTD-speak they’re called projects, all “desired outcomes that take more than one action to complete” or goals. Goals are good, but can not be acted on immediately. They need to be made more specific and normally follow the route from defining projects first and actions later.

Now start writing. Take your time and keep writing, until your head is empty. If ten minutes of frantic writing are not enough, hold on. Later you’ll thank yourself! OK, there we go, I’m waiting for you …

Ready? When everything went according to plan, you now have an impressive list in front of you. Full of actionable items, projects and the more fuzzy goals. With less than 30 points you either have an extremely laid back life or cheated. In the latter case: maybe write a little more? Until the number approaches 50 or even 100 you’re probably not done yet. This only works if your head is clear of every loose end you will know when you’re done.

What you have achieved now is that everything is in a trusted system outside your head. Now it comes down to the most important thing: doing something with this information. First look at things that can be done in one step: your actions. These go on an action list, to be done the moment you are ready for them. The rest of your items are either projects or goals. Put them on two separate lists, and keep them current..In the future, these lists make it easier for you to focus on what’s requiring your attention now (projects) and to check whether your actions are in line with where you’re heading in life and work.

Getting Thins Done—Bonus Tip

Overwhelmed by a huge project list? Do not shoot the messenger! 😉 this is all your stuff. Who says you are required to complete the entire list? Take a critical look at the projects that don’t give energy and that you can eliminate without risk of getting in trouble. Be honest, there’s more to be deleted than you think. You are your judge.

A waste of time, all this list making? On the contrary! You have found a way to get those loose ends out of your head. This will give a tremendous amount of energy and focus. From now on you’re doing only things that are important to YOU. It’s hard to come up with a better time saver than that, I’d say.

Good luck clearing your head. Did it work? Share your experiences below.

Arjan Zuidhof is a guest author and efficiency coach based in the Netherlands.

Snakes and Corporate Ladders—A career simulation

The career path of a manager on her way to the boardroom is full of unexpected surprises. It might sometimes even feel like you are playing a game of Snakes & Ladders, the popular children’s board game. At the Lucid Manager, we have created the ultimate career simulation for a bit of fun and games. Who will get to the board room first?

Career Simulation

Will an MBA help fast-track your career or will your inability to multi-task hold you back from pin-stripe success? Download the pdf file to play our Snakes & Corporate Ladders career game and find out whether you will make it all the way to the board room. Play the game that resembles the trepidations of contemporary management.

Snakes and Corporate Ladders - a career simulation game

Managing ambiguity, do you resole uncertainty or seek opportunity?

Managing ambiguityA little while ago I was asked whether I was any good at managing ambiguity. My impulsive answer was that I prefer to resolve any ambiguity by analysing the situation. I responded to this question from the perspective of an engineer. My profession is based on using reason and logic to resolve any ambiguity inherent in reality. I did not realise at the time that this was the ‘wrong’ answer as I was expected to embrace uncertainty and seek opportunity, or something fuzzy like that.

Philosophically considered the world itself is ambiguous, e.g. light is simultaneously a wave and a particle, ethical judgements are based on cultural preferences, and the notion of absolute truth is philosophically untenable. However, our brains are wired to resolve any ambiguity. As soon as we observe light, it will collapse into either a wave or a particle, and within a given culture, ethical rules are absolute truths. Within a particular frame of reference, there can be only one truth. The most efficient tool to resolve uncertainty is logic. But reason itself has its limitations, and sometimes ambiguity remains no matter how much we analyse the situation. It is at these situations that intuition comes into play.

Management is a frame of reference in which ambiguity in most cases needs to be resolved. Customers don’t appreciate organisations that are ambiguous and require predictable quality. Uncertainty in processes also means business is not working efficiently as employees need to spend time assessing each situation to make a decision.

Management theorist David Wilkinson argues that leaders need to embrace ambiguity to initiate change. This statement is certainly true, but only to the extent that recognition of ambiguity is necessary to be able to generate possible outcomes and the manager’s ability to recognise the best solution. A preference for resolution of ambiguity does not preclude tolerance for vague situations.

Successfully managing a business is based on being able to make clear decisions. Without clear decisions, a company will not achieve its objectives, but without a recognition of managing ambiguity, a business can not evolve.