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Showing posts with label Organizational behavior. Show all posts
Showing posts with label Organizational behavior. Show all posts

Tuesday, January 23, 2018

What Makes Work Meaningful — Or Meaningless 01-23






Meaningful work is something we all want. The psychiatrist Viktor Frankl famously described how the innate human quest for meaning is so strong that, even in the direst circumstances, people seek out their purpose in life. More recently, researchers have shown meaningfulness to be more important to employees than any other aspect of work, including pay and rewards, opportunities for promotion, or working conditions. Meaningful work can be highly motivational, leading to improved performance, commitment, and satisfaction. But, so far, surprisingly little research has explored where and how people find their work meaningful and the role that leaders can play in this process.

We interviewed 135 people working in 10 very different occupations and asked them to tell us stories about incidents or times when they found their work to be meaningful and, conversely, times when they asked themselves, “What’s the point of doing this job?” We expected to find that meaningfulness would be similar to other work-related attitudes, such as engagement or commitment, in that it would arise purely in response to situations within the work environment.

However, we found that, unlike these other attitudes, meaningfulness tended to be intensely personal and individual; it was often revealed to employees as they reflected on their work and its wider contribution to society in ways that mattered to them as individuals. People tended to speak of their work as meaningful in relation to thoughts or memories of significant family members such as parents or children, bridging the gap between work and the personal realm. We also expected meaningfulness to be a relatively enduring state of mind experienced by individuals toward their work; instead, our interviewees talked of unplanned or unexpected moments during which they found their work deeply meaningful.

We were anticipating that our data would show that the meaningfulness experienced by employees in relation to their work was clearly associated with actions taken by managers, such that, for example, transformational leaders would have followers who found their work meaningful, whereas transactional leaders would not. Instead, our research showed that quality of leadership received virtually no mention when people described meaningful moments at work, but poor management was the top destroyer of meaningfulness.

We also expected to find a clear link between the factors that drove up levels of meaningfulness and those that eroded them. Instead, we found that meaningfulness appeared to be driven up and decreased by different factors. Whereas our interviewees tended to find meaningfulness for themselves rather than it being mandated by their managers, we discovered that if employers want to destroy that sense of meaningfulness, that was far more easily achieved. The feeling of “Why am I bothering to do this?” strikes people the instant a meaningless moment arises, and it strikes people hard. If meaningfulness is a delicate flower that requires careful nurturing, think of someone trampling over that flower in a pair of steel-toed boots. Avoiding the destruction of meaning while nurturing an ecosystem generative of feelings of meaningfulness emerged as the key leadership challenge.

About the Research

Meaningful work is a topic that is receiving increased attention. However, relatively little empirical research investigates in depth what meaningful work actually means to individuals. To address this, we undertook an extensive review of the literature on meaningful work from various fields, including psychology, management studies, sociology, and ethics. Drawing on these findings, we defined meaningful work as arising “when an individual perceives an authentic connection between work and a broader transcendent life purpose beyond the self.”

To conduct our research, we wanted to garner insights from people in a wide range of work situations. We interviewed 135 individuals in 10 very different occupations and asked them about times when they found their work meaningful or meaningless. The occupational groups we studied were: retail assistants, priests from various denominations, artists (including musicians, writers, and actors), lawyers, academics from science disciplines, entrepreneurs who had started their own business, nurses in an acute care hospital, soldiers, conservation stonemasons who were working on the preservation of an ancient cathedral, and garbage collectors. All data were collected in the U.K. We transcribed the interviews and coded them by theme to uncover patterns in how people view their work.

The Five Qualities of Meaningful Work

Our research aimed to uncover how and why people find their work meaningful. (See “About the Research.”) For our interviewees, meaningfulness, perhaps unsurprisingly, was often associated with a sense of pride and achievement at a job well done, whether they were professionals or manual workers. Those who could see that they had fulfilled their potential, or who found their work creative, absorbing, and interesting, tended to perceive their work as more meaningful than others. Equally, receiving praise, recognition, or acknowledgment from others mattered a great deal. These factors alone were not enough to render work meaningful, however. Our study also revealed five unexpected features of meaningful work; in these, we find clues that might explain the fragile and intangible nature of meaningfulness.

1. Self-Transcendent

Individuals tended to experience their work as meaningful when it mattered to others more than just to themselves. In this way, meaningful work is self-transcendent. Although it is not a well-known fact, the famous motivation theorist Abraham Maslow positioned self-transcendence at the apex of his pyramid of human motivation, situating it beyond even self-actualization in importance. People did not just talk about themselves when they talked about meaningful work; they talked about the impact or relevance their work had for other individuals, groups, or the wider environment. For example, a garbage collector explained how he found his work meaningful at the “tipping point” at the end of the day when refuse was sent to recycling. This was the time he could see how his work contributed to creating a clean environment for his grandchildren and for future generations. An academic described how she found her work meaningful when she saw her students graduate at the commencement ceremony, a tangible sign of how her own hard work had helped others succeed. A priest talked about the uplifting and inspiring experience of bringing an entire community together around the common goal of a church restoration project.

2. Poignant

The experience of meaningful work can be poignant rather than purely euphoric. People often found their work to be full of meaning at moments associated with mixed, uncomfortable, or even painful thoughts and feelings, not just a sense of unalloyed joy and happiness. People often cried in our interviews when they talked about the times when they found their work meaningful. The current emphasis on positive psychology has led us to focus on trying to make employees happy, engaged, and enthused throughout the working day. Psychologist Barbara Held refers to the current pressure to “accentuate the positive” as the “tyranny of the positive attitude.” Traditionally, meaningfulness has been linked with such positive attributes.

Our research suggests that, contrary to what we may have thought, meaningfulness is not always a positive experience. In fact, those moments when people found their work meaningful tended to be far richer and more challenging than times when they felt simply motivated, engaged, or happy. The most vivid examples of this came from nurses who described moments of profound meaningfulness when they were able to use their professional skills and knowledge to ease the passing of patients at the end of their lives. Lawyers often talked about working hard for extended periods, sometimes years, for their clients and winning cases that led to life-changing outcomes. Participants in several of the occupational groups found moments of meaningfulness when they had triumphed in difficult circumstances or had solved a complex, intractable problem. The experience of coping with these challenging conditions led to a sense of meaningfulness far greater than they would have experienced dealing with straightforward, everyday situations.

3. Episodic

A sense of meaningfulness arose in an episodic rather than a sustained way. It seemed that no one could find their work consistently meaningful, but rather that an awareness that work was meaningful arose at peak times that were generative of strong experiences. For example, a university professor talked of the euphoric experience of feeling “like a rock star” at the end of a successful lecture. One actor we spoke to summed this feeling up well: “My God, I’m actually doing what I dreamt I could do; that’s kind of amazing.” Clearly, sentiments such as these are not sustainable over the course of even one single working day, let alone a longer period, but rather come and go over one’s working life, perhaps rarely arising. Nevertheless, these peak experiences have a profound effect on individuals, are highly memorable, and become part of their life narratives.

Meaningful moments such as these were not forced or managed. Only in a few instances did people tell us that an awareness of their work as meaningful arose directly through the actions of organizational leaders or managers. Conservation stonemasons talked of the significance of carving their “banker’s mark” or mason’s signature into the stone before it was placed into a cathedral structure, knowing that the stone might be uncovered hundreds of years in the future by another mason who would recognize the work as theirs.

They felt they were “part of history.” One soldier described how he realized how meaningful his work was when he reflected on his quick thinking in setting off the warning sirens in a combat situation, ensuring that no one at the camp was injured in the ensuing rocket attack. Sales assistants talked about times when they were able to help others, such as an occasion when a customer passed out in one store and the clerk was able to support her until she regained consciousness. Memorable moments such as these contain high levels of emotion and personal relevance, and thus become redolent of the symbolic meaningfulness of work.

4. Reflective

In the instances cited above, it was often only when we asked the interviewees to recount a time when they found their work meaningful that they developed a conscious awareness of the significance of these experiences. Meaningfulness was rarely experienced in the moment, but rather in retrospect and on reflection when people were able to see their completed work and make connections between their achievements and a wider sense of life meaning.

One of the entrepreneurs we interviewed talked about the time when he was switching the lights out after his company’s Christmas party and paused to reflect back over the year on what he and his employees had achieved together. Garbage collectors explained how they were able to find their work meaningful when they finished cleaning a street and stopped to look back at their work. In doing this, they reflected on how the tangible work of street sweeping contributed to the cleanliness of the environment as a whole. One academic talked about research he had done for many years that seemed fairly meaningless at the time, but 20 years later provided the technological solution for touch-screen technology.

The experience of meaningfulness is therefore often a thoughtful, retrospective act rather than just a spontaneous emotional response in the moment, although people may be aware of a rush of good feelings at the time. You are unlikely to witness someone talking about how meaningful they find their job during their working day. For most of the people we spoke to, the discussions we had about meaningful work were the first time they had ever talked about these experiences.

5. Personal

Other feelings about work, such as engagement or satisfaction, tend to be just that: feelings about work. Work that is meaningful, on the other hand, is often understood by people not just in the context of their work but also in the wider context of their personal life experiences. We found that managers and even organizations actually mattered relatively little at these times. One musician described his profound sense of meaningfulness when his father attended a performance of his for the first time and finally came to appreciate and understand the musician’s work. A priest was able to find a sense of meaning in her work when she could relate the harrowing personal experiences of a member of her congregation to her own life events, and used that understanding to help and support her congregant at a time of personal tragedy.

An entrepreneur’s motivation to start his own business included the desire to make his grandfather proud of him. The customary dinner held to mark the end of a soldier’s service became imbued with meaning for one soldier because it was shared with family members who were there to hear her army stories. One lawyer described how she found her work meaningful when her services were recommended by friends and family and she felt trusted and valued in both spheres of her life. A garbage collector described the time when the community’s water supply became contaminated and he was asked to work on distributing water to local residents; that was meaningful, as he could see how he was helping vulnerable neighbors.

Moments of especially profound meaningfulness arose when these experiences coalesced with the sense of a job well done, one recognized and appreciated by others. One example of many came from a conservation stonemason who described how his work became most meaningful to him when the restoration of a section of the cathedral he had been working on for years was unveiled, the drapes and scaffolding withdrawn, and the work of the craftsmen celebrated. This event involved all the masons and other trades such as carpenters and glaziers, as well as the cathedral’s religious leaders, members of the public, and local dignitaries. “Everyone goes, ‘Doesn’t it look amazing?’” he said. “That’s the moment you realize you’ve saved something and ensured its future; you’ve given part of the cathedral back to the local community.”

These particular features of meaningful work suggest that the organizational task of helping people find meaning in their work is complex and profound, going far beyond the relative superficialities of satisfaction or engagement — and almost never related to one’s employer or manager.

Meaninglessness: The Seven Deadly Sins

What factors serve to destroy the fragile sense of meaningfulness that individuals find in their work? Interestingly, the factors that seem to drive a sense of meaninglessness and futility around work were very different from those associated with meaningfulness. The experiences that actively led people to ask, “Why am I doing this?” were generally a function of how people were treated by managers and leaders. Interviewees noted seven things that leaders did to create a feeling of meaninglessness (listed in order from most to least grievous).

1. Disconnect people from their values. Although individuals did not talk much about value congruence as a promoter of meaningfulness, they often talked about a disconnect between their own values and those of their employer or work group as the major cause of a sense of futility and meaninglessness. This issue was raised most frequently as a source of meaninglessness in work. A recurring theme was the tension between an organizational focus on the bottom line and the individual’s focus on the quality or professionalism of work. One stonemason commented that he found the organization’s focus on cost “deeply depressing.”

Academics spoke of their administrations being most interested in profits and the avoidance of litigation, instead of intellectual integrity and the provision of the best possible education. Nurses spoke despairingly of being forced to send patients home before they were ready in order to free up bed space. Lawyers talked of a focus on profits rather than on helping clients.

2. Take your employees for granted. Lack of recognition for hard work by organizational leaders was frequently cited as invoking a feeling of pointlessness. Academics talked about department heads who didn’t acknowledge their research or teaching successes; sales assistants and priests talked of bosses who did not thank them for taking on additional work. A stonemason described the way managers would not even say “good morning” to him, and lawyers described how, despite putting in extremely long hours, they were still criticized for not moving through their work quickly enough. Feeling unrecognized, unacknowledged, and unappreciated by line or senior managers was often cited in the interviews as a major reason people found their work pointless.

3. Give people pointless work to do. We found that individuals had a strong sense of what their job should involve and how they should be spending their time, and that a feeling of meaninglessness arose when they were required to perform tasks that did not fit that sense. Nurses, academics, artists, and clergy all cited bureaucratic tasks and form filling not directly related to their core purpose as a source of futility and pointlessness. Stonemasons and retail assistants cited poorly planned projects where they were left to “pick up the pieces” by senior managers. A retail assistant described the pointless task of changing the shop layout one week on instructions from the head office, only to be told to change it back again a week later.

4. Treat people unfairly. Unfairness and injustice can make work feel meaningless. Forms of unfairness ranged from distributive injustices, such as one stonemason who was told he could not have a pay raise for several years due to a shortage of money but saw his colleague being given a raise, to freelance musicians being asked to write a film score without payment. Procedural injustices included bullying and lack of opportunities for career progression.

5. Override people’s better judgment. Quite often, a sense of meaninglessness was connected with a feeling of disempowerment or disenfranchisement over how work was done. One nurse, for example, described how a senior colleague required her to perform a medical intervention that was not procedurally correct, and how she felt obliged to complete this even against her better judgment. Lawyers talked of being forced to cut corners to finish cases quickly. Stonemasons described how being forced to “hurry up” using modern tools and techniques went against their sense of historic craft practices. One priest summed up the role of the manager by saying, “People can feel empowered or disempowered by the way you run things.” When people felt they were not being listened to, that their opinions and experience did not count, or that they could not have a voice, then they were more likely to find their work meaningless.

6. Disconnect people from supportive relationships. Feelings of isolation or marginalization at work were linked with meaninglessness. This could occur through deliberate ostracism on the part of managers, or just through feeling disconnected from coworkers and teams. Most interviewees talked of the importance of camaraderie and relations with coworkers for their sense of meaningfulness. Entrepreneurs talked about their sense of loneliness and meaninglessness during the startup phase of their business, and the growing sense of meaningfulness that arose as the business developed and involved more people with whom they could share the successes. Creative artists spoke of times when they were unable to reach out to an audience through their art as times of profound meaninglessness.

7. Put people at risk of physical or emotional harm. Many jobs entail physical or emotional risks, and those taking on this kind of work generally appreciate and understand the choices they have made. However, unnecessaryem> exposure to risk was associated with lost meaningfulness. Nurses cited feelings of vulnerability when left alone with aggressive patients; garbage collectors talked of avoidable accidents they had experienced at work; and soldiers described exposure to extreme weather conditions without the appropriate gear.

These seven destroyers emerged as highly damaging to an individual’s sense of his or her work as meaningful. When several of these factors were present, meaningfulness was considerably lower.

Cultivating an Ecosystem For Meaningfulness

In the 1960s, Frederick Herzberg showed that the factors that give rise to a sense of job satisfaction are not the same as those that lead to feelings of dissatisfaction. It seems that something similar is true for meaningfulness. Our research shows that meaningfulness is largely something that individuals find for themselves in their work, but meaninglessness is something that organizations and leaders can actively cause. Clearly, the first challenge to building a satisfied workforce is to avoid the seven deadly sins that drive up levels of meaninglessness.

Given that meaningfulness is such an intensely personal and individual experience that is interpreted by individuals in the context of their wider lives, can organizations create an environment that cultivates high levels of meaningfulness? The key to meaningful work is to create an ecosystem that encourages people to thrive. As other scholars have argued, efforts to control and proscribe the meaningfulness that individuals inherently find in their work can paradoxically lead to its loss.
Our interviews and a wider reading of the literature on meaningfulness point to four elements that organizations can address that will help foster an integrated sense of holistic meaningfulness for individual employees. (See “The Elements of a Meaningfulness Ecosystem.”)




The Elements of a Meaningfulness Ecosystem

Individuals can derive meaning from their job, from particular tasks in their work, from interactions with others, or from the purpose of the organization. Although it is possible for someone to describe meaningfulness at work in terms of just one of the four elements, meaningfulness is enriched when more than one is present in a job, and these four elements can combine to enable a state of holistic meaningfulness.

1. Organizational Meaningfulness

At the macro level, meaningfulness is more likely to thrive when employees understand the broad purpose of the organization. This purpose should be formulated in such a way that it focuses on the positive contribution of the organization to the wider society or the environment. This involves articulating the following:

What does the organization aim to contribute? What is its “core business”?

How does the organization aspire to go about achieving this? What values underpin its way of doing business?

This needs to be done in a genuine and thoughtful way. People are highly adept at spotting hypocrisy, like the nurses who were told their hospital put patients first but were also told to discharge people as quickly as possible. The challenge lies not only in articulating and conveying a clear message about organizational purpose, but also in not undermining meaningfulness by generating a sense of artificiality and manipulation.

Reaching employees in ways that make sense to them can be a challenge. A clue for addressing this comes from the garbage collectors we interviewed. One described to us how the workers used to be told by management that the waste they returned to the depot would be recycled, but this message came across as highly abstract. Then the company started putting pictures of the items that were made from recycled waste on the side of the garbage trucks. This led to a more tangible realization of what the waste was used for.

2. Job Meaningfulness

The vast majority of interviewees found their work meaningful, whether they were musicians, sales assistants, lawyers, or garbage collectors. Studies have shown that meaning is so important to people that they actively go about recrafting their jobs to enhance their sense of meaningfulness. Often, this recrafting involves extending the impact or significance of their role for others. One example of this was sales assistants in a large retail store who listened to lonely elderly customers.

Organizations can encourage people to see their work as meaningful by demonstrating how jobs fit with the organization’s broader purpose or serve a wider, societal benefit. The priests we spoke to often explained how their ministry work in their local parishes contributed to the wider purpose of the church as a whole. In the same way, managers can be encouraged to show employees what their particular jobs contribute to the broader whole and how what they do will help others or create a lasting legacy.

Alongside this, we need to challenge the notion that meaningfulness can only arise from positive work experiences. Challenging, problematic, sad, or poignant jobs have the potential to be richly generative of new insights and meaningfulness, and overlooking this risks upsetting the delicate balance of the meaningfulness ecosystem. Providing support to people at the end of their lives is a harrowing experience for nurses and clergy, yet they cited these times as among the most meaningful. The task for leaders is to acknowledge the problematic or negative side of some jobs and to provide appropriate support for employees doing them, yet to reveal in an honest way the benefits and broader contribution that such jobs make.

3. Task Meaningfulness

Given that jobs typically comprise a wide range of tasks, it stands to reason that some of these tasks will constitute a greater source of meaningfulness than others. To illustrate, a priest will have responsibility for leading acts of worship, supporting sick and vulnerable individuals, developing community relations and activities, and probably a wide range of other tasks such as raising funds, managing assistants and volunteers, ensuring the upkeep of church buildings, and so on. In fact, the priests were the most hard-working group that we spoke to, with the majority working a seven-day week on a bewildering range of activities. Even much simpler jobs will involve several different tasks. One of the challenges facing organizations is to help people understand how the individual tasks they perform contribute to their job and to the organization as a whole.

When individuals described some of the sources of meaninglessness they faced in their work, they often talked about how to come to terms with the tedious, repetitive, or indeed purposeless work that is part of almost every job. For example, the stonemasons described how the first few months of their training involved learning to “square the stone,” which involves chiseling a large block of stone into a perfectly formed square with just a few millimeters of tolerance on each plane. As soon as they finished one, they had to start another, repeating this over and over until the master mason was satisfied that they had perfected the task. Only then were they allowed to work on more interesting and intricate carvings. Several described their feelings of boredom and futility; one said that he had taken 18 attempts to get the squaring of the stone correct. “It feels like you are never ever going to get better,” he recalled. Many felt like giving up at this point, fearing that stonemasonry was not for them. It was only in later years, as they looked back on this period in their working lives, that they could see the point of this detailed level of training as the first step on their path to more challenging and rewarding work.

Filling out forms, cited earlier, is another good example of meaningless work. Individuals in a wide range of occupations all reported that what they perceived as “mindless bureaucracy” sapped the meaningfulness from their work. For instance, most of the academics we spoke to were highly negative about the amount of form filling the job entailed. One said, “I was dropping spreadsheets into a huge black hole.”

Where organizations successfully managed the context within which these necessary but tedious tasks were undertaken, the tasks came to be perceived not exactly as meaningful, but equally as not meaningless. Another academic said, “I’m pretty good with tedious work, as long as it’s got a larger meaning.”

4. Interactional Meaningfulness

There is widespread agreement that people find their work meaningful in an interactional context in two ways:26 First, when they are in contact with others who benefit from their work; and, second, in an environment of supportive interpersonal relationships. As we saw earlier, negative interactional experiences — such as bullying by a manager, lack of respect or recognition, or forcing reduced contact with the beneficiaries of work — all drive up a sense of meaninglessness, since the employee receives negative cues from others about the value they place on the employee’s work.

The challenge here is for leaders to create a supportive, respectful, and inclusive work climate among colleagues, between employees and managers, and between organizational staff and work beneficiaries. It also involves recognizing the importance of creating space in the working day for meaningful interactions where employees are able to give and receive positive feedback, communicate a sense of shared values and belonging, and appreciate how their work has positive impacts on others.

Not surprisingly, the most striking examples of the impact of interactional meaningfulness on people came from the caring occupations included in our study: nurses and clergy. In these cases, there was very frequent contact between the individual and the direct beneficiaries of his or her work, most often in the context of supporting and healing people at times of great vulnerability in their lives.

Witnessing firsthand, and hearing directly, about how their work had changed people’s lives created a work environment conducive to meaningfulness. Although prior research has similarly highlighted the importance of such direct contact for enhancing work’s meaningfulness, we also found that past or future generations, or imagined future beneficiaries, could play a role. This was the case for the stonemasons who felt connected to past and future generations of masons through their bankers’ marks on the back of the stones and for the garbage collectors who could envisage how their work contributed to the living environment for future generations.

Holistic Meaningfulness

The four elements of the meaningfulness ecosystem combine to enable a state of holistic meaningfulness, where the synergistic benefits of multiple sources of meaningfulness can be realized. Although it is possible for someone to describe meaningful moments in terms of any one of the subsystems, meaningfulness is enriched when more than one or all of these are present. A sales assistant, for example, described how she had been working with a team on the refurbishment of her store: “We’d all been there until 2 a.m., working together moving stuff, everyone had contributed and stayed late and helped, it was a good time. We were exhausted but we still laughed and then the next morning we were all bright in our uniforms, it was a lovely feeling, just like a little family coming together. The day [the store] opened, it did bring tears to my eyes. We had a little gathering and a speech; the managers said ‘thank you’ to everybody because everyone had contributed.”

Finding work meaningful is an experience that reaches beyond the workplace and into the realm of the individual’s wider personal life. It can be a very profound, moving, and even uncomfortable experience. It arises rarely and often in unexpected ways; it gives people pause for thought — not just concerning work but what life itself is all about. In experiencing work as meaningful, we cease to be workers or employees and relate as human beings, reaching out in a bond of common humanity to others. For organizations seeking to manage meaningfulness, the ethical and moral responsibility is great, since they are bridging the gap between work and personal life.

Yet the benefits for individuals and organizations that accrue from meaningful workplaces can be immense. Organizations that succeed in this are more likely to attract, retain, and motivate the employees they need to build sustainably for the future, and to create the kind of workplaces where human beings can thrive.

Reproduced from MITSLOAN Management Review  

Wednesday, May 25, 2016

Managing Tensions Between New and Existing Business Models05-25


The search for new business models forces established companies to experiment with organizational designs — and leads to tensions that should be anticipated and carefully managed.






Image credit : Shyam's Imagination Library
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Exploring new business models is a recognized way for mature companies to renew their competitive advantage. Companies explore new value propositions, deploy value propositions in new segments, change the value chain, or experiment with alternative revenue models — all in a search for a different logic for value creation and capture. Sometimes this exploration goes far beyond the existing business model and requires the creation of a new business unit.

A sometimes unexpected consequence is the difficulty of fitting this new business unit into the existing organizational structure. While business model experimentation may be the raison d’être of many startup ventures, established companies typically face strong organizational rigidities that lead to tensions. Predicting these tensions and being open to experimentation with organizational structure can be the keys to a smoother business model exploration process. In this article, we report on a study of the European postal industry, in which we examined the organizational challenges that affect incumbent organizations in mature industries as they react to disruptive changes in their environment by seeking new business models.

Although the Romans had a type of postal service, the European postal industry as we know it today has existed for the past 500 years or so — one of the oldest, in Portugal, traces its history to 1520. For close to two centuries, established operators have been using essentially the same business model, pioneered in 1837 in the United Kingdom. In that model, senders pay a postal operator (usually through the purchase of a stamp) to bring a piece of mail or a parcel from A to B, with pricing dependent on some combination of distance, size, and weight. However, the postal industry has recently faced a rapid decline in physical mail as a result of digital substitution, while regulatory liberalization has boosted the level of competition in postal markets. Many postal operators have reacted by exploring new opportunities in the digital marketplace.

By interviewing managers and reviewing relevant information, we studied Danish, Portuguese, and Swiss postal operators to find out how they have dealt with the challenge of exploring new business models since the turn of the millennium. The organizations we studied strived to maintain their core business while at the same time incubating new ventures. Managers at all of the organizations felt there were potential new business models that they could benefit from developing, but when exploring the building blocks of these business models, they found that tensions emerged in their organizations. It required a separate process of organizational experimentation to find out how to organize for business model exploration.

Managing the Tensions

Our research points to three key areas of tension almost any existing business will face if it attempts to discover entirely new business models. Whether management succeeds in handling those tensions will determine their success in identifying and implementing new business models.

1. Don’t settle too quickly on structure. Top management is typically trained to see organizational structure as a means of executing strategy. As the business historian Alfred D. Chandler put it, “structure follows strategy.” In the case of business model exploration, however, our research suggests it’s a mistake for management to settle too quickly on a strategy and structure for the new business. In 2006, the Danish postal service, Post Danmark A/S, acquired Strålfors, an information logistics company, and subsequently positioned some of the company’s other innovative ventures within this subsidiary. It was thought there were possible synergies in merging products, but the fit was less than perfect, and as one manager put it, ultimately the business units “moved a bit around over the years.” The Danish and Swedish posts subsequently merged to form a new company, now called PostNord AB. PostNord at one point signaled to the market that Strålfors was for sale but then, in the fall of 2015, announced that it would retain ownership of Strålfors, after all. A manager from another postal operator offered a similar account of the struggle with how to fit a new venture into an old company, pointing out how that operator had to “constantly learn and modify … how we organize ourselves.”

The lesson for any organization wanting to explore new business models is to not settle too quickly on a structure for the new business. In fact, the organizational structure can more usefully be thought of as one of the essential building blocks of the business model — that is, as an aspect of the new business that needs to be fully explored and experimented with before you can learn what works best.
2. Balance top management support and experimentation. Exploring new business models is a strategic decision aimed at adapting the company’s activities to an evolving business landscape and discovering new revenue streams. At the postal operators we studied, this involved numerous initiatives. For example, the Swiss Post decided there might be an opportunity to expand its partnerships with online retail businesses beyond picking up and delivering parcels. The Swiss Post could leverage its established, trusted brand by selling secure sockets layer (SSL) certificates, digital signature solutions, and email certificates to online retailers and other businesses. However, setting up the new business unit involved the creation of new capabilities, both on the IT and the sales sides. It was recognized that this new business unit would be very different from the organization’s existing core business. The solution involved acquiring a startup that had developed some core solutions in this space and then building the business with a mix of management and staff hired from outside as well as transferred from the core business.

Management clearly identified a need to protect the fledgling business from above. The new business unit was a strategic initiative and as such needed to be shepherded by top management. As one manager told us, “We really managed to make sure that from the top … these organizations were protected. You need to have ownership by the CEO; otherwise, this is destroyed extremely quickly.” However, it was also gradually recognized that top management should not try to steer the new business unit. As one manager said, “It is clearly an advantage if people [in the new business unit] are a little bit remote of the headquarters. The headquarters has an existing way of doing business … you develop much more successfully if you give these people space and distance to the core.” This implies a balancing act for top management between protecting and coaching, on the one hand, and leaving the new business unit to experiment, on the other.

3. Expect a power struggle for resources. Any new business model has to grow and coexist with existing business models that may be stagnating but still provide the lion’s share of revenues for the company. Managers of such existing business models can be powerful and may have turf to protect in the internal struggle for resources. They and their employees may feel threatened if the new business unit becomes too successful. Furthermore, the new business model may not be profitable for a long time, leading to the risk that needed investments are diverted from more profitable parts of the business. One manager told us that this “has perhaps been the biggest barrier — that we are competing and working to get access to the same IT resources within the company.”

Top management needs to manage this potential competition for resources between the new business and the old core business. One way to achieve this is to accept multiple business logics, as well as multiple performance management and measurement systems. As one manager explained, “We quite successfully managed to convince the internal management that, for the moment, revenue streams shall not be the most important performance indicator.” Alternative metrics could include the estimated market potential, for example.

A point to consider is the importance of communicating across the company why it is engaging in business model exploration and how this will benefit the company in the long term. Conflicts for scarce resources within the organization cannot be avoided completely, but they can be softened if employees across business units build a shared understanding of the objectives of the business model exploration.

The Organizational Dimension

The business model canvas framework developed by Alexander Osterwalder and Yves Pigneur has become a very popular way to understand the potential building blocks of business models. The canvas highlights nine such building blocks: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure. However, organizational designs and the associated organizational tensions that emerge during the process of business model exploration are not well addressed by the existing tools. Companies exploring new business models may not fully recognize that these tensions will almost inevitably emerge and thus may be ill-prepared to manage them.

Understanding these tensions should help in managing the challenges of concurrent business models.
The tensions we highlight imply that the design of an organizational structure that accommodates both new and older business models needs to be considered an intricate part of business model innovation. Organizational design has to be questioned and experimented with as part of the exploration. A top management team that is prepared for such exploration and aware of the organizational dimension of business model exploration may well be more likely to succeed at business model innovation.


Thursday, January 7, 2016

Fighting the “Headquarters Knows Best” Syndrome 01-07


Fighting the “Headquarters Knows Best” Syndrome

Shyam's take on this symdrome.

In my long innings as a management professional, I suffered because of this syndrome at the headquarters.

Even a clerk cum typist or a management assistant would carry airs of being knowledgeable.
I found this attitude more with the newly recruited management trainees.

However when I moved into the C-suite, I tried my best to counsel the staff at the headquarters to respect the skills and Knowledge of the people at the regional and other offices and allow the decisions to be taken at the Regional level.

BEING AT THE REGIONAL OFFICE DOES NOT MAKE YOU A LESSER SOUL THAN THE ONES AT THE HEADQUARTERS.

I also agree to the view that when the Headquarters does too much, the people at regional offices begin to shun responsibilities and pass on the buck to the headquarters for all decision making and problem solving. then the Headquarters have to delegate back to the Regional office involving a huge waste of time and loss of revenue.

Regional problems are best solved at Regional levels. Similarly Regional strategies are best planned and executed and monitored at Regional level.

The organizations should recruit managers at Regional level, people who in their view have the ability to make decision and solve problems. People having experience of working in cross culture environment can be trusted for these positions. It is not always possible to get local talent steeped in the organization culture.











When subsidiary managers at global organizations are ignored or constrained by a parochial mindset at headquarters, the whole company can suffer. Here’s how one company set out to change that dynamic.


In 2007, Irdeto B.V., a Netherlands-based developer of security software for digital media providers, was eager to increase its market share in the Asian market. The company had been in China for nearly a decade and boasted a substantial regional office in Beijing. But its market share in China was under attack from Chinese competitors, including China Digital TV, which held a 40% market share compared to Irdeto’s 22%. Despite frequent visits by then-CEO Graham Kill and the sales director, the company worried that it would miss out on the anticipated market growth in China and other parts of Asia.



In Kill’s view, one of Irdeto’s problems was that too much power was concentrated in the head office in the Netherlands. Managers there conducted themselves as if they knew best, and branch offices and subsidiaries tended to defer to Amsterdam. Such dynamics undermined the company’s ability to understand remote markets, learn from them, and adapt to them. We call this malady the “headquarters knows best” syndrome.



In our experience, similar narrow-mindedness holds back many organizations in their efforts to turn global presence into a real source of competitive advantage. In this article, we explore the manifestations and costs associated with this way of thinking — and ways companies have addressed the problem. Many of the things companies have done are fairly predictable, such as decentralizing global responsibilities, changing the reporting relationships, internationalizing senior management, and creating cross-national teams.



In Irdeto’s case, the company tried a more extreme remedy: It created two headquarters, one in the Netherlands and the other in China. While this was expensive — and something Kill’s successor ultimately did away with in 2015 — our study of the company indicated that the decision to operate out of dual headquarters provided an effective way to realign the focus of the company, and it had significant positive effects on Irdeto’s performance. (See “About the Research.”) We offer a broad set of recommendations to help executives overcome the “headquarters knows best” syndrome and position themselves more effectively for global growth.




  • Limited Upward Influence for Distant Subsidiaries Even when decisions concern them, executives in less-established markets complain that they “feel at the end of a long rope.” Their requests and ideas are unheeded and their ways of operating aren’t considered. Feeling neither involved nor trusted, many subsidiary executives lack the motivation and self-confidence needed to pursue independent initiatives.


  • Horizontal dynamics also can be problematic:

  • Insufficient Exchange Among Subsidiaries Headquarters and subsidiaries often maintain a hub-and-spoke pattern of interaction. While the satellites compete for attention fromheadquarters, they maintain little contact with each other unless it’s orchestrated by the center. There isn’t much discussion of, or support for, efforts in other parts of the world, particularly between core subsidiaries and those on the periphery.

  • Weak Links With Key Stakeholders Outside its home region, the company is perceived as “alien” by the local business partners and stakeholders.3 Its seat of power is remote. Also, executives at local operations lack the autonomy or status to engage meaningfully with senior local decision makers.

The net result is that the belief that headquarters knows best can be damaging to the long-term success of a company operating in global markets. Among other things, it results in missed sales leads, the loss of talented employees working in subsidiaries due to a lack of career advancement opportunities, an overinvestment in initiatives that are close to the headquarters, and an underinvestment in innovation and entrepreneurship in far-off markets.


Although headquarters executives may have the best of intentions, their actions produce stunted offspring in the form of subsidiary executives who lack confidence, motivation, and autonomy. This places companies at a serious disadvantage, especially when they are competing against rivals with truly global mindsets.

A Common Condition


Our surveys of more than 500 executives working in the subsidiaries of multinational corporations reveal that most endure a domineering headquarters. When we asked executives to take a diagnostic quiz assessing the degree to which their companies experience “headquarters know best” syndrome, barely 10% of executives gave their companies a score that indicates the company isn’t at risk of “headquarters knows best” syndrome. The vast majority of executives gave their organizations scores suggesting that their companies are either prone to the syndrome or have an acute case of it. (See “Diagnosing the ‘Headquarters Knows Best’ Syndrome.”)