Do CEOs with foresight choose requisite organization, or
does requisite organization support executives in appropriate corporate foresight?
or both?

Requisite organization principles describe how Presidents at stratum V, EVPs at VI, and CEOs at VII ought to be capable of working on longer term tasks of  5-10, 11-20, and 20 + years to properly implement the organization's strategy.

Yet at the World Future Society* conference in Boston, July 7-10th, where future is defined as beyond five years,  while there were many smart, grey haired people there I got the impression that a small minority of the many workshops were targeted at organizational settings and that a small percent of attendees or presenters were corporate executives.

Several futurist elders claimed that their organizational clients were interested in nothing beyond three to five years -- normally the work of vice-presidents.   A popular futurist speaker being recruited to shake up a major conference of European CEOs said he was told that his talk had to be about short term shocks.

A major WFS conference focus was on the rapid rate of technological change, methods to forecast that change and the approaching Singularity when computers are predicted to be more powerful than human brains. However several presenters on these topics said that their methods were of interest mostly to senior engineers and attempts at introduction often lacked the support of VPs.

It appeared that much environmental scanning work important to effective strategic planning is being out-sourced to major consulting firms.  Internal staff who prepare such scans in several global corporations reported their role was three levels from the top, that their outputs were power point presentations, that they did not know how or if they were used.  They received few questions or feedback on their work.

One panel of corporate futurist staffers reported that none of them had any direct knowledge about how many hours or days their company's top team spent discussing the future and indicated that their impression was that top teams dealt extensively with shorter term operational problems.

Why are the futurists in such despair about corporate interest?

Are structural features of the trading of public companies and other forces causing senior executive work to be compressed?

Are CEO sponsors of major requisite organization projects different in their long-term orientation?

Sir Roderick Carnegie, long-term CEO of CRA said that he was searching in the mid 1970s for a management approach that would help transform Australia's labour relations and competitive position in the world.   Other CEO sponsors of long-running RO projects have expressed similar long term views.

Or does requisite organization structure enable executives to do their appropriate longer term work?

Your comments are welcome.


*"The World Future Society is a nonprofit, nonpartisan scientific and educational association of people interested in how social and technological developments are shaping the future. The Society was founded in 1966 and is chartered as a nonprofit educational and scientific organization in Washington, D.C., U.S.A." 

My last blog engendered interesting and useful responses, both as posts and as personal emails to me.  In future, I should like to engage more with these responses.  For the moment, client work, moving, and preparing to spend July in Nepal with my son are all occupying my attention.  In August, I expect to be more responsive to those who respond.  In the meantime, please do continue to respond.  The dialogue that will ensue is, for me, what is important about the blog.

I would also like to be very clear that the views I express in this blog represent my point of view, unless otherwise indicated.  While Elliott Jaques was alive, I always understood “Requisite Organization” to be whatever he said it was.  Given that his own point of view developed with his experience and maturation, there is no reason to expect that his point of view today would be identical to how it was over seven years ago when he was still with us.  With his passing, there is no authority to definitively state what is RO and what is not.  So, in this blog, any time I refer to RO it should be understood as how I make sense of RO.

The issue I’d like to address this month starts with the puzzle clients often have as to why they should use a particular template from RO, e.g. from a CEO at Stratum V:

“You have shown me that I have a manager at Stratum IV with a subordinate at Stratum II, but I don’t have a problem with that.  Why should I pay over $150,000 per year for a new employee at Stratum III to place between those two?”

There are at least two ways in which one can approach such a question.

The approach taken in most of management literature is craft, methods and templates to solve real problems, grounded in precedent.  There is tremendous value in the practicality of craft, but craft has limited explanatory power.  If all we could say is, “Don’t have gaps between managers and their subordinates because Jack Welch didn’t allow gaps at G.E.”, we wouldn’t be able to tell our client the consequences of having a gap.

RO methods and templates, in contrast, are engineering, which Jaques referred to as an art grounded in a science, a science being a system of facts and of laws of cause and effect.  If you need a bridge to carry a certain load of traffic across a river of a certain width, the science of physics does not dictate the bridge design, but the civil engineer who creates the design will use the laws of physics to guide and justify the design:  “I use 10cm cables because they have the tensile strength that will be required.”  Similarly, the laws of psychology do not dictate how to structure, staff and manage an organization, but they are what we in RO use to justify our templates and methods.

How do we use this approach with our client?  We use the science to predict the consequences of following the “one-managerial-level-per-stratum” template and to predict the consequences of not following it:

“If you leave that gap, likely, the manager will get impatient explaining things because the explanation that comes natural for the Stratum-IV-capable manager will not be understood by the Stratum-II-capable subordinate.  That means that the manager is unlikely to give a good explanation when assigning tasks and may even make task assignment so painful that the manager finds it easier to do some work personally instead of delegating it.  It also means that the manager is unlikely to do good coaching because a manager at IV will not want to pay attention to Stratum-II work to see how it can be improved and will not want to have the conversations required about that level of work.  The subordinate is liable to feel lost, not understanding their manager and perhaps being intimidated to ask questions.  And finally, the Stratum-IV-capable manager will have to do any Stratum-III work because the subordinate is not capable of doing it.  This pulls the manager down into unsatisfying work.  Were there a manager at Stratum III between the two of them, these problems are not likely to occur.  There would be an easier, more productive, working relationship.

Notice that these consequences of violating the “one-managerial-level-per-stratum” template all come from science.  In particular, they come from the laws of cause and effect that shape our understanding of the relation between a) cognitive capacity and b) work and relationships, laws such as the following:

• All other factors being equal, a person will tend to prefer work at their own level of capacity to exercise judgment.
• A person can do work at their own level of capacity and can understand explanations given at the next level up.
• Work at Stratum x can only be done by someone capable at Stratum x or higher.
• This approach steers the conversation away from a trap that is all to easy to fall into, the trap of orthodoxy for its own sake, considering employment of RO templates and methods to be a goal for an organization rather than a means to implementing and improving strategy efficiently and in a trust-building, sustainable way.  The problem with a gap is not that it is not Requisite but that it:
• endangers implementation of strategy because the Stratum-IV manager may not get the support they need and is pulled away from their strategic-Stratum-IV work to do the Stratum-III work required.
• creates inefficiency by requiring the Stratum-IV manager to do work that does not require their level of capability and by creating the possibility that the subordinate will not understand what is required and may have to redo their work once completed.
• creates mistrust as the manager gets frustrated with the subordinate’s slowness and the subordinate feels punished for not grasping the manager’s explanations.
• is not sustainable because the tension and mistrust between manager and subordinate will be a drag on the system.

Because our methods and templates are grounded in science, we can use the predictive power of science to explain the benefits of using those methods and templates.

But it also opens the door for a possible rebuttal by the client:

“I hear all of that and it all makes sense to me and it would concern me except that it’s not how things are.  This manager is a skilled communicator and has no trouble explaining whatever is needed to the subordinate – who happens to be very curious and is eager to understand assigned tasks and their contexts.  There’s not a lot of work to be done at III.  And for me it’s not worth the cost of hiring a manager between the two.  The cost of having a gap is not as great to me as the cost of brining in a new manager.”

I believe that such situations do occur – situations in which the standard templates and methods are not the best solution.  Realize that RO offers two criteria for designing structure:

• Fit your structure to your strategy, e.g. by ensuring there are roles for all of the work that must be done for strategy to be applied in the real world and that there are no redundant roles.
• Fit your structure to the requirements of good management and efficient work e.g. by placing the manager’s role one stratum above the subordinate’s.

These two criteria are not always completely congruent with each other.  It is the consultant’s job to offer alternative solutions and to point out the consequences and benefits of each.  It is the client’s right to judge which of the solutions best fits their needs.  It is then our job to reiterate the costs of the client’s decision and to state how the CEO should handle them:

“I can understand your not wanting to bring in a new position at Stratum III with all of the resulting costs.  But do keep the following points in mind:

• If the manager or subordinate is less productive than you would expect, consider whether it is the structure, not their dedication or ability, that is at fault.
• See if any of the Stratum-III work that now falls on the manager could be accomplished through a TIRR.
• See whether there is anyone at Stratum III in the organization who might be available to give the subordinate advice when needed.”

Our methods and templates are not science but, rather, engineering, grounded in science.  They are not ends in themselves but rather very useful means to the organization’s ends.  Use the science we have to help clients understand the consequences of using or of not using the methods and templates.  The result is better relations with your client and the best possible application of strategy:  efficiently, with trust and sustainability.