Tuesday, August 15, 2006

Joel Spolsky on management methods

Joel Spolsky (of Joel on Software) posted a good series ([1] [2] [3]) on management styles.

The first style offered is "Command and Control". Joel describes it as, "Primarily, the idea is that people do what you tell them to do, and if they don't, you yell at them until they do."

The second style is "Econ 101", which "is the style used by people who know just enough economic theory to be dangerous" and "assumes that everyone is motivated by money, and that the best way to get people to do what you want them to do is to give them financial rewards and punishments to create incentives."

The third style given is the "Identity" method where "you have to make your employees identify with the goals of the organization, so that they are highly motivated, then you need to give them the information they need to steer in the right direction" yielding teams where "people have a sense of loyalty and commitment to their coworkers."

Both Command-and-Control and Econ 101 appear to be coercive, top-down methods. One uses fear, the other money, to bend employees to the will of management.

Joel emphasizes the morale effects of the three strategies in his essays, saying that coercive strategies are bad for morale, productivity, and retention.

I would add that a key point on third, the Identity method, is that it is not just about convincing people that management knows what is best. Rather, decisions are emergent. People closest to the ground, closest to the problem, are making the decisions.

One of my common points of disagreement with MBAs at Stanford Business School -- and, unsurprisingly, we argued a lot -- was about these and similar management strategies. The majority of the Stanford MBAs favored one of the top-down, coercive approaches.

The core of their argument usually appealed to the importance of unity of action. To use a military metaphor, the idea is that it does not matter much which hill you charge up as long as you all charge up the same hill. Coordination yields overwhelming force against competitors.

I was in the minority arguing for collaborative, identity-based approaches. I argued that it is more important to pick the best hill to climb. Even if some on your team stumble up neighboring hills, that is okay.

At the core, the question is whether you prioritize exploration and optimization over coordination and control.

If you favor exploration, optimization, creativity, and innovation, you will prefer collaborative, bottom-up, identity-based management.

If you favor control, coordination, and overwhelming force, you will prefer command-and-control, top-down styles of management.

At this point in this discussion, which I have had many times, some argue that the best strategy depends on the industry. For example, some may claim that creativity is unnecessary on a factory floor.

The book "The Human Equation" (ironically out of Stanford Business School) convincingly refutes this belief. It provides several compelling examples of large productivity gains in factory settings such as auto assembly plants using less coercive management methods.

So, why do coercive methods persist? I think this is a point where individual incentives of managers come into play.

Collaborative management methods pay off in the long-term for the company, but are difficult and time-consuming in the short-term for individual managers. Managers and employees often are in a position for a short time, perhaps just a couple years, and may discount long-term gains.

As a result, it can be more beneficial for an individual manager to spend their time building an empire, which has direct and short-term benefit for the manager, and then move on, leaving their wreckage behind.

I have watched others do this before and, while it is not a strategy I have any admiration or respect for, I sadly have to admit it appeared to be quite good for the manager's career.

In the end, it appears that it is in the best long-term interests of a company to encourage collaborative management styles, but the short-term interests of individual managers may push them toward coercive styles. Particularly in larger organizations, where individual goals easily can depart from the need of the company, this should be an area of concern.

3 comments:

Paul Homer said...

A lack of empathy for fellow employees seems to be common for many senior managers in most large companies. Whether this is a personality attribute or a by-product of the years spent climbing to the top is debatable. For an aggressive personality without ties to their underlings, coercive methods are easy, effective and make the most sense. Certainly the media is awash with stories of successful, but abusive personality types. Why spend any excess energy to be nice, sympathetic or thoughtful?

Martin Probst said...

I've read that the major German auto manufacturers are indeed highly successful with a identity based approach, small groups deciding on local optimisations etc.

However I think the tricky part is to use these grass roots input and turn it into a company strategy. It's not a Command vs Identity thing, the question is how to integrate the benefits of better decisions and productivity in Identity management with the level of control over the company direction you get with the Command method. As always, it's a mixture...

Anonymous said...

All the management talk from Joel is interesting, but he runs a tiny software company that is mildly successful (at best) and has less than 10 years in business.

I wouldn't apply his philosophy to anything more than a small software company - and even then I'd consider carefully whether Joel is successful because of the reasons he says. There's a lot of post hoc reasoning in Joel's rants - and, frankly, in all management theory.

There's a significant element of luck & timing to any business' success. Most business severly overstate how much of their success is based on their "choice" of management or hiring practices. In fact, looking at Microsoft and amazon, I'd bet that despite their own internal beliefs, their business development deals have far more to do with their success than their hiring practices (as made evident by Microsoft's "success" in building an increasingly insular culture through hiring).

I personally think the studies of larger companies (Good to Great, Built to Last, Peopleware) are more illuminating - and they often point out that it's less management philosophy and more often space planning, HR policies, company mission/vision, etc. that effect long-term success.