All too often when organizations increase in size and complexity, systems and structures are added to help us “manage” the organization. Managers prefer predictability and hate ambiguity. However, prediction is at odds with creativity. So, how can we “manage,” or better yet, “lead” large complex creative organizations?
In the first half of the interview with Nancy Duarte, we discussed her new book Illuminate: Ignite Change Through Speeches, Stories, Ceremonies, and Symbols by Nancy and Patti Sanchez. Patti and Nancy are experts on communication and change and as leaders of Duarte, Inc. they also “live” the challenges of growing and continuously transforming an increasingly complex creative firm. Duarte, Inc. has created thousands of presentations for the world’s top institutions, including Apple, Cisco, Facebook, GE, Google, TED, and the World Bank. In the second half of the interview with Nancy, we explore the continuous evolution of Duarte, Inc. and the quest for an enduring creative company.
Challenges of Scale and Complexity
Nancy and Patti wrote in their book Illuminate about how at one point in their journey the lack of management systems made the company “wobble” a little bit. This inspired my first question to Nancy on how do you scale and at the same time stay innovative and creative? Her first reaction was, “I knew it would be hard; I didn’t know it would be that hard.” She is in good company. Many of us, including me, have underestimated the negative impact of the organization and managerial systems on humans and performance. This negative impact seems to be even more pronounced in knowledge, creative, and service-oriented organizations. Nancy went on to describe her particular challenge.
It’s interesting, because when you are a creative firm, the biggest thing you need your staff to do is take risks. As we were looking at trying to go global, I knew that I couldn’t copy Duarte and paste it anywhere because it was kind of boutiquey, it was different, it was not even like normal, how other agencies were ran, which was actually to our benefit for a season.
The challenge is risk-taking requires a certain level of tolerance for ambiguity. As the organization grows, the temptation to reduce ambiguity through the addition of structure, systems, and processes is hard to resist.
We even had a goofy structure, where it was almost like I had nine “mini-me” studios inside a larger agency. I had account teams that actually almost acted like business owners, and then the artists answered into my account team. That’s unheard of… My designers couldn’t be developed, they weren’t led by a creative person, and so I unbundled all of that. I had the designers answering to designers; I had the account people answering to a powerful executive.
It is one thing to have a partnership between the creatives that produce the product and the business specialists, but when the business specialists are the ones with the formal power, what appear to be good “business” decisions can actually detract from the customer experience.
I was like, what the heck is going on here? This is not the culture or the place that I designed it to be. I re-engaged, and I realized the team was a lot more parched than I thought, and a lot more kinks had been inserted in through this MIS system. I was hearing rumors that there was going to be an exodus if I didn’t do something, so we needed swift decisions. I stepped back into the role of president. I became an operational leader again, realized pretty quickly that the executive team wasn’t really being honest with each other. Like, you know, why can’t we sit in a room and say, your delay on that decision is really screwing stuff up, you know?
In addition to the organization structure and reporting issues, as more systematic methods of management were added to help manage the firm as it grew larger and more complex, the culture and climate of the organization were negatively impacted.
So here we are, this creative firm and everyone feels like we all work for accounting. Even I did. I was so pissed sometimes. I’m like, I’m in service of accounting suddenly?
Systems – The Dark Side
Management’s answer to the ambiguities related to people and firm performance when size and complexity increase is often to add systematic approaches and structure. This illusion of command and control is somehow comforting to many managers. Unfortunately, it can result in reduced performance. A high price to pay to feel comfortable. All too often these systematic approaches are designed to help management do their job, but they often detract from the performance of the people who produce the products and services and those who support them. As Nancy noted,
Suddenly I have 12 steps to do just so accounting can do their books instead of me doing my best creative work? It was unflipping believable. It was three years of deconstructing a system because what it did, was it put so many gates in there, that it was like we couldn’t even be nimble. It was like you had to create a project where it’s like…step 1, step 1 complete. Step 2, step 2 complete. It made it to where every job, almost, had to be managed exactly…and life’s not like that, especially if you’re really good at innovation. You should be able to not have to click a 10-point system. You should be able to go point 1, point 5, back to point 2, point 8, you know? It was unbelievable and unbearable on everybody.“
The problem with many “leaders” is when faced with this type of situation they will “double-down” on systems and structures in an attempt to make it work, even though all the signs indicate that the systems and structures are not working. Command and control methods along with some pay for performance incentives work pretty well for manual labor processes where conformance and quantity are the primary measures of performance. However, these same methods are often at odds with processes that involve human knowledge, creativity, learning, etc. This issue is even more pronounced when both the producer and the client are involved in the process or “dance of product creation.” Unfortunately, managers often do not have any other ideas on how to solve the problem. They were trained to use the management methods we have to solve problems. Most leaders are not trained on how to design a new approach or system. So what did Nancy do?
The good news is I had given permission to the organization to not grow. If I was also piling growth on top of that, I had to stall growth. We went flat for three years, while this is all going on, which may be idle hands, or the devil’s work or something, because there was a lot of bitching and moaning, too, at the same time. It just was this unbelievable opportunity for a hot mess.
Instead of continuing down the same unproductive “road,” she pressed the “pause button,” reflected, listened, and reflected again before taking action.
Things fall apart really quickly, especially in a tender, creative organization, I think. Not that they need a lot of coddling, but I think your role as a leader of a creative team is to create an incubator, this safe, warm, happy place where great things grow. If you’re throwing all of these external forces at them that makes them concerned or worried, they’re not able to do their best work. I like to protect these little-incubated chicks, and they just do such beautiful things. There are all these scary things that they were struggling to process that was getting in the way of their best work.”
As a creative herself, Nancy could empathize with how the people felt in the organization, but she didn’t assume she knew everything they were thinking or feeling and how that was influencing their work.
When things are not going well, we often become anxious and want immediate relief. However, that often results in “band-aid” responses to the symptoms of deeper problems. These quick fixes often cause even more problems, so on and so forth. Often the best approach is to step back and take the time to explore the underlying issues which is what Nancy did.
We needed to have that kind of candor and honesty and be one team, like be really united. So I kind of tightened up that whole team, stepped in, made some swift decisions that needed to be made, but this was not…I didn’t do any of that until I had done a listening tour. I called a ton of customers, I sat in meetings with a ton of employees, and I listened, and listened and listened. And it was really bazaar-o because I would listen to one and they had one perspective, a 180-degree perspective. I actually created this big matrix around the polarity of perspectives on different…I should actually publish it because it’s hysterical. On the same issue, the polarity of gaps and the perception around it. And so we made some really swift decisions, and nobody would accuse me of not having listened deeply.
Empathy maps are often used by entrepreneurs and designers to understand and empathize with the users of the product. Empathy maps provide a flexible structure to capture what people see and hear in the organization, what they think and how they feel about what they hear and see, and how what they think and feel influences what they then say and do. Organization architects use them to capture the same types of insights from the key stakeholders. Nancy described this process as an “empathy walk.”
I had a cross-functional team do what I called an empathy walk. We sat, we took five different project types and talked through not our process, but what does our process look like to our customers? We realized, we have too many steps in our process still, so we started hacking away at steps in the process. It was really kind of remarkable. I got to the root of the problem as quick as I could.
Informed by the insights from reflections on her own experiences and those from the empathy walk, it was time to take action and make some changes.
I stepped in in September. In January I re-claimed, I re-declared Duarte’s vision and values. I got to say; it was one of our finest moments. People were crying in the vision meeting. I got a standing ovation and people were like completely re-engaged and excited to be rejuvenated again. It’s coming true. The plans were there; we had da da da da…. And it’s happening, and people are like, oh my god, things are finally happening. It’s been quite a journey, and we’ve done some very clever and interesting things to push the momentum along. So that’s why we kind of want to publish what’s happened next.
So what can we learn from the Duarte journey?
Implications for Organization Designers
Good organization design is a happy combination of “art” and “science” to design and build organizations that create value for multiple stakeholders. All too often we design organizations and their systematic methods to serve management at the expense of other stakeholders. While an important stakeholder, management is only one of several key stakeholders of the organization. A key feature of the organization design process and framework includes an expanded “Discovery” process to increase the odds of a successful new design. The first step in the Discovery phase is to understand the needs, wants, and desires of the stakeholders.
If we begin from the outside with the customer and work our way inside the organization, the key players and relationships become clear. There is an old saying, “if you are not serving the customer, then you need to be serving someone who is!” High performing organizations are designed to facilitate the best work that directly impacts the customer experience. Then support processes are designed to facilitate this value chain. And management processes are designed to “help” make both the direct customer work and the support work the best it can be. In other words, the best way for management to serve investors is for them to design an organization that serves the people and their work so they can produce the best customer experiences possible. Then customers will come back and spend more money (repeat business) and bring their friends with them (referral business), and the top line will grow.
There is a curvilinear relationship between systems and creativity. As the right kind of systems and structures are added, creativity and productivity increase up to a point. But if we go too far we reach a point where more systems and structure reduce creativity and productivity. When we go too far the only viable (although not commonly chosen) option is to rethink, reduce, and reinvent the systems and structure. There are a few organization design principles that help reinvent systems that actually help people do their work.
The principle of “convenience” is the degree to which the system is designed to be as convenient as possible for the participants to implement (a.k.a. user-friendly). Based on this principle, systems include specific processes, procedures, and controls only when necessary. This was a key issue with the cumbersome process that Nancy described above. When we add processes that make production and support work harder or less convenient, we send a message to the workforce that their time is not valuable. At best, inconvenient systems cost your organization time and money (direct expense) at worst; they cost you employee motivation and performance which impacts the customer and revenue.
Closely related to convenience is the principle of “elegance” which is the degree of system complexity vs. benefit. This principle proposes that systems should include only enough complexity as is necessary to meet the stakeholder’s needs. In other words, keep the design as simple as possible and no more while delivering the desired benefits. This is the minimalism movement in organization design. But, if we minimize systems and structure that will guide employee behavior?
A holistic approach to organization design integrates the stakeholders, strategy, systems, and scorecard with the culture and the unique context. The space between the systems and structures is best filled with the dimensions of culture including stories, ceremonies, and symbols. In other words, all the things described in Nancy and Patti’s new book Illuminate: Ignite Change Through Speeches, Stories, Ceremonies, and Symbols. High performing cultures are cultures of service! Everyone is of service to someone else. Not subservient, but “of” service. This is how high-performing organizations have turned competing values into complementary values where you have an internal innovative “clan” culture that is focused on serving the external clients or a “market” culture.
Check out the interview for the rest of the story. I especially enjoyed Nancy’s description of the “Guild” concept and how we can take lessons from Renaissance Florence to inform organization design today.
The first half of the podcast hosted by Dr. Chad McAllister, Nancy addresses the key elements in the book Illuminate. In the second half of the interview, yours truly hosts the discussion exploring the evolution of Duarte, Inc. Part two begins at approximately the 21-minute mark.