‘Radical Management’ is a set of 5 principles. There are only two types of organizations: The ones that love and delight their customers and the others. Amazon, Apple, Salesforce are organizations that have succeded despite fierce competition due to delighted customers. What’s their management principles? Speech by Stephen Denning at Reto Hartinger’s Internet Briefing in Zurich.

1. Radical Management
Steve Denning
www.stevedenning.com
steve@stevedenning.com
http://blogs.forbes.com/stevedenning/

2. Video
Radical Management
Explaining the idea in sixty seconds

4. 1978
Robert McNamara
President, Ford Motor Company, 1960
Secretary of Defence, 1961-1968
President, World Bank, 1968-1981
“the smartest man I ever met”
John F. Kennedy

5. 1996-2000
A knowledge management
program was launched

6. 2000-2008
Teaching the Fortune 500
how to use
the power of leadership
storytelling
Why
doesn’t it
stick?

7. One clue…

8. It’s not just leadership storytelling!
Knowledge management
Not just the World Bank
• BP
• Ernst & Young
• IBM
Within a few years, it had
• HP
been put on a back-burner

9. It’s not just leadership storytelling!
Lean Manufacturing
“Only 1% of lean initiatives
meet their goals.”
Jeffrey Liker

10. It’s not just leadership storytelling!
Marketing
25 ways in which traditional
management systematically
kills great marketing ideas

11. It’s not just leadership storytelling!
Innovation
How management
systematically kills
disruptive innovation

12. 2008 The question was broader
Why did management
systematically kill all the creative
things in organizations?
• knowledge management?
• lean manufacturing?
• innovation?
• marketing?
• leadership storytelling?
• even Agile and Scrum

13. Most management textbooks…
Most business schools …
Traditional
management
rests on
five interlocking
principles

14. Five planks of traditional management
1. The purpose of a firm is to
produce outputs that make money

15. Five planks of traditional management
2. Managers act as controllers of
individuals

16. Five planks of traditional management
3. Work is coordinated by
hierarchy and bureaucracy
Rules
plans
reports

17. Five planks of traditional management
4. “The main thing is efficiency”

18. Five planks of traditional management
5. Communicate by directives

19. The shifts are interlocking & self-reinforcing
Make money
for
shareholders
Top down Managers are
commands controllers
of indivduals
Efficiency, Bureaucracy:
cost cutting rules, plans, reports
“Single fix” improvements make no impact

20. Five planks of traditional management
“Traditional management
practices are a success”
“the smartest man I ever met”
John F. Kennedy

21. 2009: Conclusive proof of the
failure of traditional management
1965 • The rate of return on assets has
fallen by 75% since 1965
• The life expectancy of Fortune
500 firms down to 15 years, and is
heading towards 5 years.
• Only 1 in 5 workers fully engaged
Today
Source: Deloitte’s Center for the Edge: The Shift Index

22. 2009: Conclusive proof of the
failure of traditional management
Source: Deloitte’s Center for the Edge

23. Many are now concluding:
Management
is broken!

24. What we have now
Failing Dispirited
firms employees
Frustrated
customers
Lose-lose-lose!

25. What we have now: tradeoffs
Quality Speed
Efficiency
The iron triangle

26. Implication for organizational survival:
“The significant problems we
have cannot be solved at the
same level of thinking with
which we created them.”
Albert Einstein
We have to think differently!

27. What is needed: win-win-win
Quality Speed
Efficiency
No trade-offs!

28. What we need
Thriving Deep job
firms satisfaction
Delighted
customers
Win-win-win!

29. We know how to achieve this:
5 big shifts
( and 70+ practices)!

30. The shifts are interlocking & self-reinforcing
Goal
Delighting
Communications customers Role
From command From controller
to conversations to enabler
Radical From bureaucracy
transparency to dynamic linking
Values Accountability

31. 11. NEW GOAL: delight the customers
from outputs to outcomes
1. Delight
the
customer!

32. Practices for creating customer delight
Customer delight
is not a new idea:
Ancient Romans
e.g. Vitruvius’s treatise on
architecture

33. Practices for creating customer delight
Is “customer delight” a serious business proposition?
“Providing a continuous
“Customer delight” =
stream of additional
value to customers and
delivering it sooner”

34. Practices for creating customer delight
Is “customer delight” a serious business proposition?
“happiness” “enchantment” “joy”

35. Practices for creating customer delight
Is “customer delight” a serious business proposition?
• “customer success”
• “customer trust in us”
• Net Promoter Score

36. 11. NEW GOAL: delight the customers
from outputs to outcomes
Produce outputs Generate outcomes

37. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
An epochal shift in the balance
of power in the marketplace:
The customer is now the boss!
Sorry
about
that!

38. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
The
bottom
line for
business
Make money Delight the customer

39. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
“You take “We want to
what we understand & help
make!’ solve your problems!”

40. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
This changes the game completely
Outputs Outcomes
Things People

41. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
A paradoxical discovery!
Customer delight Costs come down of
their own accord!

42. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
The goal is: delighting the customer
• “Making money” is not the goal
• “Being agile” is not the goal.
•“Working software” is not the goal.
• Agile & Scrum & working software
are means to achieving the goal.
• Everyone must focus on the goal

43. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
Deliver it sooner !
In a bureaucracy,
large amounts of
work wait in
queues

44. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
Aim for the simplest thing!
20th Century
54 buttons DVD
controller
L ESS Complicated
IS
21st Century
MORE ! 4 buttons
Simple iPod
Easy to use

45. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
Make “delighting the customers” explicit!
The sad
story of
Zappos

46. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
Is “customer delight” a serious business proposition?
“Customer delight”
is
measurable.

47. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
Customer delight is the firm’s new bottom line
Making money is
the result of the firm’s actions,
not the goal.
By focusing on delighting the customer,
Apple & Amazon make more money than
they would if they set out to make money.

48. Why it is inexorable …
It makes much more money…

49. 11. NEW GOAL: delight the customers
i.e. from outputs to outcomes
1. New goal: “Delighting the customer” means ….
a different way of running the organization.
2. New role for managers
3. New coordination mechanisms
4. Shift from value to values
5. New way to communicate

50. 2 NEW MANAGER ROLE: from controller to enabler
2.
2. Enable
self-organizing
teams

51. 2 NEW MANAGER ROLE: from controller to enabler
2.
Bureaucracy can Bureaucracy cannot
produce outputs generate outcomes

52. 2 NEW MANAGER ROLE: from controller to enabler
2.
Controller of Enabler of self-
individuals organizing teams

53. 2 NEW MANAGER ROLE: from controller to enabler
2.
Diversity
defeats
intelligence!
The Difference: How the Power of Diversity Creates Better
Groups, Firms, Schools, and Societies by Scott E. Page

54. 2 NEW MANAGER ROLE: from controller to enabler
2.
Hire
women,
Forget IQ:
The Emerging not
Science of Collective
Intelligence Einsteins!
(Or female Einsteins)
When women are 60% of talent and 90% of customers,
it’s not diversity: it’s the future.

55. 33. COORDINATION: From bureaucracy to dynamic linking
3. Dynamic
linking

56. 33. COORDINATION OF WORK: Dynamic linking
Short
cycles
Client
driven
Hierarchical bureaucracy Dynamic linking

57. 33. COORDINATION OF WORK: Dynamic linking
Dynamic linking: work in short cycles
Even “lumpy” work!
E.g. Quadrant Homes
Naval radar system
Polaris submarines

58. 33. COORDINATION OF WORK: Dynamic linking
Progress is measured by direct client feedback
The case of
Eric Ries:
“Most changes
the missing
make things
worse for the
customer”
button

59. 33. COORDINATION OF WORK: Dynamic linking
Define work goals in the form of user stories…
Joie de Vivre hotels: customer outcomes vs
outputs
As a hotel guest, I want a unique room
that I have a home away from home.
Work = making the story come true

60. 33. COORDINATION OF WORK: Dynamic linking
Managers’ role:
Give employees a clear line of sight to the customers…
E.g. writing
a book

61. 4 4. FROM VALUE TO VALUES: radical transparency
4. From value
to
values

62. 4 4. FROM VALUE TO VALUES: radical transparency
“Just do it” Alan Mullaly CEO, Ford

63. 4 FROM VALUE TO VALUES: continuous improvement
4.
1 million
Get the product out
improvements
each year 63

64. 5 INTERACTIVE COMMUNICATON: conversation
5.
5. From top-down
To
conversation

65. 5 INTERACTIVE COMMUNICATON: conversation
5.
Commands
kill
motivation

66. 5 INTERACTIVE COMMUNICATON: conversation
5.
Money
kills
inspiration

67. 5 INTERACTIVE COMMUNICATON: conversation
5.
Top-down commands Peer-to-peer conversations

68. The shifts are interlocking & self-reinforcing
Delighting
customers
From command
From controller
to conversations
to enabler
Radical From bureaucracy
transparency to dynamic linking

69. WHAT’S NEW: doing all at once
Delighting
customers
From
command to From controller
conversations to enabler
Radical From bureaucracy
transparency to dynamic linking
Individually, none of the shifts is new

70. Agile has focused on part of the agenda
Delighting
customers
From command
From controller
to conversations
to enabler
Agile
Radical From bureaucracy
transparency to dynamic linking
Agile has downplayed “touchy feely” stuff

71. Agile has focused on part of the agenda
Delighting The driver
customers
From command
From controller
to conversations
to enabler
Agile
Radical From bureaucracy
transparency to dynamic linking
Agile has downplayed “touchy feely” stuff

72. Agile has focused on part of the agenda
The oil Delighting
customers
From command
From controller
to conversations
to enabler
Agile
Radical From bureaucracy
transparency to dynamic linking
Agile has downplayed “touchy feely” stuff

73. Without all five pieces….
Making
money for
shareholders
Top-down
commands From controller
to enabler
Agile
Radical From bureaucracy
transparency to dynamic linking
… an organization is at war with itself

74. The transition is inevitable
Two- to four-times
gains in
productivity
Economics will drive the change!

75. Change is inevitable…

76. The opportunity for Scrum and Agile
Lead the revolution!
• Embody the change
• Be the strategy (not support the strategy)
• Master leadership storytelling
• Challenge management to join the future
• Encourage others who share the vision
• Take charge of the future
Let’s move
to the
front of
the bus!

77. The transition won’t be easy
The world’s best plant:
Ford’s Hermosillo plant
in Mexico
1990s: Ford’s Romeo plant
in Michigan
2006: The new CEO,
Allan Mullaly, embraces it
1990

78. Reinventing management requires systemic change
“Once you introduce this, it affects
everything in the organization—
the way you plan, the way you
manage, the way you work.
Everything is different. It changes
the game radically.”
Mikkel Harbo
VP, Systematic Software (Denmark)
More than a new set of management tools!

79. The real voyage of
discovery consists not in
seeking new landscapes,
but in having new eyes.
Marcel Proust
Everything
is
different!