by Rod Collins
Several years ago, the future CEO of what is today a Fortune 100 company had a problem. The staff at the then young company had been working on the development of a major product line that its leaders hoped would become the major revenue stream for the business. This revenue source was to be a prime attraction that would entice investors in its upcoming IPO. As the future CEO inspected the product prototype one Friday afternoon, he wasn’t happy with what he saw. The prototype was seriously flawed.
In most companies, these developments would have triggered a highly directed management response. In all likelihood, the CEO would have convened an emergency meeting of key leaders on Monday morning to develop an urgent corrective action plan with milestone expectations and an ambitious completion date several weeks out. A special ad hoc work group would have been assigned responsibility for solving the problem, an oversight steering committee would have been formed to monitor the progress of the work group, and a single senior executive would have been held accountable for completing the critical corrective action plan.
A Simple But More Effective Approach
But that’s not what happened in the young company because by the time everyone was returning to the office the following Monday morning, the problem was essentially solved. The CEO in this case didn’t then and still doesn’t today believe in corrective action plans—or any plans, for that matter—because he sees plans, and their related monitoring activities, as limiting factors that hold people back and slow people down. He believes fixed plans are actually counterproductive, especially when the task at hand is extremely urgent.
The young company was Google and the CEO was Larry Page. The prototype Page was examining was an early version of AdWords, and the problem was an application that was presenting useless and unrelated ads with its user searches. Page’s response to correcting the flawed prototype, described by Eric Schmidt and Jonathan Rosenberg in their book How Google Works, was a simple—but a far more effective—approach that you won’t learn in business school. Before going home on that Friday evening, Page printed a sample of the pages containing the useless ads, posted them on the bulletin board on the wall of the company kitchen, and wrote “These Ads Suck” across the top of the pages.
Over the weekend, Page didn’t call or e-mail anyone, nor did he schedule an emergency meeting. Instead, five Google colleagues, who had seen Page’s note and agreed with his assessment, voluntarily worked on a fix over the weekend. They did a detailed analysis of the dynamics of the problem, crafted a collective solution, and created a new and greatly improved prototype that was ready for examination on Monday morning. And what’s perhaps most astonishing about this story is that none of the five volunteers had responsibility for the ads project.
Leading by Being in Charge
Traditional leaders go into a highly directive mode when critical problems happen because that’s the way their organizations work. For over a century, the fundamental assumption that has served as the cornerstone of management practice is the notion that the smartest organizations leverage the intelligence of their smartest individuals. That’s why traditional organizations have been designed as top-down hierarchies. Hierarchical management assumes that the smartest individuals will rise up the corporate ladder, and that, by giving the supposed smart people at the top the power to command and control the work of their subordinates, the whole organization will perform smarter than if everyone were left to his or her own devices.
At the top of the ladder is the CEO, which is the common acronym for the Chief Executive Officer. In the typical company, the CEO is the “big boss,” the person who has the authority to direct the efforts of the entire company. As such, the CEO is responsible for making the key decisions about how and what the company does, and is expected to be “on top” of all critical issues affecting the health of the business. When something major goes wrong, the chief executive is expected to take charge, and like the proverbial captain of the ship, direct the flow of the critical work of the special workgroups and oversight committees as they navigate the business through troubled waters. When companies are designed to leverage the intelligence of the smartest individuals, there is a clear chain of command responsible for assigning and monitoring the work of those whose jobs are to follow directions.
A Different Way of Leading
Larry Page, however, is not a traditional leader. While he relishes and successfully hires smart people at Google, he doesn’t believe that the smartest organizations leverage individual intelligence through the ascription of command authority. That’s because the fundamental strategy of the business he co-founded with Sergey Brin is based on a radically different assumption: The smartest organizations are those that know how to aggregate and leverage collective intelligence.
This alternative assumption explains why, although it was the last search engine to enter a crowded field of upstarts, Google quickly became the application of choice for the vast majority of Internet users. What separated Google from other search engines was an algorithm that used the wisdom of the crowd rather than the judgments of editorial experts to rank the pages in a web search. Page and Brin turned the notion that nobody is smarter or faster than everybody into a highly successful operating system. But even more powerfully, as they built their company, they used the logic of their operating system to guide the design of their organization. Rather than building a top-down hierarchy that leveraged the individual intelligence of the few, they created a collaborative network that leveraged the collective intelligence of the many. The essence of Page’s management philosophy is to hire good people and to stay out of their way by providing them the space to self-organize their own work. When self-organization is the norm and companies are designed to leverage collective intelligence, people don’t wait around to be told what to do. If they see a problem, they form their own teams, put their heads together, and find a solution. Without the constraints of bureaucracy, they have the wherewithal to solve the problem in a fraction of the time that would be possible under the best-formulated plan of action.
Managing Change Means Changing How Manage
As the technology revolution continues to transform the business landscape, business leaders are under increasing pressure to keep pace with a rapidly changing world. This challenge is exacerbated by the troubling fact that the world is changing much faster than most organizations. If business leaders want to close this gap, they need to accept that the only way they will be able to manage at the pace of change is to change how they manage. And that challenge begins with the CEO.
Larry Page is effectively leading an organization that is at the forefront of change because, in his role as the CEO, he behaves more like a chief enabling officer than a chief executive officer. He and Brin have created an organization that enables anyone in the company to initiate an idea, organize a team, or solve a problem without waiting for permission or direction. In a rapidly changing world, the role of the CEO is a sharp departure from what most of us learned in business school.
Chief executive officers are leaders of hierarchies whose main job is to make decisions and to oversee the execution of those decisions. The chief executive officer is responsible for planning, organizing, directing, coordinating, and controlling the efforts of the many departments under his charge. Thus, the powerful CEO in the top-down hierarchy is proficient in the competencies of command-and-control and knows how to exercise power by skillfully taking charge.
Chief enabling officers, on the other hand, lead not by amassing power to themselves, but rather by enabling the practice of power throughout the entire organization. They do this by designing their organizations as highly connected collaborative networks where people are primarily accountable to their peers rather than to single supervisors. Chief enabling officers understand that, in a hyper-connected world, power is more about being connected than being in charge. They understand that, in a rapidly changing world, no single person can process everything happening in the marketplace in real time, and they appreciate the wisdom that nobody is smarter or faster than everybody. That’s why they don’t construct bureaucratic barriers to getting things done, and they encourage all their smart people to self-organize themselves when they see that something needs to be done. When people have the freedom to get things done, the time to solution is reduced from weeks to days.
If business leaders want to manage at the pace of change, those who are still leading top-down hierarchies will most likely need to change the fundamental ways that their organizations work. They will need to learn how to effectively build and lead collaborative networks by understanding and embracing the new role of the CEO, the Chief Enabling Officer.
Rod has more than 30 years of experience in management positions of increasing responsibility in the healthcare industry. Rod is an innovative executive leader with sustained success in achieving financial, operational, and market growth objectives in challenging environments. He has extensive experience in serving as a catalyst for positive change and in building highly collaborative organizations.
Rod is also a member of our Speakers Bureau.
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