Management 3.0 – Jurgen Appelo

“The performance appraisals and job titles. System thinkers know that performance in systems and also in organization performance is based on the relationship between the parts. Job titles that are a traditional view that people have the function in the organization as if the organization is a machine with different parts and you just have to find someone fits into that part of the machine. That’s an old style thing.”

I had a nice interview on new trends in management with Jurgen Appelo, one of the significant representatives of Agile Management world, Agile Lean Networking co-creator and writer of the book Management 3.0.

What is the audience of Management 3.0? Is it applicable to all business lines, sectors, factories?

It applies to create businesses, for ex. Software companies. People create products in software companies. They try to be innovative. I believe, some methods are also applicable to old-style companies for factory lines because they need to change to survive for the 21^st century. In the near future, people will be replaced by robots, which do the job more reliable and cheaper. People will get more creative jobs. Here, Management 3.0 comes in.

What are the changes coming in Management 3.0?

It’s about managing the system, not the people. In traditional organizations managers are often lead the people giving them individual targets, managing their performance, etc. In Management 3.0, it is different. The system is around the people. They can give themselves and each other’s targets and measure each other’s’ performances. That is one step back that the managers take. They have to look at the entire system. That’s different than traditional management.

Is it a generation thing? Are the companies getting prepared to the next generations?

I do not believe the millennial thing, as it is not possible to categorize people according to the birth year. It’s true that newer generation preferences are slightly different regarding what they seek in organizations. Younger generations are looking for organizations with a purpose. To make the contribution is more important than making a career. It’s part of Management 3.0 indeed. The purpose of the organization is vital. I believe that it is more applicable and suitable for younger generations.

Please tell us about the goal of Management 3.0.

The goal is to help companies survive. There are many things needed for businesses to survive. One of them is people’s happiness so that they work qualified, productive and innovative. The primary purpose is not making people happy on their jobs because you need more for a company to survive. You also need your feedback cycles, product development and keep other stakeholders like customers and business owners pleased.

Is it more about sustainability?

I have a very systemic view on organizations. That means organizations play a bigger role in the environment, which consists of investors, customers, suppliers and workers. They all allow the organization to exist and thrive, and there is no place that you can keep all the stakeholders happy. Some of them may be more important than others but ultimately you have to keep everyone glad. Otherwise, it won’t survive. So, that is a basic rule of Management 3.0. Managers are responsible for the organization as a whole. They have to manage the employees, customers and everyone else.

Do you think people are the most important criteria to do that?

Well, they are one of the most important. There are different opinions there. Some people say that the customers are the most important for businesses. Some people say, employees.

Traditional companies would tell shareholders. I have a more nuance that I think everyone can at some point be the most important. That can change over the time. It’s a bit like parents and children. All of your kids are important but sometimes you give more attention to one than other. You cannot pay attention to all of your stakeholders at the same time, so you need to have focus. According to the situation, you decide which one to show more attention.

How do you define “happiness”?

According to me, happiness is the difference between what people want and have. If people have what they want like a great spouse, a good job, etc. then they are happy. If things are missing, you are not satisfied. The more things are missing then unhappier you feel. You need to give them what they want.

Don’t you think that humans are greedy and will not be satisfied with what they have?

It is also an attitude; some people are happy with what they have, but the others run after things all the time that will not make them pleased. There is a literature about mindfulness, meditation. Some people are perfectly satisfied with the things they already have. It’s one of the duties of a manager to offer people enough in their work environment so that people feel good about what they have.

You have a concept of self-organized team, in which the team members give their decisions and there are fewer managers. Teams manage themselves. How do you define boundaries in a self-organized team?

It depends on the decision areas. Delegation boards as practice decide what the boundaries are in Management 3.0. Tool selection can be different from team membership to vacation days or office hours. I define seven varying levels from dictatorship to full anarchy. For ex. in level 3, employees offer opinions and manager decides. In level 5 it is the opposite. In level 6 for ex. The manager can say that employees can decide on the vacation days on their own, but they have to keep the manager informed. You cannot say there is one best level for all decisions.

There is a reality of Artificial Intelligence. Are they a threat to C*level management? 

It is evident that the jobs are changing. In manufacturing, the decisions that are taken by workers are very limited and may be replaced by machines. People can do what they are good at like creating new ideas and being innovative. That is exactly the whole point of being a C-level person. I believe it is impossible for an AI to take over such a job and come up with a new business model. It makes no sense that machines can overtake C-level jobs.

What is your vision for the future? What kind of a world is waiting for us in 10 years?

Today we can see that some jobs will disappear, and some will come up. I don’t see any reason why we will have taxi drivers in 10 years.  Taxi drivers do not create new businesses, which is the job for human beings. Humans will much more focus on creativity. Wherever it is possible, things will be automated. When you look at the film industry, technology is highly used. In the future, some acting jobs may be replaced by technology but to follow the script can be thought to an AI but who is going to create the script? Who is going to invent movies, TV series and write story lines? I cannot possibly imagine that an AI would write next Game of Thrones series.

Would you give your definition of “creativity”? From what we have talked, I get the message that the people need to focus on creativity. Is creativity a given thing or can it be learned? If there will be only creative jobs in the future, will all the people be able to be creative?

I think the education systems shall change. Right now most of the teachers believe that we do not need creativity but society has advanced. I think that we do not need to learn to speak other languages anymore because there will be tools to translate them real-time. Primary jobs like bookkeeping will be delegated to systems. We need to be able to create such education systems that focus more on creativity. Sadly, it is not the case.

Many people say that they cannot draw, and I find it odd. I draw all my illustrations in my book. People say that it is amazing, but I do not see there is anything special and anyone can draw. Everyone can hold a pen, a pencil, and a marker and create simple drawings. Simply, it is because no attention is given to such creative activities in the schools. We all had to memorize to learn things. That is useless now because they are all online. The attitude in the people’s mind has to change. Then, they can be much more ready for a 21^st century. They will have more time to be creative because most of the boring stuff will be done by computers.

According to you, the performance appraisals and job titles are not working in the companies. Would you please explain why you think so?

The performance evaluations do not function in traditional systems because they are done once in a year and people cannot remember what is happening in the entire year. That is evolved much faster. You cannot just discuss performance once per year. The other problem is that people are assessed by their individual performance and contributions to the organization. System thinkers know that performance in systems and also in organization performance is based on the relationship between the parts. You could have great people but they may not perform productive because their dealings with others are not okay. Then, you have to fix the relationship, not the people and this is a management responsibility.

Job titles that are a traditional view that people have the function in the organization as if the organization is a machine with different parts and you just have to find someone fits into that part of the machine. That’s an old style thing. I think we can do without job titles and hire people for their talents, creativity, and passion. The kind of roles they play in your organization can evolve. Someone good at programming can be interested in helping out with finance. In today’s organizations, they are separated.

So you think, “Being a director” has no meaning at all. 

Yes, you cannot keep people by giving them some titles in. You have to offer them great jobs. I’d quit my job immediately if an organization tried to motivate me by giving great sounding job titles. The important thing is the actual work, what I’m doing. Who cares about the title? That’s what managers should do. They should offer people great work. People need to decide on their own as my team members do. I make them write their job titles. With my staff, we don’t find titles necessary. To have freedom and make decisions are more important to them. So, they do not need to feel to anywhere else.

Does this approach improve the turnover rates? 

I’m proud of the fact that turnover rate dropped from 15% to almost zero, in the company I worked as CIO because of the changes that I have introduced. One of them was to give everyone the same job title. Instead, I gave them freedom and self-management so that they could do their planning, decide on their team lanes. They enjoyed the job much more and the turnover rates dropped.

Please tell us about the Agile Lean Network.

I co-created the Agile Lean Networking with a goal that the agile communities in Europe shall work together and out of this Agile Lean Network Annual Conference came out. It will be in Paris this year August.