The Hungry Spirit: New Thinking for a New World

by Charles Handy

  Unfortunately, this redesigning was called ‘re-engineering’ – a word from the old world of machines. Re-engineering became a euphemism for getting rid of people, the sign of a manipulative management, never to be trusted. This is sad, because the redesigning was intended to be the outward and visible sign of trust. It is interesting to reflect that very old organizations, such as the Catholic Church, were structured on the principle of the microcosm: that each part should be a microcosm, a smaller mirror image, of the whole, with the ability to organize its own destiny. Perversely, it was because the centre could not communicate with the parts that the parts had to be trusted to look after themselves, bonded together only by a common ethos and tradition. Trust was then essential. These days, the abundance of our communications gets in the way of trust. It is too easy to find out what is going on.

  3. Trust requires constant learning. An organizational architecture made up of relatively independent and constant groupings, pushes the organization towards the sort of federal structure that is becoming more common everywhere. A necessary condition of constancy, however, is an ability to change. The constant groups must always be flexible enough to change when times, and customers, demand it. This, in turn, requires that the groups keep themselves abreast of change, forever exploring new options and new technologies, in order to create a real learning culture. The choice of people for these groups is, therefore, of crucial importance. Every individual has to be capable of self-renewal. The ability to search for oneself and to regard learning as a continuing part of life, which was the justification for trusting someone in the first place, becomes one of the keys to its success.

  Learning, however, like trust, can be squashed by fear. No one will stick their neck out, or take the sort of initiatives which new situations require, if they are fearful of the consequences if they are wrong. Trust, like learning, requires unconditional support, and forgiveness for mistakes, provided always that the mistakes are learnt from.

  4. Trust is tough. When trust proves to be misplaced, not necessarily because people are deceitful or malicious, but because they do not live up to expectations, or cannot be relied upon to do what is needed, then those people have, ultimately, to go, or have their boundaries severely curtailed. Trust is like glass: once broken it can never be the same again. Where you cannot trust, you have to check once more, with all the systems of control that involves. Therefore, for the sake of the bigger whole the individual must leave. Trust has to be ruthless. The pressures to perform, however, can be positive. Most of us need deadlines and targets to pull the best out of us. Where rules and checks predominate, on the other hand, satisficing, doing enough to get by, is the preferred behaviour. We settle for enough when enough, in the case of personal growth or creativity, is never enough.

  5. Trust needs bonding. Self-contained units, responsible for delivering specified results, are the necessary building blocks of an organization based on trust, but long-lasting groups of trusties can create their own problems, those of organizations within the organization. For the whole to work, the goals of the bits have to gel with the goals of the whole. The blossoming of Vision and Mission statements is one attempt to deal with this, as are campaigns for ‘total quality’ or ‘excellence’. These well-meant initiatives can boomerang, however, if they are imposed from the top. They become the equivalent of the compulsory school song, more mocked than loved. In one organization where I worked, a memorandum was circulated from Head Office stating that with immediate effect the organization was committed to a Theory Y philosophy – a belief that individuals are self-motivating. The contrast between the medium and the message caused hilarity. Like morality, visions and missions are caught, not taught.

  Anita Roddick holds her spreading Body Shop group together by what can best be called ‘personal infection’, pouring her energies into the reinforcement of her values and beliefs through every medium she can find. It is always a dangerous strategy to personalize a mission, in case the person themself stumbles or falls, but organizations based on trust need this sort of personal statement from their leaders. Trust is not, and never can be, an impersonal commodity.

  6. Trust needs Touch. Visionary leaders, however, no matter how articulate, are not enough. A shared commitment still requires personal contact to make the commitment feel real. Paradoxically, the more virtual an organization becomes the more its people need to meet in person. The meetings, however, are different. They are more to do with process than task, more concerned that the people get to know each other than that they deliver. Video conferences are more task-focused, but they are easier and more productive if the individuals already know each other as persons, not just as images on the screen. Work and play, therefore, alternate in many of the corporate get-togethers which now fill the conference resorts out of season.

  These are not perks for the privileged. They are the necessary lubricants of virtuality, occasions for not only getting to know each other, and for meeting the leaders, but for reinforcing corporate goals and rethinking corporate strategies. As one who delivers the occasional ‘cabaret’ at such occasions, I am always surprised to find how few of the participants have met each other in person, even if they have worked together before. I am then further surprised by how quickly a common mood develops. You can almost watch the culture grow and you wonder how anyone could have worked effectively without it.

  7. Trust has to be earned. This principle is the most obvious and yet the most neglected. Organizations who expect their people to trust them, must first demonstrate that they are trustworthy. Organizations that break implied contracts through downsizing will find that those who are left will trust them less. Individuals will not be trusted fully until they have proved that they can deliver. Governments who promise to cut taxes but end up by increasing them forfeit the trust of the voters.

  These cultures of trust are easier to grow and to preserve within the bounds of a single organization. As organizations become semi-dismantled, as many more people find themselves outside the organization, then the issues of trust become more difficult to deal with. Do you and your suppliers, or you and your clients, have the same goals? If not, then trust will be difficult because each will suspect the other of promoting their agenda rather than the joint one. Are the boundaries and the contracts clear and understood? How often have you met, and what sort of affinity is there between you? Are genuine mistakes acknowledged and forgiven? These questions are as important outside the organization as inside. If they can’t be answered positively, business becomes adversarial, complicated and no fun.

  FOUR STORIES TO MAKE A POINT

  St Luke’s

  St Luke’s is a strange name for an advertising agency, but then St Luke’s is a strange place. A breakaway or, as they prefer to call it, an earn-out from Omnicom, the giant US marketing services group, the founders were the London end of Chiat/Day before it was taken over by Omnicom. At the end of 1996 there were fifty-five names on their notepaper, because that was the number of staff they had then. They were on the notepaper because the agency is owned by all members of the staff, from receptionist to chairman.

  The ownership is handled through a British device called a ‘Quest’ – a qualifying employee share ownership trust. The trust held all the shares initially, but then dispensed some of them to each employee. Every year there is another distribution so that those who stay longest get most shares. The company is valued every year and the trust buys back, at full value, the shares of anyone who is leaving, although not many are expected to leave, says Andy Law, the chairman. In fact, unusually for the advertising industry, only two of the original thirty-five members in 1995 have since left, one to be a deep sea diver.

  Although everyone is an equal citizen, as far as their ownership entitlement goes, the normal operational hierarchies do still exist, but they are as flat as can be. There are also pay differentials and annual performance reviews. The office is modelled on a university, in the sense that the place is a resource centre rather
than a working day apartment house. There is a refectory and a library, but no personal offices, and no one has a secretary, not even the chairman. Staff put their belongings in lockers and carry their work around in standard issue shoulder bags, borrowing an office or a desk when they need it. Each floor has computers where messages and diaries can be checked. The rooms are, in fact, allocated to clients rather than departments. Once a room has been allocated to a client, all meetings and data relevant to that client are held there. Andy Law tells clients, ‘Here is a raw, boiling talent of creative people who are smart and have got the right resources. You tell us what you need and we’ll change to fit the shape.’

  Not to everyone’s taste perhaps, but here is a new model of a citizenship company, where everyone is involved and committed to a common purpose, which is underlined by the physical layout. Why, after all, are we so fixated on having our private apartment at work? Most people work where the client is – teachers don’t have private offices, nor do plumbers, electricians or almost anyone in the building trade. Shop assistants, restaurant staff, hairdressers, most journalists, actors, consultants most of the time, lorry drivers, gardeners and cooks, factory foremen and women – none of these feels the need for a private space which they can fill with their files and their family photographs. They find their privacy at home, if they need it.

  More and more of us will be pressured into doing likewise as organizations begin to question the sense of having offices available for 168 hours a week but only used for 48 or so at most. We will turn the idea of the office upside down, as St Luke’s have done, and make the office the client’s room so that we work together where the client is, and on our own wherever we want to be.

  Making Magic

  As an experiment in executive development, the Arts Business Forum in London invited ten leading companies to nominate one of their executives to join an experimental programme of learning from the theatre. Each executive was asked to choose a minimum of four theatre performances from the extensive programme of foreign theatre and dance put together by the London International Festival of Theatre over six weeks. The idea was that they should watch the show, meet the director and the cast, and foregather for a one-day seminar at the end of the festival to discuss what, if anything, they had learnt.

  Six of them went to the circus, as one of their chosen shows. It was a special circus, from France. No animals, only humans performing extraordinary feats on the trapeze, with knives, flaming torches, complicated and unbelievable group acrobatics, all done with flair and precision. At the seminar they said that they had seldom seen such an example of teamwork, discipline and commitment to excellence – better, said one, than anything in our company. One of them summed it up: ‘That night, we saw ordinary people making magic,’ and he added, ‘I bet they are paid peanuts, while my bank pays people fortunes and we don’t get anything like that standard of work out of them. What are we missing?’

  What they were missing, the group agreed, was a dedication to an art form which mattered more to them than money, plus the nightly applause which was a constant recognition of their expertise and their ‘magic’. Large pay packets and an annual appraisal do not always compensate for that intensity of commitment or the nightly ‘high’ for the whole team.

  The circus is one example of what businesses can learn from other organizations who have long experience of harnessing individual talent to common purposes. Professionalism, Projects, Passion and Pride seem to be the hallmarks of the organizations of talent. The theatre is another example, one where individuals become team members for a production, with a shared interest in its success. In like vein, the world of film and television is organized around projects and, at its best, draws on passion and pride as well as professionalism. Orchestras and jazz bands have also been cited as models for the new way of working. Few of these places would claim to be perfect, but they understand that at their best they are engaged in making magic.

  X Inc.

  This hi-tech business in Silicon Valley, California, worked to a different philosophy. It was fourteen years old in 1995, with sales growing at a compound rate of 30%, and a workforce of talented young people, slowly growing older, most of them shareholders but not citizens. The difference was crucial. They set up a task force to plot their way into the future.

  ‘What is the objective of the company?’ I asked them when they came to see me.

  ‘To make as much money as possible,’ they said.

  ‘For whom?’

  ‘For the shareholders, of course, but we are also shareholders. It is exciting – we check the share price in the morning, again at lunch-time and then before we go home in the evening, and calculate how much richer we have become during the day. Every member of this group is a millionaire several times over.’

  ‘What do you spend it on?’ I asked, curious.

  ‘There isn’t time to spend it, we are too busy making it!’

  ‘So what’s the problem?’

  ‘Well, as we get bigger, it gets ever harder to keep up the percentage growth rate which the stock-market expects, so the share price has fallen. Added to which, as we bring more people in, we have to share more of the equity with them, so, as we get bigger, we get rich more slowly, may even get less rich if the shares keep falling. We are also, if we are honest, feeling rather tired, although we’re still young, but the pressure gets greater all the time. We don’t have a training budget because there’s no time for training – we just hire the expertise we need when we need it, and, because there’s no room for mistakes, we get rid of anyone if they get it wrong at any time. There is therefore a very tense atmosphere in the organization and a reluctance to take initiative.’

  I asked them to name the company they would most like to be like. They named their near neighbour, a world name as an organization, universally respected, whose growth rate, as a mature business, was much slower than theirs, with much lower dividends paid to stockholders.

  ‘Given your aims,’ I said, ‘that example doesn’t make much sense.’

  After some discussion they admitted that what they admired about their neighbour was what it stood for as a company, the way it treated its people, its determination to build for a long-term future. That company had obviously persuaded the stock market to accept a relatively moderate rate of return in exchange for a promise of long-term growth and profitability.

  The group started, then, to talk about their real pride in what they did; their technological prowess, the way their products made things possible which had never been dreamt of, the fun of going, technologically, where no one had ever been before, even in imagination. They told stories of how the equipment they made had saved lives, had helped to revolutionize education in poor countries, and how it could bring government closer to people everywhere. They told me, in other words, of their dream and of what they thought was the real purpose of their existence, the essence or soul of the company. The money bit was the scorecard. How you read it depended on what game you thought you were playing.

  They went away pondering a different idea of the company, and a different future. The combination of a sense of personality or soul, with a long-term purpose or dream, with an agreed understanding of ‘enough’ by shareholders and managers alike, in terms of what a decent return on their capital would be, of time to invest in the people who would be their future, and an atmosphere that trusted each to do their best and to learn from any mistakes, was, they realized, a combination that they could wish for themselves. Maximizing, after a while, becomes self-defeating. ‘Enough’ now is essential for ‘more’ in the future, provided you know where that future is. Greed can get in the way of growth. Citizens want a future as well as present dividends.

  The Great Game of Business

  This is the title of a book written by Jack Stack, describing his experience at Springfield Re-Manufacturing company in Missouri. This company has now become as much an exhibition as a manufacturing business. More than 2,500 people have paid $1,250 ea
ch to go and see what Jack Stack and his colleagues have been doing in this un-high-tech business, reconditioning engines. The concept which they gave birth to and called ‘open book management’ may be the most important of the new managerial gizmos of recent times, with the added value that it corresponds with common sense and a respect for the average human being’s capacity for good work if he or she is treated as a citizen.

  In 1983 Stack and others bought out a unit of International Harvester when that company was going through hard times. They started with no money and lots of debt, to be precise, an 89:1 debt:equity ratio with interest at 18%. Stack’s only priority, he says, was ‘don’t run out of cash’. To help with that aim it was important to help all the 119 people working at Springfield Re-Manufacturing to understand the firm’s cash situation, so the management started to share all the numbers with everyone, right down to the doorman, and to provide bonus systems and share incentives to reward their efforts. Over 30% of the company is now owned by the workers. All obvious, really, but more difficult than one might think to do in practice. You have to walk your talk, as they say.

  The process begins by giving people information regularly, every week, on company performance, as if they were confidential analysts looking at the business. Job counts, inventory levels, sales, expense ratios, bank balances, nothing is held back. The company then puts a great deal of effort into educating people to understand all these numbers. There are what they call ‘huddles’ to share views and to help work out the implications of the financial figures, a network of ‘player coaches’ and a big emphasis on self-management. Slack called it The Great Game of Business, on the grounds that business can be fun and personally rewarding, like a good game, but that to play it everyone needs to know all the rules, they need to be able to follow the action, and they have to have a stake in winning.