(ieee-usa) building a culture that develops leaders and managers book 3
TRANSCRIPT
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IEEE-USA E-Books
Leading and ManagingEngineering and Technology
Book 3
BOOK 1Perspectives on
Leading and Managing
BOOK 2
Developing Leaders and Managers
BOOK 4 What It Takes
To Be a Manager-Leader
BOOK3Building a Culture
that Develops Leaders
and Managers
By Gerard H. (Gus) GaynorIEEE Life Fellow
3M Director of Engineering, Retired
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Copyright © 2012 by IEEE-USA. All rights reserved. Printed in the United States of America
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This IEEE-USA publication is made possible through funding provided by a special dues assessment of IEEEmembers residing in the United States.
Copying this material in any form is not permitted without prior written approval from the IEEE.
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LEADING AND MANAGING ENGINEERING AND TECHNOLOGY: BUILDING A CULTURE THAT DEVELOPS LEADERS AND MANAGERS – BOOK 3
Table Of Contents
Leading and Managing Engineering and Technology. . . . . . . . . . . . . . . . . . 4
Book 3: Building a Culture that Develops Leaders and Managers . . . . . . . . 6The Basics of Organizational Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Organizational Cultural Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Organizational Unit Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Building a Leadership Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Case Study: IBM’s Silverlake Project . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Parting Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
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LEADING AND MANAGING ENGINEERING AND TECHNOLOGY: BUILDING A CULTURE THAT DEVELOPS LEADERS AND MANAGERS – BOOK 3
Leading and Managing Engineering
and Technology
Leading and Managing Engineering and Technology includes four E-Books: Book 1,
Perspectives on Leading and Managing; Book 2, Developing Managers and Leaders ;
Book 3, Building a Culture that Develops Leaders and Managers ; and Book 4, What It Takes
To Be a Manager-Leader.
Book 1 Summary: Perspectives on Leading and Managing
Book 1 of this series provided some basic background related to a critical leadership issue—
technology drives business performance, yet too few engineers and their managers aspire
to take on major leadership roles. Book 1 included a discussion of:
• Changing Social Paradigm—The view of the engineer has changed from the agricultural,to the industrial, to the information age —the engineer’s results are now invisible.
• Role of Scientific Management—Frederick Winslow Taylor’s Principles of Scientific
Management provides no guidance in an environment populated predominantly with
knowledge workers.
• A Few Caveats—Management is not a bag of techniques and tricks (Drucker)—no job
is more important to our society than that of the manager (Mintzberg)—leadership is not
limited to executives and managers—it crosscuts the organization. (Gaynor).
• Leadership’s Historical Perspective—The public press and management books herald
the leadership of statesmen, generals, and industry executives; our focus, tapping all theleadership resources of the Individual Professional Contributors (IPCs).
• Results from Leadership Research—Ten percent of managers move an organization
forward: these are the managers who are purposeful, highly energetic, highly focused,
and spend their time on value-adding activities.
• Leadership Style—Command and control doesn’t work; autocratic leaders, an operational
meltdown may require one; charisma, not essential but communication is; General Colin
Powell’s 18 leadership principles; the goal, authentic leaders—be yourself, empower people
to make a difference, be consistent and self-disciplined—lead with purpose, meaning, and
values.
• Leader, Manager, or Manager-Leader—Different perspectives from academics and the
world of the practitioner.
• Managing—You don’t manage people, you manage their activities—managing involves
performing the administrative duties (you can’t avoid them); providing direction to your
group; and by leading—going beyond what’s expected, and being the pathfinder to the
future.
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• Expectations from IPCs—Take your place in the organization’s decision-making process—
you may not know, but you do have a responsibility to provide your expertise in the
organization’s decision-making process.
• Leader Training—Becoming a leader involves a journey that builds on every successful
or unsuccessful experience.
Book 2 Summary: Developing Leaders and Managers
Book 2 builds on the perspectives presented in Book 1, and examines managing and leading by
1) managers at all levels, and 2) the IPC knowledge workers. Book 2 includes a discussion of:
• Managing and Leading—Warren Bennis, Peter Drucker and John Kotter present somewhat
different views on the relationship between manager and leader activities. Bennis makes
strict distinctions between the roles of the manager and the leader. Drucker considers
all managers, both individually and collectively, the leadership of the organization. Kotter
considers managing and leading as distinctive yet complementary actions and activities.
• Managing and Leading Four Generations—The current worldwide workforce includesa mix of four generations: Traditionalists, born pre-1945; Baby Boomers, 1945-1964;
Generation X (GEN X), 1965-1980; and Generation Y (GEN Y), 1980 to the present. This
confluence of generations has direct consequences for managers and the vast number
of IPCs.
• Managing by Managers—Describing the manager as someone responsible for the work
of others; to the community of engineers, who apply what scientists create, develop
new products and services, convert engineering principles into processes and systems,
innovate, and build the international social infrastructure—no longer meets requirements.
Managing the IPCs activities requires a mindset that that allows for collaboration and
collegiality, with operational discipline to adapt to the business environment.• Leading by Managers—Leading involves having the courage to move beyond the status
quo, describing the future directions of an organizational unit, identifying the requirements,
providing the required resources, developing a workable implementation plan, and being
closely involved in assuring performance.
• Managing by the IPC—If we define managing as being responsible for contributing to the
results of the organization, then IPCs meet the requirements for managing. If IPCs are part
of the organization’s management, then they need to develop a philosophy for managing.
IPCs need to develop a managerial attitude, viewpoint, mindset and business perspective.
• Leading by the IPC—How do IPCs take the lead? IPCs take the lead by promoting
meaningful change, changing the organizational-unit mindset, building team competenceand capability, recommending opportunities for innovation, adopting a business attitude,
promoting inter-disciplinary integration, building meeting behaviors that surface issues in
a timely manner, challenging their management’s actions before the decision is made;
and using the word colleague for the traditional follower .
• Dealing with the Manager Leader Dichotomy—Managing and leading are complimentary
and co-dependent activities at the operational levels.
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Book 3: Building a Culture
that Develops Leaders and Managers
How do organizations develop a culture that fosters leadership? The answer in one sense is
very simple and in another way very complex. Fostering leadership, when viewed through
a formalized and logical lens, poses few problems. However, fostering leadership becomes
complex when the human element is introduced. It becomes further complicated when the
organizational environment is introduced. Book 3 of this series includes:
• The Basics of Organizational Culture
• Organizational Culture Research
• Building a Leadership Culture
• Case Study: IBM’s Silverlake Project
• Parting Thoughts
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The Basics of Organizational Culture
There is no lack of literature from the academic and public press regarding the impact of orga-
nizational culture on business performance. However, the literature is directed to actions
taken at the executive levels. While the organization’s defined and desired culture provides
direction, it is implemented by managers and Individual Professional Contributors (IPCs) work-
ing in the major organizational units, projects, teams, and task-forces in the many interrelated
disciplines.
Perspectives on Organization Culture
How do we dene organizational culture? Organizational culture includes many factors, such as
past history, principles of operation, long-standing traditions, policies and practices, and the re-
alities and myths. Organizational culture also includes the observance of shared values, beliefs,
rituals, legends, heroes, and other artifacts that make up the non-quantifiable assets and liabili-ties of an organization. Some factors may be more important than others, but in total, define
the environment in which employees interact with their internal and external colleagues, and
meet their obligations. These culture-based factors serve the organization favorably in meeting
its objectives, or inhibit its progress. While those macro statements concerning culture define
what’s desirable, I propose that the organizational unit sub-cultures define the organization, and
are far more important to the organization’s future than the formally stated cultural expecta-
tions, although important, issued from the executive levels.
If you follow the business press or reflect on your own organization, you’ll begin to realize how
culture affects organizational performance. The cultures of such organizations as IBM, Hewlett
Packard, 3M, Motorola, Boeing, and Ford are quite different. Some of these cultures haveundergone dramatic changes over the years. Hewlett Packard, originally an innovative culture,
merged with Digital Equipment, and went from an innovative culture that provided freedom to
innovate, to an undefined culture, that to this day, struggles to make progress. The Boeing and
McDonnell Douglas merger in 1996 brought together two organizations with totally different
cultures. Boeing used engineering-based collaborative problem-solving; McDonnell Douglas
used aggressive cost control. The combined organization continues to exhibit the negative
impact from integrating two different cultures. These differences in the two cultures have most
likely played a role in the three-year delay in delivery of the first 787 Dreamliner, and delays on
other major projects. The Daimler Benz and Chrysler merger also failed because of a clash of
two cultures; executives could not bring two opposing management philosophies into a suc-
cessful union.Changes in social culture also affect organizational culture. Today’s workforce, as noted in
Book 2, includes Traditionalists, born pre-1945; Baby Boomers, 1945-1964; GEN X, 1965-1980;
and GEN Y, 1980 to the present. This confluence of generations has direct consequences for
managers and the vast number of IPCs in developing an integrated culture that meets require-
ments. As our social culture moved from the Traditionalists to GEN Y, we moved toward greater
entitlement, and organizational cultures followed: both have influenced each other. In the
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1950s, accountability was expected; performance appraisals were more realistic; communica-
tion took place face-to-face; newly-minted graduates recognized the need for experience;
organizations were not involved in providing guidance on personal matters; mental-health
days were unknown; and this list could continue. Slowly but surely, employees became more
dependent on the organization. Historically, if unchecked, we could go back to the days of the
company-owned town: company owned the schools and grocery stores, and provided recre-ational and other personal needs. I’m not suggesting the 1950s represented some form of orga-
nizational utopia, but illustrate these points to show the progression of the entitlement society.
In 1997, the dotcom era was introduced that further expanded the entitlement culture. To meet
what was considered to be a shortage of required competencies and capabilities, organizations
began providing hiring bonuses, only to find the total demise of the dotcoms some years later.
The dot-com culture provided opportunities for those who wished to pursue their vision of the
future, at very high energy levels, but it also introduced an era where the career path involved
“making a quick buck” and retiring early. The dot-com era created cultures driven by perfor-
mance that went beyond the dot-com industry; their energy infected most business sectors.
After its downfall many managers and discipline specialists became self-satisfied with their
work environment, and upper management never recognized the cultural changes that began tooccur in the early 1980s.
Organizational executives played a major role in the move from the Traditionalists to GEN Y.
Amanda Bennett1, presented a classical description of average middle managers in an article
“Broken Bonds,” published in The Wall Street Journal . This description involves all people in
the organization’s management, including executives, managers and discipline specialists at all
levels, in academia, government, or industry. She states that although the contract was unwrit-
ten and unspoken, it was very specific. It said:
“Take care of business and we’ll take care of you. You don’t have to be a star;
just be faithful, obedient and moderately competent, and this will be your home
for as long as you want to stay. We may have to lay off blue-collar workers now
and then, and even cut off some heads at the very top, but unless we are in the
deepest kind of trouble, you will remain on the payroll. You are family.”
What a stinging indictment of the management community. Leadership (taking the lead) which
requires sticking your neck out, being proactive, taking initiative, accepting risk, dealing with un-
certainties, meeting commitments, basing decisions on limited information, understanding the
business environment, and having the courage to deliver bad news, was no longer a
prerequisite for being part of the management team.
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Organizational Culture Research
Academic research has not produced an integrated theory of organizational culture. Yet,
it is obvious that culture affects organizational performance. I question if any theory of
culture could apply over the diverse conditions that occur in every organization or organizational
unit. The cultures in academia, government, industry, and the not-for-profit organizations
vary significantly. Industry could not survive in the typical academic culture, and vice versa.
Human behavior determines culture, and except for describing the desired characteristics
and capabilities in very general terms, no individual can be fitted neatly into specific boxes that
include all the requirements. Nevertheless, the following provides an overview of the results
from the research on organizational culture.
D. R. Denison2 considered the relationship between culture and organizational effectiveness.
He suggested four hypotheses: 1) Involvement, 2) Consistency, 3) Adaptability, and
4) Mission. These four hypotheses appear to be self-evident to the practitioner. Involvementcreates a sense of ownership. Consistency argues that a shared system of values allows an
organization to reach consensus and implement coordinated actions. Adaptability emphasizes
the ability of an organization to perceive and respond to changes in the environment.
Mission provides purpose and meaning, by defining the importance of individual roles,
within the organization’s purpose. Denison tested these four hypotheses by surveying
3,425 CEOs (969 responded).
Judith Bardwick3 classified organizational cultures as: 1) Entitlement, 2) Fear and 3) Earning.
Entitlement cultures are dominated by high levels of apathy and complacency, conformity
to rules and procedures, ineffective bureaucracy, risk avoidance, and too much agreement
and graciousness. Fear cultures are based on lack of predictability and direction; little, if any,
top-down communication; turf control and self-protection; a fire-fighting mindset, overreaction
to critical events; and in essence, a command and control approach to managing—devoid of
leadership. Earning cultures display high levels of trust, accountability, leadership, risk-taking,
teamwork, build a sense of excitement, respect the constructive nonconformists and free
thinkers, and outcome is more important than process.
Kotter and Heskett4 show that shared values and institutionalized practices can promote
good performance; they can also undermine the organization’s ability to adapt to changing
environments. They classify cultures as Theory I, Theory II, and Theory III. Theory I cultures
assume the world economy is relatively stable and predictable. They operate in uninhabited
markets with little competition. Managers operate with a consistent set of values; new
employees are expected to adapt, changes in management create little or no change inoperations, and such cultures are generally considered to be strong cultures, until they no
longer dominate the market. In Theory II cultures, behaviors are probably more important
than organization’s resources, and provide a benefit only when individual and organizational
behaviors meet the organization’s specific needs. As an example, the required behaviors of
an entrepreneurial firm would be quite different from those of an established firm. Theory III
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cultures try to adapt their culture to a changing economic and business world. They adapt,
focus on creativity, deal with uncertainties, and accept risk; its members accept change, pursue
innovation and entrepreneurship, and are proactive in providing for the organization’s future.
The NO-RULES5 culture is primarily associated with the digital age. These cultures display
high levels of innovation, personal dedication in pursuit of objectives, willingness to work
around the clock, little or no formal organization, and much social interaction. The dot-comera and its subsequent demise evolved in the No-Rules culture. In many cases, minimum direct
compensation, significant stock options and profit sharing, and unsurpassed self-motivation.
Unfortunately, management fundamentals cannot be disregarded; some level of operational
discipline is required to develop a sustainable organization.
These four research results are based on what we refer to as organizational or corporate
culture. They provide a perspective, not an answer or process, for developing an acceptable
culture. Denison’s four hypotheses: involvement, consistency , adaptability and mission,
when grouped together, could form the basis for developing an appropriate culture: get
people involved, be consistent in your actions, adapt to changing conditions, and focus on
the organization’s mission. However, we need to be cautious about introducing too muchconsistency to the detriment of experimentation and innovation, for fear of stifling individual
initiative and open communication. Significant problems can arise when a “this is the way
we do it here” mindset dominates the culture.
Bardwick’s entitlement, fear and earning cultures probably do not exist in pure form in any
organization; they may appear simultaneously in any organization, and at different times. An
entitlement culture cannot survive in a competitive economy for a long period of time; it will
not reach its 100th birthday. However, any organization may have groups that demonstrate the
traits of an entitled or fear-dominated organization. It may be appropriate to introduce some
level of fear to change the entitlement culture. Bardwick’s Earning culture defines a somewhat
idealized situation. Organizations involve people who bring all their baggage, good and bad,
to the workplace. The larger an organization becomes, the more difficult to control how
people interact. While attempting to hire people who fit the organization’s culture may be
a prerequisite to employment, not all people come with a seal of approval.
The Theory I, II and III cultures Kotter and Heskett suggested somewhat parallel Bardwick’s
entitlement, fear and earning cultures. They also identified factors that undermine long-time
economic performance, and follow a sequence of actions in making a transition from success
to failure.
• Visionary leadership, plus some luck, builds a successful organization.
• A committed group of people implement a workable strategy.
• Over time, the organization becomes dominant in the marketplace.
• A strong patent position may exist.
• Maintaining market dominance becomes routine.
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LEADING AND MANAGING ENGINEERING AND TECHNOLOGY: BUILDING A CULTURE THAT DEVELOPS LEADERS AND MANAGERS – BOOK 3
• Organizational growth begins to create internal challenges.
• Managers are selected who do not demonstrate the necessary leadership.
• These less-than-competent, managers become the executives.
• Business leadership begins to evaporate.
• We’re successful—“if it ain’t broke, why x it.”
This limited example demonstrates where arrogance, self-satisfaction and eventual lack of
leadership can destroy an organization. When organizational growth begins to create internal
challenges, it’s time to focus on providing the leadership to deal with the issues. However,
when an organization reaches the comfort zone of self-satisfaction, it becomes difficult to
change the mindset without basically changing most of the management. Developing leaders
does not take place in zero time; it takes a period of time for people to learn what leadership
involves, and what it takes to lead.
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Organizational Unit Culture
While executives like to define the organization’s culture through its various directives and
communication, I suggest that the cultures of the operational organizational units, suchas business units, projects and teams, are far more important. The real work of the organization
takes place at the operational levels. In no way do I diminish the work effort of organizational
executives, but their work is of a totally different type; these executives consider the big pic-
ture, and not the individual pieces of the business puzzle. Executives are not in a position to be
hands-on managers, except in areas that involve the future of the organization.
Abraham Zaleznik6 in Real Work notes that social relations and psychopolitics get more atten-
tion than products, markets, customers and clients. Managers are measured on how well they
get people to go along with the organization’s expectations, not on how well the company
performs. In this sense, executives are more concerned with coordination and control. Dur-
ing the 1930s, academic researchers began to look at organizations as a social system, ratherthan as a technology-driven economic system. Emphasis was placed on the role of individuals
in the organization. Organizations focused on human relations, workplace harmony, role of the
hierarchy, and gave birth to various versions of the sensitivity managers. Over time, the human
relations school redefined management work to involve ; developing and maintaining a system
of cooperation, fostering communication, motivating employees, helping employees in control-
ling their own destiny, and minimizing conflict. While Zaleznik focuses on executives, the same
applies, to what I have described as the organization’s management team that includes execu-
tives, managers, and the IPCs. As Zaleznik notes, executives and managers spend their time
militating conflict and unconsciously “avoiding aggression”—instead of developing an aggres-
sive organization, and maintaining peace and quiet.
Zaleznik refers to Charles I. Barnard, who noted that in this process of socialization, technical
and substantive work came to look like mere mechanics, and led to an unhealthy emphasis
on process rather than productivity. Process and procedures are a requirement and important,
but are not the substance of the business. In the process of meeting social requirements,
executives and managers place interpersonal matters ahead of what Zaleznik calls, Real Work ,
and Barnard refers to as Executive Work . Peter Drucker has reminded us, on many occasions
that managing is a social science, but social science does not imply making excuses for
non-performance, by anyone in organization, regardless of position. On the contrary, meeting
performance requirements is the primary responsibility of executives, managers and an
organization’s community of professionals.
Too many managers put interpersonal matters and peace-keeping ahead of real work. Whileactive in their jobs, they fail to provide constructive criticism, seldom encourage conflict among
peers at all levels, and they often avoid being aggressive . Being aggressive does not mean
being abrasive ; it means being energetic and determined, and in pursuit of a goal. Managing
effectively requires deliberately introducing some dissonance. We are all familiar with managers
who, under some guise of social leadership, avoid conflict, yet conflict becomes an essential
element of making progress. We do not live in a world of the known; on the contrary, we live in
world of the unknown and often the non-definable.
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LEADING AND MANAGING ENGINEERING AND TECHNOLOGY: BUILDING A CULTURE THAT DEVELOPS LEADERS AND MANAGERS – BOOK 3
I recently had an opportunity to listen to a talk by poet David Whyte7 on “Leadership through
conversation.” Whyte uses a blend of poetry, humor and insight to make his points. While
Whyte becomes philosophical in his commentary, he does make a point that an organization’s
management team should reflect on very seriously. Whyte asks, “What is the conversation
we’re not having?” All of us can provably reflect on situations where, had that conversation
continued before reaching a decision, the results may have been quite different.Those unin-tended consequences may have been anticipated, and some thought might have been given
to the decision’s long-term consequences. This point does not suggest delaying decisions,
through requests for additional studies, but an emphasis on thinking .
Zaleznik says hard thinking constitutes an executive’s real work. I will extend that hard thinking
constitutes the real work of the management team. Obviously, not all issues require the same
level of thinking. But, decisions that relate to human performance, future directions of the orga-
nization, impact on the environment, and role of the organization in the world economy, involve
more than a perfunctory response; such issues require deep and constructive thought to take
into account future impacts on an organization.
But what do I mean by thinking ? Reducing overall costs, improving customer service, expand-ing in new markets, acquiring new technologies, and depending on incremental innovation for
sustaining the organization are routine management issues. These only involve time tested
methods for improving effectiveness and efficiency, but with the caveat that the organization’s
resources and infrastructure support the effort. Such actions represent short-term thinking,
which dominates much of decision-making. Aaron Shenhar8, professor at Rutgers University,
notes that; “Short-term efficiency gains will always result on long-term, much bigger, and costly
losses.” He cites the case where NASA, at the shuttle’s inception, was forced into a compro-
mised development budget of $5 billion, while its needs were estimated at $18 billion. To meet
this budget limitation, NASA abandoned its plan to develop small-scale test vehicles—to make
sure, it selected the best technologies before embarking on the full-scale vehicle. The resulting
shuttle development presented major and exasperating engineering challenges: developmentcost exceeded the estimate by 60 percent, and the projected 60 flights per year never mate-
rialized. What does this have to do with culture? Such decisions set the tone of management
thinking, which cascades throughout the whole organization. It is now acceptable to overspend
a development program by 60 percent and not meet the requirements. NASA management
asked engineers to take off their engineering hats and put on their business hats. While this
may be a reasonable request of engineering—because in the final analysis, the business of
engineering is business performance—engineers cannot discard the engineering hat totally.
NASA should have asked the engineers to think of engineering as part of the business. It’s a
different mindset. Putting on the business hat requires taking into account the requirements
of the business, but not removing the engineering hat. NASA management evidently did not
understand what is meant by putting on the business hat, and for one reason or another, theengineering community failed to make its case.
Research has clearly identified the poor performance in meeting project requirements, time
schedules and cost. Dov Dvir and Aaron Shenhar9 are well-known researches and authors on
issues related to project management. They propose that the classical approach to project
management requires a more adaptive and strategic approach. According to Dvir and Shenhar,
projects are major drivers for creating new businesses. The objective of the project team is
to achieve business results. While technology is important, technology by itself provides no
benefit unless meeting some purpose. Technology and markets are expected to provide some
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LEADING AND MANAGING ENGINEERING AND TECHNOLOGY: BUILDING A CULTURE THAT DEVELOPS LEADERS AND MANAGERS – BOOK 3
type of competitive advantage. It’s through providing competitive advantage, that organizations
add value from the efforts of the many organizational functions and disciplines. The strategic
approach to project management recognizes that “one size does not fit all” and the approach
must meet the particular organizational context and the dynamic changes in the business
and economic environment. Taking the strategic approach requires a project team to adapt to
changing conditions, and that requires a culture that can adapt to new dynamics, without highlevels of anxiety and panic.
Dvir and Shenhar have analyzed the qualitative and quantitative data of more than 400 projects
in diverse industries, to identify the successful and long-term projects. Great projects:
1. Involve creating a unique competitive advantage and /or exceptional value to stakeholders.
Examples: IBM’s AS 400 series of computers; Opera House in Sydney, Australia; Mall of
America in Bloomington, Minn.
2. Take a long period of time to define requirements, and identify a clear vision and the
appropriate execution approach. Examples: Transatlantic optical cable between the United
States, Germany and the United Kingdom by Tyco Submarine Systems, Ltd; Boeing’s devel-
opment of the 777; and NASA’s Kepler Project, extraterrestrial spacecraft in 2009 into theMilky Way.
3. Create a revolutionary project culture. Examples include IBM and the AS 400 computer
series; the Boeing 777 project; and the Z3.
4. Require a highly qualified project leader, who is unconditionally supported by management.
Examples: Bill Gates support for Windows; Tom Furey, director of IBM’s Rochester, Minn.,
Development Laboratory was the AS 400 project manager; Canon, when it decided to
compete with Xerox in the light weight compact copier market, appointed the Director of
Reprographic Products Development as the project manager.
5. Maximize use of existing knowledge, often in cooperation with outside organizations.Examples: Word for Windows used the existing Word for Macintosh design; Boeing’s 777
team used the CAD/CAM software purchased from Dassault Systems; the 1960s World
Trade Center project in New York City used Italian technology to cope with reaching bedrock
water levels in the Hudson River.
6. Have integrated development teams with fast problem-solving capability; and the ability
to adapt to business, market, and technology changes. Almost all great projects use multi-
disciplinary teams capable of adapting to business and technology changes, and refocusing
direction, if necessary.
7. Have project teams with a strong sense of partnership and pride. Examples include all the
projects previously mentioned.
Projects are where organizations succeed or fail, and the cultures, of those organizational
units, determine the level of success. As organizations consider their project performance
in all functions and disciplines, they need to examine why so few of their projects meet the
projected requirements, schedule and cost. When a major project, that has a major impact
on future performance, requires three additional years for delivery of its first unit, it affects the
culture. When an organization sheds thousands of its IPCs, culture will be affected: it does not
take research to come to a conclusion. Continued uncertainty generates employee frustration,
and leads its members to wonder just who is running the show.
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LEADING AND MANAGING ENGINEERING AND TECHNOLOGY: BUILDING A CULTURE THAT DEVELOPS LEADERS AND MANAGERS – BOOK 3
Building a Leadership Culture
The academic research on organizational culture suggests that culture is determined at
the highest levels of the organizations; the executive suites. While the basic tenets ofan organization’s culture come from the executive suite, it’s implemented by managers at
several levels, in the various organizational units, and by the Individual Professional Contributors
(IPCs). Organizational cultures may come from a dened organizational philosophy, established
by the organization’s founders, or it may just happen. In our current business and economic
environment, organizational culture takes on much less significance, when executive positions
are most often filled by individuals with no experience or association with the business; these
executives have no direct knowledge of the organization’s values, beliefs, rituals, and heroes.
Eastman Kodak and Hewlett Packard provide examples worth considering.
When Eastman Kodak dominated the photographic market, maintained a steady growth
pattern—until it chose to protect its silver-halide photographic business against the incursionof digital photography—even though it demonstrated the first elements of digital photography.
Kodak was always rated as having an employee focused culture, maybe even to the point of
developing an employee comfort zone. Rochester, New York, is no longer a Kodak Park, the
sprawling complex of research and manufacturing facilities; it now fights for its existence
because of its late entrance into the digital age. The Wall Street Journal recently reported that
Kodak hired a group of restructuring lawyers to assist in its strategic and financial renewal.
Hewlett Packard (HP) has gone through extensive changes, since its acquisition of Digital
equipment, under CEO Carly Fiorina. Ms. Fiorina was dismissed in 2005. Mark Hurd took over
as HP CEO, only to be ousted in 2010. Leo Apotheker became CEO, and he was ousted within
eleven months. Meg Whitman, former eBay CEO, and member of HP’s Board, became the
new HP CEO. Not a good environment to show its thousands of employees. Not a very good
environment to spur those managers and IPCs responsible for providing the innovation and
new products, to put in that extra effort required for organizational dominance in its field. It
is doubtful that Ms. Whitman will be successful in reinventing the HP culture established by
Messrs. Hewlett and Packard. Providing freedom with discipline, to delve into the unknown,
requires a tolerance for failure.
While, what happens at the executive levels in an organization eventually flows throughout
the whole organization, managers of organizational units and their IPCs do have control over
their immediate culture, they only need to take the initiative to build it to their expectations. I’m
not suggesting the process is simple and can be achieved in a short period of time. Changing a
culture requires an understanding of the current culture; how it developed and sustained itselfover many years; a flexible plan; and the determination and will to make it happen. Engineer-
ing, as an example, uses project management principles to achieve its goals. A team, a task
force, or a group of people assigned to some task make up a project. Of course, projects span a
continuum of sizes with very different requirements, different levels of resource commitments,
different impacts on the organization’s future, but the fundamentals of project management
apply equally. Developing the desired culture requires finding 1) the right people; 2) supporting
them with the required education; 3) providing opportunities to demonstrate
leadership; and 4) making available the required resources.
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Find the Right People
You cannot build an organization without talent, or talent that can be developed. Too many man-
agers attempt to reenergize people who just can’t take the lead in any situation, but can meet
requirements in other areas of their discipline. Basically, these people cannot live with uncer-
tainty, and cannot accept the risks to take the lead. Let me reiterate, everyone in the organiza-
tion does not need to be able to take the lead . Don’t expect everyone to be that exceptional
performer. We’re not looking for short-term geniuses, not looking for prima donnas. The right
people possess certain attributes: they are willing to learn, enjoy their chosen discipline, and
have a tangential interest in related disciplines. They bring a breadth of experiences; are willing
to be exposed to new opportunities and learn; take on projects of ever-increasing complexity
and scope; possess people skills; can adapt to fit the situation; have the courage to challenge
decisions and actions of others; propose improvements without losing sight of the original
objectives; and set their own high performance expectations. A combination of each of these
attributes gives the individual the competencies to take the lead .
Managers take on significant personal responsibilities. They determine the future of all the
people in their unit by how they manage their activities. Here is a personal example from mycareer that I consider a case of management malpractice. A vice president of engineering
attempted to convince me to take on the responsibility of an upper-level engineer, in whom
I had no interest. This engineer was celebrating his 25th anniversary with the organization,
and was known for never completing a project. However, in spite of his poor performance
over many years, he continued to be elevated in grade level, with the commensurate salary
increases. I was familiar with this individual’s past performance, since he had been assigned
to several of my projects over the years, with my objections, and somehow never managed
to meet commitments. I politely rejected the request from the engineering VP. For the next
ten minutes, I was lectured about the fact, that I only wanted the best people on my team.
That was true. I’m a firm believer that incompetence needs to be corrected, or in some way
mitigated. I spent a great deal of time and effort grooming people, to become competentengineers and managers, but I wanted people who were willing to learn. My personal
managing philosophy provided plenty of time for developing people, who were not performing
to requirements, but I also recognized that some people just cannot meet the requirements,
so why jeopardize their careers? But after many years of non-performance by this particular
engineer, I knew he would never meet expectations, neither mine nor the organization’s. I
recommended that this engineer should be reclassified to possibly technician status, for his
own benefit, where he could do a commendable job, and under a competent manager, rebuild
his career. This was a difficult choice, but the appropriate one. The vice president hung up the
phone. The VP convinced another director, who was willing to please the VP, to accept this
individual. Within a month, this director was attempting to pass this engineer off to someone
else. Eventually he (the engineer) went through several demotions, and was terminated. Hadsomeone had the courage to counsel this person in his younger years, he might have become
an excellent engineer. Management failed. It’s easy to appraise competence. But it’s difficult,
and it takes courage, to deal with those who need improvement.
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Support Educational Programs
Organizations need to be proactive in providing educational resources to develop a culture
that fosters leadership. This educational effort can originate from just about any place
in the organization—it may or may not require support from the executive levels. I’m not
considering executive leadership at the highest levels in the organization, and I’m not
considering situational leadership—where someone performs heroics because of the
need for someone to act. I am focusing on what managers and the IPCs need to learn, and
put into practice, to develop a culture that allows its member to take-the-lead.
• Straight Talk—When facts are replaced by wishful thinking, someone must raise the red
flag. Differences regarding any matter must be resolved. Postponing those decisions to
some later date only exacerbates the issue. Raising the issue requires courage—a required
leadership trait.
• New Social Contract—You’ve read the social contract as described by Amanda Bennett.
That social contract resulted in a comfort zone that was detrimental to the employees. The
new contact expects developing and optimizing the added-value from each participant—asan individual and as a team member.
• Importance of People—You may have heard organizations being described as being a
“lean and mean machine.” Lean is okay, but mean is not acceptable. Current employees
represent the organization’s competencies and capabilities. Brining new talent into the
organization poses a serious issue, if viewed from an employee’s perspective. That action
either promotes careers or destroys them. Choose wisely.
• Identifying the Critical Mass—How often have you been assigned to a project that lacked
the critical mass of talent from the outset, with no attempt to correct the situation? “Don’t
get concerned. We’ll find a way to deal with it, just be patient” is heard much too often.
Is this a cultural issue? Definitely, yes! Lack of a critical mass becomes institutionalized—it becomes a way of organizational life.
• Developing a Sense of Ownership—Personal experiences in a more than fifty-year ca-
reer in engineering and management have taught me that people who take ownership of
whatever their responsibility may be, lead far more satisfying careers. But developing that
sense of ownership requires managers to identify the competencies and capabilities of their
people and assign them accordingly. Ownership is a voluntary act, it cannot be demanded.
• Educating about the Organization and the Business—It is surprising how little employ-
ees know about their organizational history and business, in spite of all those websites and
multi-colored communications. They know far more about their sports teams than their
organization. Why is this important? Knowledge about the organization, its management,and its business provides valuable information, in assessing issues that arise, and where
one’s contribution may provide greater for personal career satisfaction and value to the
organization.
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• Building Integrity—What do we mean by integrity? Trust is one of the major components
of integrity. We do not need unconventional ways to build trust. We no longer seal a
contract with a person or another organization with a handshake. Life has become more
complex, if in no other way than meeting all the legal requirements. We know that lack of
trust breeds various degrees of cynicism. All negotiations need to be carried out in good
faith. At the center of integrity lies trust which is more than telling the truth. Integrity
is difficult to describe, but it includes the following qualities; accountability, candor,
character, conscientiousness, credibility, decency, fidelity, frankness, loyalty, principles,
reliability, respect, responsibility, and sincerity.
• Bringing the Right People on Board—People determine performance. The challenge:
How do you transform a group of people, with the required competencies and experience,
into an effective operating entity? Selecting people as employees or as team members, in
any form, requires performing due diligence. The process involves exploring the specific
professional competencies, the breadth of understanding, and the needs of related disci-
plines. And it’s about exploring the interpersonal and communication skills. It’s not about
credentials, but past performance. What’s the track record of past performance?
• Expecting Involvement—Organizational unit success begins with dening expectations.
Meeting those expectations requires empowering people to demonstrate application of
those known talents. However, managers need to be cognizant of the nuances in describ-
ing talent. While knowledge and experience in some technology may take precedence, that
technology must be communicated to others to be of benefit to the organization.
• Promoting Teamwork—Teamwork doesn’t come from teaching teamwork. Yes, there are
some fundamentals, but it’s too late to teach teamwork principles at the start of a project.
Teams are made up of people who bring all their baggage with them to the table. People
who demonstrate some level of flexibility and agility provide a significant benefit to the
team. It’s not that they compromise on principle, but recognize that the needs of the many
disciplines and functions must be accommodated to meet requirements. Team agility allows
team leaders to make changes as projects meet new requirements. So, developing flexibil-
ity and agility need to become part of the organizational unit culture.
• Pursuing Excellence—Excellence does not mean perfection. Excellence involves doing the
best that can be done with the available knowledge and physical resources under a specific
context. Excellence for a symphony orchestra would be quite different than excellence for
a baseball team. In baseball, a batting average of .325 would be considered to be excellent
performance. The orchestra conductor would most likely be discharged, if the violin section
was rated at .325. But, excellence must be demonstrated from the top to the bottom of the
organization to be successful—it becomes an expectation and a way of life—do your best
with the available resources.
• Insisting on Accountability—Accountability implies obligation. Accountability also applies
to successes and failures. Accountability for success is easily demonstrated although
seldom analyzed as to reasons for its success. Accountability for failure becomes more
problematical. We learn from failure, if we take the time to reflect on what circumstances
caused the failure. Failure is a requirement for success, but not failure due to negligence.
Failure from experimentation is the road to success—investigating the unknown. A sense of
accountability is a prerequisite for organizational success—it is an organizational mantra.
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• Clearly Stated Purposes, Objectives, and Strategies—Organizations generally provide
written documentation of its purposes, objectives, and strategies in broad terms. While
those documents are essential, and should be understood by the organization’s employees,
they must be interpreted for the individual organizational units. What do those documents
mean to an organizational unit, a project, a team? How do they apply to the managers
and the IPCs? Purposes, objectives, and strategies become very specific at the operationallevels for the managers and IPCs—while they relate directly to the organization, they are
now described specifically for the organizational unit. These specific purposes, objectives,
and strategies define the role of the organizational unit within the organization—they
provide direction.
• Focusing on Process or Outcomes—Process and outcomes often become the primary
operational focus. Follow the prescribed process, with its fixed methodologies, and attain
nirvana. Not so! Following a process does provide benefits, if the appropriate process is
followed. However, a process must relate to the problem at hand. Also, processes depend
on people for implementation—people are not automatons—they interpret through a
different lens and mindset. Process is like an algorithm developed for meeting certain
results—it must meet the conditions for which it was designed. Focusing solely onoutcomes often leads to short-sighted and short-term results, with long-term negative
consequences—a focus on the immediate to the detriment of future possibilities. Yes,
following the appropriate process with a focus on the outcomes, and adapting the process
as required when changes are required, does enhance performance. It is not an either/or
situation.
• Making Timely Decisions—Making timely decisions continues to perplex many managers
and IPCs. Does your organization’s culture promote a casual decision-making process that
leads to delayed decisions? Delayed decisions create various levels of chaos and added
cost. Those delays affect not only direct cost, but also opportunity costs in the chain of
events from research to the marketplace. When IPCs delay making decisions, it creates achain of problems, because others depend on timely decisions from other IPCs. On-time
decision-making becomes an organizational unit cultural issue. On-time decisions are a
requirement not a choice.
• Promoting Change—Change creates levels of uncertainty, discomfort, and various levels
of anxiety. These feelings come through clearly when new technologies and markets
are considered, when management is reorganized, when operations are consolidated,
when acquisitions or mergers are considered, when markets become more competitive,
and when an organization attempts to reduce its redundancies. Such changes impact
organizational members very differently, depending where one sits on the continuum,
including those who resist change, to those who cannot live without change. Change
must be managed and communicated. How it is managed, depends on the organizational
culture. Has the culture prepared its constituents for the changes?
• Taking Acceptable Risks—There are no risk-free activities—there is only the degree of
risk. There are two types of risk: 1) group risk associated with organizational units, projects
and teams; and 2) individual or personal risk. Group risk can be quantified through various
means, if the information is available. Financial risk can be determined and managed, based
on using the appropriate facts. However, the follow-up implementation activities must
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follow some plan where performance can be measured. As an example, Boeing evaluated
the risks involved in developing the 787 Dreamliner; the three-year delay in implementation
destroyed what was considered an acceptable risk. Individual risk arises when the individual
poses questions that the group may choose to disregard, or takes some action not accept-
able to the group, but important to the individual. This person may be considered disruptive,
even though some may acknowledge the rightness of the action. This demonstrates risk atthe personal level, and requires confidence and the courage to proceed. Does the culture
allow this type of action, or constrain such action in some way?
• Forgetting the Gurus—Why do managements place such great faith in management
gurus? Why do organizations that include thousands of members need these gurus to tell
them how to run their organizations? I do not suggest that organizations may need advice
and counsel that may not be available within the organization, but seeking it should be a
rare occasion. Much of what appears to be new is old—old wine in a new bottle. It’s diffi-
cult to find a publication that does not have something to say about innovation. We’re going
to solve our economic difficulties through innovation, but few, if any, know what innova-
tion involves and what it takes to make it happen. So, we now have gurus promoting open
innovation, which has been practiced by some companies for decades—using internal andexternal sources for championing innovation.
• Introducing Systems Thinking—What do I mean by systems thinking? Engineers as a
group focus on engineering needs, marketers focus on marketing needs. Where do such
mindsets put the product manager? Engineers generally know nothing about marketing and
marketers know nothing about engineering. Engineers and marketers have the processes
by which they perform their respective duties. Engineers may be aware of the require-
ments of their own discipline, but lack understanding of other engineering disciplines, and
they fail to take into account the needs of other engineering disciplines. The same applies
to marketers. I have asked myself on many occasions, how can an engineer develop a
design, a component, or a sub-assembly, without some knowledge of how that componentor sub-assembly fits into the product? How can an engineer design a component or sub-
assembly, and not take into consideration the manufacturing requirements? The system
approach involves looking at the specific and the general at the same time; you’re one
piece of the puzzle, but you need to be aware of every other piece. It takes time to develop
a culture that embraces a systems thinking approach, but it’s time to begin.
• Anticipating Future Events—Disregard the future and you may have to turn off the lights.
IBM didn’t anticipate the PC. Eastman Kodak anticipated digital photography, but decided to
protect its silver-halide photographic market. Major networks did not anticipate CNN, FOX,
and others. In Post WW II, the major automobile companies discouraged new entrants and
eventually met their own demise at various levels. General Motors was bailed out by the
federal government; Chrysler went through several major mergers and acquisitions and be-
came part of Fiat with federal government assistance; and Ford, under CEO Alan R. Mulally,
has made excellent progress, without government support. Anticipating future events does
not include consulting the futuristic gurus. It does involve monitoring events. Organizations
will monitor the future of their technologies, or, they will understand their markets and their
competition. In both cases, they will keep abreast of publications and other resources that
focus on their specific business. However, those sources of information may not be the
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usual in their industry. Something related to technology may be found in an economics
journal. Something related to marketing may be found in an engineering publication. A
model or simulation may be found in any unrelated source. Whether the organization an-
ticipates future needs and changes, depends on whether it’s based solidly in the culture.
It’s not restricted to any level of management, or solely to some staff function. The whole
organization becomes involved, and a means exists for processing the various inputs.• Fostering Innovation—In today’s world, innovation is receiving so much attention we
might conclude some public relations firm somehow developed a business plan to promote
it. However, for our purposes; Innovation = Invention + Commercialization or Imple-
mentation—no commercialization or implementation, no innovation. Innovation doesn’t
crosscut an organization by sponsoring a magic program on innovation—it’s a lifestyle—
and it’s grounded in the organization’s purpose and culture. For developing a culture for
innovation, management must have a significant amount of tolerance for failure. It also
requires free thinkers, those who have a vision and a passion to pursue innovation, against
all odds (the constructive mavericks). The mavericks must be able to accept “no” for an
answer, but return time and again—until they receive the necessary approval, or find a
champion to carry their message. Innovation requires some out-of-the-box thinking, butdon’t forget what’s inside the box. How do you convince colleagues to transcend traditional
boundaries, think strategically, and develop a business perspective? It’s an opportunity to
become involved in the whole of something, rather than just the pieces. It’s an opportunity
to integrate all the independent functions and disciplines into a cohesive team effort, and
think about a business breakthrough. Innovation does not occur by chance, it must be a
conscious choice.
• Creating a Sense of Excitement—It’s easy to identify a sense of excitement when you en-
ter a group of people working on a project—this isn’t fun and games, it’s an air of collegiality
and interest focused on meeting some goal. It doesn’t mean that the group is void of any
conflict of ideas, but ideas and issues are discussed based on the available facts. People areengaged. There’s a high level of camaraderie. The excitement is directed at the intellectual
levels of discovery and using what is discovered to further their goals. The enthusiasm
is contagious. There’s freedom to act without permission, but of course, within limits.
Personal initiative thrives. These people are willing to put their jobs on the line for what they
believe. Contrast this environment with one where apathy reigns. Apathy destroys careers
and quickly disengages people from meeting their goals.
• Communicating—What are the expectations from the organizational unit and the IPCs?
Surveys on organizational communication usually show that about two-thirds of its mem-
bers are satisfied. However, research on the other one-third shows that they expect far
more communication, but without relevance to their needs. Keep in mind, I’m referring to
organizational unit communication, not corporate. So, the immediate manager or managers
have responsibility to meet the communication requirements. But, the mode of communica-
tion has changed. The call should go out for managers to once again start walking around,
and find out what’s going on in the organization. Reports do not tell the whole story. IPC
to IPC communication now presents some serious problems. The engineering bull pen no
longer exists. Cubicles continue to dominate. As ridiculous as it sounds, too many IPCs
communicate via the Internet, even though they sit in adjacent cubicles. IPCs go through a
succession of Internet exchanges, without leaving those cubicles or picking up the phone to
resolve an issue.
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• Promoting Lifelong Learning—Lifelong learning is not a choice; it’s a requirement. Learn-
ing can be acquired in many different ways: formal courses; independent reading; confer-
ences and workshops; and probably the easiest, although not always possible, working on
the leading edge. Organizations can support education, but in the nal analysis, the IPCs
and managers are responsible for maintaining their competencies. Credible managers can
provide for growth and learning opportunities for IPCs, but the manager establishes theculture that promotes lifelong learning.
Educating for taking-the-lead in developing an appropriate culture has its limitations. Please
note: I’m considering an appropriate culture, and not some idealistic model that will apply
to all organizations. Not every organization, or every form of organizational unit, can adopt
the same culture. The culture in the research laboratory will be quite different from the culture
on the factory floor. Yes, there are common elements that apply to all—equal treatment for
all, high levels of trust, respect for people, and adequately developed competencies and
capabilities.
Further, educational programs must provide opportunities to demonstrate what has been
learned. Unfortunately, few opportunities arise, in any educational program, to demonstratecompetencies in the practice of the subject matter. Book learning, lectures, workshops,
whether formal or informal, provides the basic knowledge. The process of educational
leadership begins with an understanding what it means to manage.
Providing the Resources and Infrastructure
Cultures require support of adequate resources and a supporting infrastructure from
management. Unfortunately, resources seldom receive adequate detailed consideration.
Organizational resources
Resources include more than people and money. Consider the following required resources:
• People—Too often management takes a macro approach in assigning people, instead of
a micro-level approach. It’s necessary to identify the specific competencies based on past
experience.
• Access to Information—Information drives performance, but it must be available to all who
need it. Who owns that information, some organizational unit, or the organization? Can an
engineer gain access to marketing information?
• Technology—Does the organization own the technology, or the individual operating units?
Is there a free flow of technological information across all organizational units?
• Marketing and Sales—Do research and product development have access to customerinformation? Do engineers receive reports from marketing about the operation of products
in the marketplace?
• Time—Time is a limited commodity and business resource—only twenty-four hours in a
day, no more. The implication of this statement involves three elements; time, timing and
cycle duration. These three elements work interactively, collectively, and concurrently.
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• Distribution—Includes the functions required to move a product to the marketplace; it
includes: 1) the means by which an organization moves its products to the marketplace;
2) the physical plant and equipment required to move the product from the production line
to the customer; and 3) providing the required after-sale service. These functions must be
designed into the product.
• Customers—Do more than pay the organizations bills. They’re a source of ideas for futureproduct development.
• Suppliers—Suppliers have provided valuable input for improving products and processes
long before downsizing and outsourcing became popular. But, those relations must be
nourished, just like any other relationship. Both supplier and buyer must be protected.
• Finance—I have placed finance at the end of the list, since too often, lack of available
financing is used as an excuse for not pursuing a program. Yes, financing is essential,
but seldom are proposals rejected solely for financial reasons. Engineers, take note: the
business of engineering is business performance.
Organizational infrastructure
Resources provide the raw material, but the organizational infrastructure provides the catalyst
to maximize the output of the resources. Organizational infrastructure includes:
• Clearly Stated Vision, Purposes, Objectives and Strategies—Organizations generally
provide written documentation of its vision, purposes, objectives and strategies in broad
terms. Those documents need to be interpreted at various levels in the organization.
• Organizational Structure—Management research has not provided much realistic guid-
ance regarding organizational structure. Structure depends on people, and other than in
generalities, must be based on the available competencies and capabilities.
• Management Attributes—Management attributes are the glue that keeps the organiza-
tion together and keeps it moving forward. Attributes involves issues such as management
attitude; breadth of knowledge; acceptance of uncertainties and risk; support for innovation
and entrepreneurship; and judicious use of policies, procedures and practices.
• Leadership—Leadership must be viewed within the context of the industry, organization,
and organizational units. Giving the title of “leader’ to the highest level executive may be
a disservice to the many who “take the lead.” I do not diminish in any way the role of
executive leadership. Executive leadership involves establishing the parameters that guide
the future of the organization. Fulfillment of those leadership parameters requires the many
who do “take the lead.”
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Case Study: IBMs Silverlake Project
IBM’s Silverlake Project 10 , later to be designated the AS/400 series of mid-range computers,
provides an excellent case study of how to change a bureaucratic technology-driven culture,into one of IBM’s most successful businesses. It is impossible to tell the complete story in this
e-book, so if you’re interested, I suggest you try and retrieve a copy from the library.
The history of IBM in Rochester, Minnesota, begins in 1956—when IBM purchases a 401-acre
site that eventually became home to 8,000 engineers, programmers, marketers, managers,
manufacturing facilities, and all the support people from finance, human resources, sales,
distributions, procurement, legal and patent, and all other administrative functions.
The Silverlake Project story tells us how a group of about 2,500 engineers, programmers, and
planners, transformed themselves from a technologically driven laboratory, into a customer-fo-
cused, and market-driven organization. This transformation shows the role of a leader/manager
taking a somewhat dysfunctional and non-business focused organization—and an uninterestedIBM headquarters—to transform it into a major force within IBM, and produce one of its most
long-term, profitable computer systems. This transformation began, when Tom Furey came to
Rochester, Minnesota, as manager of the IBM Rochester Development Laboratory (IBMR).
IBMR entered computer manufacturing in 1966, when a group of engineers designed a card
reader that included a processor. IBMR began making punched-card readers. The Rochester
operation grew, as engineers and software developers created a steady stream of well-received
computers, for small and medium-sized businesses. These developments gave IBMR a base
of electronics expertise, so when IBM decided to make a computer for small to medium-sized
businesses, IBMR was given the challenge. IBMR gave birth to the System/3 in 1969. Sys-
tem/3 was a technological and business success. IBMR developed the System/32 in 1975,System/34 in 1977, System/36 in 1983, and System/38 in 1978. According to the authors,
System/38 was too elegant, and not compatible with System/3 and the System 34 software,
but System/38 became the choice of sophisticated users, and the engineers and programmers
who created it.
IBMR was successful. It delivered products on time, and became a computer company, only to
be exceeded in size by its parent, IBM. IBMR was a nice little business. Rochester was far from
White Plains, NY, so executives seldom took the opportunity to visit; as long as sales and profit
targets were met, no one bothered them. The authors note, they lived in “relative obscurity,”
and “they left us alone, and we kept to ourselves.” The decision to allow an organization to live
in “relative obscurity” seems contradictory to what we know as IBM headquarters operating
philosophy.
Good things usually come to an end. While IBMR was meeting its sales and profit targets, it
was losing market share. Current products were losing competitive position, and no break-
through replacements were on the drawing boards. IBMR’s computers were not compatible
with the competition. How IBM managed to allow this incompatibility between systems to
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develop, is difficult to understand. IBM decision-making processes must have somehow been
corrupted. IBM was not a start-up at this time. The fact that IBMR was living in “relative obscu-
rity” doesn’t sound like good management practice. Who made the decisions? Or did they just
happen?
In 1982, to recapture the mid-size computer market, IBM headquarters gave birth to the Fort
Knox project. IBMR becomes home to Fort Knox. Objective: develop a single successor toIBM’s range of mid-size computers. The concept supposedly was simple, and the project would
be directed from IBM Headquarters. The authors of The Silverlake Project note, “Fort Knox
would have been tantamount to combining the features of a sports car, a station wagon, a
compact, a luxury car, and a pickup truck into a single all-appealing vehicle.” The project failed
for many reasons—among them: the project was driven from headquarters; used multi-site
development; faced unresolved issues among engineers and software developers in multiple
locations; and a different mindset at IBMR, as to the role of managers and the professional
staff.
Justification for the Fort Knox project was questionable, and IBMR offered the stiffest opposi-
tion to Fort Knox. Those who criticized the project were relieved of their responsibilities, andsent to technological Siberia. IBM headquarters then decided that System/36 would be the
machine that challenges the competition in office automation and declared System/38 as
non-strategic. The 20,000 customers, who owned the System/38 machine found themselves
in a dead end regarding future upgrades. The concept was not feasible, and the final cost of an
installation would not be acceptable for small and mid-size users.
The reasons for the failure of Fort Knox were many, and even the decision to cancel came
late: too much top-level decision-making; combining the requirements of too many machines
into one; use of multiple-sites with control from headquarters, yet no control; lack of adequate
leadership; delays and rework; ineffective coordination between engineers and programmers,
working in different locations; and ineffective communication. Fort Knox never received buy-in
from the cooperating organizational units. The Fort Knox experience forced IBMR to reconsider
the role of its management hierarchy: leave business decisions to the managers and the techni-
cal decisions to the experts. The failure of Fort Knox left the IBMR staff with a feeling that they
had “something to prove.”
Fort Knox died. An experienced developer and programmer present a proposal to launch a new
machine and received approval for additional staff. IBM headquarters gave its blessing, and the
Silverlake Project becomes official. Headquarters sends Tom Furey, a veteran IBMer, with major
accomplishments, as director of IBMR. Furey receives a very cool reception, engineers and
programmers question his ability to make a difference.
IBM headquarters handpicked Tom Furey. But Furey did not exactly covet the assignment. He
was a 24-year IBM veteran, 45 years old, came to IBM from college as a systems engineer,
and progressed through many positions in those 24 years—installing and programming IBM
computers, as software development manager, as new technology analyst, put in charge of a
venture in large computer display screens, and head of strategic planning for IBM’s telecom-
munications products. Headquarters executives picked Furey because they pegged him as
a “manager who could think strategically and had the breadth, depth, and the knack to run
IBMR’s development lab as though it were a real business , subject to the same disciplines as
any commercial enterprise.” Once they appointed Furey, headquarters supported him, got out
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of his way, and let him manage the situation as he saw fit. Furey was not one who necessarily
exuded personal warmth.
As far as IBMR staff was concerned Fury was in over his head. While he had a well-rounded
career, he was never a lab director, and certainly never managed anything as large as the
Rochester lab. Furey did not exactly receive a vote of confidence on his arrival. He didn’t endear
himself to the staff, when one of his first actions was to redecorate his office, and expand theconference room. Nevertheless, we’ve all probably witnessed a situation, where the first act of
a new manager involved enhancing the personal work space or some similar action. Sometimes
this approach can be a good decision, sometimes a bad decision, depending on the final out-
come. Best strategy: Don’t rush to judgment. Tom Furey was the new boss of the IBMR Lab.
Furey launched a turnaround—he called a meeting in the cafeteria and presented the plan,
required not only to maintain the viability of the organization, but to save their jobs. He
presents his vision for IBMR; “to be the undisputed leader in the mid-range computer market,
He described his vision of the future, and applause was not to be heard. No cheers, just
quiet polite Midwestern resignation! They didn’t buy it. Comments such as, “Furey was hav-
ing delusions of grandeur,” and “played the role of a cheerleader” were common. Wide-spreadskepticism abounded about his approach: Silverlake would be a repeat of Fort Knox. Furey’s
continual requests for answers to questions that previously had never had been asked, resulted
in open rebellion from some. The consensus: Furey will be gone in two years; things will get
back to normal. The decision by staff to turn off Furey’s proposal identified the difficulties on
the road ahead to transform IBMR into a customer- and market-driven organization.
When Furey began asking questions such as: (1) Who are our customers? and (2) What capa-
bilities do they want?—he received blank stares. Staff felt it was their business to design, build
and program computers, not become involved in such mundane questions. It was beyond their
scope of thinking to look at the business issues that determined IBMR’s business viability.
Furey formed a cross-functional task force, involving people from manufacturing, development
and marketing, and appointed a former manufacturing manager, with a “pit-bull” mentality, to
look at the business related issues.
Furey manages by facts, figures, computer modeling, market research, and forecasting
disciplines. He argues consistently that these actions must be part of the engineering and
programming groups. He continues to ask for data to make decisions. Furey’s insistence
on information before making decisions, appears to be a problem for the engineers and
programmers. It generates significant issues, not only with engineers and programmers, but
also with some managers.
A preliminary report by the task force showed that IBMR had 200,000 customers worldwide,
60 percent outside the United States; sold almost as many System/38 computers in Japan as
in the United States; and had a huge number of independent software producers who grew
up around Rochester’s computers. Furey began seeing a vision for IBMR, and realized that
with the right computers and attitude, IBMR could become the undisputed leader in the global
mid-range computer market . Furey began to think, that Silverlake was not just another com-
puter—but a breakthrough product. He perceived the possibilities of Silverlake before all the
information was available. He began to refine his vision of what role IBMR could be, and brings
in the people who were exiled to technological Siberia, when they voiced their concerns about
the viability of the Fort Knox project.
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Furey decides it’s time to act, and hosts a series of “roundtables” at lunch time, calling in vari-
ous groups. He listens, rather than lectures. Furey expected piercing questions, and established
himself as a non-vindictive manager. Those questions had to be asked and answered. When
employees found that they could open up without risking any type of repudiation, the round-
tables flourished. They had an opportunity to vent their concerns. Furey began to communicate
his vision, by answering the many questions. Now, we all know how difficult it is to convey avision clearly, and in a manner that has meaning to those responsible for implementing it.
Furey presents the Silverlake plan to the complete organization The challenge: to complete Sil-
verlake in two years will involve: more than 50,000 different parts; over 7 million lines of code;
over 3,000 person-years of programming; work in no less than 27 languages; 33,000 pages of
operating instructions; and training of 32,000 sales and service people.
IBMR culture appears to be quite different from what appears in the business press, about IBM
as a corporation. The press provides a picture of a well-managed organization that embodies
all the elements of a progressive and employee-focused organization. IBMR may be an IBM
anomaly. Silverlake presents many management problems. The IBMR management philosophy:
managers were expected to be technically knowledgeable and capable of answering all ques-tions—supposedly led managers to become micromanagers. On the other hand, when Furey
wanted technical information, he went directly to the sources—the technical experts. Furey’s
managing philosophy: managers must lead more and manage less; managers set broad goals,
and support the troops; manage the process as much as people; managers must make sure
people understand the goals to be achieved; managers should not abdicate complete control;
and managers must push authority and accountability down into the ranks.
The launch of Silverlake was to be like no other IBM launch. John Akers, IBM Chair, said
Silverlake was so important to IBM’s future, that he personally appointed a key executive in
charge of the Silverlake launch. A cross-functional Executive Committee was appointed, and
began planning of the product launch. A Red Team was formed to put Silverlake under the
microscope, and determine all the negative issues that could be raised by the competition.
Manufacturing ramped up production. Customers and business partners tested Silverlake.
The executive Akers appointed to launch Silverlake, was known for his organizational
acumen, decisiveness, and his ability to get things done. He immediately began putting the
right people in the right place, and formed a cross-functional team called the Executive Steer-
ing Committee. This committee, included representatives from all the functions involved in
Silverlake, including Furey, and from each of IBM’s five geographical areas. Part of the launch
included the activities of the Red Team made up of 20 battle-hardened sales veterans. For three
months, they placed Silverlake under a microscope and focused on finding all the weaknesses
of the system. They eventually arrived with a list of items that competitors would consider as
weaknesses. The Red Team concluded that, “nothing would damage Silverlake’s credibilitymore than if it failed to deliver on its promises.” Manufacturing ramped up production, and
through an early ship program, placed 4,755 machines with customers and the business part-
ners. These machines were placed with the understanding that the machines would be used as
test machines, but some customers were so enthusiastic, that they immediately switched over
to the AS/400.
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The launch of the AS/400 worldwide was a spectacular event starting in Japan and Australia;
it went on to the European Capitals of Rome, Bonn, Paris, London, and others; and finally to
New York City10 In New York City, IBM assembled more than 2,000 members of the press and
guests, and arranged for telecasting the event to 100,000 customers and prospects gathered
throughout various IBM operations. The launch was a spectacular success, and IBM received
all types of accolades for a product launch that exceeded all expectations. Within four months,IBM sold more than 25,000 units and the AS/400 became IBM’s most successful product intro-
duction in its 75-year history. Within 18 months IBM sold 100,000 units worldwide. IBMR went
from being a “nice little business” to being a “nice big business,” and the installed base of all
IBMR systems grew to 450,000. By the end of 1990, IBMR became a $14 billion business. As
a business by itself, it would place number 28 in the list of Fortune’s 500 companies in 1991.
IBMR was now a customer-centered and market-oriented operation.
The Silverlake Project was completed in the unheard time-frame of 28 months. They did what
many of the executives doubted, even though they put Tom Furey, their hand-picked manager
in to revitalize IBM Rochester. They completed Silverlake by turning the IBMR culture upside
down, and by changing attitudes; giving people the tools, techniques and skills; and providing
opportunities for individual leadership. Managers were educated to be both managers and lead-ers.
What have we learned from IBM’s Silverlake Project ? If you want to change a culture:
1. Appoint a leader to develop a vision/purpose.
2. Institutionalize the vision/purpose with the right people.
3. Empower the participants.
4. Use cross-functional teams.
5. Segment the market.
6. Research and model the markets.
7. Set priorities and allocate resources.
8. Use parallel processing in engineering and management.
9. Form partnerships with outsiders.
10. Shape and exceed customer requirements.
Sounds like a simple process. However, it all depends on selecting the leader who is expected
to bring about the change. Silverlake was an action plan built around saving an organization, and
not a dictum from the executive offices that we need to change the organizational culture.
It is difficult to understand what IBMR management was thinking over those many years. As
the authors note, were those at IBMR “really those hicks that were totally removed from the
IBM power centers?” Furey’s program to rebuild IBMR:
• Selects a group to develop an organizational structure that will meet the Silverlake require-
ments. He could have accomplished this more quickly himself, but his approach provides
for a buy-in from managers and IPCs.
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• Establishes clear objectives and benchmarks for organizational behavior—expects team
members, at all levels, to exercise judgment
• Challenges the information required to manage Silverlake, and prioritizes the 2,000 item
laundry list on the Silverlake specification
• Develops information about the customer base for this mid-range market that could reach$200 billion at maturity, for computers, selling for $15,000 to $1 million
• Establishes a committee to position Silverlake in the marketplace. The committee of 15
people worked 18 months to develop the global plan.
• Expands use of concurrent engineering principles to concurrent management of all organiza-
tional functions
• Breaks IBM’s long standing self-reliance and secrecy policy; selected outsiders were now
welcome
• Establishes a Customer Council that invites customers to work on prototype machines and
convert their software to work on Silverlake• Changes an essentially command and control culture to an empowerment culture, by
involving managers and the Individual professional contributors in their respective,
decision-making processes
• Brought in top-level consultants, who recognized that IBMR suffered from a scarcity of
competent managers. Managers were micromanagers: prior IBM policies required manag-
ers to be able to respond to all technical questions
• Establishes workshops for managers, and the engineers and programmers related to inno-
vation, strategy, operations and marketing
• Changes management philosophy: no more command and control. Leave business deci-sions to the managers, and the technical decisions to the experts
• Gave employees’ power to bring their strengths to the workplace
• Hires a full-time communications professional to start an IBMR newsletter; continues the
roundtable discussions; and continues the all-manager and all-employee meetings
• Hires a manager from the IBM Rochester Brieng Sales Group to communicate the full
impact of the Silverlake Project
• Completes the Silverlake Project in the unheard of time period of 28 months
The history of IBM Rochester, Minnesota provides much learning about transforming a culture.
It involved a project manager who asked questions that had never been asked. It involved
a project manager who listened. It involved transitioning engineers and programmers from
their narrow vision of their responsibilities, to include the business requirements—and in the
process, increased their technological capabilities.
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Parting Thoughts
In Book 3, I’ve focused on organizational unit cultures, rather than the organization’s culture.
The organization may espouse certain values, but those values become reality in the orga-nizational units that include business units, projects, teams, task forces, and any grouping of
individuals given responsibility to pursue an activity. Those organizational unit cultures will vary
depending on the leader. The IPCs, however, also have opportunities to change a culture, if
the unit leader fails to build a responsive culture. The task is not easy, but doable, and requires
courage and a willingness to accept the associated risks.
IBM’s Silverlake Project provides an excellent example of how a culture can be transformed
when a project manager begins asking the questions and listens to the responses. It demon-
strates the importance of building trust. It demonstrates that when a project manager takes
personal initiative, it can infect the organization—in a good way. It demonstrates that corporate
knew when to enter the game in launching a product. Finally, it takes a lot of hard work andcooperation by many people to make it happen—it takes freedom with operational discipline. It
ends with not only personal satisfaction for those involved, but also for the future of the organi-
zation. If you’re interested in changing a culture, I suggest you read the The Silverlake Project ,
written by people who lived it.
In Book 4, What It Takes to be a Manager-Leader, I’ll discuss what the manager-leader brings to
the organization, differentiate the manager and leader functions, describe the effort required to
manage and to lead, identify the characteristics of the manager-leader, and present information
to help you decide if you want to take on the responsibilities of the manager-leader.
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References
1. Amanda Bennett. “Broken Bonds,” WSJ , December 8, 1989. p. R21.
2. D. R. Denison, “Organizational Culture and Organizational Effectiveness: A Theoryand some Empirical Evidence,” Proceedings of the Academy of Management (1989):
pp. 168-172. (Best Paper)
3. Judith M. Bardwick, Danger in the Comfort Zone , (New York: AMACOM, 1991)
4. John P. Kotter, William McKnight, and James L. Heskett, Corporate Culture and
Performance (New York: The Free Press, 1992)
5. Gerard H. Gaynor, Innovation by Design (New York: American Management Association,
2002), pp. 220-242.
6. Abraham Zaleznik, “Real Work.” Harvard Business Review . January-February1989, Reprint
No. 97611.7. David Whyte
8. Aaron Shenhar, “The Shuttle Era: Lasting Lessons,” Aviation Week & Space Technology ,
July 18-25, p. 90.
9. Dov Dvir and Aaron Shenhar, “What Great Projects Have in Common,” MIT Sloan
Management Review , Spring 2011, Vol. 52 No. 3, pp. 19-21. Reprint No. 52316.
10. R. A. Bauer, E. Collar, and V. Tang, The Silverlake Project , (New York: Oxford University
Press, 1992)
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