How social media will change your leadership style
- By Charlene Li
- Jul 08, 2010
Talk about scope creep. When social media began making inroads in the federal government in the past several years, most federal officials saw it as either irrelevant to agency operations or, at best, a peripheral function of public affairs. Many agencies — including the military services — even debated the idea of blocking access to commercial social media sites.
But a few agency officials thought otherwise. They shared concerns about the security and privacy of commercial sites, but they also realized that social media could play a valuable role in their daily operations, making it possible for employees to collaborate in new and unimagined ways.
NASA developed a system called Spacebook, which enables agency employees to network in a secure environment. The Defense Department is following suit with Milbook and the State Department with Statebook. Later this summer, the General Services Administration plans to launch a secure social networking system for agencies that do not wish to build their own.
For federal officials who had hoped that social networking was a fad that would fade away or, at most, just another collaboration tool, the news keeps getting worse.
By making it so easy for information to flow across an organization, social media is changing how decisions get made, said Charlene Li, a social media expert and founder of the Altimeter Group.
“Not only is this trend inevitable, but it also is going to force you and your organization to be more open than you are today,” Li writes in her new book, “Open Leadership: How Social Technology Can Transform the Way You Lead.”
In the following excerpt from her book, Li provides an overview of how open decision-making might just work.
Like information sharing, open decision-making varies significantly not only between companies but also within them. You can find one type of decision-making among executive ranks and another type being used at the team level. There are four major types of decision-making in organizations today: centralized, democratic, consensus and distributed. As we go through each one in turn and examine how each type is enabled and also changed because of openness, keep in mind that no one type of decision-making is best. Rather, understand that they differ in terms of the degree of control, extent of information shared and choice of people involved as appropriate for each situation.
A small number of people — typically the chief executive and perhaps a small team around that person — have the knowledge and judgment to make centralized decisions. It is not necessarily micromanagement (although it can be), but the general sense is that for certain types of decisions, especially highly strategic ones, the person in charge can’t afford to let other people make that call.
The advantage of centralized decision-making is that it can be decisive and quick — and also effective, if the leader is trusted by the organization. However, it frequently carries the stigma of “command and control,” whereby employees feel they are being dictated to and have little recourse except to abide and obey.
But in a world in which the marketplace is moving at unprecedented speed, few leaders can afford to act within a cocoon of information or risk not having full buy-in to their decisions. The key challenge to making centralized decision-making more open is not to involve more people in the actual decision but to open up information sharing in both directions, so that those in power have the right information on which to base their decisions and also have the commitment to share it back out to the organization.
In democratic decision-making, a limited set of choices is put forward to a group and voting is used to make the decision. The creation and selection of the choices could be a simple “yes” or “no” vote. Think of the way most public companies approve members of the board of directors, for example. But increasingly, voting is used to allow people to choose from a set of equally viable options — for example, the service provider for the company cafeteria — and the choices are then put to a vote. The result: Employees feel a much greater sense of ownership in the process.
This is also becoming prevalent in decisions with customers. Walkers in the United Kingdom, for example, held a “Do Us a Flavour” campaign to crowdsource ideas for a new potato chip taste. The company narrowed the choices down to six, produced them as a sample pack, and asked people to go online and vote for their favorite. More than a million people voted for the winner, “Builder’s Breakfast,” which tastes like eggs, sausage, bacon and beans and is now a permanent Walkers flavor. And of course, there are the perennial talent contests like the “American Idol” or “Who’s Got Talent?” television shows whose viewers vote for their favorite performers.
Although compelling, democratic decision-making isn’t well suited for most situations. First, the cost of mounting the outreach to engage potential voters — even inside an organization — can be daunting. Second, this process isn’t suitable for complex decisions that have nuance, and those who use it in such situations run the risk of being perceived as rubberstamping when the decision had already been made. Last, voting is open to politicking and based on popularity rather than merit, as is often seen on shows like American Idol. This decision-making may be appropriate for picking the next best-selling artist, but not if you’re trying to make strategic decisions.
In this decision-making model, every person involved and affected has to agree about whatever is being decided, resulting in tremendous buy-in. One typical place where this type of decision-making is often used is in hiring — everyone has to feel comfortable that this is a good person to add to the team. But it’s also a cumbersome model, as it takes a tremendous amount of time and effort to corral everyone into agreement.
W.L. Gore, the maker of Gore-Tex fabric, is one of the few examples of enterprise-level consensus decision-making in business, and for good reason — it’s really, really hard. From the beginning, Gore has had no employees or managers — only associates. The organization is extremely flat and hierarchies are actively broken down. Decisions are made because people believe they need to be and agree to them. So although the decision-making process can be chaotic and slow, in the end, everyone buys into it. With 8,600 associates and $2.5 billion in annual sales, Gore is able to do this because their culture supported it from the beginning. As Gary Hamel describes in his book "The Future of Management," one employee sums up the essence of Gore, saying, “We vote with our feet. If you call a meeting and people show up, you’re a leader.”
Other companies, like Whole Foods, Google and Semco Bank in Brazil, have been cited as examples of companies that allow employees to self-manage. The common trait of these companies is that either they are owned by their leaders (Ricardo Semler, Semco Bank) or they began with these philosophies and cultures in place from the start (Whole Foods, Google and W.L. Gore).
Most organizations don’t have the luxury of junking the entire org chart or the ability to do so, but they can realize the benefits of self-managed teams with a variation, which I call distributed decision-making.
This model of decision-making is a hybrid of all of the preceding ones, in that it pushes decisions away from the center to where the information and knowledge to make decisions actually reside, typically closer to the customer. Once decisions are made closer to the edge, the actual method of making the decision may still be centralized, but the mere act of pushing it down into the organization means that the buy-in that usually comes with consensus decision-making is achieved. Decision-making inside of distributed models may look confusing and chaotic, but it’s just the opposite — a tremendous amount of discipline and planning is needed to get everyone working in the same direction.
The payoff: the ability to break down complex tasks as well as speed and [agility].
We’ll take a look at how Cisco Systems — a very large, established, hierarchical company — is trying to instill that discipline.
Let’s first understand what Cisco CEO John Chambers is trying to do. After weathering the 2001 tech meltdown, Chambers was determined to make the company more nimble and responsive to changing customer and market demands. But Cisco is a $40 billion company with 65,000 employees scattered all around the world and a deeply ingrained hierarchical structure. Although Chambers is a charismatic leader deeply respected for his leadership and decision-making, how could he pull this off?
In effect, he cloned himself. Or at least the decision-making part.
Cisco saw that its core business of networking technology was becoming mature, so the company needed to find new market opportunities to enter and grow. To do this, Cisco created councils and boards and shifted decision-making down several levels. Only nine councils report directly into the very top operating committee, made up of top executives, including Chambers. These councils are typically responsible for $10 billion in revenue, and each has about 16 executives. Reporting into the councils are more than 50 boards, each responsible for $1 billion in business, and reporting into the boards are numerous working groups that come and go to support initiatives.
In total, there were more than 750 executives involved in the councils and boards at the time this book was written — up from 100 executives two years earlier. That means strategic decisions — acquisitions, entering new markets, creating new products — are handled by a huge number of people. Moreover, these councils and boards are almost always co-led by two people, typically one person from sales and one person from product development or engineering. On the surface, it looks like Chambers created an entirely new matrix organization on top of Cisco’s functional departments — in effect, duplicating the bureaucracy. Requiring consensus at the leadership level would also seem to defeat the purpose of greater speed and agility.
But the proof is in the numbers, and the numbers are shocking. In an interview with me, Chambers shared what the company had accomplished in just the prior 45 days:
- Announced four acquisitions, with two of the acquisitions above $3 billion in value and three of the four acquisitions outside the United States.
- Prepared and announced quarterly earnings.
- Held a CIO conference and a service partner meeting.
- Led a $5 billion debt offering.
- Announced strategic partnerships with EMC and VMware.
On top of this, Chambers personally had 125 individual customer meetings in the same time period. And he isn’t doing all of this by working insane hours — in fact, just the opposite is happening. “I am working less than I did two years ago,” Chambers said, smiling. In fact, the amount of time spent by senior executives on strategic decisions is 60 days a year — exactly the same that it was in 2007. But the number of cross-company priorities increased from two in 2007 to 30 in 2009, a fifteen-fold increase. The speed and scale of Cisco’s activities is breathtaking, but to Chambers, this is the way that Cisco should run. He said, “This is business as normal at Cisco. Name me any other organization in the world that could do this.”