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Why employers need to ‘loosen up’

Why employers need to ‘loosen up’
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First Published: Sun, Sep 25 2011. 11 24 PM IST

Find the balance: Get rid of unnecessary rules.
Find the balance: Get rid of unnecessary rules.
Updated: Sun, Sep 25 2011. 11 24 PM IST
Moving away from the safety of set rules and practices, Martin Thomas’ Loose: The Future of Business is Letting Go promotes the concepts of flexibility, agility and readiness to improvise. This, it argues, will set apart successful businesses from mediocre ones. Thomas, who has been working as a marketing consultant, trainer and public speaker with different companies on a range of business, branding and communication projects, co-authored his first book, Crowd Surfing: Surviving and Thriving in the Age of Consumer Empowerment, in 2008 with David Brain. In Loose, he challenges the reliance on lazy, rigid processes, especially in a time of constant cultural, technological and economic flux. In an email interview, Thomas talks about why businesses need to rely on the experience and judgement of their people. Edited excerpts:
You talk about freedom within a framework. How does an organization decide how much control is good and when does it become too much?
A successful business cannot be entirely “loose”. There has to be some structure or an organizing principle, a framework in which loose thinking and working can thrive. The type of structure that is required will vary, depending on the nature of the organization and the space in which it operates. A pharmaceutical company, operating in a highly regulated environment in which mistakes can be literally life-threatening, can never be as loose as a business selling low-risk consumer products. But equally, it cannot be entirely tight if it is to thrive in the modern world, retain the best people, harness their creativity and deal with its critics. Some degree of looseness can be built into any organization. It is simply a question of finding the right tight-loose balance or defining the level of freedom within an organizational framework.
Find the balance: Get rid of unnecessary rules.
There is a simple reality that most organizations are weighed down by unnecessary bureaucracy that simply adds cost rather than real value. My advice to business leaders is to fight the instinct to solve every problem through rules and regulations.
I love the Google philosophy which, according to Fortune magazine, is “to determine precisely the amount of management it needs—and then use a little less”. This is a loose philosophy writ large—freedom within a framework.
Your book values personal judgement and flexibility over set rules and processes. Can that not cause chaos?
I am conscious that “loose” is a challenging concept and it comes with many negative connotations. For many business experts, it appears to espouse chaos, rather than structure and the benefits of accumulated knowledge.
Loose—The Future of Business is Letting Go: Hachette India, 262 pages, Rs 395.
But as I hope I make clear in the book, I am not suggesting that organizations abandon proven ways of working, ignore the importance of accountability and ride roughshod over safety or legislative concerns. Key targets of my criticism are rules that don’t work, processes that add bureaucracy and plans and forecasts that are merely exercises in report writing.
By analysing the behaviour of some of the world’s largest companies—such as Microsoft, Procter & Gamble (P&G), Xerox, Unilever, Cisco, Gore, Nike, Hewlett-Packard (HP)—I have been able to demonstrate how “looser” ways of thinking and working are starting to pervade even the largest and most complex institutions.
Paradoxically, for any institution, being loose is far more difficult than being tight. It takes time and effort to create an organizational culture that can operate without a command and control mindset.
You say that the times we live in now make “loose-over-tight” even more relevant. Why?
The need to loosen up has been championed by many leading business thinkers, from Rosabeth Moss Kanter in When Giants Learn to Dance, to Richard Pascale in Surfing the Edge of Chaos. Tom Peters has virtually made a career of it. In his seminal work, In Search of Excellence, he stated how systematized approach can be counterproductive, suggesting that “we must embrace a model of leadership that is loose, open and perpetually innovative”.
The ideas remain the same, but I would argue that the circumstances in which we now live have made them even more relevant. Businesses are operating in an increasingly complex and unpredictable social, cultural, economic, political and environmental landscape, which is creating new challenges and forcing institutions to operate and respond in real time. Our world is messy and bewilderingly complex and the public mood is cynical, mildly subversive and increasingly adversarial. It is a situation that defies rational analysis and neat, simple solutions, no matter how superficially attractive they might appear. In the words of the advertising and marketing services group WPP’s group chief executive Sir Martin Sorrell, “The 21st century is not a place for tidy minds.” This new reality also places a premium on speed and the ability to improvise over cautious deliberation and longer-term planning.
After the global financial crisis, tighter regulations were suggested. What is your opinion?
In the aftermath of the global financial crisis, many politicians have called for the imposition of tighter regulation to prevent what they perceive to have been irresponsible and fraudulent behaviour. They have called time on the era of laissez-faire capitalism and light-touch regulation instigated during the Reagan-Thatcher years and sustained by their successors. Others argue that the collapse of the system was more a case of people failing to adhere to the spirit of the law rather than its letter: a view I have some sympathy with.
Financial institutions, such as Lehman Brothers, were guilty of gaming the system and would probably have done so, whatever the legal framework. Paul Moxey, head of corporate governance and risk management at the Association of Chartered Certified Accountants (a global body), describes how Lehman Brothers “was able to make assets disappear off its balance sheet, simply by picking and choosing which legal jurisdictions it had got its legal opinions and accounting standards from. But Lehman never broke the rules… Every bank that failed in the crisis complied with corporate governance requirements”.
He also makes a simple but powerful argument in favour of a focus on business ethics, rather than simply on the tightening of regulations: “While you can dodge a rule, you can’t dodge a principle.” The politicians may like to think that by imposing a tougher regulatory framework, they will stop financial institutions from operating entirely in their own interests rather than those of society in general. They think it makes them look tough in the eyes of the electorate—but unless those institutions are willing to operate in a principled way, loopholes will continue to be exploited. A “looser” approach, relying on a stronger code of ethics at the heart of the financial system, may fail to sate the voters’ desire to punish the bankers, but it is likely to be far more effective as a regulator of behaviour than the imposition of yet more legislation.
komal.sharma@livemint.com
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First Published: Sun, Sep 25 2011. 11 24 PM IST
More Topics: Workplace | Employer | Martin Thomas | Loose | Freedom |