Let’s start with a look at the numbers: Apple reported year-on-year revenue growth of 11% to USD 43.6bn (a figure which Google, Microsoft or the like could only dream of), strong profits of USD 9.5bn (better than expected yet lower than year-on-year for the first time in almost 10 years), representing a 21.7% net profit margin. Apple sold 65% (!) more iPads than a year ago, and even iPhone unit sales increased 7% over the same period. iTunes sales grew 30% and Apple holds a towering 63% share of digital music downloads in the US. Other fundamentals also point to a very strong company in sound health. With less than 10% of unit sales in the global mobile phone industry, Apple collects 75% of the industry’s profits (#2 Samsung comes in at 16%). In PCs, Apple holds a 5% market share but accounts for 45% of the profits.

Maybe even more important: customers love (and continue to love) Apple’s products. Apple just recently won the J.D. Power and Associates award for customer satisfaction with smartphones – for the ninth time in a row. It continues to dominate its PC making rivals such as HP or Dell in the American Customer Satisfaction Index. The company ranked #1 in Fortune’s list of the worlds most admired companies again in 2013 – for the sixth year in a row. It ranked #1 in BCG’s “most innovative companies” study in every year since 2005. And. So. On.

Yet ahead of Tuesday’s results the financial press was full of reports of how Apple has lost its magic touch, how Apple’s board is under pressure to replace Tim Cook as CEO and that he has at best 6 months to win back the trust of shareholders. Earlier this year, activist shareholders led by Einhorn of Greenlight Capital sued Apple, trying to force it to pay out more of its cash reserves to shareholders.

Yes, Apple’s share price has tanked recently, coming down from it’s record high of over USD 700 in September 2012 to just under USD 400 a few days ago, making Apple lose its spot as the worlds most valuable company to Exxon Mobil again.

But who’s fault is this? Tim Cook’s?

Why not turn to shareholders and financial analysts who drove up the share price to 700 in the first place? What were they thinking? That Apple would dish up game-changers and whole new categories of devices on a yearly basis? That growth would never slow? That margins would never come under pressure even as Apple enters new customer segments, and lower income emerging markets, all while copycat competition increases? That Apple had invented a money-making machine which defies traditional economics?

Tim Cook and Apple did not have a say in setting the share price – not in September last year, and not now. It is simply a reflection of what those buying shares are willing to pay – for whatever reason, sound or not. The problem starts, of course, when shareholders subsequently begin the project their own irresponsible behavior on the real performance of a company and its management team. Even if spectacularly successful, as is certainly the case with Apple, a company is bound to disappoint people whose dreams have run wild.

Now again, who’s fault is that? And does it matter? In theory it should not. Apple could simply ignore the capital markets (as it has done for much of its successful history). But it’s of course more complex than that. Apple’s managers and employees are human beings like you and me and it’s very hard to ignore the press, the share price (especially if your paycheck depends on it) or even lawsuits against your company. (Side note: picture this incredible arrogance. Here comes a guy who has never created anything of value to anyone. Out of free will he buys shares of your company at an overrated price. And then sues you because he thinks he deserves a bigger share of your cash pile – as if he knows better what to do with it than you do).

Again, in principle there’s nothing wrong with people placing bets in an expectations game like the capital markets. What’s wrong, is that the real game (where real customers are served with real products, resulting in real profits) is being negatively affected by this expectations game. (Refer to Roger L. Martin’s great book – Fixing the Game – for an in-depth analysis on this subject). It’s not Tim Cook’s fault that some people placed ridiculous bets on Apple’s shares – yet they’re trying to make him and his team pay for it. The result is a colossal distraction for the company – and it begins to show. When management teams begin to focus on what capital markets expect, they begin to play the  expectations game at the expense of the real game. Witness the un-Apple like announcement of the biggest share buy-back program in the history of corporate America. It seems to me that even the decision to market the iPad mini (or the rumored upcoming budget iPhone model) may have been taken with an eye on maximizing revenue to please analysts, and not because the company truly believes in these.

What made Apple so successful in the first place was its unrelenting focus on creating insanely great products with the best possible customer experience. Not maximizing revenue or market share. Not driving up its share price to become the world’s most valuable company. Who cares anyway?

A truly great business creates satisfied, loyal customers. Capital markets risk destroying great businesses through their mindless, short term pursuit of “shareholder value” at the expense of a long-term focus on innovation and customer value. That’s sad.

May Apple be strong enough to withstand these destructive forces.

The idea of “management as a liberal art” is not new. In his 1988 book The New Realities Peter Drucker wrote:

“Management deals with people, their values, their growth and development – and this makes it a humanity. So does its concern with, and impact on, social structure and the community. Indeed [....] management is deeply involved in spiritual concerns – the nature of man, good and evil.

Management is thus what the tradition used to call a liberal art: ‘liberal’ because it deals with the fundamentals of knowledge, self-knowledge, wisdom and leadership; ‘art’ because it is practice and application. Managers draw on all the knowledge and insights of the humanities and the social sciences – on psychology and philosophy, on economics and on history, on the physical sciences and on ethics.”

Sadly, if we look at the state of management today, it seems that too many practicing managers (and the institutions they lead) don’t seem to care much. Just look at how the shareholder value maxim has dehumanized management and how management is failing people and institutions.

Clearly, it’s time management rediscovers its roots in the liberal arts. Here’s five ways in which the practice of management would benefit:

1. Management requires character

Think of a really bad manager for a moment. It doesn’t matter whether you pick a celebrity or a former boss unknown to the rest of us. Then think of what makes this person a bad manager. And now imagine this same person equipped with what Aristotle called “moral excellence”. A person with an ethically admirable, strong character. Would it be fair to say that this is likely to make him or her a much better manager? That many of the reasons that led to your classification of “bad manager” would instantly disappear?

The thing is,  management requires character. And while not a sufficient condition, it is certainly a necessary one. The traditional “artes liberales” sought to develop well-rounded people of good character. Following this tradition, actively seeking to develop “moral excellence” would not just turn us into better persons – but also better managers.

2. Management requires understanding of what makes people “tick”

If management is the “technology of human accomplishment”, then clearly you have to have an idea of how people think and act, what motivates them, what makes them collaborate, what brings out the best – and worst – in them, as well as many other aspects of basic human behavior. So on top of having a genuine interest in people, if you want to be a great manager, you better develop a working knowledge of some key disciplines in the humanities and social sciences: psychology, sociology and economics. And figure out how  to use this knowledge to create a productive work environment – because that is one of the most important responsibilities any manager has.

3. Management requires an appreciation of local cultures

Culture is of course a major driver of human interaction. And this also manifests itself in the workplace. What’s inappropriate in one culture (say, raising objections in public) can be a requirement for success in another – and vice versa. Since management is to a large extent about enabling the productive collaboration of human beings, an appreciation and understanding of local culture and history becomes critical. And ever more so in an increasingly globalized world. A manager sent abroad will fail miserably unless he or she learns about and engages in local culture – and figures out which elements to use in order to make management more productive.

4. Other disciplines of the liberal arts have already solved many of the problems managers are facing today

Think of how to study of political philosophy could influence our contemporary discussions about governance. How history could inform geographic expansion. Sociology the shaping of corporate cultures. Or psychology our dealing with conflict. Surely, a mind with a broad interest and education would make a better manager than one narrowly focused on the functions of business and the bottom line.

5. The liberal arts can teach managers how to learn and develop

It’s not just the subject matter of the liberal arts from which managers and management education can benefit. The teaching and learning methods itself could teach us a thing or two about educating managers. Reflection and deep thought play an important role. As does the Socratic method which emphasizes discussion and feedback, thus stimulating critical thinking, engaging in a creative process of argument and counter-argument, sharpening the use of language at the same time. Contrast this with an over-emphasis on frameworks, ready-to-use checklists, “how-to” recipes and a largely passive, theoretical form of learning through lectures and self-study so prevalent in management development today. And how this so often leads to the mindless application of “best practice” and other “one-size fits all” management tools.

The liberal arts traditionally sought to develop virtuous, knowledgeable and articulate individuals. The aspiration was to develop the whole human being to their full potential.

Not a bad aspiration for managers, I’d argue. What are your thoughts on this?

Sadly, way too many people, managers and non-managers alike, have a rather inadequate notion of what management is. They see it as a sign of status, a privilege, a reward, a license to rip off customers or shareholders, as a nuisance, something that gets in the way of doing real work, being the boss, the right to tell people what to do, and many more equally inadequate and often times worse descriptions.

When in fact it is nothing less than the most important social function in the world. Why?

Because management is what enables our organizations and institutions to produce meaningful results from a large number of diverse inputs and talents. As Gary Hamel so eloquently put it, management is the “technology of human accomplishment”. Without management, organizations could not exist. When management fails, organizations fail. This is true not just for business, but also for governments, schools, hospitals or the Church. Whenever human beings come together to create something that no individual could do alone, management matters – a lot.

How can Europe solve the Euro crisis? How do we get Western economies back on a growth trajectory? How can we do both in a sustainable way? How can our pension systems cope with an aging population? What to do about rising health costs? Youth unemployment? Poverty? Hunger? Failing education systems? How can business make more meaningful contributions to society than to give us 3251 different flavors or soap? Or hedge funds? The answer is management. Only extremely well managed organizations of both the public and private sector can help solve the world’s biggest challenges.

But management and managers also have a much more direct impact on people. Whether you can thrive at work is to a large extent determined by the quality of your management. Can you use your talents productively to serve a clear, meaningful purpose? Or are you drowning in operational hectic, useless meetings, are stuck with office politics, “flavor of the day” change programs and mindlessly pursuing such inspiring objectives as cutting operating cost by 7%? The difference is management. Are you happy and fulfilled at work? Or do you dread going to work, having to pay your bills being the only reason you show up? The difference is management. And it does not stop there: how you feel at work quickly spills over to the rest of your life and sets the tone for how you treat family and friends.

So being a manager comes with a huge amount of responsibility attached. Isn’t it about time we recognized this? By investing properly in selecting and developing managers and building much better organizations? By trying harder to innovate and advance the state of management? By viewing management as a proper discipline? In other words: by beginning to treat management as what it is: the most important social function in the world.

This post launches part two of the series “what’s wrong with management and how to fox it”. Part two is dedicated to outlining a vision for better management, while part 3 will suggest practical steps towards that vision.

Unfortunately, in today’s new realities people are no longer central to management. Ever since Michael Jensen and William H. Reckling published their famous essay Theory of the firm: managerial behavior, agency costs and ownership structure in 1976, the theory and practice of management became obsessed with maximizing returns to shareholders. Customers and employees were relegated to the fringes of manager’s radar screens and merely became two out of many means to produce shareholder value. Ethics, or morality, were excluded – first from theory, then from the practice of management. Rather conveniently so, cynics would argue. In his brilliant piece Bad Management Theories are Destroying Good Management Practices the great Sumantra Ghoshal calls this the “dehumanization of management”.

The consequences, of course, are devastating. Giant public corporations have enormous influence over the lives of the thousands of people who work for them. But with the human element largely stripped from management, guess what’s happening?

Among others, you get beliefs about human behavior totally devoid of humanity. Such as when Gary Becker (Nobel Laureate in Economics, 1992) asserts that theft is harmful only because it diminishes productivity. When managers mindlessly apply bell-curve ratings in annual performance reviews to identify “enough” low performers. Or when leaders claim that competition or capital markets are relentless in their demands, and that individual companies or managers have no scope for choices. You get managers who don’t feel accountable to anyone or anything. Not to other people and certainly not to moral ideals. Which of course provides fertile ground for corporate scandals. Think Enron, Tyco or the recent excesses in the financial industry. No wonder the vast majority of employees in western economies feel unhappy about and disengaged from their work. The Gallup employee engagement surveys consistently puts the proportion of the workforce feeling engaged at no more than 15-25%. Managers are generally held in low esteem and public trust for the profession of management is plummeting. Populist policies such as the EU’s cap on bonus payments for bankers or the Swiss constitutional amendment aimed at curbing “fat cat salaries” are a result. Ultimately, if uncorrected, managerial behavior created by the shareholder value maxim will destroy capitalism as the foundation of our prosperity.

It should be painstakingly clear that the mindless pursuit of shareholder value is not good for us. Perhaps ironically, it is not even good for shareholders. To quote from Roger Martin’s Fixing the Game: “Total returns on the S&P 500 for the period from the end of the Great Depression (1933) to 1976, the beginning of the shareholder-value era, were 7.5% (compound annual). From 1977 to the end of 2010, they were 6.5% – suggesting that shareholders have little to celebrate, despite having been made the clear priority.”

If management has been dehumanized, then clearly we need to humanize it again. We need to return management to its roots in the humanities and the liberal arts. To re-establish people and moral purpose as the center of gravity based on which management is practiced. Or as Charles Handy so eloquently pointed out in his opening keynote at the 3rd Global Peter Drucker Forum in 2011: “We need to bring sympathy back into the deliberations of the people atop of these glass towers.”

Drucker, who famously observed that “You cannot just hire a pair of hands, its owner always comes with it”, would agree.

This concludes part 1 of this blog series, defining the problem. In part 2 I will propose a vision for management renewal and in part 3 suggest practical steps towards implementing that vision.

In the corporate world, there’s primarily three ways in which managers are trained, if at all: coaching & role modeling from more senior managers, business schools (MBA and executive education programs) and internal corporate training programs.

How do they measure up to the critical task of training managers? Sadly, it’s not a pretty picture.

Senior managers don’t coach and are terrible role models
Most senior managers don’t see it as part of their job to develop their more junior direct reports – and if they do, it typically is of low priority to them. Which means young managers don’t get coaching from their more experienced bosses. So how about role modeling? Yes, senior managers do serve as role models. You can’t really opt out, can you? But here’s the thing: they do so unconsciously and often in terrible ways. After all, they’re the protagonists of the sorry state of management.

Business schools teach business. Not management
Business schools are generally seen as schools of management. Many carry these three words in their brand names. But they don’t teach management. They teach business. Whether it’s their MBA programs or flagship executive education programs, the curriculum typically focuses on functional disciplines such as Marketing, Finance, Strategy, Operations, Economics or Decision Sciences. But management? Sadly, no.

What about Organizational Behavior, you might ask? It certainly is the closest business schools get to management and the most relevant for future managers. But it typically makes up only about 10% of the curriculum. And while it provides valuable insights into organizational psychology, it does not define and teach the practice of management. Don’t get me wrong. An MBA can be very valuable. I got one myself from INSEAD. Loved every minute of it and still greatly benefit from it nearly 15 years after graduation. But it did not teach me how to be a good manager. MBA programs produce consultants and analysts. Not managers. That’s ok, but we should not confuse the two. Sometimes I’m led to believe that even business schools confuse business literacy with management. A case in point: Kevin Kaiser is Professor of Management Practice at INSEAD. How can the school award him this title when his research and teaching is about Corporate Finance, Value Creation in Corporate Restructuring and Value-Based Management? Why isn’t he a Professor of Finance? I’m sure Professor Kaiser is an outstanding researcher and wonderful teacher. There’s a reason he’s a finalist in this year’s EIU Business Professor of the Year Awards. But he’s teaching Finance. Not Management. (Note that it’s Business Professor of the Year, not Management Professor of the Year - at least the EIU gets it right).

Corporate training programs are largely ineffective
Corporate training programs suffer from many diseases which make them ineffective.

Focus on micro skills
They often lack a coherent underlying model of management and tend to focus on isolated micro skills: how to have a performance review discussion with an underperforming employee, how to interview a job candidate, how to manage your time, how to listen actively, how to delegate properly, how to use the MBTI to communicate more effectively – and so on. These are very valuable skills. But they are taught without context. Such as the responsibilities of a manager and principles effective management. They give you tools but don’t discuss when and how to use them – or what for.

Little transfer
Adults learn through practical experience and reflection. Yet most training programs are strong on classroom teaching and weak on the transfer of new skills to real life. Yes, you might do exercises, case studies and role plays in the classroom – but it’s still the class room. Real learning occurs when people go back to their jobs and begin to apply new knowledge and skills in their individual contexts – with the degrees of freedom to try things out, permission to make mistakes, time to reflect, support of their managers and systematic follow up. Sadly, this hardly ever happens. Most organizations treat training as a kind of one-off, tick-the-box exercise where you send someone on a course for a few days. They already consider that a considerable investment. And are not prepared to invest the time and energy required for a proper follow-up and transfer of skills after the training.

No change in behavior
Applying new skills successfully often requires a change in behavior. Most organizations fail to address this critical element or, worse, actively discourage changes in behavior. They fail to identify the underlying mindsets which drive behavior or have corporate incentive systems (formal and informal) which discourage people from actually changing. Worst of all is probably the boss who doesn’t care what you learned on your last training and basically tells you to “just do the work”. How often have participants in my trainings told me that “actually, my boss should be here”? Remember what we said about coaching and role modeling at the beginning of this post?

Clearly, that’s not a pretty picture. Thankfully, it does not have to be that way. There’s great managers out there who take time to coach their younger colleagues and serve as wonderful role models. I was lucky enough to work for one of them. Similarly, there’s business schools who pioneer better approaches to developing managers. Think of Henry Mintzberg’s International Masters of Practicing Management (IMPM) at McGill’s Desautels Faculty of Management. Or of Ivo Matser and his TSM Business School. Likewise, there are great corporate training programs which get things right. Some of which I was fortunate enough to contribute to.

What we need, though, is critical mass. The above exceptions only prove the rule, they don’t change it.

Before we turn to a vision of a better future and steps to get there, my next post in this series will look at how the shareholder value maxim is responsible for much of the sorry state of both management and management training described here. Stay tuned.

Shockingly low levels of employee engagement
You’ve all seen these figures. According to Gallup, only 29% of the US workforce is engaged, 20% or less in Europe. Worse, these numbers have not moved for the last 10 years. Just how long does it take for managers around the world to wake up to this sad reality? Behind the numbers, of course, are real people. We all have lots of anecdotal evidence from work-related conversations we have with friends and colleagues or those we overhear in airport lounges: they’re working extremely hard but lack a true sense of purpose and progress. Their boss sucks. The guys from <insert your favorite department here> are just a bunch of useless bureaucrats. And so on. The cost of this, of course, is enormous. Not just in terms of lost productivity, passion and creativity in organizational terms. But in human terms, too: disillusioned workers, largely stripped of their humanity. And how they feel at work quickly spills over and affects their families and friends as well.

General public holds managers in low esteem
In countless studies, the reputation of managers ranks rock bottom amongst professional groups. The hardest contestants for last place are typically politicians & journalists, recently joined by bankers. Lawyers often beat managers hands down. No matter whether reputation is measured by trustworthiness, confidence or honesty, the picture remains the same. Very sad for one of the most important social functions in today’s world. In principle, that is.

Large scale corporate failures and scandals
Although banks have recently been at the forefront of this sorry chapter of capitalism (think LIBOR manipulations, Lehman Brothers, countless government bailouts, out of this world compensation schemes), the phenomenon is of course not limited to the banking industry. Remember Enron? BP and the Gulf oil spill? Or how about the rapid demise of Nokia? The bankruptcy of Monitor? Boeing’s 787 Dreamliner disaster? Don’t tell me that anything else than a colossal failure of management is to blame.

Why am I not surprised by these outcomes? While there are many reasons, here’s what I believe are the four main culprits:

1. You don’t have to qualify to be a manager
We’re obsessed with qualifications, degrees and diplomas in almost every aspect of corporate life. Not so in management. Anyone, capable or not, can become a manager. Today you’re a software developer, tomorrow (after that well deserved promotion) you’re a manager of software developers. How come? Just because someone has given you a title and a pay raise?

2. We don’t even agree on what management is
Maybe it was unfair to ask for a qualification in the previous point. A qualification in what? It seems that we don’t even agree on what management is. Ask any two practicing managers and you’ll get vastly different responses – not nuances – about the objectives of management as well as the underlying principles and tools a manager should master to perform well in his or her job. Nobody knows what it is – but everyone is an expert, of course. Witness the cacophony of self-help business and management books in any bookstore – with often totally contradicting advice for the poor new manager.

3. Companies select the wrong people for the wrong reasons
As outlined above, you become a manager by virtue of being promoted. But who is typically promoted? The people who perform well in their current jobs. So the best software developer, the stellar sales person all of a sudden finds herself leading a team. Ability, let alone interest to become a manager, does not matter.

4. Management 1.0 is no longer adequate for today’s world
In contradiction to my previous point 2: there are indeed a few things we know about management – and many practicing managers would even agree on these. The problem is, that this body of knowledge (call it Management 1.0) is quite a few decades old and was designed to solve a totally different set of problems from what organizations face today. Command and control may have been ok to run factories in the 1930s and 40s. Sadly, what’s practiced as management hasn’t evolved much since. And its limits are painstakingly obvious in today’s world where customers have incredible choice, innovation cycles are accelerating and your workforce is totally mobile.

So we’re in desperate need of a shared, solid understanding of what constitutes good management. An understanding of management that’s fit for today’s challenges and fit for people who want to be treated as human beings. Luckily, this does not need to be an elusive goal.

There’s enough wonderful and practical thinking about better management out there. Peter Drucker (probably more relevant today than ever) comes to mind. Or Gary Hamel, Steve Denning, Roger Martin, Patrick Lencioni, Umair Haque, Gianpiero Petriglieri. You and me.

Better yet, there’s a number of movements and platforms out there dedicated to improving the state of management. Think of the Drucker Institute (including Drucker Societies around the globe), the Global Drucker Forum, the Management Innovation eXchange (MIX) or the Stoos Network.

Great, now we add business schools, corporate universities and training centers to the mix and all we’ve got to do is wait for the next generation of managers who will surely do much better?  Not so fast, unfortunately. There’s a slight problem not just with management, but with management education and training as well. Stay tuned for my next post in this series.

This is the first post of the series: What’s wrong with management and how to fix it. More to come. 

Today I’m launching a blog series on management. Over the coming weeks I will put forward 10 theses outlining what I see as the problem with management, a vision for the future of management as well as some practical steps towards that future. I would love to engage in a discussion and hear your perspectives. So stay tuned and share your views!

To start with, here’s the outline:

Part 1. The problem

1. Management is broken and needs to be fixed

Managers enjoy very little respect and appreciation, both within organizations as well in society at large. The typical organization run by managers turns way too many employees into disengaged resources, largely stripped of their humanity. Not surprising in light of the fact that most managers practice their jobs without any formal qualification or professional training.

2. Management education is broken and needs to be fixed

There is no universally agreed core body of knowledge about what management is (a profession? a practice? an art? a gift?) or what constitutes “good” management. Similarly, we don’t fully understand how to properly train managers. And what we do know is often ignored by managers, business schools and corporate training grounds alike.

3. Agency theory and the shareholder value maxim have destroyed both management and management education 

People are no longer central to management. Managers have lost touch with their greater responsibilities and management’s roots in the humanities and liberal arts. Moral dilemmas are easily delegated to the notion that shareholder value is good for all of us – even when it’s painstakingly clear that it is not. Not even for shareholders!

Part 2. The vision

4. Management is one of the most important social functions in today’s world

Management provides the basis for organizations of any kind (not just in business) to produce meaningful results from a large number of diverse inputs and talents. Only with extremely well managed institutions can we progress as a civilization and solve the world’s biggest challenges.

If that were not enough, management has the ability to profoundly impact people, families and communities. There is a huge amount of responsibility attached to being a manager. We need to recognize how important a social function management is and begin to treat is such.

5. Management is a liberal art – the technology of human accomplishment

Management is all about people, enabling them to together achieve great things that individuals could never do. To be effective, management requires character and is thus in the best tradition of the “artes liberales” which sought to develop well-rounded people of good character. Management should therefore draw much more on the humanities and social sciences.

6. Management is a discipline and practice which can be systematically learned

It is simply not acceptable that management continues to be “defined” by a cacophony of fads, personal preference or “style”. Management must evolve into a proper discipline and practice which can be systematically taught and learned.

7. Management needs to be renewed

A rich body of management principles, tools and techniques has been developed over the last 100 years or so. Many of these remain relevant today, but at least as many need to be eliminated from the manager’s toolkit. In a changing world they are now more harmful than anything else. And then there’s a whole new set of management challenges in today’s world, for which we have yet to find appropriate answers.

Part 3. The solution (practical steps towards the vision

8. Management’s only purpose is to deliver value to a customer 

We need re-focus on what Peter Drucker knew long ago, namely that “the purpose of a business is to create a customer”. If the manager’s job is to create results, then the only meaningful results are those valued by customers, such as insanely great products or services which solve a real problem of a real customer. Note that it is NOT shareholder value or the bottom line. That will be a by-product of creating products and services that customers really want and value.

9. Management delivers results by creating a healthy organization

Managers deliver results not by being smart and knowing all the answers, ie, they are not primarily domain experts or technical specialists (that stopped being the case the first time they were promoted and began leading a team). They deliver results by creating an environment enabling other people to be at their best everyday. An organization where there’s strong teamwork at all levels, starting at the very top. An organization where everyone pulls in the same direction, silos and politics are unknown and energy levels are extraordinary. I call this a healthy organization.

10. Healthy management aims to create a healthy organization

Good, sound management creates healthy organizations by developing strong, cohesive teams, clarifying direction, priorities and objectives, ensuring engagement and internal alignment, selecting and developing people and making sure that the customer is and remains at the heart of everything anyone does.

To be able to do so, the manager needs to master practices and follow principles. Almost a prerequisite, though, is good character: a well-rounded person who seeks to pursue a purpose beyond him- or herself and who’s capable of demonstrating humility and vulnerability. I call this healthy management.

So that’s the 10 theses. I look very much forward to exploring each of these in a bit more detail in the coming weeks.

Nothing could be further from the truth. I’m a big believer in the power of teams. But I find it silly that so many myths prevail around teams. That you build a team through ropes courses or scavenger hunts, for instance. Or that in the age of political correctness everyone’s got to be a team player.

Compromise for the sake of harmony
Another favorite of mine is this: harmony is an attribute of great teams. It is not. Quite the contrary. Harmony is a sign that you’ve given up. That you no longer care. Great teams don’t compromise for the sake of harmony – mediocre ones do.

Great teams achieve the best results because they make great decisions. Because they act on these decisions with incredible commitment. And because they hold each other accountable for their actions and behaviors.

Conflict as a source of greatness
All this requires the ability to engage in conflict. You don’t make great decisions when those who disagree don’t speak up. Also, people don’t commit to team decisions when they’ve not been heard during the discussion. And people certainly don’t hold each other accountable when they’re afraid to confront their colleagues.

Great teams can do this because they know how to engage in constructive conflict.

Trust as the key enabler
This means they’ve agreed on a few ground rules for how they want to engage  in conflict. Far more important, though, is that they really trust each other. Trust is the single most important ingredient of great teams. When people trust each other, they are not afraid to make or admit mistakes. When they trust each other, they are not afraid to ask for help. Because they don’t need to demonstrate a false sense of superiority. When they trust each other, they are not afraid of anything – not afraid of conflict, not afraid of disagreement, not afraid of holding each other accountable.

Harmony as masked distrust
In fact, the supposedly wonderful trait of harmony may very well be a sign of distrust among team members. It provides an easy way out of the tough task to take a stand or to confront a colleague. And it’s even commonly seen as a virtue. Bingo!

The role of the leader
Great leaders therefore do two things: they build trust and they mine for conflict. They make sure everybody on the team is heard. They actually make disagreement a virtue.

Peter Drucker famously writes about the following episode involving Alfred P. Sloan, then Chairman of General Motors:

Alfred P. Sloan is reported to have said at a meeting of one of his top committees, “Gentlemen, I take it we are all in complete agreement on the decision here.”  Everyone around the table nodded assent. “Then,” continued Mr. Sloan, “I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about.”

Mediocrity and the modern corporation
Consider how this contrasts with the decision making processes in most large organizations. They are eager to avoid controversy and thus invest considerable time in “stakeholder management” geared towards eliminating disagreement, not really probing to understand different perspectives. The result are boring meetings where pre-cooked decisions are ticked off without any substantial debate. Often based on the lowest common denominator.

Maybe here’s a reason why so many large organizations serve as textbook examples of mediocrity?

P.S. Oh, and one more thing: you might enjoy this inspiring TED talk by Margaret Heffernan: Dare to disagree.

In a recent post on LinkedIn, Inge Geerdens asks whether team building is a nuisance or a necessity.

The article refers to team building as the kind of event where you spend a weekend at a nice resort and engage in some kind of outdoor activities. Such as building a raft or running blindfolded through a forest. Or both. Note that it is almost always a weekend – after all you’ve got real work to do during the week. Also note that typically the external consultant brought in to run these activities has no idea of what business you’re in or what particular challenges your team is actually facing.

Well, if that’s what we mean by team building, then I’d vote for nuisance. Or waste of time. Or both. Certainly not a necessity. Except maybe for the team leader who’s got to tick a box on his annual objectives. Team building? Done.

Sadly, that’s still how all too many managers view team building. And it’s a sign that the nature and power of teams is still widely misunderstood. Similar signs are that any group of people who happen to report to the same boss are typically called a team. Or that harmony is supposedly an attribute of well-functioning teams. Or that teamwork is considered a virtue. It is rather a strategic choice, as Patrick Lencioni so brilliantly explains in this short 50s video:

So what’s a team then? And how does awesome teamwork look like?

A team is a group of people choosing to work together and pursue shared goals which transcend individual contributions. In contrast, the typical executive “team” in most organizations is not really a team. They tend not to work on shared goals and instead operate within their functional, regional or business unit silos. The spend much time and energy highlighting their individual contributions, claiming credit for things going well and assigning blame for things going not so well. Discussions are often framed by politics and turf wars while at the same time avoiding open conflict. Yet the CEO refers to them as “my management team”. Or better: “my leadership team”.

Real teams eat these other “teams” for breakfast. They are cohesive and share clear common goals. They know how to nurture constructive conflict for the sake of better decisions and extraordinary levels of commitment in the interest of higher order goals. They hold each other accountable for both results and behaviors. Note that they hold each other accountable – they don’t rely solely on the leader to hold team members accountable. Also note that they hold each other accountable not just for results but also for behaviors. What enables them to do so is their ability to be vulnerable. They admit mistakes, know how and when to apologize – and when to ask for help.

Developing such a team is hard work and an ongoing process. On a daily basis. It’s reflected in how you run team meetings. In who you hire and let go. In the kind of behavior you tolerate – and many other things.

Clearly, you don’t get there by running blindfolded through a forest. Granted, the foundation for cohesive teams is mutual trust. And getting to know each other is the starting point for trust. “Team building” can contribute to this – but in itself will never have any sustainable effect on team cohesiveness and performance.

Maybe that’s why so many of us – if we’re truly honest – consider team building a nuisance. Or waste of time. Or both. Because it tends to be treated as a “tick the box” exercise outside any longer term commitment or plan to become a truly awesome team.

So next time you’re asked to build a raft, have the courage to speak up and say what most likely everybody else thinks: “What a waste of time! How is this helping us become a better team? Do we even want to be a real team? Do we pursue shared goals? Do we openly engage in conflict? Do we hold each other accountable? Do we trust each other?”

And thus trigger a discussion that will eventually lead to the conscious decision to either become a real team – or not. To commit to the hard work of an ongoing team development process – or not. In either case you’re likely to have better things to do than building a raft.

Of course I’d recommend implementing all of them to get the best possible results – but I’m often asked whether some are more important than others. Indeed I’d consider one of them the most important of all – and it’s precisely “knowing what’s most important”.

You see, all too many times when we “set objectives” we produce laundry lists of differing goals. And while all of them may be worthwhile, even important, they fail to establish clear priorities. Hence we end up being overwhelmed not just by the sheer amount of work to get done but also by our inability to decide what to focus our energy on at any given hour of the day, day of the week, week of the month and month of the year. It’s the primary reason for being extremely busy but, sadly, not really getting done much.

Of course, this is due to the fact that we have not established the priorities required to help us navigate. Which is why we keep getting pulled in so many directions.

So setting objectives is not an exercise in drawing up a wish list of desirable things to achieve. That’s easy but not helpful. It’s an exercise in making tough choices, setting priorities and clearly defining what’s most important. Almost by definition, something’s got to be most important. If everything is important, then nothing is. So go clarify what’s most important. It can and should be a big goal for the next 3, 6, 9 or 12 months (who says we can only have yearly objectives?). But it’s got to be a single goal.

It can be scary to make this kind of commitment. The benefits, however, are enormous. Not just in terms of improving effectiveness beyond your wildest dreams – but also in terms of living and working in a peaceful state of mind that comes from knowing what’s really important. And the ability this brings to confidently make the many small decisions required on a daily basis.

The key word in the last paragraph is “commitment”. It’s not enough to write down what’s most important – you have to wholeheartedly commit to it. As with so many other things in life, without true commitment, you’re not going the get the best out of you and your team.

So clarify what’s most important. Commit to it. And reap the rewards.