John D. Rockefeller modeled the organization of Standard Oil on the two models he knew to work: The United States Army and the Catholic Church. These are traditional hierarchical models, and hierarchy became the norm for company organizations for most of the 20th century. In this model, authority and accountability are everything. Ultimately, the chief executive has authority over all the employees of the company, and is accountable for all aspects of its performance.
The model sets aspiration for the individual. Having authority over a larger number of people is better than over a smaller number. Having a bigger budget is better than having a smaller one.
Dare we challenge this model? After all, it has been widely used and seems to have stood the test of time. Still, in BP, and in many other companies in the last 15 years, an alternative has emerged. And that is the model based around influence. It says that what we really want, for our most senior and gifted employees, is the ability to influence the direction of the company, and its outcomes. This is also what they want for themselves.
But if you are running a big organization, hundreds or thousands of people, it is very difficult to have influence beyond the part of the company that is your area of accountability. Lots of people mean lots of people problems, and no matter how good the managers in the business, no matter how excellent the Human Resources function, the person in charge has to deal with lots of these people issues. These are important issues, they affect lives and careers, and how well they are handled determines in large part how employees feel about the company. The leader of a business entity or a big technology center must deal with safety, customers, community relations, environmental performance. Every day becomes filled with these issues. I know from my own experience that with 500 people, doing the essential things in business means that time for thinking about strategic issues is reduced to near zero.
Increasingly, companies have begun to create posts at the most senior level, in corporate headquarters, that have very few people reporting to them, and a huge responsibility for influencing the direction of the company. These may have titles like chief economist, chief scientist, vice president for operations (not running operations but putting in place policies and practices to ensure their excellence). The posts rely on the quality of the individuals in them, on the networks they have built up in the corporation over time (so generally must be filled by those with internal track records) and on access to the CEO and other directors.
They work by influence. Difficult to measure, sometimes, but you know when someone has it, and when it is working, because the right person is much in demand by the organization, and the wrong one is always trying too hard. The right person in these roles knows what he or she wants to achieve, how he thinks the corporate agenda should be moved forward, and undertakes activities to undertake to make this happen. The right person is sought after for ideas when the CEO is thinking through a new corporate direction, or putting together ideas for a speech to articulate that direction.
Mergers can strain the system. Companies that may be a perfect business fit often have very different cultures regarding individual influence and authority. This was certainly the case in the merger of BP and Amoco, and virtually all those from Amoco who went into position where they had to work by influence were gone from those jobs in a very short time. In part they did not have the networks in the new company, but more important was a lack of deep understanding of how their job could work.
You do not need someone to do this for you; serious people can do this for themselves if the spirit of the company is sympathetic. Going into a new corporate job -- say vice president for health, safety and environment -- ask yourself: What do I need to make this happen? And do people need to be working for me or could they be embedded in a business unit? If much of the organization I inherited is crucial to achieving my goals, or (even if they are doing valuable work) would I be better off giving these people away so I can focus on what is important?
Few people take initiative to make any organizations radically smaller. Done with a strong rationale it can allow you to be much more productive and influential.
About Leadership:About Leadership is a series of 52 columns on corporate leadership -- essential skills, leading teams, managing your career, the strategic and business practices to make a company and its leader distinctive from competitors. These columns will be of interest to people leading small and medium sized companies today, many of whom have not had much formal training in management skills and techniques; for the many people in big companies who aspire to senior management; and for anyone who thinks: Give me a hint, how can I do this better?
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