Philippe Brière: Niels, “Creating prosperity while nurturing human and natural systems” – that is the vision of the Business Innovation for Global Good movement, also known as AIM2Flourish. Do you think this kind of « superhero ambition” somewhat resonates with your work?
Niels Pflaeging: In fact, I believe that all people are superheroes, to a certain degree. But organizations today do not even come close to making good use of the potential that is available in their people. Companies sit on mountains of unfulfilled potential that they cannot unearth, because their structures and beliefs cripple them. This problem exists in the world of work and value creation, of course, but it also exists in the realm of education. My contribution to the problem of organizations and in the domain of work is to influence people, so that they can drop obsolete theories and methods, and get acquainted with more robust and powerful theory, in order to create much more effective, high-performing and complexity-robust organizations.
So, yes, the ambition you cited is strongly related with my work. Only that the focus of my work is not on natural systems, but on human and social systems. I firmly believe that to create better organizations, mere experimentation or an occasional work practice hack is not enough. We need to start working the systems, instead of working the people. We must overcome command & control and organizational bureaucracy and unleash that leads to neglecting available human potential. We must make use of people´s superpowers, instead of treating employees as cogs in the machine. This is not just relevant for some specific companies or industries: Complexity is everywhere, so we must promote this shift everywhere, fast. We should better accept that there is a political responsibility in creating better organizations, and in going for what I have come to call the necessary organizational renaissance.
« What the Beyond Budgeting movement offered: a strong set of 12 principles, fabulous insights into a working alternative to command-and-control, and two dozens of case studies. »
How did you come to these conclusions?
I studied economics in the 1990s. After that, I moved to Brazil and started working as a finance manager. I lived in Brazil for 12 years, all in all. But about 5 years into working as a corporate controller for multinational firms, I quit my job to join the Beyond Budgeting Round Table BBRT as a research director, while at the same time starting my own consulting and speaking business. Beyond Budgeting might be considered as the equivalent of Agile in the realms of Performance Management, Finance and organizational leadership. In the same year in which I joined the BBRT, in 2003, I also wrote my first book on Beyond Budgeting – a 500-page manifesto against organizational planning and against command-and-control. This book became the most widely-read resource on Beyond Budgeting in the German-speaking countries.
The Beyond Budgeting movement, just as the Agile Manifesto, came up with a set of principles, rather than tools. There were only 7 principles at the beginning, if I remember well, and gradually the set of principles was refined through case study-based research, until we got to a set of 12 very robust principles. There is a difference, though, between Agile Manifesto and the Beyond Budgeting principles: While the Agile Manifesto talks about what to “prefer”, individuals and interactions over processes and tools, for instance, the Beyond Budgeting model highlights that the principles of command-and-control actually collide with the more contemporary Beyond Budgeting principles. In other workds: Beyond Budgeting always called for abolishing and overcoming command-and-control. It always called for profound transformation. I believe the Agile Manifesto and movement would also profit from overhauling its principles in this way, to gain more clarity, vision and purpose.
Another important difference of the BBRT when compared with the Agile movement was its original case study research, which covered pioneering companies such as Borealis, Guardian Industries and Handelsbanken, the Swedish Bank. Among the cases of « agile, adaptive organizations » the BBRT studied back then, Handelsbanken was especially notable. It had a history of almost 40 years of radical decentralization at the time, and it had abolished all features of command-and-control, successfully, while at the same time becoming Europe´s most successful bank, undoubtedly (see this article for details). Handelsbanken taught us more about the Beyond Budgeting model and about what was needed to make this “new model” robust and coherent, than any other company in the world. It was only a couple of years later that we became acquainted with other, equally advanced case companies such as Toyota, Southwest Airlines, W.L.Gore, Aldi, dm-Drogeriemarkt and Semco So, through Beyond Budgeting, I got into researching and promoting radically decentralized ways of building organizations. At the same time, I also started supporting companies´ transformational efforts in this direction, through my consulting work.
» We must promote insight & learning as means to organizational renaissance. We must overcome our fixation with tools and solutions. »
As a finance manager, I suppose you had no mandate to do transformational work in your job. Was this limitation a source of motivation for you to move into research and consulting?
Yes, of course. In 2000 to 2002, while I was still a controller and started to present the ideas of Beyond Budgeting at finance management conferences, it became more and more clear to me that all the planning and reporting work I was doing was pretty much entirely wasteful. I understood how ineffective and often destructive our bureaucratic ways of steering and controlling the organization were. But I also enjoyed the intellectual challenge of deconstructing command-and-control and of proposing a fresh, radically new way of building and leading organizations. One that, ultimately, was completely opposed to what most professionals would consider “normal” and “common-sense” back then. I see the same amazement that I felt when writing my first book in 2003, in Frederic´s book (Reinventing Organizations). With the exception that, in 2003, the principles of the Beyond Budgeting model had already become very clear to us, and that we had collectively researched more than two dozens of large-firm cases, over a period of more than five years.
What took us much longer to comprehend that what we were discussing then and today should neither be framed as a revolution, or as an overthrow of the old organizational model, nor an evolution, or gradual improvement. It took me more than 10 years to understand that we are not in an age of transformation, or reinvention, but that we are experiencing a renaissance in organizational leadership. Which is important for us to grasp if we want to succeed with turning the BetaCodex (or Beyond Budgeting, as we called it until 2008) into the standard way of organizing, everywhere. The challenge in this organizational renaissance is not to create a new model, or to optimize the old one, but to putting things right again. In other words: If we keep selling the BetaCodex, Agile or other mindsets as “new”, or as a revolution, then we cannot expect to be as successful as we should be.
Ultimately, promoting “newness” in the context of work and organization appears small-minded to me these days. Plus: The attitude that that comes with will always demoralize, annoy, and repel managers and professionals. And this is happening today. Our methods more often than not defy both our principles and our intent. Most in the field of Agile live off certifying, convincing, implementing and optimizing – which are all command-and-control-related attitudes and patterns. The way out of us boycotting organizational renaissance is to stop hyping solutions and tools. We must stop certifying, and help people in organizations think and learn better, instead. The challenge is not to transform project work or organizations, in fact. It is the thinking that is the problem, and it will always be the problem. We must promote insight, learning and organizational development as means to organizational renaissance. We must overcome our fixation with tools and solutions.
» Instead of trying to steer change and people mechanistically, we should practice the craft of change as exercising constructive irritation. »
Can you tell us about recent achievements of yours, and about what the intent of your work is, in essence?
All my work aims at contributing to make the BetaCodex the standard organizational model, worldwide… this is the renaissance we talked about a minute ago. This renaissance is not something that individuals can achieve, of course. It must be a collective effort. So as part of this movement, we founded the BetaCodex Network, in 2008, which we describe as « the network with answers for organizations in the knowledge economy ».
Among the personal achievements that I am most proud of is probably my writing, I have written 6 books so far. Since the fourth book, entitled Organize for Complexity, I have tried not only to offer avant-garde, ground-breaking thinking, but also to stretch the limits of the business book – by employing illustration and design, for example, and by eliminating all story-telling from the writing. This move has not only helped me reach a wider audience. It also opened up new possibilities for me as a speaker, consultant and teacher. There is more to come in this sense – the next step is of course being the publication of the Complexitools book in English. This illustrated, visual book that I wrote together with Silke Hermann is the follow-up to Organize for Complexity, on one hand. On the other hand, it explores the topic of organizations for the age of complexity in an entirely fresh way, as a tour de force into the realm of complexity-robust method.
One the more specific conceptual achievements of the last few years was that we finally figured out how to approach the topic of change differently, to enable a renaissance in organizational development as well. In the BBRT, we started integrating John Kotter´s change leadership approach into our work around 2004,. Later we added William Bridges´ approach to individual transition to that. This led to the notion of an innovative double helix approach to change. But something was still missing. We finally discovered the final pieces while working on the Complexitools book, I published the key insights on this fresh approach to change in an article that would later be renamed into Change is more like adding milk to coffee. This concept is rooted in major insights from Kurt Lewin, another one of my heroes: Instead of trying to steer change and people mechanistically, we should practice the craft of change as exercising constructive irritation. We call this craft “flipping the system”, or change-as-flipping. This is actually the only way that organizational change has ever worked.
« Collective, learned organizational helplessness – that irritates me. We can do much better! »
What is it that upsets you most in the realm of organizations, and organizational development?
Oh, many things – almost everything! (laughs) One example would be today´s widespread use of tools – old and new – that should never have existed in the first place! That somewhat bothers me. It is as if a Sushi-man would use constantly use inappropriate, useless tools for the job. But overall, I would say: collective, the learned organizational helplessness that is present in the overwhelming majority of companies irritates me. We can do much better!
Perhaps we would see the world of work and organizational value creation differently if we took a more political attitude towards it, you know? Because it is not politically okay to exercise command-and-control, and to practice centralized steering in any company that is part of a democratic society. Command-and-control is abominable, both in humanistic terms, and with regards to effectiveness in complexity.
In a way, I believe that by creating far better organizations, and through abolishing command-and-control, a.k.a. management the social technology, we can fulfill not only our people´s superhero potential, but also significantly improve our societies. And I am not talking about achieving individual happiness here! But about creating more societal value creation, and constant experience of self-organization for everyone involved in that value creation. This should ultimately ripple through into our societies, and strengthen our democracies at large.