The world of social has provided so many incredible opportunities for me. One of which was connecting with David Burkus. I loved his book The Myths of Creativity and I am beyond excited to be part of the launch team this week, for his new book Under New Management. Even though I have an HR background, I absolutely loved everything in the book, Under New Management. I am one of those HR people that doesn’t believe that HR needs more policies and procedures. Quite the contrary…businesses and HR needs fewer of them. Business has changed and the command and control style of leadership is not needed in most work environments. We have moved into the knowledge economy and the world of work needs to adapt to maximize what everyone brings to the table.
As David so eloquently puts it;
“Great leaders don’t innovate the product, they innovate the factory.”
That is the truth! Great leaders and organizations work with their employees to create a better workplace culture, build better teams and in the end that is what creates a better product and profits for business.
The following is a guest post from my friend, David Burkus.
This original post was inspired by concepts from chapter thirteen of Under New Management. As career tenures continue to shrink in industries across the board, leaders are find themselves saying good-bye to their best people more frequently than ever before. However research is now showing that maintaining positive relationships with those former employees can lead to real benefits for the company saying good-bye.
As individual job tenure in companies becomes shorter, leaders say good-bye to even their best people more frequently. How they do this — whether they celebrate or shun the departed — affects not just those leaving but those who stay, as well as the performance of both the old and new firms.
Companies that maintain alumni networks are in a better position to leverage a principle that sociologists call ’embeddedness.’ Every industry is a network of connections: companies, clients, vendors, competitors, and partners. Embeddedness refers to a company’s location in the larger network. And location matters: research shows that the strength of a company’s relationships to other entities in the industry directly affects that company’s financial strength.
This effect was first uncovered by Brian Uzzi in research he conducted early in his career. In fact, it was his doctoral dissertation. Uzzi decided to study the garment industry in New York City, a complex network that he was already a little familiar with. “When my family came over here [the United States] from Italy, they both went into the needle trade. My grandfather was a tailor; my mother went to sewing school,” he recalled. Uzzi knew that the New York City garment industry was a network ripe for study, and he knew that different company leaders interacted differently. What he wanted to find out was whether their actions in the network made a difference for their company.
Uzzi studied twenty-three apparel firms in New York City and conducted interviews with each company’s CEO and other key executives. He also observed interactions with company employees and distributors, customers, suppliers, and competitors. In addition, he gathered information on company transactions through the International Ladies’ Garment Workers’ Union (ILGWU), the trade union to which over 80 percent of New York’s better apparel firms belonged. The union kept records on the volume of exchanges between different firms in the industry. Uzzi also modeled the likelihood of failure for each firm in the industry against his research on the companies, based on the number of firms that failed during the calendar year of his research. When he analyzed all of his research and compared a firm’s network interactions with its likelihood of failure, Uzzi found something surprising.
As he suspected, different firms interacted in the industry differently, and the differences mattered. “Embedded networks of organizations achieve a certain competitive advantage over market arrangements,” Uzzi wrote in his article on the research. Some firms did business with only a few trusted vendors (what Uzzi labeled ‘close-knit ties’), while others portioned out their business by giving many small assignments to various firms (‘arm’s-length ties’). He found that having strong close-knit ties did increase a firm’s chances of survival — but only to a point before being too close with too few firms began to have a negative impact.
The firms with the most success in the industry maintained a solid mix of close-knit and arm’s-length ties and selectively chose which ties to use when. “There’s this balance between having arm’s-length ties that don’t go as deeply into the relationship, but allow you to scan the market more broadly,” Uzzi explained. “At the same time, the energy spent that you might put into a close-knit tie could have been split up among or across many arm’s-length ties. That allows you to get information from many different points of view and then integrate it to produce the very best benefit.”
A firm that is too distant from other firms in the industry can’t leverage the benefits of trust or get help to solve the challenges they might face. At the same time, being too close to only a few firms prevents the individual company from getting enough new market information and being adaptive to changes in the industry.
That balance between close-knit and arm’s-length ties is exactly what an alumni network brings to its parent organization. Current employees and clients become the close-knit ties with whom the company interacts frequently. At the same time, former employees scattered across industries and sectors provide arm’s-length ties that can relay important information and serve as important connections. “If I were running a company,” Uzzi outlined, “I would want to maintain strong ties with some firms. But I would also like to have lots of looser ties that could be from my alumni network. Not necessarily people that I would want to approach and attempt to get new business from, but to use as more or less market research. So I could find out what’s going on in their company, in their market—just kind of general information. I would want that mix of sources for market information.”
Companies that engage or build alumni networks are still in the minority, but their numbers are on the rise. As the nature of work and the nature of management change, the way even former workers are managed is changing along with it. The benefits that companies have reaped from networks, as well as the research on the importance of a proper blend of network connections, definitely support the concept of keeping in touch with former employees. There is real value in celebrating departures and making sure that a farewell simply becomes a “see you later.”
About the Book
Do open floor plans really work? Are there companies that put their employees’ welfare first, and their clients second? Are annual performance reviews necessary?
Dr. David Burkus is a highly regarded and increasingly influential business school professor who challenges many of the established principles of business management. Drawing on decades of research, Burkus has found that not only are many of our fundamental management practices wrong and misguided, but they can be downright counterproductive.
These days, the best companies are breaking the old rules. At some companies, e-mail is now restricted to certain hours, so that employees can work without distraction. Netflix no longer has a standard vacation policy of two to three weeks, but instructs employees to take time off when they feel they need it. And at Valve Software, there are no managers; the employees govern themselves.
The revolutionary insights Burkus reveals here will convince companies to leave behind decades-old management practices and implement new ways to enhance productivity and morale.
Pick up your copy of Under New Management today. I think that all leaders, future leaders, entrepreneurs, and HR should be reading this book.
About the Author
David Burkus is the author of the forthcoming Under New Management. He is host of the Radio Free Leader podcast and associate professor of management at Oral Roberts University. Please visit his website at www.davidburkus.com.
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