Blog: Getting it together

Porterian and Peterian Performance

13 July 2018

What makes an organization effective? After Peter Drucker, Michael Porter and Tom Peters became the most prominent writers about the performance of organizations, but with quite different perspectives. For Michael Porter, in his book Competitive Strategy, an effective organization positions itself in the marketplace for competitive advantage. For Tom Peters, in his book In Search of Excellence (with Robert Waterman), an effective organization executes excellently whatever position it has. One of these guys might eat in a restaurant that is different, the other in a restaurant that is solid (although I suspect that, personally, they might opt for the opposite).

What makes an organization effective? After Peter Drucker, Michael Porter and Tom Peters became the most prominent writers about the performance of organizations, but with quite different perspectives. For Michael Porter, in his book Competitive Strategy, an effective organization positions itself in the marketplace for competitive advantage. For Tom Peters, in his book In Search of Excellence (with Robert Waterman), an effective organization executes excellently whatever position it has. One of these guys might eat in a restaurant that is different, the other in a restaurant that is solid (although I suspect that, personally, they might opt for the opposite).

Porter described competitive advantage as either cost leadership or differentiation, namely providing lower prices or unique offerings—say, fast food fusion or high-end poutine. And both strategies can be pursued with a wide or narrow focus—for example, through a single outlet or a whole chain. Accordingly, in his writings on health care, Porter is a fan of specialized hospitals (as in cardiac surgery), not general ones. In his terms, general hospitals hardly have strategy: they tend to be neither differentiated nor cost leaders.

But might Porter be looking for strategy in the wrong place? General hospitals have a focus that must be the most common strategy on earth. I call it “local producer.”1  From the corner shoemaker to the national post office, they provide some undifferentiated service at regular prices in a geographic niche (a community, a country). In fact, I recall Peters being a great fan of just such an organization: a garbage collection firm in San Francisco. The CEO had a little garbage truck on his desk, and explained his success as being “…because I love garbage!”

Would you rather go to a hospital that does unique things, or ordinary things correctly? That, of course, depends on whether you have an ordinary problem, like appendicitis, or a complicated one, like a special heart ailment. Given the time and the money, I imagine that both Porter and Peters would not hesitate to fly to a specialized hospital for the latter treatment, whereas both might go to a local general hospital for the former, especially if it is urgent. Their choice would be made, in one case, on the basis of strategy, in the other, on the basis of location. But not only that: the quality of the service would also be uppermost in their minds.

Accordingly, to be truly effective, a Porterian organization has to be Peterian: it has to have a great strategy with wonderful execution. True, some organizations can get away with being more Porterian than Peterian—if their market position is really good. When I shopped at IKEA years ago, they were notorious for running out of stock. (Someone in the company once told me that it was because the founder hated planning!) But in other respects—design, layout, meatballs and more—IKEA executed brilliantly. So I went back.2  The problem with this, however, is that enticed customers can tire of going home disappointed.

A truly effective Peterian organization, however, need not be Porterian. Excellent execution can be enough. I imagine that both these guys might eschew a differentiated garbage collection company in their community, maybe even a cost leader, for one that is clean and reliable. Thus, in this battle that I have concocted of these two titans, while together both win, apart I believe that Peterian effectiveness usually wins. Who needs an effective strategy effected ineffectively? I used to seek out restaurants that were truly novel, until I realized that many of them failed to blend their fancy ingredients. (That is called synthesis, beyond analysis.) Now I celebrate restaurants that do classic dishes, and not just novel ones, splendidly.

Porter does include customer service as a form of differentiation. Isn’t this Peterian? Not quite. For Porter, this is a strategic choice—calculated—perhaps to offer more extensive service, aside from  more attentive service. For Peters, service is not so much a calculated choice as a driven imperative: a philosophy of doing business, a way of life, done with soul. A management fixated on strategy—the grand and the glorious, from the top—can lose sight of what is happening on the ground. Don’t we all know companies with great strategies to which we shall never return?

Too much calculation can get in the way of managing with soul.  On the desks of people who manage like this, you are more likely to find a financial report than a garbage truck. What they love is Shareholder Value. But surely we have enough cold love in our economies. So please: a little more attention to Peterianism, with or without Porterianism.

© Henry Mintzberg 2018. Coming in the new year, a collection of my TWOGs entitled Bedtime Stories for Managers (Berrett-Koehler).

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1See my book Managing the Myths of Health Care (2015) on strategy with regard to hospitals (pages 173-179).

2One such IKEA experience of mine is described in “Opening up Decision Making: The View from the Black Stool” (with Ann Langley, Pat Pitcher, Elizabeth Posada, and Jan Saint-Macary) Organization Science (May-June 1995).

Nothing is rotten in the state of Denmark

17 May 2018

I am sorry to correct Shakespeare, but nothing is rotten in the state of Denmark. I should know—I just spent a few days there. True, I didn’t get into any of the deep, dark Danish secrets, the way Shakespeare did. But I did have enough exposure to be charmed by the Danish differences.

Denmark has its act together. In today’s world, that’s different!

The first thing you see, as you line up at border control, is a sign that says “Find your passport”, then another that adds “Open passport on photograph page”, followed by a third that states “Hand over passport like this.” Charming… and telling. You’re not even in the country yet, and the stage is set: do your bit of personal effort for the collective good.

I am sorry to correct Shakespeare, but nothing is rotten in the state of Denmark. I should know—I just spent a few days there. True, I didn’t get into any of the deep, dark Danish secrets, the way Shakespeare did. But I did have enough exposure to be charmed by the Danish differences.

Denmark has its act together. In today’s world, that’s different!

The first thing you see, as you line up at border control, is a sign that says “Find your passport”, then another that adds “Open passport on photograph page”, followed by a third that states “Hand over passport like this.” Charming… and telling. You’re not even in the country yet, and the stage is set: do your bit of personal effort for the collective good.

Into Copenhagen you go, to find out that the prices are outrageous. That’s because the income disparities are not outrageous. I read somewhere that McDonald workers here earn about $25 an hour (they are unionized, like 70% of the Danish workforce), so they live middle class lives. Hence a Big Mac costs about a buck more than in the U.S. Is this too much to pay for inclusive democracy, let alone social harmony?

You take a taxi and hand your credit card to the driver, who declares “no tip” as he enters the amount on the meter. No subordination here. No Uber either. Instead, bicycles, galore. The Danes discovered the obvious—that what is destroying almost every city on earth is more roads to accommodate more cars that attract more cars which require more roads. Instead of going with this flow, the Danes reversed it and brought back the bikes, favoring them in the city as well as installing paths for them in the countryside. In the capital, bikes can ride on some subway cars and buses, and parking for them is plentiful in the center. Hence 60% of Copenhagen commuters now go by bike, 46,000 of them daily across one bike bridge alone. The guy who designed that bridge says that Copenhagen has the most beautiful rush hour in the world!

If you rent a kayak in the harbor for an hour, you pay nothing if you bring back a bucket of trash. Imagine that: imagination! In the hotel where I stayed, the carpet in the elevator tells you which way to go to your room. (Don’t we all stare down anyway?) More imagination. And then, in your room, you find a basket balanced across the three sectors of recycling.

More soul too. We visit a war memorial for fallen Danish soldiers. It’s a subtle, simple place.  The names of just over 100 soldiers are inscribed, and so are the 47 countries where they fell. Turns out this is to commemorate peacekeepers. How many countries have a memorial dedicated to the soldiers who fell for peace?

Had I stayed a few more days, I’m sure I would have found something rotten in the state of Denmark. (Good thing I didn’t, for the sake of this title.) Maybe I would have found garbage that was rotten in the state of Denmark, or at least rotting. But then again, in Copenhagen they built a big incinerator to burn it—and, being Danish, they designed it with a long slopping roof, using some of the energy generated from it to make snow for the skiers of this flat country. Charming, so charming.

In polls, the Danes come out as the happiest people on earth. Is this why they get their act together? Or is it because they have their act together? Yes.

Helping all this along, the Danes keep the financial sharks at bay, so to speak: most of the major Danish corporations, such as Carlsberg, LEGO, and Novo Nordisk, are controlled by foundations. One figure put the number of such Danish companies at over 1300, with the publicly-traded ones comprising about two-thirds of the total market capitalization of the Copenhagen Stock Exchange.1 This can help them to do better for all, instead of grabbing more for the few. In 2015, the Harvard Business Review named the CEO of Novo Nordisk the best-performing CEO in the world… and he was one of the lowest paid among the top candidates! Does he suffer? Maybe he hides a Maserati in his garage while cycling to work, thus helping to keep the country in balance.

I have written much in these TWOGs about balance across the public, private, and plural sectors of society. On the roads of Denmark, you have this balance exemplified: the community pluralism of the bikes, the private individualism of the cars, and the public infrastructure of the state, all working together. A true PPPP—public, private, plural partnership. These little islands are leading the world, just as they have been in the use of renewable energy.2

Something is rotten in the state of the world. If the Danes can get their act together, how about the rest of us?

© Henry Mintzberg 2018. My book Rebalancing Society was unintentionally written about the state of Denmark.

1Steen Thomsen “Industrial Foundations in the Danish Economy”, (Center for Corporate Governance, Copenhagen Business School, 19 February 2013)

2See our article “Worldly Strategy for the Global Climate”,  forthcoming in the Stanford Social Innovation Review in September.

Going public with my puzzle

21 December 2017

I don’t like doing jig-saw puzzles and other games that come in a box. They Boggle my mind, Scrabble my brain. I prefer puzzles beyond boxes, including the box called “thinking outside the box.”

Recently, I joined some family in Toronto for a game that I was told I would love, as soon as I figured it out. I never did figure it out, perhaps because I never cared to figure it out. Look, I’m a word guy who goes blank in cross-word puzzles (although I delight in inventing words, like TWOG).

On a table, beside this game of ours, sat a jig-saw puzzle, its pieces strewn about near the box that showed what picture to make. Then and there it hit me. These games are too pat for me, too circumscribed, closed-ended. Choose the proper words or move the proper pieces while respecting the proper rules to make the proper picture. I want to fly with ideas, not be grounded by some rules.

I don’t like doing jig-saw puzzles and other games that come in a box. They Boggle my mind, Scrabble my brain. I prefer puzzles beyond boxes, including the box called “thinking outside the box.”

Recently, I joined some family in Toronto for a game that I was told I would love, as soon as I figured it out. I never did figure it out, perhaps because I never cared to figure it out. Look, I’m a word guy who goes blank in cross-word puzzles (although I delight in inventing words, like TWOG).

On a table, beside this game of ours, sat a jig-saw puzzle, its pieces strewn about near the box that showed what picture to make. Then and there it hit me. These games are too pat for me, too circumscribed, closed-ended. Choose the proper words or move the proper pieces while respecting the proper rules to make the proper picture. I want to fly with ideas, not be grounded by some rules.

So let’s call these pat puzzles, to compare them with another kind of puzzle, defined in my dictionary as “a difficult or confusing problem.” These we can call puzzling puzzles. They are not about breaking the rules so much as creating new rules to get around old rules are broken. To do this, we have to be playful rather than pat. Puzzling puzzles require solutions that are outrageous—until they turn out to be obvious.

In a pat puzzle (jig-saw):

1. The pieces are supplied.
2. Each is clean-cut.
3. They fit together perfectly
4.  To make the picture shown on the box.

(I took this photo of that table in Toronto.)

In a puzzling puzzle

1. The pieces have to be discovered, or created.
2. Each appears obscure, like a fragment.
3. They need to connect, although never neatly.
4. With no box in sight, the picture has to be constructed from these fragments and connections.

(I took this photo of my work table at home, exactly as I had left it earlier, while puzzling over this TWOG. Notice the fragments at the front, loosely connected.)

Pat solutions for puzzling problems?

Why are we so enamored with puzzles that are pat. Sure they can be fun, even useful for problems that are pat. But how about problems that are not? Pat solutions can no more resolve puzzling puzzles than can Monopoly develop entrepreneurs or chess model guerrilla warfare.

We used to play more open-ended puzzles at home. Remember charades—that was playful.  And how about LEGO? It used to let the kids build their own thing, instead of assembling 3-dimentional jig-saw puzzles. Here in Canada, kids used to learn hockey on some local pond. Now they are marched off to a designated arena where a designated coach teaches them the designated way to play. No wonder novelty has declined in professional hockey.

As for adults, look at how much of medicine, management, politics, and life has succumbed to pat programming. Get the patient or the problem into a category, a box where clean-cut pieces can be connected correctly. As a physician, diagnose that disease to apply the proper protocols. As a captain of industry, buy and sell businesses the way you bought and sold Monopoly hotels. In the affairs of state, treat diplomacy like a game of chess. And in life, find a partner on a dating site that lists categories of compatibility.

Some of this is fine when an existing category fits. Hail to those protocols and marriages that work. But problems fester when there is a misfit, or a forced fit, or no fit. A patient falls between the cracks of medical specialties. A merger or marriage proves incompatible beyond the categories. Diplomacy discovers that chess isn’t much of a model when faced with guerrila warfare.

Why do we have this propensity to use pat programming for puzzling problems? Sure, it’s easier. But just as surely, it’s fruitless. Has pat schooling killed our capacity for discovery? Or is it all those convenient apps we use on our phones?  Click and go—no novelty required. (Siri does the thinking.) Do we play too many games that come in e and cardboard boxes, or watch too many sitcoms on that big black box? Maybe we have simply become irrationally rational, thanks to centuries of privileging thinking over seeing and doing.

Our profound puzzle

Now we face a number of particularly difficult and confusing problems—puzzling puzzles that are foreboding, yet continue to fester. These include global warming, income disparities, and declining democracy. I see them as the fragments of a single profound puzzle, which in various TWOGs and a book I attribute to a basic imbalance in society. Narrow economic forces, encouraged by rampant individualism and unrestrained globalization, have been overwhelming our collective and communal needs as human beings. 

What can we do about this imbalance? We can start by putting seeing and doing ahead of thinking. We need a compelling image of what we are facing that can suggest concerted action, so that we can begin to think differently. This is the puzzle that engages me now: how to form that image—a comprehensive picture to see our way to a rebalanced society.

As I probe around—by meeting, reading, testing, tweeting—the fragments of ideas come at me, left and right, in no particular order. (I list some below—in a box of all things!) Imagine the image I am trying to construct as a map on which the fragments can be positioned and connected, to locate ourselves in the territory and construct possible routes to a better place.

Each new fragment contributes to the image that is forming in my mind. So please stay connected as I post the play of this profound puzzle.

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Some fragments for rebalancing society

Some of these fragments have been mentioned in TWOGs, as indicated; others are ideas in progress.

• Focusing corporate social responsibility on the causes of problems, not just their conditions (CSR 2.0)
• Liberating enterprises from the tyranny of the stock market
• Shifting production and consumption away from MORE, toward better
• Encouraging Indigenous development from the inside up
• Putting economic globalization in its place, namely the marketplace (forthcoming)
• Challenging illegitimate trade tribunals in national courts
• Building up the social economy
• Using progressive protests (1 hour longer each day) for impact
• Collaborating among prominent NGOs for common cause, beyond institutional causes
• Establishing a Peace Council (see pp. 92-93) for security instead of insecurity
• Developing a worldly strategy for the global climate (with Dror Etzion and Saku Mantere, submitted for publication)

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This last one may be the start of a map, with key roles of the three sectors located around a circle: grounded engagement in the plural sector, autonomous venturing in the private sector, and orchestrated planning in the public sector. The fragments listed above can be placed near each, but we conclude that real progress will depend, not on a collection of such efforts, but a consolidation of them around the circle.

© Henry Mintzberg 2017. My thanks to Dulcie and the gang, Dulcie for the idea of the map, Gavin and Lorraine for the puzzles, and David for explaining why there may now be less novelty in professional hockey.

Follow this TWOG on Twitter @mintzberg141, or receive the blogs directly in your inbox by subscribing here. To help disseminate these blogs, we also have a Facebook page and a LinkedIn page.