Chapter 10 part 4

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Evolutionary Governance

Open leadership relies on giving impulses that deploy secondary processes, as in Governance (the more 'hip' and secularized form of Cybernetics (both from the Greek κυβερνάω [kubernáo], to steer, lead, guide, conduct)). In non- -or not clearly- hierarchical chains of effects or commands, (as e.g. the evolution of nature), the (dynamic) outcome is determined by previous influences on different levels. These latter "frames" are to be influenced via different channels.

Internal and External Frames : Time and Path Dependencies

Illustration : Making ends meet Jorma Ollila is quietly confident without being the slightest overbearing. A well cut blue suit hangs off his lean, steely frame, as he slips into his seat, his eyes studious and alert. Ollila, the long time chairman and chief executive of Nokia, is probably as close as you get to an open leader within a multinational company. Nokia made itself a leading force in mobile communications only thanks to the vision and entrepreneurship of a small group in its senior leadership who charted it away from Wellington boots and cycle tyres into high technology when the market for mobile phones was still unproven. Yet Nokia is also a highly egalitarian bottom-up company, which earned its position only by learning rapidly as the market developed around it. One reason Nokia adapted so fast was that its staff all feel it is their job to learn and innovate. Creating a culture in which innovation thrives is one of Ollila’s main tasks: “Innovation and creativity are not individualistic. It’s really about interaction. Getting people to interact with one another in the right way. That is about creating an atmosphere in which people get a kick from working with one another.”

Ollila explained the kind of culture he is trying to create in a company in which almost half the 55,000 employees work in some for of R & D: “You have to forget the pipeline model of innovation. It does not work anymore. In the past when phones were simpler analogue devices research and development had an engineering culture. You set out of solve difficult but manageable problems. You could draw a timeline for that. But now products are much more complex. It’s about hardware and software, infrastructure and services. People are trying to solve complex problems that are always shifting, as the market, competition and the consumer shift. The atmosphere in R & D is much closer to working with artists. We have to create an atmosphere in which people can express themselves.” In these conditions the costs of bad leadership go up, according to Ollila. “In the past if you managed people in the wrong way you might lose a bit of output but you could make that up later. Now bad management could mean you lose a great idea with lots of potential. In the past you could quantify the costs of bad management. Now it is much more difficult to do that.”

Increasingly Ollila is leading not just his staff but a flocks of suppliers and partners, developing games, software, components, base station, as well as regulators and consumers. Nokia is trying to lead this flock not just to innovate a new physical product – a handset – not just new software or systems but the way they all come together. Erkki Ormala, head of technology policy at Nokia calls it new value domain innovation: “The mobile phone is not just a handset or a product. That is what we might have thought of it when it first started. Now we are creating a whole range of mobile services that come to people via this handset, which they can use to do a whole range of things in their lives, not just make telephone calls. That is why we talk about life going mobile not just about people making telephone calls on mobile phones. Mobile services are a new domain of value, a new kind of economic space. We have created a new way of doing things but that has meant bringing together telephone companies, regulators, infrastructure, software, all these players have been involved in creating this new platform. We might have started as a mobile telephone maker but increasingly our job is to try to orchestrate all these people to continue to develop the space in which we all operate.”

Innovation does not come down a pipeline but from the interaction of all these players together. That kind of orchestration requires open leadership. As products and services become more complex, created by networks of suppliers and partners, so open leadership of the kind practised by Ollila and other Nokians will be vital.

The more that organisations depend on complex networks of suppliers and partners, employ people who see themselves as the authors of their own careers and interact with demanding consumers who want to be contributors and participants, at least some of the time, the more these open styles of leadership will be required.

An unlikely example of where this kind of leadership has been applied is Heathrow airport. Heathrow is many people’s least favourite airport, a rag bag of different buildings, long walks, confusing signage. Some people call it Theifrow because of its reputation for bags going missing. And it has been the repeated scene of chaos brought on either by industrial disputes at catering companies or threats of terrorist action. In the summer of 2006 the company that runs the airport – BAA – came under fierce attack for failing to employ enough new security staff to deal with tightened security regulations following a threatened terrorist attack.

But for a moment imagine what it is like trying to run Heathrow airport. Each day about 80,000 passengers arrive, the same number leave and 40,000 transfer from one flight to another, often moving between terminals. The population of a reasonable sized town moves through 224 gates, served by about 100 airlines, spread over four terminals, built in different eras, to quite different designs. A fifth terminal, which has to fit into the way the whole airport works is under construction. A plane takes off and lands every 45 seconds. Heathrow can be a nightmare, a byword for delays and lost baggage, but in a way it is a triumph of innovation. When the airport opened in the 1950s, it was expected to handle 180,000 passengers a year. Now it handles almost that many in a day. Not quite Moore’s law perhaps – which predicts a doubling of semi-conductor processing power every year – but something close to it. More and more output has been generated from a tiny strip of land to the West of London. Heathrow serves about 60m passengers a year and they bring with them about 90m bags. About 15,000 bags a day travel through a tunnel connecting Terminal 4 to its three sister terminals. Those bags are usually time critical for passengers transferring from long haul flights onto European services. If something goes wrong with the automatic trains that carry bags through the tunnel staff have five minutes to decide what should be done. If they wait any longer then chaos spreads like a plague through the terminals. Bags get stacked up and so they miss connecting flights. People get very upset.

Heathrow is a highly complex system: there are many players, everything it intimately connected and constantly in motion. Just to add to the complexity, the company that runs the airport – the British Airports Authority - does not control key aspects of Heathrow’s operations: air traffic control, the airlines, aspects of security, transport to and from the airport.

I spent a day with Nick Temple the man charged with running Heathrow and I asked him how he managed to stay in control. Temple explained: “Every day there must be ten million, little interconnected decisions taken by the people working at Heathrow and the people using it. I cannot take those decisions or even know about more than a tiny handful of them. The only way I can do my job is to set the context so that people – my staff, airline staff, transport staff – are more likely to make decisions in a way that adds up and helps people.” In complex and very open systems like an airport the job of leadership is mainly to help other people to take decisions in the right way, not to take decisions yourself.

Temple shapes the context for those decisions by setting a few simple goals: “We have a slogan – clean, safe, friendly – those are our priorities for serving people. They apply to someone cleaning the toilets, checking bags or running the security system. People need a sense of how their jobs fit into the bigger picture of how the place works without that being vague.” The more complex the system the simpler the rules of thumb needed to run it. Temple reckons that those goals – clean, safe, friendly – help guide people to work out how to handle 85% of decisions they make. If a complex system like Heathrow was ruled by complex and bureaucratic rules then an already complex system would just be made more complex, and unmanageable, by the rules designed to control it.

As well as some simple goals the system also needs boundaries: “We want people to take responsibility for decisions within their roles but also to recognise their responsibilities to others in the system. There have to be parameters. When something starts to get out of hand, something that might affect safety and the rest of the system, for example, then it is critical that people do not try to solve it themselves but they ask for help.” Once an issue like that emerges – something like a breakdown on that railway between the terminals – then executives at the centre need to get involved to sort it out. Central leadership has to focus on challenges and opportunities that affect the system as a whole.

Temple has to lead more than his own staff. He has his flock to think of, all the other people who use the airport – airlines, passengers, retailers – as well as people whose cooperation he needs to make it all work – air traffic control. So he works assiduously trying to get people to collaborate even when they are fierce competitors. “They have to recognise they share the same stadium and play by the same rules even if they are competing like hell,” he says.

Temple’s approach has more in common with Wales, Torvalds and Trippi and other open innovators than might first be apparent: set a few simple goals; establish some critical boundaries; know when the centre has to intervene and lead; provide good information and clear yardsticks so decisions can be distributed; create a sense of shared purpose among all the people collaborating so they are motivated by a shared goal. The job of leadership is not to take decisions but to create the context in which thousands of others can make the right decisions.

Seen from Temple’s office Heathrow is not a value chain but a platform on which tens of thousands of people a day come together, collaborate and combine, making millions of interconnected decisions. The value of the platform goes up the more that people can use it easily, connect to it, exchange with others and then leave. The Sims is a platform for computer game playing and content creation. Wikipedia is a platform for knowledge sharing created by a community. EBay is a platform for people wanting to buy and sell with one another, often within communities of interest. The Linux community has created a platform for software development. All these platforms and communities have leaders. They are not rudderless. But the kind of leadership they exercise is quite different from the closed leaders of traditional and closed organisations. The more networked companies become the more they will need open styles of leadership practised by the likes of Ollila and Temple. Open leadership does not mean distributing all decisions to the community. It requires a mix: a strong, entrepreneurial and inspirational centre, to set big challenges and goals, combined with high levels of devolution to allow people much greater scope over most day-to-day decisions. Open and distributed leadership allows most decisions to be taken away from the centre, thus creating more scope for the centre to do what it should do best: the strategic and system-wide issues that only it can deal with. Often strategic challenges are not evident at the periphery where people can only see that part of the picture closest to them. Yet open, devolved and distributed are not bywords for vague, relaxed or creative. Open organisations require common yardsticks of performance and contribution. A highly devolved organisation needs a confident, strong leadership at its core. Truly open organisations measure performance rigorously and openly: no code gets adopted in Linux without being checked out by several people; a Wikipedia contribution has to pass the test of peer-review. The task of modern leaders is to create the conditions for effective self-organisation. Nowhere is that more evident than in the way we organise ourselves in cities.

Forcing Free Will, or Conditions of Legitimacy

The heroic moral standard for the autocratic ruler or protestant believer cannot be practical anymore today. The unavoidable ignorance, perspectivity and restrictions of human life and knowledge, amplified by the increasing complexity of the human habitat, for some judges leave no room for a "duty towards the Good". But a mere "competition of energies" might not bring about the overall results we desire.

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Proceed to Chapter 11

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