James Caan: People Business

James Caan is a serial investor who builds or buys businesses… and then sells them and moves on. He is one of the UK’s most successful and prominent entrepreneurs, with a nice-guy image. This image reflects his underlying business philosophy.

James Caan

James Caan

Short Biography

James Caan was born as Nazim Khan in Lahore, Pakistan, in 1960. Two years later, his family moved to the United Kingdom and, like so many immigrant families over the last few hundred years, they settled down and built a business in London’s East End – not far from where Lord Sugar grew up and got started.

Although his father wanted Caan to join the garment business he had started, Caan had other ideas. He left school, left home, and split with his father at the age of 16, and went west, to live in a flat in Kensington.

After a series of job placements made by a recruiting company, he decided he wanted to start his own business. But this was after helping his then future wife start her own fashion shop. He met her, interviewing her while working for a fashion recruitment agency, and promised to invest in her business, because he was attracted to her – not, I suspect he would now argue, the shrewdest of business justifications. With little capital of his own, he borrowed heavily, and luckily she made the business work.

Having worked for several recruitment businesses, he started his own in 1985: Alexander Mann.  This was followed by others, as he started, expanded and sold businesses largely in the recruitment sector. Most notable were Alexander Mann (founded 1985, sold 2002) and Humana International (founded 1993, sold 1999). His LinkedIn profile will give you a sense of his energy.

In 2003, he returned to formal education for a year, joining Harvard Business School’s Advanced Management Program. On his return, he founded what is now his primary business, Hamilton Bradshaw. This is an equity investment business that specialises in the UK recruitment industry. Its portfolio currently (Summer 2016) consists of four recruitment businesses (with 9 others sold) and five other professional services businesses (with 1 other sold).

Between 2007 and 2011, Caan was a panelist on the successful BBC television series Dragon’s Den, alongside entrepreneurs including Deborah Meaden, Theo Paphitis, Peter Jones and Duncan Bannatyne. He left the series after frequent collaborator Bannatyne and he got into a dispute about the corporate structure of Hamilton Bradshaw and whether its funds are held off-shore.

In 2012, Caan was appointed Chairman of the Government’s Start-up Loans company, and in 2015, he was made CBE (Commander of the Order of the British Empire). He has written several books (including a best-selling autobiography, The Real Deal: My Story from Brick Lane to Dragons’ Den) and published a top-selling smart-phone App.

James Caan’s Business Philosophy

Caan became successful in his late 20s and has maintained a high work rate and exceptional success record ever since. His philosophy is simple:

Business is about people.

This is reflected by the overwhelming focus of his business investments; in people-focused businesses. This was also true in his investment choices in the Dragon’s Den series, although he did make a number of investments in product based businesses too.

He takes this further and says that good business is not about the quality of your transactions, but the quality of your relationships. We can see a reconciliation of relationship and transaction in one of the two pieces of advice he claims to have had from his father that influenced him significantly:

‘Always look for opportunities where both parties benefit.’

This very much matches a piece of advice in Fisher and Ury’s classic book on negotiation, ‘Getting to Yes‘:

‘Invent options for mutual gain.’

We have a blog about another key insight from that book, ‘Going round in circles: Problem Solving Simplicity

The other piece of advice Caan’s father gave him is also instructive:

‘Observe the masses and do the opposite.’

This seems to be a quintessential entrepreneurial attitude. However, I am not sure it is really at the heart of what has made Caan so spectacularly successful. For me, his formula seems equally simple. Looking at a succession of similar businesses that he has started, made profitable, and then sold on, I wonder if his philosophy s not something like this:

‘Observe what works and replicate it.’

 

Jennifer Aaker: Story Power

Jennifer Aaker wants you to get your message across. And her conclusion is that the best way you can do it is by telling a story. Stories are powerful, memorable, and impactful.

Jennifer Aaker

Jennifer Aaker

Short Biography

Jennifer Aaker was born in 1967 and grew up in California. She studied psychology at UC California, Berkeley, under Daniel Kahneman and Philip Tetlock, graduating in 1989. She went on to win a PhD at Stanford University’s Graduate School of Business in 1995.

She went straight into an academic role as Assistant Professor in the School of Management at UCLA Anderson. She then returned to The Stanford Graduate School of Business in 1999, becoming a full professor in 2004, and General Atlantic Professor of Marketing in 2005.

We try to avoid framing our management thinkers in terms of their family members, but it is relevant to note in passing that Jennifer Aaker’s father is David Aaker – now an emeritus professor of advertising. Clearly he was influential in Aaker’s interest in branding and you can watch the two Aakers in conversation about brand and marketing.

However, she has moved away from that as her primary interest, focusing on two areas:

  1. the psychology of happiness, and how it relates to our perceptions of time and money
  2. how we can communicate via social media, using the power of storytelling

The two link together, because small acts, often mediated by social media messaging, can have an effect on our happiness.

In 2010, Aaker co-wrote The Dragonfly Effect with her husband, Andy Smith.

Brand Personalities

Jennifer Aakers came to prominence researching the personalities we associate with brands. Her idea was to see if there are a small subset of ‘personality types’ that consumers associate with brands. These would be like the ‘Big Five’ personality factors* in people. Each one is clearly distinct from the others and together, they account for a large proportion of personality traits.

Her assessment was that bands do have ‘personalities’ and that consumers make consistent interpretations. So her research set out to narrow the number of different personality types down to five. In her paper**, she shows how she reduced brand personality labels down to:

  • Sincerity
  • Excitement
  • Competence
  • Sophistication
  • Ruggedness

The personality dimension that a brand chooses to emphasise will influence consumer buying and loyalty choices. She advocated that brands can select a dominant personality type to emphasise, and present related characteristics to its audience. This creates a way to communicate brand identity and values.

Interestingly, subsequent work show that her five dimensions are far more parochial than the true Big Five Personality Factors. Outside the US, where she conducted her work, other brand personality dimensions are dominant, including Peacefulness in Japan, and Passion in Spain.

The Dragonfly Effect

The metaphor Aaker and Smith chose is one of a dragonfly’s agility being dependent upon it co–ordinating the use of four wings. In communicating effectively using digital media, Aaker and Smith’s four components are:

  1. Focus
    What one goal will you pursue?
  2. Grab attention
    How will you seize your audience’s attention in a noisy environment?
  3. Engage
    What story will engage your audience and appeal to their emotions?
  4. Take action
    What will you ask of your audience, and what difference will they make?

What Goal?

Before you communicate, you need to decide on a goal. It will need to meet five design criteria:

  • Humanistic – affecting people
  • Actionable – inspire action
  • Measurable – clear success criteria
  • Clarity – cannot be further simplified
  • Happiness – achieving the goal will make people happier

Grab Attention

To grab attention, your message must  be at least one of:

  • Personal
  • Unexpected
  • Visual
  • Visceral

Engage

To engage your audience, you need to tell a story. Stories connect the audience to the story-teller and create an emotional response. This is important because we primarily make our decisions emotionally, and use reason to justify them afterwards.

Take Action

People should fee ready and able to take action. As much as possible, make it easy for them, and fun. And the more they feel you are offering them something that is uniquely tailored to them and their circumstances, the more readily they will act.

Jennifer Aaker talking about her Research on Happiness

… and how it relates to social media.

 


* The Big Five Personality Factors are: Openness, Conscientiousness, Extraversion, Agreeableness, Neuroticism

** Dimensions of brand personality, Jennifer L Aaker, JMR, Journal of Marketing Research; Aug 1997; 34, 3

Charles Handy Part 2: The Nature of Organisations

In last week’s Pocketblog, we surveyed the life of Charles Handy, and referred to some of the big ideas in his many books. Now it’s time to look at those ideas.

The Gods of Management

In Handy’s first book, Understanding Organisations, he set out to collate and understand a wide variety of management and organisational thinking. In his second, The Gods of Management, he presented his own ideas. He perceived that organisational cultures can be classified into four broad types, according to how formal their structure is, and how centralised power is, within them. He drew the analogy with the characters of four of the olympian gods, from Greek mythology. He was, after all, an Oxford classics scholar.

The Gods of Management - Charles Handy

The Gods of Management – Charles Handy

Zeus – The Club Culture

Zeus presides over a highly centralised ‘Club’ culture, where one dominant executive holds all the reigns of power, making all of the important decisions themselves. They control al the important resources and can have low acceptance of what they perceive as under-performance. This culture tends to arise under a dominant and successful founder, or with the ascendancy of a charismatic leader. Political parties, start-ups, and crime families often share this culture.

Apollo – The Roles Culture

Mature, bureaucratic organisations adopt a solid, stable, rule-based culture, where everyone has a specific role. People know what is expected of them and will rarely step beyond those boundaries. Reporting lines are well-defined and decisions follow set procedures. Job positions confer authority to make those decisions, and processes can be long-winded and inflexible. Apollo cultures struggle to adapt to a changing environment

Athena – The Task Culture

The Athena culture is a meritocracy, where ability to think and get things done is highly valued, and rewarded well. Talent is well rewarded, and teams are fluid, with people coming together to work on projects and solve problems. Authority is less important here than knowledge, expertise and the ability to influence and persuade. You can see this culture in consultancies, research organisations, and in agile business units of larger, forward thinking businesses that may be stuck with an Apollo or Zeus culture.

Dionysus – The Existential Culture

The Dionysus culture is all about me, me, me. It serves the individuals and can lead to both creative freedom and equally internal discord and unproductive competition. The organisation is little more than the home and resource for a set of self-motivated individuals who often care more about their own position than that of the organisation. Accounting and law firms are good examples, because of the partnership nature of the businesses. So too are pressure groups.

New Organisations

In his 1989 book, The Age of Unreason, Handy started to foresee some of the changes we now take for granted. As technological and commercial realities were shifting, Handy built on his earlier book, The Future of Work, to develop new models of how we would work in the future. He further developed those ideas in The Empty Raincoat, and The Elephant and the Flea. Two of the characteristics of Handy’s books are

  • That they often take management and organisation as their starting point, but then extend their ideas outwards to reflect on the impact of society
  • Each book seems to build on and develop further, the ideas of its predecessor

Here are four of the trends and ideas that most appeal to me as both relevant to our readers, and accurate as forecasts. Inevitably, they interlink into a coherent idea-set.

Portfolio Workers

Handy’s concept of a portfolio career, with lots of components, rather than one single ‘job’ is a reality for many professionals nowadays (including me). The concept of a flexible labourer able to turn his hand to anything from agricultural work to general making and mending, to selling goods at market, to working in a tavern, is ancient. What Handy foresaw (and embraced for himself) was the emergence of this lifestyle for white collar, knowledge workers.

The Shamrock Organisation

This trend will enable what Handy describes as a Shamrock Company.

The Shamrock Organisation - Charles HandyThe Shamrock Organisation - Charles Handy

The Shamrock Organisation – Charles Handy

In the The Age of Unreason, Handy originally described three leaves, but four seems to be a fuller model: the first is the professional core of managers, technocrats, vital support staff, and a minimum of specialists. Together, they define the core competence of the business, and provide and manage its infrastructure. Everything else is provided by contracted workers: outsourced services from specialist providers, contracted independent professionals with highly specialised skills, and a flexible, lower-paid  workforce that can be brought in on short contracts and day-rates.

The Federal Organisation

Berkshire Hathaway seems to me to be the epitome of Handy’s Federal Organisation. Here, there is a tiny core business, managing a large number of highly independent businesses, all of whom have complete autonomy to manage their affairs, and succeed on their own terms. When you see the success that Warren Buffett and Charlie Munger have created, you have to wonder why other large federal multinationals spend so much effort trying to control their subsidiaries, impose processes and functional verticals upon them, and generally over-manage the local talent.

The Triple-I Company

The astonishing rise of internet-based software companies, web-based news aggregators, digital information providers (increasingly, Management Pocketbooks is transitioning to becoming one of these), and the high-tech consultancies that serve them, seems to me to be ample evidence of the prescience of Handy’s third kind of new organisation: one that capitalises, above all, on:

  • Ideas
  • Intelligence
  • Information

Discontinuous Thinking

Handy foresaw our current period of discontinuous change, and suggested that incremental ‘continuous’ thinking was not going to solve the problems it throws up. He doesn’t require us all to have the genius-level intellects of Einstein or Marx, but instead implies we need to build a capacity for curiosity, reframing situations, and constant learning. It seems inevitable that, once again, Pocketblog returns to the thinking of Carol Dweck, on Growth Mindset.

Charles Handy: Management Philosopher (Part 1)

In my research for this article, I found an unreferenced remark, suggesting that it was The Economist magazine that coined the term ‘management guru’, and that they first used it as a description of Charles Handy. Handy rejects the label – and so he should. It almost belittles the breadth of his thinking. From organisational theory, to management trends, to social polemic; Handy’s thinking goes well beyond easy categorisation.

Charles Handy

Short Biography of Charles Handy

Charles Handy was born in a small town a few miles outside of Dublin, in Ireland, in 1932. He was educated in an English public school, and at Oxford University, where he gained his MA in ‘Greats’ – classical history and philosophy. He went from there to work for Shell, taking a number of operational roles around the world, where he had great autonomy as a young manager. Returning to London, he found headquarters life didn’t suit him. What did, however, was a transfer to the staff college, where he found teaching much more to his liking than corporate administration.

MIT Sloan School

Having taught himself the basics of economics earlier on, so he could take up a role at Shell, he moved briefly to Anglo American as an economist, before travelling to MIT to study at the Sloan School of Management. here he met and studied among some of the greats of US management theory: Warren Bennis, Chris Argyris, and Edgar Schein, who supervised his studies. He was greatly influenced by them all, and also by the work of Douglas McGregor, who had also worked there and died a little before Handy arrived in 1965.

He returned to London to set up the Sloan Program at the newly founded London Business School, where he became a professor in 1972. It was there that he wrote his first book, Understanding Organizations, which has remained in print pretty much ever since 1976, with new editions updating it for modern readers. It is still a first rate introductory text, of which Handy says that he wrote it to get to grips with the ideas in it. He also (famously) recommends that once you have read it, you should re-write your own version and burn the original. In part, Pocketblog is my attempt at re-writing his book, though I never plan to dispose of my trusty 1993 fourth edition!

Handy finds his Voice

Whilst Understanding Organizations is very much a compendium and synthesis, Handy’s next book introduced his own ideas. 1978 saw the publication of The Gods of Management. We’ll take a look at the ideas in this book in part 2 of this blog.

In 1977, Handy left academia, in search of a somewhat more spiritually rewarding role. He found it in an organization set up by Prince Philip the Duke of Edinburgh, and the Church of England. St George’s House is an institution that encourages business and political leaders to come together, along with faith leaders, to consider contemporary and societal issues. His post as Warden allowed Handy to marry his philosophical and commercial instincts.

Portfolio Career

However, in 1981, Handy left, to pursue a new direction in his working life. This was a direction signposted in one of his most important books, 1984’s The Future of Work. In it, he signposted the development of portfolio careers, and the downshift from high-powered corporate jobs (the rack he had been on at Shell) to lesser-paid, but more congenial lifestyle careers. He embraced this downshift through the 1980s and started his own portfolio career that has served him to this day.

Handy further developed the ideas from The Future of Work in 1989’s The Age of Unreason. This book is full of ideas that we will explore further in part 2 of this blog. At its heart is Handy’s rejection of people as human ‘resources’. In modern organizations, we will want to assert our individuality.

A Stream of Ideas

The late 1980s and early 1990s were a particularly prolific time for Handy. He contributed to Making Managers, which sparked a new focus on management as a professional discipline, rather than a simple set of tasks, and led to the growth in the UK of management qualifications, and wrote Understanding Voluntary Organizations. In 1991, he presented a BBC TV series called Inside Organisations, and published a book by the same name, which set out 21 management concepts or ideas. Handy chaired the RSA from 1988-89.

His more philosophical leanings emerged from 1994, when he wrote one of his biggest selling books, The Empty Raincoat, about the emptiness at the heart of global economic growth. In the US, it was called The Age of Paradox. This book may be the most prescient among many of his works that seem that way.

Handy has barely let up with a stream of new books with new and interesting ideas:

A Summing Up

Without a doubt, Handy is a prodigious thinker. He has done and written so much, that we have to consider him one of the few of our Management Thinkers and Doers for whom a single article is not possible. Like another great, Peter Drucker, Handy is one of our foremost commentators on the nature of organisations. And like Drucker, his ideas have ranged well beyond that field. In Part 2 of this article, we will focus entirely on some of Handy’s biggest and most important management ideas.

Daniel Goleman: Emotional Intelligence

Daniel Goleman is a psychologist and journalist who catalysed a significant shift in the way we see human potential and capabilities – not just at work. It is not as though we did not know about the importance of our emotional response. Nor was the work he described his own. But his combination of timing, accessible writing, and psychological training made his  book, Emotional Intelligence, a stand-out best seller that started a revolution in management and leadership training.

Daniel Goleman

Short Biography

Daniel Goleman was born in 1946 and grew up in California. He went to Amherst College, Massachusetts, but spent much of his study time closer to home, at University of California, Berkeley. He majored in Anthropology, and graduated Cum Laude, winning a scholarship to study Clinical Psychology at Harvard.

There, Goleman’s mentor was David McClelland, whom he quotes in his writings. His doctoral dissertation was on meditation as a treatment for stress. He travelled to India to study ancient psychological knowledge and returned after his PhD, where further research resulted in his first book, The Meditative Mind: The Varieties of Meditative Experience, summarising his research on meditation.

After a spell as a visiting lecturer at Harvard, teaching the psychology of consciousness, Goleman was invited to write as a journalist for Psychology Today, and found he liked writing. In 1984, he moved to the New York Times on the science editorial staff, covering psychology. While he was there, he realised that many of the stories and research he was covering came together in his mind and demanded a deeper treatment than his journalism would allow. From that, came his massive 1995 best-seller, Emotional Intelligence: Why it Can Matter More Than IQ.

This ignited a huge interest in the public, and also, to Goleman’s surprise, in the business world. It led him to write Working with Emotional Intelligence (1998) and also one of the most reprinted ever of Harvard Business Review’s articles, ‘What makes a leader?’ Finding this a fertile area, and having left the New York Times, Goleman then collaborated with former Harvard Grad student colleague Richard Boyatzis, and Boyatzis’ former student Annie McKee, to write The New Leaders: Transforming the Art of Leadership (published in the US as: Primal Leadership: Unleashing the Power of Emotional Intelligence).

Pocketblog has already covered Emotional Intelligence in earlier articles. What Goleman has given us, in summary, are a five-fold emotional intelligence framework (in Emotional Intelligence), an inventory of 25 emotional competencies (in Working with Emotional Intelligence), and six leadership styles (in The New Leaders).

For a first rate primer on the topic, you may enjoy The Emotional Intelligence Pocketbook.

Goleman’s more recent work

Goleman’s actively curious mind continues to synthesise and create ideas. Having established links with the Dalai Lama, his 1997 book Healing Emotions: Conversations with the Dalai Lama on Mindfulness, Emotions and Health was followed in 2004 by Destructive Emotions: A Scientific Dialogue with the Dalai Lama.

His other books include:

Focus

Goleman’s thesis in Focus: The Hidden Driver of Excellence is simple: to succeed in a busier, more complex world, we need to focus our attention. Variously seen as groundbreaking and disappointing, insightful or just pop psychology, there is no doubt that, in Focus, Goleman is really returning to his roots.

As a grad student, he started to ask what ancient wisdom could teach us about human psychology. In Focus, he alights on one valuable lesson: focus. I think it no coincidence that, when asked what the secret is to their great success, both Warren Buffett and Bill Gates have each cited one answer: the ability to focus on one thing at a time.

Whatever you think of the way this book is written, it is, without doubt, a message to hear.

Why aren’t we More Compassionate?

Daniel Goleman at TED, in 2007.

 

Liz Wiseman: Multiplier Effect

Liz Wiseman is a former senior executive at the Oracle Corporation, where she ran their Oracle University. There, she became interested in leadership development and has, since leaving and setting up her own business, taken up a research-based approach. Her research into why some leaders seem to get the best from the people around them, while others equally shut down contributions, led to the powerful idea of Multipliers and Diminishers, and two best-selling books.

Liz Wiseman

Very short biography

Liz Wiseman was born and grew up in the San Francisco Bay area. She attended Brigham Young University, studying Business Management and getting her bachelors degree in 1986, followed by a master’s degree in Organizational Behaviour, in 1988. From there, she joined Oracle, where she stayed for 17 years, becoming a Vice President with responsibility for leading the Oracle University.

Wiseman left Oracle in 2005, to found her own leadership consulting business. She is currently president of The Wiseman Group (formerly known as Mindshare Learning). She cites CK Prahalad as her career mentor.

She has written three books, most notably Multipliers: How the Best Leaders Make Everyone Smarter (2010 – with Greg McKeown), which was followed in 2013 by The Multiplier Effect: Tapping the Genius Inside Our Schools. Her most recent book, Rookie Smarts: Why Learning Beats Knowing in the New Game of Work (2014), introduces another interesting new idea about leadership.

The Multiplier Effect

Wiseman’s big idea, which she researched with British consultant Greg McKeown, is that some leaders seem to get vastly more from the people around them than others. She calls them Multipliers. She made this observation while at Oracle and then researched just what it is that they do differently from otherwise equally intelligent leaders, who seem to suppress the contributions of others. She calls those Diminishers.

Multipliers are able to access the intelligence of the people around them and somehow grow that intellect, making them feel (and maybe become) smarter still. They ask questions and make challenges in much the same way as Bernard Bass referred to in one of his four dimensions of Transformational Leadership: Intellectual Stimulation. They seem to see more capabilities than  other leaders and therefore make bigger asks of people.

By multiplying the intelligence of your people, Multipliers have a disproportionately positive effect on your business. They can harness under-utilised capacity of busy but bored people, by expecting more and giving them the opportunity to deliver it.

Wiseman identifies five characteristics of Multipliers, and six skills that allow those characteristics to blossom.

Multipliers are Talent Magnets

This is almost the definition of a Multiplier. They seek out and attract people with ideas and talent, and draw their genius from them.

Multipliers are Liberators

They create the kinds of environments that free people up to do their best work and contribute their most innovative and critical thinking.

Multipliers are Challengers

They are able to define a challenge or opportunity and set people the responsibility to excel themselves and meet it. This way, they get the very best from their people.

Multipliers are Debate Makers

They can drive sound decision-making by creating rigorous evaluation and thorough debate. They encourage people to apply all their intellect fearlessly by caring more about the quality of discussion, than about personal gain or loss – we all win when we make a good choice together.

Multipliers are Investors

They invest in other people’s development and growth, and allow people to feel ownership for their careers and the results they achieve.

The Six Skills

The six skills that Wiseman teaches are:

  1. Asking questions that spark innovation and intelligence
  2. Creating debate that drives the best decisions
  3. Identifying and utilizing genius in others
  4. Creating space for others to think and contribute
  5. Transferring ownership and accountability for results
  6. Generating learning from mistakes

Rookie Smarts

It is worth briefly discussing Wiseman’s other big idea, captured in her 2014 book, Rookie Smarts: Why Learning Beats Knowing in the New Game of Work. Even more so than her Multiplier Effect, this reminds us powerfully of the work of Carol Dweck on Growth Mindset.

The idea behind Rookie Smarts is simple: new people in an organisation bring a freshness and energy with them. They question the absurd and want to change things because , as an outsider, they have no allegiance to the ways of the past.

Long-serving leaders, on the other hand, easily get trapped into a mindset of ‘that’s the way we do things around here’ , and consequently lose their passion for change and drive to innovate.

What Wiseman advocates is that we ignite our curiosity, fire-up our energy, and become Perpetual Rookies. She says that:

‘Learning beats knowing’

and in so doing, she echoes precisely the principle of the Growth Mindset.

Liz Wiseman in her own words

The 2-minute intro…

And a longer 16 minute talk…

Edgar Schein: Organizational Culture

Edgar Schein is a social psychologist who has introduced a raft of ideas around organizational culture, and placed his thinking at the heart of the subject. He was brought to The Sloane School of Management by Douglas McGregor, where he was a contemporary of Warren Bennis. Though less widely known, he seems to me to be every bit their equal.

Edgar Schein

Short Biography

Edgar Schein was born in 1928 in Zurich and moved to the United States. There he became a citizen and studied Social Psychology, gaining a BPhil from the University of Chicago, and MA from Stanford, and his PhD in Social Psychology from Harvard, in 1952.

Following this, he spent four years in the US army, studying both leadership and, importantly for his later thinking, the rehabilitation of prisoners of war (POWs) returning from Korea under the influence of brainwashing.

In 1956, Douglas McGregor invited him to join the faculty of the Sloan School of Management at MIT, where he became a professor in 1964 and chaired the Organizational Studies Group from 1972 to 1982. He remains an emeritus professor there.

Edgar Schein’s Work

Edgar Schein’s work is deeply concerned with organizational culture and its relationship to behaviours, motivation, learning, management and leadership, and careers. Let’s survey six big themes in his work.

Organizational Culture

Schein sees culture as the dominant force within an organization, and he defines it as a pattern of shared assumptions, about how we relate to one another, how we perceive truth and reality, the balance of task focus with growth and fulfilment, and others. These affect how people behave and the values and social norms that evolve.

His primary thinking was captured in his best known book, Organizational Culture and Leadership, originally published in 1985, but now in its fourth edition. In a later article, ‘Organizational Socialization and the Profession of Management‘ he argued that integrating with an organizational culture requires undoing, ‘unfreezing‘ prior cultural norms, and establishing new ones. He related this to what he learned during the Korean War, about brainwashing, and suggested there are three responses to these pressures.

  1. Rejection of the organization’s imposed norms and culture: ‘rebellion
  2. Selective adoption of certain values and norms: ‘creative individualism
  3. Full acceptance of the new culture: ‘conformity

Psychological Contract

In another of Schein’s important text books, Organizational Psychology, (1980), he focused on the idea of a ‘psychological contract’ between an employer and its employees. He credits the original idea to Chris Argyris, but develops it considerably. The psychological contract is a set of undocumented expectations between the organization and its employees. Where expectations match, there will be harmony: where they mismatch, problems arise, such as disloyalty, under-performance, and industrial disputes.

Management Cultures

Within an organization, Schein identified three management cultures that co-exist and, to a degree, compete unhelpfully with one another. Organizational Learning will come as people evolve their organizational culture to properly integrate these three cultures.

  1. Operator Culture: local cultures within operating units
  2. Engineering Culture: technicians and experts seeking optimal technical solutions, mistrustful of the soft roles of people in driving the right answers
  3. Executive Culture: managers focused on financially-driven metrics

Organizational Learning

Under the pressures of constant change, organizations can only thrive when they learn quickly. The problem is that it is frustrated by employees’ and managers’ fear of change. He calls this fear ‘Anxiety 1’ and argues that for learning to occur, it must be overwhelmed by ‘Anxiety 2’ – the fear of the consequences of not learning, and therefore of not transforming to meet the new realities. He therefore advocates the need for creating a culture where people can feel safe to learn and experiment, as a way of overcoming Anxiety 1 without the need to induce greater levels of fear.

Motivational Theories

Not surprisingly for someone who came to the Sloan School at the behest of Douglas McGregor, Schein’s fertile mind also paid attention to motivation. He created two contributions. The first was to group models of workplace motivation into three categories, and the second was to add a fourth category.

  1. The Rational-Economic Model
    McGregor’s Theory X, building on Taylor’s approaches to Scientific management suggest we act out of compliance with incentives of coercion.
  2. The Social Model
    Mayo’s Hawthorne experiments suggested we respond to social cures, which was in part captured in McGregor’s Theory Y.
  3. The Self-Actualizing Model
    Maslow’s Hierarchy of Needs and, to some extent, McGregor’s Theory Y focused on our need for something more than social or economic benefit.
  4. Schein’s fourth category really seems obvious from any distance…
    The Complex Model
    We are all subject to a whole array of needs, expectations, desires, and motivations, and a wise manager will engage with all the subtlety and complexity of each individual. For me, Self Determination Theory is a good introduction to that necessity.

Career Anchors

We all have perceptions about ourselves. Carol Dweck has shown that we are most successful when we feel free to enlarge these as we learn, rather than see ourselves in a fixed way.

In his 1985 book, Career Anchors: The Changing Nature of Careers, (now in a new edition), Schein documented, first five, then three more, perceptions that act as anchors in the career choices we make. The original five were:

  1. Their technical-functional competence
  2. Their general managerial competence
  3. Their need for autonomy and independence
  4. Their need for security and stability
  5. Their entrepreneurial spirit and sense of creativity

The three later components are:

  1. Their desire to give service or their dedication to a cause
  2. Their need for challenge for its own sake
  3. Their desired lifestyle.

What is Culture?

Excerpts from an Interview with Edgar Schein