More on coordination and control in an empowered organization....

How can an executive improve the performance of an organization?

Amidst all the myriad pressures on organizations, one thing is clear: Executives who "take control" and personally make all key decisions become bottlenecks that bring organizations to a standstill. Executives' traditional roles of high-level decision makers and master project managers are stifling everybody else's creativity and their organizations' performance.

To deal with all the many tough challenges organizations face, there's only one answer: empowerment.

To understand the difficulty of empowerment, imagine that the overall goals of the company are clear. What mechanism will get everybody in the company to work in concert to achieve those shared goals? Conversely, why is it that people work at cross-purposes even when they share common goals?

For organizations to work -- that is, for them to perform any better than an equal number of individuals -- people must be coordinated. They need clear and integrated priorities, accountabilities, and authorities.

Furthermore, controls are necessary, not because people are stupid or evil, but because organizations must ensure that their scarce resources are used for just the right things, and that people's activities are aligned with organizational goals.

In the past, managers played a critical role in coordinating and controlling people's work. This put managers in the position of bottleneck while wasting many of the bright minds in organizations. Eliminating the management bottleneck means one thing: abandoning the organizational hierarchy as a means of coordination and control.

Empowerment dismantles one mechanism of coordination and control, specifically, top-down management. But somehow, people's daily activities must still be coordinated. You can't just say, "Okay, everybody, here's a common goal. Do as you see fit." Common goals are necessary, but in themselves don't coordinate people's daily work. Meanwhile, "do as you see fit" means that management will no longer serve as the coordinating mechanism.

In other words, you cannot dismantle one mechanism of coordination and control without explicitly replacing it with another. Effective empowerment depends on replacing hierarchical coordination and control with some other coordinating mechanism.

In healthy organizations, controls are not a matter of micro-managing bosses and occasional audits, but rather are inherent in what people must do to succeed. People are managed based on their results; and they determine for themselves how to achieve those results. Coordination and control are built into the definition of "results."

Put another way, empowerment doesn't mean eliminating controls; it means moving controls from the top line to the bottom line, so that people are managed by results rather than by tasks.

In such an environment, people can act independently. As they look after their own success, they will automatically do what's right for the organization as a whole. And executives can stop "micro-managing," that is, directing tasks and intervening in day-to-day decisions. They won't need to. Instead, managers can focus on adjusting the organizational signals that guide everybody every day.

Empowerment doesn't mean eliminating the organization chart, getting rid of managers, or undermining the chain of command. It means getting managers out of the job of telling people what to do, and into the job of leading organizations.

What is leadership? First and foremost, it's a matter of designing healthy organizations.

As an alternative to hierarchy, coordination can be built into the fabric of an organization. Organizations send signals that guide everybody's behavior. In a healthy organization, these signals are well aligned, so that individual initiatives are automatically well coordinated.

Of course, getting all the organizational signals right is not simple. It requires a thorough understanding of the mechanisms within organizations that influence people. This is a core competence of leaders.