The comments made by Daria Chernenko in her presentation for the Mannkal Ukraine Essay Contest inspired me to put some notes together on the difference between flat (bottom-up) and vertical (top-down) management techniques.
To start, take this comment from Roland Bartetzko answering a question on Quora about Russia’s inability to effectively conduct offensive warfare:
“It’s never advisable to underestimate your opponent.
The Russian military is a big bad machine. Its doctrine and structure may appear antiquated but the bottom line is that it works.
The Russian leadership knows pretty well what they can do with their often corrupt and inefficient administration and what would be too ambitious.
While modern Western militaries prefer a flat hierarchy leaving a lot of the decision-making to lower-ranking commanders near the frontline, Russia is doing the opposite. Their structure is extremely vertical and all orders are given from the very top. Of course, this makes for a slow process and it’s also extremely difficult for them, in case something doesn’t work out, to correct course.
With a destroyed Russian armored vehicle after the fight for Bucha. When the Russians lose too many tanks, they do not improve training or change tactics but simply produce more of them. (Picture: Hedi Aouidj)
On the other hand, their system is extremely foolproof. It doesn’t require to have well-trained soldiers, non-commissioned officers, and field commanders. There are also no complicated maneuver warfare operations to expect from them, a thing not even the Armed Forces of Ukraine could master.
Short, Russia keeps it simple.
Against a nimble and smart enemy such as the Ukrainians, their approach leads to a high number of casualties, especially on the offense. The Russians know this but they accept it…”
I would also like to share some earlier notes of my own, on two books that touch upon the subject of management structures:
“Tom Peters’ Liberation Management exemplifies the difference between American and European management advice. Americans believe that problems have solutions, whereas Europeans believe that solutions have problems. Peters, heavily influenced by my favorite economist, F.A. Hayek, understands the use of knowledge in society and how economics is a study of human action, rather than a collection of mathematical formulae.
The other book is Max De Pree’s Leadership Jazz. You can see from the yellow Post-its how impressed I was with his description of how an ideal company should operate. Strangely enough, I was doing this three years before the book was published. let me quote from my 1989 seminar notes to our Croesus Mining team:
The Jazz Band Analogy:
Exploration and mining have a natural rhythm, hence the analogy with jazz. What we are doing is like playing in a band. Music mans diferent things to different people but most importantly, deep down inside you, you know when it sounds good – when it all comes our ‘right.’
We have an audience. The concerned audience, being 5000 shareholders and the casual audience that cheers when we play a good note and boos when we foul-up. Each individual member of the band is a star in their own right, but generally we are useless unless we are all playing in the same key and better still when we are playing the same tune.
Soloists are good value but they need the rhythm section, the same way that geologists need mining engineers and vice versa, and without the administration and accounting laying the firm foundation of chords, the geologists and engineers wouldn’t be able to play the melody.
We must know when to start, harmonise, blend and stop. As band leader I’m useless without every one of you in this band, just as each of you are totally interdependent on each other. You are all star performers and as band leader, I care about each of you, what you eat, what you think, what you read (remember you ultimately become what you eat, think and read).
I care about Croesus and its further development so that it can accommodate your career plans and challenges. I’m limited in what I can do about it and realistic enough to know that like a band leader I should limit myself to selecting the tunes and the key that matches our range of skills. The tapping foot is setting the vision for the company (with input from fellow directors and yourselves) reviewing budget limits and then giving you the freedom to set your own whip-cracking pace to go forth and produce the goods.
Strangely enough, three years later a book was published by Max De Pree called Leadership Jazz, where he managed to put it together in a much more concise form:
A jazz band is an expression of servant leadership. The leader of a jazz band has the beautiful opportunity to draw the best out of the other musicians. We have much to learn from jazz band leaders, for jazz, like leadership, combines the unpredictability of the future with the gifts of individuals.
Flatter than flat personnel structure:
Driving the company are five technically competent people whose average age is around 33. Each is totally responsible for their sphere of the operation. This includes the General Manager and he and I both do a fair degree of fetching and carrying, again to increase the effectiveness of the team. We minimise the team’s involvement with the form-filling bureaucracy as I’ve seen how this tends to take over if permitted. Large companies put on additional staff to deal with all the census and statistical returns and related non-productive documentation, but in small business you’ve got to make a clear decision about either: filling in all the forms and going broke, or remaining focused on your objectives, and prospering.
We want to keep our people at the productive end of the action. In many ways I think of them as a team of gladiators or Olympic athletes in training, and they know that 1995 is the main event. Each of our 35 team members including clerical people, field hands and mill workers know that they are responsible for generating A$700,000 per person, of export earning income for Australia each year. Their self-esteem protects them from any bureaucrats’ effects to slow them down. Here are our staff’s responses to my question on how they feel about our flat management structure:
- Enjoy the ability to discuss problems and to decide on solutions, without the political point scoring or ‘one-upmanship’ antics that plague many companies when people don’t have enough constructive work to do.
- It enhances our ability to recognise time-wasters and time-wasting activities.
- It has developed confidence and trust in team members to use their judgement and skills in the best interests of Croesus.
In my mind the major benefit is that they all learn to be decisive. In a flattened hierarchy, it is important that more decisions are made, by more people, and that they are made quickly and assertively. It also helps me in my role as bandleader/coach/manager as it has been said: The successful manager is someone who ends up redundant.
Goals:
For the first week of every year I lock myself away and write a review of my previous year’s goals and assemble those for the coming year. My personal goals for Croesus are much more detailed than the official Croesus Corporate Goals. This draft is distributed to our five member management team for their comments. Pretty dangerous stuff, baring your soul like this, but having done this now for a few years I wouldn’t want it any other way.
A fresh look at the same old challenges can be rewarding. For one challenge that had been plaguing us for a few years, the suggestion from one staff member was that we simply “get rid of that property” rather than keep trying to find a mine on it. We did. We sold the property to a company that was to list last year. Unfortunately the market turned against them and they didn’t list; so now we have the challenge back again! The point I’m really making is that your staff can help you with your goals, probably more effectively than you can help them with theirs.
Getting there faster and cheaper:
Another aspect over which we have control is the speed at which we do things. Time is now of the essence and in this sense the technological age has created a revolution. I remember working with a greatly respected senior geologist about 13 years ago. When we were offered an exploration property he refused to actually visit the property for at least a month. This gave him time to assemble, in very precise fashion, all previous Mines Department records and data he pulled in from various sources. It was always a pleasure inspecting the property with him as he would by then have developed a great appreciation of what was over each new rise and could give me a running commentary of those who had worked the property previously and the results of their work. That was fine 15 years ago but would be a totally unacceptable timeframe now.
Employment Policy:
Constant change now being regarded as normal, is having a great influence on our employment policy. Most people love progress, but they hate change. This certainly restricts the number of people who will progress very far in mining companies designed for the future, but enhances the prospects of those who can meet the challenge. The productivity pattern for businesses to survive into the next century, five years away, will see many companies employ half as many people, pay them double and produce three times the output.
This ½ + 2 + 3 formula (half as many people being paid twice as much and producing three times as much), is why we only employ people who are in some way, better or smarter than we are. If Croesus doesn’t have the best people, it will hurt everybody in the organisation. We have also been asking ourselves simple questions, like what business are we in? We are not in the mining business; that’s a description of what we do. We are in the business of turning ideas into gold bars economically. We run a business and like any business if we don’t know who our clients are, we cannot succeed.
How many people working for mining companies know who their clients or customers are? I went to a seminar some time ago where the seminar leader selected individual delegates and asked them exactly who their clients were. A senior official from the Tax Department wasn’t sure, but he thought that his client might be the Federal Treasurer. When asked if the actual taxpayers could be his clients he replied: “No, they are our suppliers”. A guy from Telecom was asked the same question and I found his reply interesting. They had only recently discovered that people who use telephones are their clients, and he was a bit upset that Telecom’s advertisements are now promising service and that their clients are now insisting on service standards to match the adverts.
I am glad I wasn’t asked who our clients are, because I needed more time to think it through. Are our clients the people out there who wear gold jewellery, or the manufacturers of jewellery or our shareholders? None of the above, but we are responsible to our shareholders and we discharge our responsibilities to our shareholders by serving our clients well. Who are our clients? Our clients are the people with whom good dealings bring on repeat business and this was brought home to me recently when North Exploration (Geopeko) paid Croesus the honour of saying at a seminar, that their dealings with us are always so good that they unhesitatingly do business with us again and again. Our clients are the people who phone us. That’s why our company Secretary gets upset when the phone rings more than three times without being answered.
Building client relationships is important to Croesus because we never know what further opportunities this will open up for us. I don’t mean that we have to be pliable push-overs, because that will not earn anyone’s respect. To be successful is about being tough but fair. Just because we are a mining company doesn’t mean that we don’t have clients. By clearly identifying our clients and treating them accordingly we will put ourselves ten paces ahead of other mining companies who don’t even know that they have clients.”
Thank you for reading.
Regards,
Ron Manners AO
August 2024