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Influence Not Hierarchy – The 21st Century Corporate Model

Bernie Bulkin

In the second part of his blog series on leadership lessons, Bernie Bulkin, author of Crash Course and former senior executive of BP, talks about how corporations need to rethink their organisation in the 21st Century

John D Rockefeller modelled the organisation of Standard Oil on the two models of organisation he knew to work: The United States Army and the Catholic Church. These are traditional hierarchical models, and hierarchy became the norm for company organisations for most of the twentieth century. In this model, authority and accountability are everything. Ultimately, the chief executive has authority over all the employees of the company, and is accountable for all aspects of its performance. It seems to me that in the 21st century it would be best to consign this model to the dustbin of history and move on.

Dare we challenge hierarchy as the basis for corporate organisation? After all, it has been widely used and seems to have stood the test of time. Still, in many companies in the last 15 years, an alternative has emerged.  And that is the model based around influence. It says that what we really want, for our most senior and gifted employees, is the ability to influence the direction of the company, and its outcomes. This is also what they want for themselves.
But if you are running a big organisation, hundreds or thousands of people, it is very difficult to have influence beyond the part of the company that is your area of accountability. The leader of a business entity or a big technology centre must deal with his or her people, as well as safety, customers, community relations, environmental performance. Every day becomes filled with these issues. I know from my own experience that with 500 people, doing the essential things in business means that time for thinking about strategic issues is reduced to near zero.

Increasingly, companies have begun to create posts at the most senior level, in corporate headquarters, that have very few people reporting to them, but a huge responsibility for influencing the direction of the company. These may have titles like Chief Economist, Chief Scientist, Vice President for Operations (not running operations but putting in place policies and practices to ensure their excellence). The posts rely on the quality of the individuals in them, on the networks they have built up in the corporation over time (so generally must be filled by those with internal track records) and on access to the CEO and other directors.

They work by influence. Difficult to measure, sometimes, but you know when someone has it, and when it is working, because the right person is much in demand by the organisation, and the wrong one is always trying too hard. The right person in these roles knows what he or she wants to achieve, how he thinks the corporate agenda should be moved forward, and undertakes activities to make this happen. The right person is sought after for ideas when the CEO is thinking through a new corporate direction, or putting together a speech to articulate that direction.

A 21st Century corporation makes space for people who work through influence rather than through authority and hierarchy. In doing this it also makes space for innovation. What’s more, individuals earn their influence, so having these roles shows that the company is a rigorous meritocracy.   

Now some people will never be comfortable with working this way; they can still be valuable to the company, but it sets them on a particular career path. More dangerous, [and this often becomes evident in mergers], is that some senior executives have trouble dealing with individuals who don’t represent a big organisation in the company. It is hard to root out this problem, but it is worth having antennas that are sufficiently sensitive to pick this up.

It is easy to feel a bit at sea when you switch from a line job with lots of people to a ‘staff role’ where you work by influence. Absence of a full day of small problems and events can seem like a loss. Going into a new corporate job ask yourself: What do I need to make this happen?  Do people need to be working for me or could they be embedded in a business unit?  If much of the organisation I inherited is crucial to achieving my goals, or (even if they are doing valuable work) would I be better off giving these people away so I can focus on what is important? And perhaps most important, who are the two or three bright people who I need to make me successful?

Few people take initiative to make their own organisation radically smaller. Done with a strong rationale it can allow you to be much more productive and influential.       

Bernie Bulkin is the author ofCrash Course, published Whitefox. A former senior executive of BP, he has served on nine corporate boards, three of them as Chairman. He is a senior partner on Leadership and Operational Effectiveness with UK consultancy Re.fresch.

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