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Why traditional management will kill your startup

Why do we all keep adopting traditional management methods? They were originally designed to de-skill and routinize work - the extreme opposite of what the knowledge workers of our era need.

The era of knowledge workers

As a serial entrepreneur, I have played a part in building several software companies, most of which fortunately turned into successful businesses. Like most modern organizations, a software company is knowledge intensive and consists of highly specialized, super-skilled people who build and sell their company’s products. These people are what Peter Drucker called knowledge workers.

Software companies usually exist in a fast-moving market where innovation, change and adaptability needs to be continuous in order to succeed. As long as they are still small startups with only a handful of motivated and well-aligned people, there is a prevalent feeling of being both innovative and competitive.

How to kill a startup

But when the headcount passes 100 or 200, something seems to happen to the previously quick and nimble companies. In every case that I’ve known throughout my career, sooner or later, growth and success were always accompanied by hierarchies and the managerial frustrations that come with them.

But the moment when things really slow down is when we conform to traditional management, pouring cement over our once so flexible startups. In a blink, we turn them into rigid and uninspiring systems.

The more I look around, the more I observe that most companies evolve that way. After all, more people require more management and more hierarchy, right?

As an impatient entrepreneur, I find this seemingly inevitable slowdown extremely frustrating. Inability to change and innovate is obviously a killer for any young company — not just for software companies.

“Management 1.0”

Over the years, I’ve spent a lot of time reflecting on this challenge and experimenting with different approaches.

The rather obvious conclusion that came to me first, is that skilled, motivated and autonomous knowledge workers are the single most important factor for innovation and competitiveness in a modern organization.

However, as leaders, we too frequently subscribe to the same old-school management practices that are found within most organizations today. Leaders are often unaware of the suffocating effect these practices have on knowledge workers. And no matter where we look for inspiration, traditional and old-fashioned management methods dominate.

I’ve come to name them “Management 1.0”, and it is an insufferable and demoralizing place for highly skilled people. This traditional way of managing people was originally created for a completely different type of workers; it goes all the way back to the industrial boom of the early 19th century, when work had to be organized in such a way that it required a minimum set of skills. It was designed to de-skill tasks and routinize work.

We’re all control freaks

It’s the very opposite that is required for knowledge workers! By nature, knowledge work is nonroutine and calls for autonomous collaboration within and between teams of people with specialized knowledge.

Talking to a lot of people inside seemingly successful companies across most industries, the general picture that emerges is as follows: in a world of accelerating change and increasing competition, organizations are looking for practices and tools to implement a different management method – let’s call it “Management 2.0”.

When we think about it – what is the goal of management in modern and innovative organizations? It’s all about encouraging inventiveness and adaptability. And first and foremost, about keeping our precious knowledge workers inspired and motivated.

As I see it, this is the heart of the matter: Traditional management is about controlling the activities of the business. This has generally been achieved by creating routines and rigid, chain-like workflows, with extensive managerial oversight.

Release the handbrake

As I see it, it’s like driving an organization of knowledge workers with the handbrake on. Knowledge workers are specialists who will thrive if they’re given autonomy, and who will be twice as motivated and twice as valuable if they can form communities of passion. Giving them exactly that, while creating a significantly more purposeful way for managers to control the business is the key.

Today I work with an amazing team of about a dozen people in a small organization called Norselab. Simply put, we build meaningful technology (software) companies from the ground up. We generally co-found companies together with seasoned industry experts that have deep knowledge into the challenges and workarounds within their industry. They also have insights into customers – and the competitive landscape.

Our team then adds some financial funding - but more importantly, we deploy our own core team of experts to complete the co-founders’ skills and experience. From day one, they get an experienced CFO, a kickass business developer, a UX specialist and someone that can build a brand from scratch – as well as an armada of technologists. Basically, we kick off startups with a full team, enabling a much faster introduction into the market.

Autonomy vs. legitimate control

Both within our team and across all our portfolio companies, we are all typical knowledge workers. Many of us have seen the ravages of traditional management first-hand, and we unite forces to combat it. Every day, we work actively with ourselves and our natural urge for control. We have decided we on a different approach. Our teams need maximum autonomy to perform well – but they still need to satisfy management’s legitimate need for oversight to make sure our companies grow unusually fast.

So how do we pull off that balance? Although we think we’re on the right track, we constantly seek management hacks that brings us closer to “Management 2.0” and enable our startups to grow into triple digit number of employees without fighting off slowly drying cement.

Here are a few examples of the things we do:

  • We work extensively on the vision and overall purpose of each startup. This helps to give people a clear and motivating sense of direction, without tripping them up with micro management.
  • We help teams find their footing quickly by shortening the time needed to get to know one another.
  • We do very open evaluations of the work in startups as we pass important milestones (see Norselab’s Lessons Learned Session Playbook)

The list goes on, but it is far from complete. We actively look for management moonshots and ways to improve and optimize the working lives of knowledge workers.

Will you join our quest?

Please comment with your own perspectives, principles and hacks!