Creating the Best Workplace on Earth - What employees really require to be their most productive by Rob Goffee and Gareth Jones
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HBR.ORG May 2013
reprinT R1305H
Creating the Best
Workplace on Earth
What employees really require
to be their most productive
by Rob Goffee and Gareth Jones
2 Harvard Business Review May 2013
For article reprints call 800-988-0886 or 617-783-7500, or visit hbr.org
Rob Goffee is an emeritus Gareth Jones is a visiting
professor of organizational professor at the IE Business
behavior at the London School, in Madrid.
Business School.
Creating
the Best
Workplace
on Earth
What employees really require
to be their most productive
by Rob Goffee and Gareth Jones
S
uppose you want to design the
best company on earth to work
for. What would it be like? For
three years we’ve been investi-
gating this question by asking
hundreds of executives in sur-
veys and in seminars all over the
world to describe their ideal orga-
Illustration/Photography: Ryan Snook/Getty Images
nization. This mission arose from
our research into the relationship
between authenticity and effective leadership. Simply put, people
will not follow a leader they feel is inauthentic. But the executives
we questioned made it clear that to be authentic, they needed to
work for an authentic organization.
What did they mean? Many of their answers were highly specific,
of course. But underlying the differences of circumstance, indus-
try, and individual ambition we found six common imperatives.
Together they describe an organization that operates at its fullest
potential by allowing people to do their best work.
Copyright © 2013 Harvard Business School Publishing Corporation. All rights reserved. May 2013 Harvard Business Review 3
Creating the Best Workplace on Earth
We call this “the organization of your dreams.” In ered them in all kinds of academic disciplines—an-
a nutshell, it’s a company where individual differ- cient history, drama, the Spanish department.
ences are nurtured; information is not suppressed or The ideal organization is aware of dominant
spun; the company adds value to employees, rather currents in its culture, work habits, dress code, tra-
than merely extracting it from them; the organiza- ditions, and governing assumptions but, like the
tion stands for something meaningful; the work chancellor, makes explicit efforts to transcend them.
itself is intrinsically rewarding; and there are no We are talking not just about the buttoned-down fi-
stupid rules. nancial services company that embraces the IT guys
These principles might all sound commonsensi- in shorts and sandals, but also the hipster organiza-
cal. Who wouldn’t want to work in a place that fol- tion that doesn’t look askance when someone wears
lows them? Executives are certainly aware of the a suit. Or the place where nearly everyone comes in
benefits, which many studies have confirmed. Take at odd hours but that accommodates the one or two
these two examples: Research from the Hay Group people who prefer a 9-to-5 schedule.
finds that highly engaged employees are, on average, For example, at LVMH, the world’s largest luxury-
50% more likely to exceed expectations than the goods company (and growing rapidly), you’d expect
least-engaged workers. And companies with highly to find brilliant, creative innovators like Marc Jacobs
engaged people outperform firms with the most and Phoebe Philo. And you do. But alongside them
disengaged folks—by 54% in employee retention, you also encounter a higher-than-expected propor-
by 89% in customer satisfaction, and by fourfold The ideal tion of executives and specialists who monitor and
in revenue growth. Recent research by our London assess ideas with an analytical business focus. One of
Business School colleague Dan Cable shows that em-
organization the ingredients in LVMH’s success is having a culture
ployees who feel welcome to express their authentic makes explicit where opposite types can thrive and work coopera-
selves at work exhibit higher levels of organizational efforts to tively. Careful selection is part of the secret: LVMH
commitment, individual performance, and propen- transcend looks for creative people who want their designs to
sity to help others. be marketable and who, in turn, are more likely to
Yet, few, if any, organizations possess all six vir-
the dominant appreciate monitors who are skilled at spotting com-
tues. Several of the attributes run counter to tradi- currents in its mercial potential.
tional practices and ingrained habits. Others are, culture. The benefits of tapping the full range of people’s
frankly, complicated and can be costly to implement. knowledge and talents may be obvious, yet it’s not
Some conflict with one another. Almost all require surprising that so few companies do it. For one thing,
leaders to carefully balance competing interests and uncovering biases isn’t easy. (Consider the assump-
to rethink how they allocate their time and attention. tion the diligent chancellor made when he equated
So the company of your dreams remains largely research intensity with late-night lab work.) More
aspirational. We offer our findings, therefore, as a fundamentally, though, efforts to nurture individu-
challenge: an agenda for leaders and organizations ality run up against countervailing efforts to increase
that aim to create the most productive and reward- organizational effectiveness by forging clear incen-
ing working environment possible. tive systems and career paths. Competence models,
appraisal systems, management by objectives, and
Let People Be Themselves tightly defined recruitment policies all narrow the
When companies try to accommodate differences, range of acceptable behavior.
they too often confine themselves to traditional Companies that succeed in nurturing individu-
diversity categories—gender, race, age, ethnicity, ality, therefore, may have to forgo some degree of
and the like. These efforts are laudable, but the ex- organizational orderliness. Take Arup, perhaps the
ecutives we interviewed were after something more world’s most creative engineering and design com-
subtle—differences in perspectives, habits of mind, pany. Many iconic buildings bear the mark of Arup’s
and core assumptions. distinctive imprint—from the Sydney Opera House
The vice chancellor at one of the world’s leading to the Centre Pompidou to the Beijing Water Cube.
universities, for instance, would walk around cam- Arup approaches its work holistically. When the
pus late at night to locate the research hot spots. A firm builds a suspension bridge, for example, it looks
tough-minded physicist, he expected to find them in beyond the concerns of the immediate client to the
the science labs. But much to his surprise, he discov- region that relies on the bridge. To do so, Arup’s peo-
4 Harvard Business Review May 2013
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Idea in Brief
You want to design the best • You can be yourself. Those virtues seem like common sense,
company on earth to work for. • You’re told what’s really but few companies exemplify all six. Some
What would it be like? The going on. of the attributes conflict, and many are
response from hundreds of • Your strengths are magnified. complicated, costly, or time-consuming to
implement. Almost all of them require lead-
executives all over the world, •The company stands for
ers to carefully balance competing interests
in a nutshell, is that their dream something meaningful.
and reallocate their time and attention. So
organization is a place where: • Your daily work is rewarding. the list stands as a challenge: It’s an agenda
• Stupid rules don’t exist. for executives who aim to create the most
productive and rewarding working
environment possible.
ple collaborate with mathematicians, economists, when a senior executive told us, “Friends and family
artists, and politicians alike. Accordingly, Arup con- would recognize me at work.”
siders the capacity to absorb different skill sets and “Great retail businesses depend on characters
personalities as key to its strategy. “We want there who do things a bit differently,” another executive
to be interesting parts that don’t quite fit in…that explained. “Over the years we have had lots of them.
take us places where we didn’t expect to get to,” says We must be careful to cherish them and make sure
chairman Philip Dilley. “That’s part of my job now— our systems don’t squeeze them out.”
to prevent it from becoming totally orderly.” Pursuit of predictability leads to a culture of con-
Conventional appraisal systems don’t work formity, what Emile Durkheim called “mechanical
in such a world, so Arup doesn’t use quantitative solidarity.” But companies like LVMH, Arup, and
performance-measurement systems or articulate a Waitrose are forged out of “organic solidarity”—
corporate policy on how employees should progress. which, Durkheim argued, rests on the productive
Managers make their expectations clear, but individ- exploitation of differences. Why go to all the trouble?
uals decide how to meet them. “Self-determination We think Ted Mathas, head of the mutual insurance
means setting your own path and being accountable company New York Life, explains it best: “When I
for your success,” a senior HR official explains. “De- was appointed CEO, my biggest concern was, would
velopment and progression is your own business, this [job] allow me to truly say what I think? I needed
with our support.” to be myself to do a good job. Everybody does.”
If this sounds too chaotic for a more conventional
company, consider Waitrose, one of Britain’s most Unleash the Flow of Information
successful food retailers, according to measures as The organization of your dreams does not deceive,
diverse as market share, profitability, and customer stonewall, distort, or spin. It recognizes that in the
and staff loyalty. In an industry that necessarily fo- age of Facebook, WikiLeaks, and Twitter, you’re bet-
cuses on executing processes efficiently, Waitrose ter off telling people the truth before someone else
sees its competitive edge in nurturing the small does. It respects its employees’ need to know what’s
sparks of creativity that make a big difference to the really going on so that they can do their jobs, particu-
customer experience. larly in volatile environments where it’s already dif-
Waitrose is a cooperative: Every employee is a co- ficult to keep everyone aligned and where workers at
owner who shares in the company’s annual profits. all levels are being asked to think more strategically.
So the source of staff loyalty is not much of a mys- You’d imagine that would be self-evident to manag-
tery. But even so, the company goes to great lengths ers everywhere. In reality, the barriers to what we
to draw out and support people’s personal inter- call “radical honesty”—that is, entirely candid, com-
ests. If you want to learn piano, Waitrose will pay plete, clear, and timely communication—are legion.
half the cost of the lessons. There’s a thriving club Some managers see parceling out information
culture—cooking, crafts, swimming, and so on. We on a need-to-know basis as important to maintain-
have a friend whose father learned to sail because ing efficiency. Others practice a seemingly benign
he worked for this organization. In that way, Wait- type of paternalism, reluctant to worry staff with
rose strives to create an atmosphere where people certain information or to identify a problem before
feel comfortable being themselves. We were struck having a solution. Some feel an obligation to put a
May 2013 Harvard Business Review 5
Creating the Best Workplace on Earth
The “Dream Company” Diagnostic How close is your organization to the ideal?
Let Me Be Myself Tell Me What’s Discover and Magnify
I’m the same person at home Really Going On My Strengths
as I am at work. We’re all told the whole story. I am given the chance to develop.
I feel comfortable being myself. Information is not spun. Every employee is given the chance to develop.
We’re all encouraged to express It’s not disloyal to say something negative. The best people want to strut their stuff here.
our differences.
My manager wants to hear bad news. The weakest performers can see a
People who think differently path to improvement.
from most do well here. Top executives want to hear bad news.
Many channels of communication Compensation is fairly distributed
Passion is encouraged, throughout the organization.
even when it leads to conflict. are available to us.
I feel comfortable signing my name We generate value for ourselves by
More than one type of person adding value to others.
fits in here. to comments I make.
positive spin on even the most negative situations site visits because they foster honest conversations
out of a best-foot-forward sense of loyalty to the about fundamental business values and processes.
organization. Radical honesty is not easy to implement. It
The reluctance to be the bearer of bad news is requires opening many different communication
deeply human, and many top executives well know channels, which can be time-consuming to main-
that this tendency can strangle the flow of critical in- tain. And for previously insulated top managers, it
formation. Take Novo Nordisk’s Mads Øvlisen, who can be somewhat ego-bruising. Witness what en-
was CEO in the 1990s, when violations of FDA regula- sued when Novo Nordisk recently banned soda from
tions at the company’s Danish insulin-production fa- all its buildings. PeopleCom, the company’s internal
cilities became so serious that U.S. regulators nearly news site, was flooded with hundreds of passion-
banned the insulin from the U.S. market. Incredible ate responses. Some people saw it as an attack on
as it seems in hindsight, no one told Øvlisen about personal freedom. (“I wonder what will be the next
the situation. That’s because Novo Nordisk operated thing NN will ‘help’ me not to do,” wrote one exas-
under a culture in which the executive management perated employee. “Ban fresh fruit in an effort to
board was never supposed to receive bad news. reduce sugar consumption?”) Others defended the
The company took formal steps to rectify the policy as a logical extension of the company’s focus
situation, redesigning the company’s entire quality- on diabetes. (“We can still purchase our own sugary
management system—its processes, procedures, soft drinks…Novo Nordisk shouldn’t be a 7-Eleven.”)
and training of all involved personnel. Eventually, That all these comments were signed indicates how
those practices were extended to new-product de- much honesty has infused Novo Nordisk’s culture.
velopment, manufacturing, distribution, sales, and Trade secrets will always require confidentiality.
support systems. More generally, a vision, core val- Think not about And we don’t want to suggest that honesty will nec-
ues, and a set of management principles were ex- how much essarily stop problems from arising, particularly in
plicitly articulated as the Novo Nordisk Way. To get highly regulated industries that routinely find them-
at the root cause of the crisis, Øvlisen also set out to
value to extract selves under scrutiny. We maintain, though, that ex-
create a new culture of honesty through a process he from workers ecutives should err on the side of transparency far
called “organizational facilitation”—that is, facilita- but about how more than their instincts suggest. Particularly today,
tion of the flow of honest information. much value to when trust levels among both employees and cus-
A core team of facilitators (internal manage- tomers are so low and background noise is so high,
ment auditors) with long organizational experience
instill in them. organizations must work very hard to communicate
now regularly visit all of the company’s worldwide what’s going on if they are to be heard and believed.
affiliates. They interview randomly selected em-
ployees and managers to assess whether the Novo Magnify People’s Strengths
Nordisk Way is being practiced. Employees know, The ideal company makes its best employees even
for instance, that they must inform all stakeholders better—and the least of them better than they ever
both within and outside the organization of what’s thought they could be. In robust economies, when
happening, even when something goes wrong, as competition for talent is fierce, it’s easy to see that
quickly as possible. Does this really happen? Many the benefits of developing existing staff outweigh the
employees have told us that they appreciate these costs of finding new workers. But even then, compa-
6 Harvard Business Review May 2013
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To find out, check off each statement that applies. The more check marks you have, the closer you are to the dream.
Make Me Proud Make My Work Don’t Hinder
I Work Here Meaningful Me with Stupid Rules
I know what we stand for. My job is meaningful to me. We keep things simple.
I value what we stand for. My duties make sense to me. The rules are clear and apply
I want to exceed my current duties. My work gives me energy equally to everyone.
Profit is not our overriding goal. and pleasure. I know what the rules are for.
I am accomplishing something I understand how my job fits Everyone knows what the rules are for.
worthwhile. with everyone else’s. We, as an organization,
I like to tell people where I work. Everyone’s job is necessary. resist red tape.
At work we share a common cause. Authority is respected.
nies grumble about losing their investment when another 20 employees earn an apprenticeship
people decamp for more-promising opportunities. qualification.
In both good times and bad, managers are far more Like many large companies, McDonald’s has ex-
often rewarded for minimizing labor costs than for tensive management training programs for its execu-
the longer-term goal of increasing workers’ effective- tives, but the firm also extends that effort to restau-
ness. Perhaps that explains why this aspiration, while rant general managers, department managers, and
so widely recognized and well understood, often re- shift managers who, as the day-to-day leaders on the
mains unfulfilled. front lines, are taught the communication and coach-
Elite universities and hospitals, Goldman Sachs ing skills they need to motivate crews and to hit their
and McKinsey, and design firms like Arup have all shifts’ sales targets. The return on the company’s in-
been adding value to valuable people for a very long vestment is measured not in terms of increased rev-
time. Google and Apple are more recent examples. enue or profitability but in lower turnover of hourly
They do this in myriad ways—by providing networks, managers and their crews. Turnover has declined
creative interaction with peers, stretch assignments, steadily since the programs were initiated, as re-
training, and a brand that confers elite status on em- flected in the Great Place to Work Institute’s recogni-
ployees. None of this is rocket science, nor is it likely tion of McDonald’s as one of the 50 best workplaces
to be news to anyone. every year since 2007.
But the challenge of finding, training, and retain- To get a sense of how far employee development
ing excellent workers is not confined to specialized, can be taken, consider Games Makers, the volunteer
high-tech, or high-finance industries. We contend training effort mounted by the London Organising
that the employee-employer relationship is shifting Committee of the Olympic Games. LOCOG was re-
in many industries from how much value can be ex- sponsible for the largest peacetime workforce ever
tracted from workers to how much can be instilled assembled in the UK. It coordinated the activities of
in them. At heart, that’s what productivity improve- more than 100,000 subcontractors, 70,000 Games
ment really means. Makers volunteers, and 8,000
Take McDonald’s, a company founded on the pri- paid staff. Games Makers used
macy of cost efficiency. In an economy with plenty bold, imaginative schemes to
of people looking for jobs, McDonald’s nevertheless employ people who had never
focuses on the growth paths of its frontline work- worked or volunteered be-
ers—and on a large scale. In the UK, the company fore. Through its Trailblazer
invests £36 million ($55 million) a year in giving its program, for example, paid
87,500 employees the chance to gain a wide range staff learned how to work ef-
of nationally recognized academic qualifications fectively with volunteers of all
while they work. One of the largest apprenticeship social backgrounds. Through
providers in the country, McDonald’s has awarded a partnership with other state
more than 35,000 such qualifications to employees agencies, the Personal Best
since the program’s launch in 2006. Every week the program enabled more than
equivalent of six full classes of students acquire 7,500 disadvantaged, long-
formal credentials in math and English. Every day term-unemployed individuals,
May 2013 Harvard Business Review 7
Creating the Best Workplace on Earth
some with physical or learning disabilities, to earn a But the advantage these companies have is not
job qualification. Games Makers’ School Leavers pro- the businesses they’re in. The connections they
gram targeted students who have left school in east forge stem, rather, from the way they do business.
London, the host borough for the games, by grant- To understand how that works more generally, con-
ing them two three-month placements that, upon sider Michael Barry, who once was a teacher made re-
successful completion, were followed by a contract dundant by state spending cuts. Three decades later,
for employment until the end of the event. LOCOG’s the experience remained vividly traumatic: “It was
model has inspired government agencies and private- a case of ‘last in, first out,’ nothing to do with merit. I
sector employment bureaus in the UK to rewrite their decided I never wanted to lose my job like that again.
work-engagement guidelines to enable them to tap I researched things quite carefully, looking for places
into—and make productive—a far wider range of peo- that were clear about what they wanted.”
ple than had previously been considered employable. And where did this idealistic man go? He became
We recognize that promising to bring out the best an insurance salesman for New York Life. “It is a very
in everyone is a high-risk, high-reward strategy. It different company—from the top down,” he said,
raises reputational capital, and such capital is eas- when we asked him what connection he felt to the
ily destroyed. Goldman Sachs, for one, spent years company. He further explained it this way: “Back
building its reputation as the most exciting invest- when other life insurance companies were demu-
ment bank of all. That’s why Greg Smith’s scathing tualizing and becoming financial services super-
resignation letter, accusing the company of not liv- markets, New York Life made it very clear that life
ing up to its own standards, was so damaging. Once a insurance would remain our core focus. The agents
company heads down this road, it has to keep going. didn’t like it [at first]—they felt they were losing the
opportunity to make more money. But Sy Sternberg,
Stand for More Than the CEO at that time, went to public forums with the
Shareholder Value agents and pulled no punches. He told us, ‘We are a
People want to be a part of something bigger than life insurance company, and we are good at it.’” This
themselves, something they can believe in. “I’ve is more than a business strategy, Barry says. “It’s how
worked in organizations where people try to brain- we operate every day. This is not a place where we
wash me about the virtues of the brand,” one semi- wriggle out of claims. One man took out a life policy,
nar participant told us. “I want to work in an orga- went home to write out the check. It was on his desk
nization where I can really feel where the company when he died that night. The policy was unpaid, but
comes from and what it stands for so that I can live we paid the claim. The agents really buy into this.”
the brand.” Current CEO Ted Mathas acknowledges that New
It has become commonplace to assert that orga- York Life’s status as a mutual company gives it an ad-
nizations need shared meaning, and this is surely vantage in claiming that profit is not all that matters.
so. But shared meaning is about more than fulfilling But he argues that the same logic applies for public
your mission statement—it’s about forging and main- firms—that profit is (or should be) an outcome of the
taining powerful connections between personal and pursuit of other, more meaningful goals. Again, this
organizational values. When you do that, you foster is hardly a new idea. “But many companies in public
individuality and a strong culture at the same time. ownership have lost their way and with it a sense of
Some people might argue that certain compa- who they are,” Mathas suggests, and we agree.
nies have an inherent advantage in this area. An
academic colleague once asked us if we were work- Show How the
ing with anyone interesting. When we mentioned Daily Work Makes Sense
Novo Nordisk, he produced from his briefcase a set Beyond shared meaning, the executives we’ve spo-
of Novo pens for injecting insulin and said simply, ken to want something else. They seek to derive
“They save my life every day.” Engineers who design meaning from their daily activities.
the side bars for BMW’s mini have been known to This aspiration cannot be fulfilled in any com-
wake up at 4:00 in the morning to write down ideas prehensive way through job enrichment add-on. It
that will make the cars safer. And that might be ex- requires nothing less than a deliberate reconsidera-
pected of people drawn to the idea of building “the tion of the tasks each person is performing. Do those
ultimate driving machine.” duties make sense? Why are they what they are? Are
8 Harvard Business Review May 2013
For article reprints call 800-988-0886 or 617-783-7500, or visit hbr.org
they as engaging as they can be? This is a huge, com- of when to impose his will on the team and push it
plex undertaking. toward a structural, rather than a mechanical or an
Take John Lewis, the parent company of Waitrose architecturally oriented, solution. To participate in
and the department store Peter Jones. In 2012 it com- such an evenhanded, interdependent environment
pleted a review of its more than 2,200 jobs, slotting is extremely hard, he says. There were “incredible
them within a hierarchy of 10 levels, to make it easier rewards when it worked well and incredible frustra-
for employees to take advantage of opportunities tions when it didn’t.”
across the organization. This sounds like a homog- We don’t wish to underplay this challenge. But we
enizing move, and it might be at a traditional com- suggest that the benefits of rising to it are potentially
pany. But at John Lewis, which operates for the ben- very great. Where work is meaningful, it typically be-
efit of its employee owners, it was a deliberate effort comes a cause, as it is for the engineers at BMW and
to match its people with the work they want to do. the agents at New York Life. We also acknowledge
Or consider Rabobank Nederland, the bank- an element of risk: When we interviewed legendary
ing arm of the largest financial services provider in games designer Will Wright, he told us that his pri-
the Netherlands, Rabobank Group. After several mary loyalty was not to his company, Electronic Arts,
years of development, the bank has rolled out Rabo but to the project—originally for him the record-
Unplugged, an organizational and technical infra- breaking Sims franchise and, more recently, Spore.
structure that allows employees to connect to one Will ultimately left EA to start his own company, in
another from practically anywhere while still meet- which EA became a joint investor.
ing the stringent encryption standards that banking The challenge is similar to that of fostering per-
systems require. With no fixed offices or rigid job sonal growth. If you don’t do it, the best people may
descriptions, Rabobank’s employees are, like Arup’s, leave or never consider you at all. Or your competi-
responsible for the results of their work. But they are tors may develop the potential in people you’ve
free to choose how, where, when, and with whom overlooked. When you do make the investment,
to carry it out. This approach requires managers to your staff members become more valuable to you
Shared meaning is about more
than fulfilling your mission statement—
it’s about forging powerful connections
between personal and organizational values.
place an extraordinary amount of trust in subordi- and your competitors alike. The trick, then, is to
nates, and it demands that employees become more make it meaningful for them to stay.
entrepreneurial and collaborative.
Beyond reconsidering individual roles, mak- Have Rules People Can Believe In
ing work rewarding may mean rethinking the way No one should be surprised that, for many people,
companies are led. Arup’s organization, which the dream organization is free of arbitrary restric-
might be described as “extreme seamless,” is one tions. But it does not obliterate all rules. Engineers,
possible model. As such, it takes some getting used even at Arup, must follow procedures and tight qual-
to. In describing how this works in Arup’s Associ- ity controls—or buildings will collapse.
ates unit, board member Tristram Carfrae explains: Organizations need structure. Markets and enter-
“We have architects, engineers, quantity surveyors, prises need rules. As successful entrepreneurial busi-
and project managers in the same room together... nesses grow, they often come to believe that new,
people who genuinely want to submerge their own complicated processes will undermine their culture.
egos into the collective and not [be led] in the clas- But systematization need not lead to bureaucrati-
sic sense.” That was a challenge for Carfrae, who as zation, not if people understand what the rules are
a structural engineer wrestled with the question for and view them as legitimate. Take Vestergaard
May 2013 Harvard Business Review 9
Creating the Best Workplace on Earth
Authentic organizations are clear about
what they do well. They are also suspicious
of fads and fashions that sweep the
corporate world.
Frandsen, a start-up social enterprise that makes into East Africa.” We have never heard this: “I’ll be
mosquito netting for the developing world. The home late. I’m increasing shareholder value.”
company is mastering the art of behavior codes that
can help structure its growing operations without People want to do good work—to feel they mat-
jeopardizing its culture. Hiring (and firing) decisions ter in an organization that makes a difference. They
are intentionally simple—only one level of approval want to work in a place that magnifies their strengths,
is required for each position. Regional directors have not their weaknesses. For that, they need some au-
significant freedom within clear deadlines and top- tonomy and structure, and the organization must be
and bottom-line targets. Knowledge-management coherent, honest, and open.
systems are designed to encourage people to call But that’s tricky because it requires balancing
rather than e-mail one another and to explain why many competing claims. Achieving the full benefit
someone is being cc’ed on an e-mail message. Vester- of diversity means trading the comfort of being sur-
gaard sees these simple rules as safeguards rather rounded by kindred spirits for the hard work of fitting
than threats to its founding values. various kinds of people, work habits, and thought
Despite the flattening of hierarchies, the ensuing traditions into a vibrant culture. Managers must con-
breakdown of organizational boundaries, and the tinually work out when to forge ahead and when to
unpredictability of careers, institutions remain what take the time to discuss and compromise.
Max Weber calls “imperatively coordinated associa- Our aim here is not to critique modern business
tions,” where respect for authority is crucial for build- structures. But it’s hard not to notice that many of
ing and maintaining structure. However, we know the organizations we’ve highlighted are unusual in
that, increasingly, employees are skeptical of purely their ownership arrangements and ambitions. Fea-
hierarchical power—of fancy job titles and traditional tured strongly are partnerships, mutual associations,
sources of legitimacy such as age and seniority. And charitable trusts, and social enterprises. Although all
they are becoming more suspicious of charisma, as share a desire to generate revenue, few are conven-
many charismatic leaders turn out to have feet of clay. tional, large-scale capitalist enterprises.
What workers need is a sense of moral authority, It would be a mistake to suggest that the organiza-
derived not from a focus on the efficiency of means tions are all alike, but two commonalities stand out.
but from the importance of the ends they produce. First, the institutions are all very clear about what
The organization of your dreams gives you power- they do well: Novo Nordisk transforms the lives of
ful reasons to submit to its necessary structures that people with diabetes; Arup creates beautiful envi-
support the organization’s purpose. In that company, ronments. Second, the organizations are suspicious,
leaders’ authority derives from the answer to a ques- in almost a contrarian way, of fads and fashions that
tion that Steve Varley, managing partner of Ernst & sweep the corporate world.
Young UK, put to senior partners in his inaugural ad- Work can be liberating, or it can be alienating, ex-
dress, after he reported record profits and partners’ ploitative, controlling, and homogenizing. Despite
earnings: “Is that all there is?” (In reply, he proposed the changes that new technologies and new gen-
a radical new direction—a program called “Grow- erations bring, the underlying forces of shareholder
ing Successfully, Making the Difference”—aimed at capitalism and unexamined bureaucracy remain
achieving both financial growth and social change.) powerful. As you strive to create an authentic orga-
During the past 30 years we have heard the following nization and fully realize human potential at work,
kinds of conversations at many organizations: “I’ll be do not underestimate the challenge. If you do, such
home late. I’m working on a cure for migraine.” “Still organizations will remain the exception rather than
at work. The new U2 album comes out tomorrow— the rule—for most people, a mere dream.
it’s brilliant.” “Very busy on the plan to take insulin HBR Reprint R1305H
10 Harvard Business Review May 2013You can also read
