©Karl-Erik Sveiby. All rights reserved. Originally Published in (Ford & Gioia ed.) Creativity in Organizations. Sage 1995
Where is the most creative environment in the world today? Silicon Valley? Northern Italy? Sophia Antipolis (France)? Hongkong? My own bet is on the former communist countries. In those countries there is chaos today and human creativity tends to flourish in chaotic surroundings. Creativity is thus not an unproblematic concept. Who is for instance interested in encountering a creative surgeon on a chaotic operation table? Or a judge interpreting the tax law in a new creative way?
Creativity is not necessarily good for business either. On the contrary, business success is often firmly attached to the ability to repeat successful patterns over and over again. The founding father of McDonalds, Ray Kroc, was creative once, when the concept was innovated, but the ongoing success depends on the fact that the consumer gets no surprises. And who has forgotten Coca Cola's demise when they tried to be creative by changing the taste?
In business creative problem solving and routine production must co-exist side by side. Publishing is a case in point. The reader wants to be surprised by new creative ideas in the same old morning paper every day. A publishing company becomes a strange blend of an academy (the editorial staff), a used-car dealer (the advertising sales department) and a steel-works (the printing plant). All are invloved in the production and they must cooperate under time pressure.
In this article I try to answer the question: How does top management organize in order to allow maximum creative liberty coexist with the limits of standard and routine?
My Swedish publishing company is the biggest trade press publisher in Sweden. The company publishes 7 journals and has a staff of 150 people, of them 80 in the editorial staff, 50 in sales and marketing and 20 in administration/service. The journals cover business, engineering, computers, electronics, chemistry, and medicine. The company has contracted out all the printing. Almost all the journalists have an academic degree in either a technological field, in economics, or business administration.
The organization can be seen as 7 editorial "pro-teams" (teams of professionals), a marketing department and an administration department, each one with their own professional knowledge, skills and know-how.
The Editor is in charge of the editorial pro-team and is responsible for motivating the individual writers, encouraging the flow of ideas and at the same time for keeping the creativity on the track so that the readers get a fresh product they recognize.
The Editor has an academic degree within the professional field of the magazine. He or she is also experienced in writing and is often contributing to the texts. The writers are the experts within their fields. The Editor has to be a professional with an action bias but is seldom the one with the deepest knowledge within a specific field. The writers are experts in their fields and exhibit most of the personality traits of the creative individual. They are allowed a large amount of freedom to pursue topics that are of interest to them.
The climate in the editorial room must encourage new ideas, it must be "on top of the news" in order to stimulate the writers and be of use to the readers. The atmosphere is thus intense, busy and confusing to the visitor. Most writers are sitting in one big open room. The writers come and go as they like, some like to work nights, some like to sit at home with their PCs a couple of days a week, many are out "in the field". The Editor agrees with them a rough angle and the deadline of the article, and then it is up to the journalist(s) to accomplish the article.
Each journal has its own open office landscape for the editorial staff. The big rooms look untidy and are crammed with desks with piles of paper on them. There is only one or a maximum of two levels of management. Journalists have handsome salaries, their own home computers but no company cars.
The climate in the marketing department is very different from that of the editorial teams. The salesmen spend a lot of their time in their own rooms, speaking over the phone. They work normal office hours and have nicely furnished rooms with furniture of their own choice. The most successful earn more than the editors and their own boss. Many have company cars.
If the editorial departments are characterised by their analytical and intellectual discussions and their freedom, the marketing department is young, hungry, competitive, and very target oriented. Big orders are accompanied by applause and cake or beer. There are games and lotteries, free tickets to exotic places if one beats the sales target, etc.
The pro-teams and the marketing and administration departments are allowed maximum freedom to develop their own formulas for success, a freedom that encourages very different management styles. A sales manager would last a maximum of one day as an editor before he would be ridiculed. An editor would quickly ruin the revenues of the company if put in charge of the sales team.
Economy-of-scale exists in production on both the editorial and marketing/administration sides. All writers thus use the same computer software and the magazines are edited on the same kinds of equipment and software. Economy-of-scale also exists in being a big purchaser of print, (the company has no printing plant of its own). Economy-of-scale is zero, however, in the creative process of article writing.
Figure 1. The Pro-teams in a Publishing Company.
The company thus has different climates and cultures, different remuneration systems, motivation methods and working hours. It is more like a network of independent teams, albeit sitting in the same building. See Figure 1. Does this not become very confusing? Yes, it does to anyone using the traditional industrial perspective on management. The top management in this publishing company must devote most of its time to other issues than what is common i.e. in the manufacturing industry.
The issue of knowledge transfer between the various teams becomes a crucial top management issue, as well as how to interact between, for instance the marketing department and the pro-teams. A lot of internal information is needed in order to maintain the trust between the members of the organisation and projects. One important organisational feature is that the editors are running their magazines as independent business units and have profit responsibility. So they have to interact with the marketing people and cannot withdraw to the pedestals of their profession.
Top managers function as the "glue" in this fuzzy organisation. They initiate and encourage the flow of information and knowledge between the pro-teams, where journalists use each others' fields of expertise for creating new angles on subjects. Each editor is a member of the top management team that meets regularly. The budget with special, non-monetary key ratios for comparing productivity is also important.
A publishing company organised in this way is a an attempt to establish "organised creativity", which in many ways is a contradiction. It is widely noted that creative individuals find organisations, especially large bureaucracies, stifling and hindering their creativity. For all we know creativity is particularly hampered in large organisations with a lot of structure.
From a manager's point of view, the creative person causes complications. The creative person tends to be more loyal to the task or the idea, or even the profession than to the organisation. Another problem is that the personality of the creative person tends to be contradictory to teamwork. 'An excellent article is never designed by a committee'. No compromises. The typical creative individual is almost the polar opposite of the loyal subordinate - in short a nightmare to the manager in a large industrial organisation.
I have argued elsewhere that because of the contradictory elements in both the personalities of the employees and the managerial know-how needed to run these kinds of organisations, a useful model for understanding them would be a matrix with creative professional know-how on the one axis and managerial know-how on the other axis. (Sveiby/Lloyd 1987, Sveiby 1992).
Figure 2. The four categories of personnel in a "Know-how Company".
The creative individual or the 'professional' is thus found in the upper left corner of the matrix and the manager in the lower right in Figure 2 above.
Since the managers are in charge of the organisation, keeping the balance becomes the responsibility of the top manager, the Leader. The leadership is more of "Managing the Milieu" and I am of the opinion that for doing this, the Leader needs to know the profession, otherwise he/she will not be able to "Lead" only to "manage". I label those knowledge intensive companies which are able to do this successfully "Know How Companies".
Peter Drucker (1991) divides the knowledge workers and service workers into three groups, depending on what can be done to raise productivity:
The two extreme categories need different management logic. This makes management very difficult for an organisation like mine, which is a bit of both. In this respect a publishing company is probably similar to the majority of large organisations today. It is neither-nor and has to both-and.
I believe that one of the reasons for problems with productivity and management in large organisations is that top management have not understood the differences between the two logics and therefore impose inefficient solutions. This quite unnecessarily hampers creativity, in those areas where it is needed.
Figure 3. Two extremes of non-manufacturing companies. Companies on the left side should be managed by a different logic than companies to the right, whic are much more like traditional manufacturing.
The label "pro-team" was coined in "Managing Know-how" (Sveiby/Lloyd 1987). It is a team of professionals, without marketing or administrative knowledge, like a research lab or an editorial department. It consists of a number of professionals and their support staff. A pro-team is an ad-hocracy, using the expression coined by Mintzberg. It has a creative climate, a flat hierarchy and is run by and for the professionals.
To return to Peter Drucker's three categories, the first category would probably be best managed as a pro-team, whereas the third category is more industrial. We thus get a sliding scale of optimal managerial behaviour, from the left to the right in Figure 3 above. The Know-how Companies are at the far left, the industrialized service organisations at the far right. They cannot and should not be managed in the same way because the success factors are so different. The issue for top management is then to choose by which perspective they will run the company. My argument in this article is that the perspective of Know How Management is more likely to yield successful actions in organisations on the left side, employing creative talent, rather than the industrial perspective, which probably benefits from an industrial perspective.
Problems arise in the organisations which are a bit of both. I suggest that a balance is created by finding ways of accommodating the adhocratic small pro-teams within the structure of the larger corporation as in the case below. I'm not suggesting that the fuzzy "Neither-nor organisation" of my publishing company is all a "happy family". The heterogeneity easily causes problems of mistrust, the "inequality" nurtures envy (especially in the Swedish society). Information is often misunderstood. Projects are started but not fulfilled. These are important problems that must be addressed on a daily basis by top management.
In what respect is a pro-team different from a functional department? One might argue that the editorial pro-team is merely the "production department" of the publishing company. Yes, but the "production" is a creative process by a team of professionals who need a distinctively different management than the other more "normal" departments of the company. The marketing department is thus not a pro-team.
The pro-team might also be seen as a project team. However, since the task is not limited in time, it is not. On the other hand, many project teams can probably benefit from Know-how Management.
The concept of Know-how Management and the idea of creative pro-teams within the large organisation allows both chaos and structure exist side by side. It does away with the tradition of the one and only management model. I believe that it is a positive and practical approach to one of the really difficult and challenging management issues of the 1990:s. How can we put the vast unutilized creative resources of human beings into productive work?
I hope I have made it clear that I do not think that creativity can be managed in organizations in the way that we understand management today. According to my experience "management" always harms creativity so we must probably learn how to manage a milieu encompassing both standard and creativity.
Drucker Peter The Productivity Challenge, in Harvard Business Review Nov-Dec issue 1991.