Years ago, SAS CEO Janne Carlson proclaimed that the pyramids should be torn down. It was a good idea that many have come to understand.
But after working with the future and the demands placed on companies today, I have lacked a management tool that can satisfy the holistic understanding that management needs. Therefore, inspired by the pyramid, I have worked with another option.
- To turn the pyramid upside down.
The "inverted pyramid" should be seen as a management tool that allows management and employees to create a framework that enables the best possible utilisation of human resources while the organisation develops and adapts.
Introduction to the Philosophy and Holism of the Model
The main philosophy of the model is that future demands for creativity, flexibility and change will lead to a greater need for individual freedom and decision-making. In order to make the right decisions, it is necessary to know the framework and conditions in which the organisation lives. The model is based on a holistic approach and works at both the strategic and operational levels - from the organisation's overall goals to the individual's daily decisions. It works with concepts such as security and stimulation, ambition and anxiety, and freedom and boundaries. The understanding is that the organisation can be at the forefront of developments, setting new standards and directions, but also sometimes has to adapt to changes in the environment.
Future Challenges and AI's Role in Productivity
One of the biggest challenges facing management is the optimal utilisation of information technology. Despite huge investments in IT technology around the world, office productivity has not increased significantly. At best, it only increases by 1-3% per year. This is where AI plays a key role in driving the necessary productivity growth. While it's debatable whether growth is always necessary, the world's demographics show that the population is ageing and fewer people can contribute in terms of labour and consumption. AI has huge potential to change this, but we also see that the way we organise work is a major obstacle to the optimal use of all IT technologies, including AI.
Optimising Work Organisation and Hierarchical Information Sharing
Traditionally, top management held all the information and knowledge that they used to make decisions. Tasks were then distributed via middle managers, who also acted as the disseminators of information. Employees have often been reduced to carrying out specific tasks, while management could only see the totality of information - and only the information they actively requested. However, modern organisations have discovered that the increasingly competitive future requires faster decision-making. This requires a larger decision-making base that includes not only the information requested by management, but also spontaneous information that comes from employees.
Investing in Technology and Open Information Sharing
As a result, many companies are now investing heavily in information technology that gives all employees access to information that would previously have been considered confidential or secret in more hierarchical organisations. This open sharing of information has become essential to respond quickly and effectively to changes in the market and environment.
The Iceberg Problem
The Iceberg problem illustrates that only 4-5% of the challenges and problems to be solved are known by top management. 9-10% are known by middle managers 70-80% are known by team leaders and almost 100 % are known by frontline employees.
Decision making at the frontline employee level
Problem solving requires decisions to be made on the spot, which means more decisions need to be made by frontline workers.
This means that they need to have much more information about the company and its environment as a whole, and they need to be thinking people who can analyse information, see patterns and connections and make the right decisions.
In other words, you need to create a clear frame of reference that employees can rely on when making the right decisions.
Requirements for Information Technology and Work Organisation
To optimise the use of information technology, there are major challenges. We need to find new ways of organising work, breaking down hierarchies and giving middle managers a new role. Previously task-oriented functions such as task and information dissemination must now be supplemented with soft functions such as inspiring, creating development environments and collecting, analysing and disseminating information, patterns and correlations. Middle managers must also be able to provide reassurance and stimulation, see the big picture, think strategically and communicate the organisation's identity and culture. This involves forming, developing and dissolving problem-orientated teams and constellations.
Employee Responsibility and the Role of Management
Employees need to take responsibility, think independently, process information and make decisions. The biggest problem here is not the employees' abilities, but that management doesn't always allow this. In a transitional phase, many will struggle to understand what this means and will often feel anxiety and fear. Leaders need to be strong and allow employees to think for themselves, while understanding that the transition will require extra work, more mistakes and greater tolerance without compromising on goals.
Bureaucracy and the Floating Organisational Structure of the Future
With the realisation that the bureaucratic work structure is not efficient, more organisations are looking for new ways to organise and coordinate work. The organisations of the future will be fluid, where people organise themselves into groups to solve a problem, after which the group dissolves and new ones form. Participation in multiple groups simultaneously will be possible, but this is not the same as a matrix organisation. Groups are formed according to the needs of the task and who has the skills, desire and time to solve it. The future of leadership will therefore be about creating the right framework for teams, and leaders must understand the five elements of the 'inverted pyramid' to create an optimal basis for problem solving. The organisation will be both chaotic and systematic, where the framework for work creates order in the chaos.
Chaos and Order in Organisations of the Future
Increased competition in both national and international markets, with shorter product lifecycles, innovation time and lead times, requires companies to differentiate themselves through creativity, flexibility, productivity, design and strategic differentiation. Employees must be able to be creative, flexible and fulfil customer demands for speed, individuality and on-the-spot decision-making. This requires a new way of managing work, which brings into play various coordination mechanisms such as standardisation of production methods, skills and knowledge, as well as mutual adaptation, where employees exchange information and adapt to each other. Finally, organisational values and norms play a major role, as employees must act in accordance with company values and goals.
Value-based Leadership of the Future
The coordination mechanisms work today, but when robots and AI start handling the technical aspects, most people in the labour market will not want this to apply to the more creative and value-oriented aspects such as mutual adaptation and organisational norms. The managerial task of the future will therefore be to work with organisational values, identity, goal setting and reward systems. A good clarification of these elements is necessary for employees to adapt to each other's work in a flexible and creative way.
Competition and Creativity in the Future
The future of competition will require a combination of analytical thinking and creativity. Companies must be competitive not only on standardisation and productivity, but also on their ability to innovate, change and offer solutions that are flexible and creative. Customers demand solutions that are both simple and of high quality, while being delivered quickly. Companies that can combine creativity and systematic thinking will be well equipped to win the battle for customers. "The inverted pyramid can be used as a tool to create an environment where both creativity and analysis can thrive side by side.
Security as a Basis for Development
In order to grow, employees need to feel safe. If we feel insecure or worthless, our energy will be spent on achieving safety. Safety provides the opportunity to work with new ideas, change and development. Therefore, management must be aware of when employees are insecure, as new ideas and reorganisations without a base of security will only lead to resistance and frustration.
Elements of the Inverted Pyramid
The elements of the "inverted pyramid" satisfy both the need for stimulation and security, creating an ideal foundation for human resource development.
The Iceberg problem illustrates that only 4-5% of the challenges and problems to be solved are known by top management. 9-10% are known by middle managers 70-80% are known by team leaders and almost 100 % are known by frontline employees.
Problem solving requires decisions to be made on the spot, which means more decisions need to be made by frontline workers.
This means that they need to have much more information about the company and its environment as a whole, and they need to be thinking people who can analyse information, see patterns and connections and make the right decisions.
In other words, you need to create a clear frame of reference that employees can rely on when making the right decisions.
To optimise the use of information technology, there are high demands.
We need to find new ways of organising our work, hierarchies must be broken down, middle managers must have a new function, from having a major function as task, information communicators and order distributors, their future function must have a greater share of soft functions such as inspiring, creating and maintaining good development environments, collecting, analysing and communicating connections and patterns in information, creating security and stimulation, being able to see the big picture, thinking strategically about the environment, communicating corporate identity, being a cultural architect etc. Form, develop and dissolve problem-oriented team constellations.
Employees need to take responsibility, think independently, process information and make decisions. This is not a big problem, the biggest problem is that management will not allow people to do this. In a transition phase, there will always be many who can't figure out what this means and harbour anxiety and fear. This is where leaders need to show their strength and almost order employees to think for themselves, while understanding that a transition phase will require a lot of work, more mistakes and greater tolerance on the part of the leader, without relaxing the goals.
As the Western world realises that the bureaucratic way we organise our work is wrong, more and more people are trying to find new organisational structures, new ways of organising and coordinating work, a new and different way of putting people in boxes. I can console them that they will never find it.
The future requires a fluid organisational structure where people organise themselves into groups and solve a problem together, after which the group dissolves and new groups are formed, people will also be able to participate in multiple groups at the same time, not to be confused with matrix organisation.
The grouping will be formed based on the shape of the problem and who takes responsibility for the problem, has the ability, desire and time to solve it. The management of the future will therefore be about establishing the framework for the group and the organisation to work within. Leaders must learn to work with the five elements of the "inverted pyramid" to create the optimal framework for problem solving. Organisations of the future will be both "chaotic" and systematic. The elements of the inverted pyramid are the security and framework for the organisation's operations.
Within the framework created by the "inverted pyramid" there will be chaos, but there will be some order in the chaos. The increasing competition in international and national markets where product lifespan decreases, innovation time decreases, delivery time decreases, service levels increase, product standardisation increases, customers become more individual and their demands increase. As a result, companies must sell their products and services on creativity, flexibility, productivity, design and strategic differentiation. Employees must be able to be creative, flexible and fulfil customer demands such as speed, individuality and on-the-spot decisions and follow-up services become important.
This requires a new way of managing work. To this end, different coordination mechanisms are in place.
All these coordination mechanisms work today, but where robots and AI handle the former, few in the labour market want that to be the case for the latter. Mutual alignment, organisational values and norms are gaining ground as demands for creativity, flexibility, individuality and productivity grow.
Therefore, the managerial task of the future will be to work with the company's values, its external and internal identity, goal setting, power/organisation and acceptance/reward. Only by clarifying these elements will employees have the opportunity to adapt to each other's work flexibly, creatively and purposefully, while at the same time establishing concrete values and norms that can serve as a basis for decision-making.
Where competition often creates mindsets of strategy, control, planning, standardisation, manipulation. The future will place greater demands on collaboration, exploration, testing, spontaneity, play, freedom, and flexibility. A very strong competitive orientation will often be at the expense of the things that are truly developmental and that characterise innovative environments and people, and almost every industry we have created after World War II has been created with the help of an innovative and collaborative management structure.
The danger with competitive orientation is that we become too stereotypical and analytical in our thinking and actions. For example, for many years companies have been doing strategic planning, and consultants have been using the same boring systems and giving the same boring advice to companies. It all becomes incredibly stereotypical, no one is able to differentiate themselves from the competition, and creativity and flexibility are in short supply despite customers demanding these qualities in products and problem solving.
Companies need to understand that competition in the near future will require them to be competitive on attributes such as creativity, flexibility, adaptability, analytical, systematic and standardisation. Customers will demand new solutions, new products, good design and simple solutions, while demanding a quality product delivered on time.
Competition often brings out an analytical and rational mindset. We need to get away from that when we talk about competition in innovation and creativity. As we know, creativity does not thrive in a box of 16 square centimetres.
Companies that can combine the two sides will be well equipped to win the battle for customers. The "inverted pyramid" is a good tool to use in this work, it can be clarified so that there is room for both creativity and flexibility, systems and analysis. The increased competition we see in both domestic and international markets today leads to greater and greater pressure on the company and its employees. The crucial question for the company will therefore be how to channel the energies of such external pressure and turn it into an advantage.
One of the most important things for us humans is to maintain our security and sense of value, if we feel insecure or worthless we will use all our energies to get into a state where we feel valuable and secure. Security releases energy to work with new ideas, change and development. That's why you need to be good at sensing when employees are unsafe. Coming up with new ideas and restructuring without a certain amount of safety is like pulling on a rope, unaware that the rope is connected to a 30 tonne tanker sailing in the opposite direction.
The elements of the "inverted pyramid" satisfy both the stimulation side and the need for security. There is no better foundation for the development of human resources.
