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|In: Leadership|Last Updated:

Which is more important in human behavior — nature or nurture? It’s a classic question, with “nature” in this context meaning inborn tendencies and nurture meaning the consequences of life experience.

People, including academics who should know better, still argue the question today. Those who know more long-ago recognized that it’s a false dichotomy.

If you aren’t familiar with the term, a false dichotomy is an argument that presents as antithetical two possibilities that can, in reality, be simultaneously valid. The roles of nature and nurture in human behavior are, most assuredly, complementary.

Take Michael Jordan’s successful career as a basketball player. Nature or nurture? Anyone who doubts nature hasn’t looked at the average height of an NBA player. Also, anyone who doubts nature has to believe there are no genetic traits that confer above-average strength, stamina or agility. If you’re one of them, I commend to you “Finding the golden genes,” (Patrick Barry, Science News, 8/13/2008).

Those who think genes are the whole story should pay more attention to what Jordan and nearly every other top performer in the history of the world has had to say about the importance of their upbringing and life experiences.

The occasion of Labor Day makes another false dichotomy timely: The question of which matters more for a company’s success — the quality of its managers and leaders, or the quality of its employees.

It’s a false dichotomy because both are necessary conditions for achieving sustainable success, regardless of the nature of the organization you lead.

The importance of top-notch employees is old news in IT. Way back in 1975, Frederick Brooks’ The Mythical Man Month described research showing how much more productive great programmers are than average ones. Depending on the metric the answer turned out to be roughly a factor of ten.

Since compensation is based on market value and not delivered value, it’s unlikely any CIO pays top performers ten times more than average ones. Even three times more is a stretch, making top talent an excellent investment. Let’s see: Invest two more dollars a year to get ten back — sounds good to me.

More generally: All of the value-creating work in most companies is performed by its non-managerial employees. They are the ones who design, assemble, market, sell, distribute and support the company’s products and services. Every single step in the chain of events that convert raw materials to finished products is either performed by non-managerial employees, or is performed by automated systems they assemble and program.

It takes a serious act of denial to figure they don’t matter (an act of denial many executives have proven themselves all too capable of).

False dichotomy sorts conclude from logic like this that instead it must be leadership that doesn’t matter. They’re wrong.

The simplest demonstration of this wrongness is a basic fact: Non-managerial employees are hired by managers and executives. When a company has figured out how to attract, recruit, retain, train and promote great employees, the credit belongs to its management team, even as credit for the actual work belongs to its employees.

Leadership matters for more reasons than this. In particular, excellent leadership is the difference between employees expending their efforts at cross purposes, canceling each other out, and employees reinforcing each others’ efforts, extending the reach of the corporation.

It’s a vector thing.

One trend is turning the management/staff false dichotomy into a real one: The executive wage gap.

Thirty years ago, the average CEO made about 40 times the pay of an average employee. That’s now ballooned to 800 times as much. I’ve read that in typical corporations the top four officers draw ten percent of the total payroll.

Beyond the visceral reaction these statistics elicit (unless you’re one of the top four officers, an immediate need for Pepto-Bismol), is a practical business issue: Where the opportunity cost of a 1970s CEO’s compensation was 40 non-managerial positions the company could not afford to hire, the 2008 CEO paycheck costs 800 non-managerial employees — a net loss of 760.

Depending on the size of the company that can be a lot of value-adding labor that isn’t going to happen.

CEO compensation is a Pandora’s box that isn’t going to shut any time soon, so CEOs, and you too, had better concentrate on hiring the best talent available, even if it drives up the average wage (and drives down the CEO-to-employee wage ratio).

Doing anything else will turn a false dichotomy into a false economy.

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|In: Leadership|Last Updated:

Once you’ve made the sale, management consulting is pretty simple. It works like this:

1. Interview a lot of people. If, like me, your name is Bob, hope the employees haven’t watched Office Space.

2. Ignore everything that works well. If two people complain about the same issue, it’s a problem.

3. If the company is centralized recommend decentralization. And vice versa.

4. Define metrics to track how the problems you identified improve. Don’t establish metrics to track what’s currently working well.

You’ll get results. Two phenomena guarantee it.

The first is that you get what you measure. Once a company establishes a measurement system, employees will move the measures, regardless of the actual impact on the organization.

The second is the Hawthorne Effect — the placebo effect of management change. Just paying attention improves things, regardless of the specifics.

Your job: Take the credit. Your metrics will “prove” improvement. And, in your future promotional efforts, you can use the popular phrase “measurable improvements” in your case studies.

Sure, you might have wrecked what used to work well, but that’s okay. With no metrics to track all the formerly positive attributes, nobody will ever know, or care.

Except, of course, the affected employees, but since everyone knows employees always resist change, you can ignore them.

No, this isn’t true confessions time, and no, my consulting company IT Catalysts doesn’t operate this way. Not that we haven’t recommended centralization or decentralization to support organizational change. We have … when doing so removed barriers to achieving important business goals and didn’t do more harm than good.

Here’s how to decide:

Some companies do a single thing. They sell a single product or service, or a well-focused family of products and services, to a defined industry segment in a single geographic region. Companies like this organize functionally. They are purely centralized.

Most companies are more diversified than this. Some diversify geographically — they open offices in (for example) Chicago, Altoona, and Ypsilanti.

Other companies might not think about customers in geographic terms. Instead they specialize their sales efforts on specific industries.

Or, they might sell both luxury and utility consumer products, to the affluent and middle market, respectively.

Whatever the diversification, it must result in some level of decentralized decision-making and operations. The question of centralization is not whether, but what and how much.

Here’s a handy guideline to help you decide, based on the six parameters of process optimization (overhead cost, unit cost, cycle time, throughput, quality and excellence; see “Six Stupid process controls,” KJR 4/30/2007) for more on this subject).

It’s pretty simple: For low unit costs, high throughput, and quality (adherence to specifications), centralize. For low overhead, short cycle times and excellence (flexibility and richness or customization of function), decentralize.

The question of whether to centralize or decentralize hits CIOs where they live, and the bigger the company, the harder the choice, not least because the executives who run large enterprises are only rarely in consensus on these points.

The CFO will likely prefer centralization, and be willing to invest in infrastructure (higher overhead) in order to gain economies of scale (lower unit costs). The Chief Marketing Officer will prefer it because centralized marketing helps prevent uncontrolled messages to the marketplace that could weaken the brand.

Meanwhile, every business unit head says the same thing: Go ahead and centralize as long as I get what I want, the way I want it, when I want it. Which is ManagementSpeak for “Go ahead and centralize, but the first time I don’t like anything at all I’m going to build my own.”

A CIO’s instincts are usually on the side of centralization — to build infrastructure, gain economies of scale, enforce a consistent and coherent architecture, and in general maintain control of the company’s information technology.

Luckily, being humans, CIOs have brains as well as instincts, which means they can (and should) choose a more nuanced course of action. Nuance in this case means looking at every IT delivery process. For each, decide whether centralization or decentralization makes more overall sense. Then add balance by recognizing special cases that don’t fit.

For example: Overall, centralized applications support might fit the business best — perhaps the company uses a standard ERP suite across all business units. Nonetheless, business intelligence will still be supported best using local analysts reporting directly to the business units.

No problem.

The question of centralization and decentralization is a false dichotomy. As is usually the case with false dichotomies, when the question is whether IT should centralize or decentralize, the proper answer is no.

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