The "Loose Reins" Approach to Management

Harvard Business Review

Sometimes, the best management is little or no management at all. Sometimes, effective order and engaging experiences can be achieved with the most simple rules.

Take "shared space" urban design, for example. In these schemes, motor vehicles, pedestrians and cyclists all share the road equally, with the only rule being "all due respect to the most vulnerable". There are few if any traffic signs or lights. Curbs have been removed, asphalt replaced with red brick, and fountains, trees and café seating are situated where you think you should drive. It's completely ambiguous. You have no choice but to slow down and think as you move through the space. The result is double the traffic flow with at least half the accidents.

This kind of design began as an experiment in small European towns that didn't have a budget for traditional traffic controls at high-volume intersections and it has since spread to metropolitan cities. Visitors to the 2012 Olympic Games enjoyed the shared space rework of London's cultural mecca, Exhibition Road, a three-year, multi-million dollar project.

Look around the corporate world, and you can find great examples of organizations also taking the "shared space" approach too so people can better collaborate and innovate. Take the community workspaces at Toronto's internationally recognized Centre for Social Innovation (CSI). The idea is to create the conditions and context for people to feel comfortable, develop relationships with others interested in the public good, and engage in mutually beneficial interactions.

Several companies now allow "pet project" hours to break up the work day, institute mandatory downtime policies and dispense with confining job descriptions. Perhaps the most well-known examples are 3M's "sandbox" time (which Google copied); Netflix's vacation policy, which is essentially take as much or as little as you want; Boston Consulting Group's routine "time off," defined as one no-work evening per week, and W. L. Gore's team-based organization where associates do not have job titles. Even at Toyota headquarters in Japan, a surprisingly flat organization given its size, a newly hired associate is often told, "Dig your own job."

ROWE (results-only work environment) has become a popular strategy too, especially in companies with predominantly younger workforces, like automotive web publisher Edmunds.com. The company motto: "We don't care where you get your work done, as long as the right work gets done." It's about performance, not presence. Some companies have gone as far as to let people set their own salaries. Brazil's Semco SA is perhaps the best example. In a 2009 HBR blog, Tammy Erikson wrote about its "Up 'n' Down" program, which allows employees to manage their own pay with flexibility and freedom, noting "The company has found that individuals almost always do so fairly based on the information they are provided regarding compensation levels for comparable jobs in the company or industry — in part because their choices will need to withstand the scrutiny of colleagues."

The power of this kind of self-organization suggests that creativity and innovation might best be achieved not through rigid hierarchy and central controls, but from one or two simple but vital agreements. These agreements are often implicit, ones that everyone understands and is accountable for, yet that are left open to individual interpretation and variation. The limits of the rule are set by social context. This quote from Netflix vice president Steve Swasey makes the case: "Rules and policies and regulations and stipulations are innovation killers. People do their best work when they're unencumbered. If you're spending a lot of time accounting for the time you're spending, that's time you're not innovating."

When we provide the right social context and then let things be, employees self-organize and produce better environment and better results than managers imposing control. Is this a revolutionary new idea? Not at all. It's been more than 2,500 years since philosopher Lao Tzu wrote:

Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.

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