H is for Handy
When I am asked to list some excellent books on management, I have a few I like to suggest. I always start with Niccolò Machiavelli’s The Prince. It’s a great guide to old-fashioned (i.e. 20th Century) management and the command and control paradigm, although you do have to replace the word ‘prince’ by ‘CEO’, and ‘State’ by ‘company’. Otherwise, it is a good introduction to how things used to be and largely still are, as it seems little changes in organisational politics! Robert Greenleaf wrote an outstanding analysis of what he called ‘servant leadership’, and it’s an article to which I often refer those interested in thinking about how to be a good at working with others.[i] Another writer on the same topic is Ronald Heifetz, and his 1994 book, Leadership without Easy Answers. [ii] I think Max Holland’s cautionary tale about the fate of manufacturing in the US, When the Machine Stopped, is another analysis every manager should read. [iii]
Enough of that. Let’s move on to Charles Handy, brought up in Ireland, described as one of the most influential living management thinkers, and a graduate of Oriel College Oxford, but despite this latter handicap,[iv] a very special kind of thinker. He has written several great books, some with his partner Elizabeth Handy, but there are four in particular which I regularly recommend: The Age of Unreason, The Empty Raincoat, Beyond Certainty, and The Hungry Spirit. [v]
Before I review some of the ideas in these four books, let me jump ahead. Six years after The Hungry Spirit, The Elephant and the Flea appeared. Part autobiographical, Charles Handy explained the title; it was an image for his underlying theme, which was about two types of work, either being part of a large and relatively slow-moving enterprise (an elephant) or working independently or for a small and nimble organisation (a flea). He wanted to make clear large and often very bureaucratic organisations needed irritant individuals or groups to support innovation and new ideas, without which they would slowly fall of touch and be unable to survive in the face of change. While it might be seen as rather simplistic, as he admitted, it made sense as well as a nice image to capture his own career, changing from being an employee (of Shell, and later the London Business School) to a self-employed provocative commentator and observer.
1989 was a year of change. Much of it focussed on Eastern Europe and Russia, as Vaclav Havel became President of Czechoslovakia, Ceausescu was deposed in Romania, the Berlin Wall came down, and Russia held its first set of elections for membership of the House of Deputies. It was also the year of the protests and the eventual massacre in Tiananmen Square, and the year in which Emperor Hirohito of Japan died. These and many other events across the world suggested a major shift in politics around the world was in the air: the end of history? Just in case you have forgotten, this was also the year Stephen Hawking published A Brief History of Time, and Salman Rushdie earned himself a fatwa with the release of his novel, The Satanic Verses.
Change was also on Charles Handy’s mind when The Age of Unreason came out, the first of four books revealing his skill in making key issues clear with apparently simple and memorable ideas. The changes he was concerned with were not so much the events just listed, but rather what was happening in organisations, work, technology and education. His perspective on change was rather different from the political commentary that followed the events of 1989, as he focussed on discontinuity, randomness and the uncomfortable sense of uncertainty. Looking back, his perspective proved relevant to those geopolitical changes, too, prescient in its implications.
There are many themes in The Age of Unreason, and thirty years later it remains both highly relevant and important. Some stories are dated, and I did enjoy him quoting an American teenager who predicted (among other things) that there would be test tube babies and a cure for cancer (both well on the way), and robots holding political office in the USA (certainly applies to a lot of White House staff and appointments – even if that wasn’t the kind of robot she had in mind!). At the same time, it is also a little surprising to see the original book cover was based on the story you could kill a frog by putting it in a beaker and slowly bringing the water to the boil: not true, and, as it happens, not an especially good analogy for what Handy had to say.
More seriously, this is the first book in which Charles Handy emerges unambiguously as a ‘flea’, or maybe better described as a mosquito making irritating stabs at comfortable familiarity. He pushes us to think ‘upside down’, offering insights and frameworks to turn conventional models on their head. One example, which many writers have since taken up, is the ‘shamrock’ organisation. The three leafed shamrock (most appropriate for an Irishman!), suggests we think about contemporary businesses as having three parts: the full-time core of experts, managers and specialists, the individuals and others who are contracted to perform various services, and the part-time and occasional workers drawn in from time to time. Cleverly, he reminded us of the lucky four-leafed shamrock, with a fourth group, customers, also working for the company. For many, his view effectively pushed aside the hierarchical model of the enterprise.
Another striking idea was the federal organisation, where the parts worked largely independently, only ceding some roles to the centre (co-ordination, funding), rather than following the typical corporate model of the head office controlling all the subsidiaries. The mosquito knew how to irritate. He suggested the federal model relied on subsidiarity, a word from the Roman Catholic Church. He quoted from Pope Leo X on the principal of subsidiarity: “it is an injustice, a grave evil and a disturbance of right order for a large and higher organisation to arrogate to itself functions which can be efficiently by smaller and lower organisations”. Subsidiarity means involves giving power to front line staff. As a model for business, it is both powerful and relevant: despite this, years later, most CEOs still try to control almost everything.
If The Age of Unreason was a new kind of business book, five years later Charles Handy’s next book, The Empty Raincoat, firmly established him as a leading thinker, and as an important and provocative commentator. As with the image of the shamrock in the previous book, he used several equally telling and memorable ways to ensure his ideas stuck. This time his focus was clearly on paradoxes and uncertainty: no more frogs on the cover, but a photograph of an empty raincoat: “the empty raincoat is, to me, the symbol of our most pressing paradox. If economic progress means that we are becoming anonymous cogs in some great machine, then progress is an empty promise. The challenge must be to show how paradox can be managed”. Today his agenda of 25 years ago is, if nothing else, even more pressing.
This book represents another shift, as Charles Handy stepped back from suggesting solutions and, instead, decided to alert the reader to issues and how to think about them. This is one of the key reasons he had focussed on paradoxes, as they describe situations that are inherently contradictory, not problems to be solved. One of my favourites included in his list is the paradox of time. Simply put, the contradictory nature of time is that we have never had more time available to us, as we live longer and more healthily, but at the same time we never have enough time to do what we want!
Early in The Empty Raincoat, Handy introduces one of his most well-known devices for thinking, the ‘sigmoid curve’. The sigmoid curve is the letter S that has fallen forwards: if you start at what had been the tail of the S you travel downwards, then level out, then start moving upwards until you reach the maximum, and then fall back down again. It is an analogy for what happens to a business. Initially, a new business requires investment and expense, and no profits in return; slowly things turn around, income grows and the company becomes more and more profitable; eventually, it has peaked, and starts to decline. A novel description of a familiar path. However, he continued to explain how the next cycle of growth has to begin before the company reaches maximum profitability. In other words, you initiate a new business before the current one has even reached the top of the curve. From that simple image, the sigmoid curve seems to have entered the lexicon of businesspeople, entrepreneurs and even management trainers.
Further into the book, Handy returns to the issues of subsidiarity and the concept of the federal organisation. He then looks at the nature and purpose of a company, but since that is most memorably addressed in the next book, I’ll pick up one other theme he addressed here, and another with a memorable image. This is his discussion of the ‘portfolio’ world. As he saw how work was evolving, there were various ways in which one might spend time: being employed, working on a contract for a fee, working without income for a non-profit organisation, home duties, and working for one’s own personal benefit (like a blogger!!). The image of the portfolio calls to my mind those big black portfolios artists use to carry around their work, evidence of their abilities through work they have completed. In a portfolio world, we have our collection of things we do, especially once we have made the transition from working full time to other ways of working, by choice, by retirement, or because we have no other choice. Many people I talk to today are assessing and managing their portfolio of activities, and deciding how they will spend their time in the future. It is often a greater challenge for men, many of whom have worked full-time and done little else, than for women, who are often thrown into a portfolio life early on.
In the next book in this series of four, Charles Handy included several talks and essays he had given over the years. Many were the basis of the topics discussed in the first two books, but often the analysis is more pointed and specific. Beyond Certainty addresses many intriguing issues, but for me it contains one of Handy’s most important papers, ‘What is a Company For?’. This was the Michael Shanks Memorial Lecture he gave in 1990, during his time as Chairman of the Royal Society for the Arts.
The underlying thesis of this address was that companies should not see their business as solely concerned with making profits, and especially not as making profits for shareholders. This was not to say that providing a return to shareholders was not important. However, Handy saw shareholders as investors, and their investment as no different from putting a wager on a horse in a race. Controversial, to say the least, this was a direct attack on the conventional view of business in the western world in the past couple of decades, where the established orthodoxy had become maximising the returns to shareholders was the business of business.
He took his theme in a number of directions. His first point was that the purpose of a company is to make goods or services that customers sought, and that profits were necessary to invest in improving what was made or offered. Shareholders took a chance their investment might help a company grow and prosper: if it did, the value of their shares would increase, and they might receive a share of profits in the form of dividends. The second, and equally important point was that shareholders did not ‘own’ a company. A company was an independent legal entity (the result of legal measures taken in the 19th Century to allow companies to raise funds in their own right), and shareholders were simply backers. Indeed, as the major assets of companies were increasingly people, rather than plant or equipment, the idea of owning people was morally wrong, as well as legally incorrect. Finally, he suggested people working in a company might more usefully be considered members rather than employees, members who collectively looked after the business as stewards, ensuring its future viability as well as its current success. Slowly but surely, his underlying ideas have started to change how companies are seen and operate, although there is still a long way to go, especially in the US where old habits die hard.
In this sequence of four books, the last, The Hungry Spirit is the most personal, less directed to business and organisations. It reads as though Charles Handy now want to address the reader as an individual, and the progress over the four volumes has completed an arc that began with the changing nature of business, and ends with an exploration of what lies beyond traditional capitalism, in what he described as “a quest for purpose in the modern world’.
He begins with a trenchant critique of capitalism, especially as it allows markets to dominate, money to be the only measure, and efficiency to be the only justification to determine what to do. If his remarks were stinging then, the corporate world today appears even more misaligned in favouring the already very rich and in exploiting everyone else. In Handy’s view, back when he wrote The Hungry Spirit, markets, money and capitalism have a role to play, but they need a context, and that is a matter of purpose, not economics. For Charles Handy, the overriding purpose is to leave the world “a little better than we found it”.
To pursue this, he explores the idea of “a proper selfishness”, which is not about economic self-interest. To explain this, he offers another compelling and memorable concept, the ‘white stone’. Handy quotes from the Bible, “to the one who prevails, the spirit says, I will give a white stone . on which is written a name, which shall be known only to the one who received it.” (Revelation, 2:17). As Handy explains it, this is a way of saying that, if you work at it, you will find out who you truly ought to be. This is not about navel gazing, however, as he sees this in the same way Socrates saw living an examined life. It is about “truth, justice, beauty and a decent society”, each one of us working in our own way to improve the world around us. The rest of this book explores this theme in thought-provoking and compelling detail.
Charles Handy is an outstanding writer and commentator, analysing change and encouraging us to pursue meaning and purpose in creating a better world. His books challenge and unsettle; the image of the white stone is a touchstone to an examined life. Be provoked. Keep Handy handy.
[i] The original; piece is included in his book Servant Leadership, Paulist Press, 2002 (25th Anniversary Edition)
[ii] Belknap Press, an imprint of Harvard University Press
[iii] 1989, Harvard Business School Press
[iv] In joke from a Cambridge graduate about someone who went to Oxford!
[v] All published by Hutchinson, 1989, 1994, 1995 and 1997 respectively
