[MUSIC] In this segment, we're going to talk about the fourth dimension of management, which is about objective setting, how we in our organizations set objectives. And once again, we’re going to talk about the traditional concepts or principle which we’re going to call linear alignment. And then we’re going to talk about an alternative principle, which is obliquity. And if you think you don’t know that word obliquity, that wouldn’t be a surprise because it’s a, it's a fairly, kind of made up word. It will come clear what it means, but let us first talk about linear alignment. What is alignment? It's about the process of ensuring that all employees, are working directly towards an explicit objective. And it's one of those most deeply rooted concepts in the whole kind of way of organizations. We have an image here of a, of a rowing eight. And indeed, I've seen books which explicitly use, the kind of, the metaphor of the rowing team as something that organizations should aspire to. Because the rowers are all, they're all trained professionals, and they're all working exactly in line to do a particular thing well. And they're all kind of marching to the same drum beat. Now, linear alignment in organizations works in a very kind of predictable and well understood way, which is that an organization will set itself some objectives. It might be two years out. It might be five years out. And then they will say, in order to reach these objectives which are almost always financial objectives, what do we have to do to achieve that? Well, we have to break down those, those goals into the constituent parts, so it's very common in an organization, to be told you will deliver the following amount of revenue growth or the following amount of profitability, in order to be aligned around the overall targets that have been set. And then sometimes gets cascaded down even to the individual level, where, a particular manager might be told, your, your job is to make this much money next year in order to be aligned around a particular set of targets. So, many companies use, use this sort of top down approach to objective setting. Does it work? Well, it certainly has enormous benefits, right? It is very simple to manage, it's very easy to figure out a way of giving everybody a job to do when you're breaking down some sort of high-level target into a bunch of smaller targets. And of course, by the same token, it's also very easy to identify where the shortfalls are. If for whatever reason, some group doesn't deliver on its targets, it's very clear where the gap is. So, it's consistent with everything we've been talking about up to now. It is part of this classical model where in a top down world, we can make things work as long as the wor, as long as the world doesn't change too much. As long as we've got some sort of predictability or stability in the world, this sort of top down approach just about works. However, there are some undoubted weaknesses to this process of linear alignment. The image you see on the left oh, left side of this slide, I mean I just took it from the internet. It's a classic example of a kind of a planning process drawn I think from a U.S. government agency. When we see this sort of process in place, we recognize immediately that we're, we're driving out innovation and creativity. We're not encouraging people to figure out for themselves what to do. Because obviously, we're just telling them how their piece fits into the bigger set of objectives. It also almost always ends up being a model which focuses on quantifiable objectives, numbers. And almost always that means financial numbers. It means about making particular revenue targets. Sometimes there's quality mixed in. Sometimes there's service agreements, but they're all quantifiable. They're all things you can put numbers around. Another bias, another weakness, rather, is that it's typically very short-term biased. It's very difficult to come up with a ten year plan. That's got numbers against it, so instead what companies typically do, of course, is they have one or two year plans, because that's what they can get their heads around in terms of actually managing something which is which is specific enough that they can set sensible targets. And then finally, I think it's worth acknowledging that, that this sort of linear alignment approach does not reflect the true complexity of organizations. I'll give you a very specific example of what I mean by that. Imagine you are a scientist. Imag, imagine you are working in drug development for a big pharma company like a Pfizer, or a GSK or a Roche. What, what gets you out of bed in the morning? What gets you to go to work and to put in long hours? Is it you're worrying about the company's share price? Maybe your not. What you're worried about is the particular scientific problem you're working about. You're, you're trying to, to cure a disease, you're trying to get a particular drug developed, you're trying to work through a really tricky scientific problem. You know, it is the job of the scientists to work on science. It is then the job of somebody else to kind of corral and, and manage that process, and at some point, through some sort of means, to actually achieve some sort of financial value out of that. If every scientist worried about the share price of the company, they wouldn't actually be able to do their job effectively. So, for all these reasons, I believe that there are real limits to the process of linear alignment, it's not wrong, it's never completely wrong, but there are real limits to it. I'll just let you watch, in your time, in the course from this video from Jeffrey Pfeffer, who's a professor from Stanford. And he's just got a few particular thoughts about the kind of the, the dangers in particularly in large companies of having too much focus on targets, and he's got a few thoughts on alternatives to that.
