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Charles Handy Part 2: The Nature of Organisations

In last week’s Pocketblog, we surveyed the life of Charles Handy, and referred to some of the big ideas in his many books. Now it’s time to look at those ideas.

The Gods of Management

In Handy’s first book, Understanding Organisations, he set out to collate and understand a wide variety of management and organisational thinking. In his second, The Gods of Management, he presented his own ideas. He perceived that organisational cultures can be classified into four broad types, according to how formal their structure is, and how centralised power is, within them. He drew the analogy with the characters of four of the olympian gods, from Greek mythology. He was, after all, an Oxford classics scholar.

The Gods of Management - Charles Handy
The Gods of Management – Charles Handy

Zeus – The Club Culture

Zeus presides over a highly centralised ‘Club’ culture, where one dominant executive holds all the reigns of power, making all of the important decisions themselves. They control al the important resources and can have low acceptance of what they perceive as under-performance. This culture tends to arise under a dominant and successful founder, or with the ascendancy of a charismatic leader. Political parties, start-ups, and crime families often share this culture.

Apollo – The Roles Culture

Mature, bureaucratic organisations adopt a solid, stable, rule-based culture, where everyone has a specific role. People know what is expected of them and will rarely step beyond those boundaries. Reporting lines are well-defined and decisions follow set procedures. Job positions confer authority to make those decisions, and processes can be long-winded and inflexible. Apollo cultures struggle to adapt to a changing environment

Athena – The Task Culture

The Athena culture is a meritocracy, where ability to think and get things done is highly valued, and rewarded well. Talent is well rewarded, and teams are fluid, with people coming together to work on projects and solve problems. Authority is less important here than knowledge, expertise and the ability to influence and persuade. You can see this culture in consultancies, research organisations, and in agile business units of larger, forward thinking businesses that may be stuck with an Apollo or Zeus culture.

Dionysus – The Existential Culture

The Dionysus culture is all about me, me, me. It serves the individuals and can lead to both creative freedom and equally internal discord and unproductive competition. The organisation is little more than the home and resource for a set of self-motivated individuals who often care more about their own position than that of the organisation. Accounting and law firms are good examples, because of the partnership nature of the businesses. So too are pressure groups.

New Organisations

In his 1989 book, The Age of Unreason, Handy started to foresee some of the changes we now take for granted. As technological and commercial realities were shifting, Handy built on his earlier book, The Future of Work, to develop new models of how we would work in the future. He further developed those ideas in The Empty Raincoat, and The Elephant and the Flea. Two of the characteristics of Handy’s books are

  • That they often take management and organisation as their starting point, but then extend their ideas outwards to reflect on the impact of society
  • Each book seems to build on and develop further, the ideas of its predecessor

Here are four of the trends and ideas that most appeal to me as both relevant to our readers, and accurate as forecasts. Inevitably, they interlink into a coherent idea-set.

Portfolio Workers

Handy’s concept of a portfolio career, with lots of components, rather than one single ‘job’ is a reality for many professionals nowadays (including me). The concept of a flexible labourer able to turn his hand to anything from agricultural work to general making and mending, to selling goods at market, to working in a tavern, is ancient. What Handy foresaw (and embraced for himself) was the emergence of this lifestyle for white collar, knowledge workers.

The Shamrock Organisation

This trend will enable what Handy describes as a Shamrock Company.

The Shamrock Organisation - Charles HandyThe Shamrock Organisation - Charles Handy
The Shamrock Organisation – Charles Handy

In the The Age of Unreason, Handy originally described three leaves, but four seems to be a fuller model: the first is the professional core of managers, technocrats, vital support staff, and a minimum of specialists. Together, they define the core competence of the business, and provide and manage its infrastructure. Everything else is provided by contracted workers: outsourced services from specialist providers, contracted independent professionals with highly specialised skills, and a flexible, lower-paid  workforce that can be brought in on short contracts and day-rates.

The Federal Organisation

Berkshire Hathaway seems to me to be the epitome of Handy’s Federal Organisation. Here, there is a tiny core business, managing a large number of highly independent businesses, all of whom have complete autonomy to manage their affairs, and succeed on their own terms. When you see the success that Warren Buffett and Charlie Munger have created, you have to wonder why other large federal multinationals spend so much effort trying to control their subsidiaries, impose processes and functional verticals upon them, and generally over-manage the local talent.

The Triple-I Company

The astonishing rise of internet-based software companies, web-based news aggregators, digital information providers (increasingly, Management Pocketbooks is transitioning to becoming one of these), and the high-tech consultancies that serve them, seems to me to be ample evidence of the prescience of Handy’s third kind of new organisation: one that capitalises, above all, on:

  • Ideas
  • Intelligence
  • Information

Discontinuous Thinking

Handy foresaw our current period of discontinuous change, and suggested that incremental ‘continuous’ thinking was not going to solve the problems it throws up. He doesn’t require us all to have the genius-level intellects of Einstein or Marx, but instead implies we need to build a capacity for curiosity, reframing situations, and constant learning. It seems inevitable that, once again, Pocketblog returns to the thinking of Carol Dweck, on Growth Mindset.

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Charles Handy: Management Philosopher (Part 1)

In my research for this article, I found an unreferenced remark, suggesting that it was The Economist magazine that coined the term ‘management guru’, and that they first used it as a description of Charles Handy. Handy rejects the label – and so he should. It almost belittles the breadth of his thinking. From organisational theory, to management trends, to social polemic; Handy’s thinking goes well beyond easy categorisation.

Charles Handy

Short Biography of Charles Handy

Charles Handy was born in a small town a few miles outside of Dublin, in Ireland, in 1932. He was educated in an English public school, and at Oxford University, where he gained his MA in ‘Greats’ – classical history and philosophy. He went from there to work for Shell, taking a number of operational roles around the world, where he had great autonomy as a young manager. Returning to London, he found headquarters life didn’t suit him. What did, however, was a transfer to the staff college, where he found teaching much more to his liking than corporate administration.

MIT Sloan School

Having taught himself the basics of economics earlier on, so he could take up a role at Shell, he moved briefly to Anglo American as an economist, before travelling to MIT to study at the Sloan School of Management. here he met and studied among some of the greats of US management theory: Warren Bennis, Chris Argyris, and Edgar Schein, who supervised his studies. He was greatly influenced by them all, and also by the work of Douglas McGregor, who had also worked there and died a little before Handy arrived in 1965.

He returned to London to set up the Sloan Program at the newly founded London Business School, where he became a professor in 1972. It was there that he wrote his first book, Understanding Organizations, which has remained in print pretty much ever since 1976, with new editions updating it for modern readers. It is still a first rate introductory text, of which Handy says that he wrote it to get to grips with the ideas in it. He also (famously) recommends that once you have read it, you should re-write your own version and burn the original. In part, Pocketblog is my attempt at re-writing his book, though I never plan to dispose of my trusty 1993 fourth edition!

Handy finds his Voice

Whilst Understanding Organizations is very much a compendium and synthesis, Handy’s next book introduced his own ideas. 1978 saw the publication of The Gods of Management. We’ll take a look at the ideas in this book in part 2 of this blog.

In 1977, Handy left academia, in search of a somewhat more spiritually rewarding role. He found it in an organization set up by Prince Philip the Duke of Edinburgh, and the Church of England. St George’s House is an institution that encourages business and political leaders to come together, along with faith leaders, to consider contemporary and societal issues. His post as Warden allowed Handy to marry his philosophical and commercial instincts.

Portfolio Career

However, in 1981, Handy left, to pursue a new direction in his working life. This was a direction signposted in one of his most important books, 1984’s The Future of Work. In it, he signposted the development of portfolio careers, and the downshift from high-powered corporate jobs (the rack he had been on at Shell) to lesser-paid, but more congenial lifestyle careers. He embraced this downshift through the 1980s and started his own portfolio career that has served him to this day.

Handy further developed the ideas from The Future of Work in 1989’s The Age of Unreason. This book is full of ideas that we will explore further in part 2 of this blog. At its heart is Handy’s rejection of people as human ‘resources’. In modern organizations, we will want to assert our individuality.

A Stream of Ideas

The late 1980s and early 1990s were a particularly prolific time for Handy. He contributed to Making Managers, which sparked a new focus on management as a professional discipline, rather than a simple set of tasks, and led to the growth in the UK of management qualifications, and wrote Understanding Voluntary Organizations. In 1991, he presented a BBC TV series called Inside Organisations, and published a book by the same name, which set out 21 management concepts or ideas. Handy chaired the RSA from 1988-89.

His more philosophical leanings emerged from 1994, when he wrote one of his biggest selling books, The Empty Raincoat, about the emptiness at the heart of global economic growth. In the US, it was called The Age of Paradox. This book may be the most prescient among many of his works that seem that way.

Handy has barely let up with a stream of new books with new and interesting ideas:

A Summing Up

Without a doubt, Handy is a prodigious thinker. He has done and written so much, that we have to consider him one of the few of our Management Thinkers and Doers for whom a single article is not possible. Like another great, Peter Drucker, Handy is one of our foremost commentators on the nature of organisations. And like Drucker, his ideas have ranged well beyond that field. In Part 2 of this article, we will focus entirely on some of Handy’s biggest and most important management ideas.

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