CHAPTER THREE

Inverting the Organizational Pyramid

Building a Structure for Change

Suddenly, it seemed, we had finished all our tasks!

We had looked into the mirror and confronted reality. We had dramatically increased our transparency and addressed the issue of trust. We had won a few big decisive deals and were winning new ones with encouraging regularity. There was rejoicing throughout the land of HCLT. Any day now, it seemed, we could declare victory and rest on our laurels!

That was exactly my fear.

I worried that the gains and changes we had made were not big enough or deep enough—that inch by inch, decision by decision, action by action, we might slowly and inexorably slide back down the mountain we had only just begun to climb.

The more I thought about what we had accomplished, the more it seemed that we had successfully created an environment that was ready for change. Such an environment is very different from a company that has actually made a change and even farther from a company that has created a long-lasting transformation.

I did not know what our next move should be. So, as I often do, I looked to my past for some guidance. I remembered the geography teacher I’d had in grade school. Our school sat at the edge of the foothills. One clear day, she led us outside and pointed to the Himalayas in the distance.

“What do you see beyond the mountains?” she asked.

We had no idea, so we made up all kinds of answers. She asked the question again and again. Finally, we had to admit that we did not know.

“Good,” she said. “That’s the right answer. Now let’s go inside and see if we can find out.”

At HCLT, as we looked toward the end of 2006, I did not know what lay beyond the mountains for us.

I had a pretty good sense of the lay of the land on this side of the mountains, however. Just as we had discussed at the Blueprint meeting, customers were increasingly frustrated with their IT vendors and wanted to get more value for the significant amounts of money they were spending on information technology. Moreover, their frustrations could be turned into a huge opportunity for HCLT. I also saw that we could not yet seize that opportunity, because we were really not much different from the vendors who were causing the frustration. Yes, we had enjoyed a lot of success recently. But winning a few deals would not transform the entire company.

I realized that we had to do much more than fiddle around with our current processes, which made me think back to a summer job I had held during my student days. There, I learned something that I now saw as relevant to our position at HCLT.

A Lesson from the Poultry Farm

During my school years, I took a summer job on a poultry farm near my home. I worked with a number of friends, and our job was to gather eggs from the henhouses, which were on one side of the farm, and carry them to the storage sheds on the other side. The poultry manager gave us detailed instructions about how we were to do the job. Each of us would gather a basket of eggs in one of the henhouses, carry it to one of the storage sheds, then go back for more, crisscrossing the farmyard until all the eggs had been collected and deposited in the storage sheds.

We followed orders for a day or two. Then, being pretty smart young kids, we decided this egg-handling methodology had its limitations. It was slow, boring, and inefficient. We got paid once the job was done, not by the number of hours worked. If we could deliver all the eggs in a shorter time, we could get off work earlier and spend our free time playing soccer or doing whatever else we liked.

We started experimenting. What if we carried more eggs per handful? What if we used one of the henhouses as a central depot, collecting all the eggs there first and then making our trips to the storage sheds? What if we divided the labor—some of the workers collecting while others delivered?

After about two weeks of trying every method we could think of, it became clear that each method had its advantages and disadvantages, but none of them really made much difference. We were still carrying eggs in the same way that people had been carrying eggs for decades, probably centuries, maybe even millennia. We grew tired of experimenting and went back to doing the job as it always had been done. To make the work more tolerable, we joked and talked about what we would do after we got off work. Maybe we’d play a cricket match. Or maybe we’d go home and listen to the Beatles.

On my last day of work that summer, I had a revelation about the job. I realized that tinkering with the process of egg carrying or just trying harder would never change the fundamental nature of the work or the operation of the poultry farm. We were stuck in an archaic structure, and until that changed, nothing else would or could change.

The same was true of our experiments at HCLT, including U&I and the sharing of financial information. We had tinkered with the process and put ourselves in the mood for change, but we were still carrying our eggs in pretty much the same way we always had.

It seemed to me that we now had to look more deeply at how our farm was structured. We had to find ways to build our EFCS approach into our organizational structure in a way that was fundamental and not easily reversed.

The Old Pyramid in a New Landscape

As I’ve said, the organization at HCLT, like that at so many other companies, was a traditional pyramid structure. There were the senior people on top; a thick layer of middle managers and enabling functions such as finance, human resources, training and development, quality, and administration in the middle; and the frontline workers, who had the least power and influence, on the bottom.

The command-and-control approach has characterized large organizations for centuries. Monarchies, armies, and religious institutions have grown, expanded, and dominated their competitors by creating rigid hierarchies that serve a supreme leader. The structure worked equally well in the industrial economy when it first emerged. The value zone of industrial companies is deep inside the organization, in the R&D centers and the manufacturing plants. Everything else could be seen as important but not essential to competitive differentiation and market success.

For many years, IT had essentially been a manufacturing industry. The value zone lay—just as it had in automobiles, appliances, and aerospace—in hardware design and manufacture. Every company was trying to create the faster chip, the better user interface, the smarter feature, and offer it all at the lowest possible price.

The rise of the knowledge economy, however, has changed all that. As I had realized from my very first days as CEO at HCLT (particularly from some of those conversations with customers), the value zone no longer lay in the technology itself and certainly not in any particular hardware or software technology. Customers could choose among many options, all of which would likely enable them to achieve their goals if implemented well.

Something had to be different, then, about the way the technologies were brought together and implemented for each customer. Something more had to be changed about how we delivered our services.

Four Trends in Information Technology

In order to change the how, we had to think carefully about the changes in the global IT landscape and develop a strategy that made sense for what was happening around us.

For HCLT in 2005, the IT world was characterized by four major trends.

First, as we had realized in our assessment of our point A during the Mirror Mirror exercise, business was growing more complex and IT was becoming more central to business strategy. Consequently, the position of chief information officer (CIO) had much more power and prominence than in the past.

Second, the IT industry was valued the most when it developed innovative technologies that could help make business processes faster, cheaper, and more available and that offered the analytics that CIOs and other company leaders needed to drive better decisions. But adopting such technologies also increased the implementation complexity of the hardware and application solutions involved.

Third, the increased complexity of the customer’s business, combined with the increasing complexity of solutions (usually sourced from multiple vendors), made it necessary for customers to focus on execution and implementation. They needed to avoid being overly seduced by the hype around the latest innovation. The implication was that customers would increasingly be looking for solutions that were customized to their specific needs but that could be built, as much as possible, on standard technologies. In other words, this value zone would become more critical in the future, because that’s where the customization and implementation got done.

Finally, system integrators—companies that gather technologies and solutions from a variety of vendors and, theoretically, make them all work seamlessly together—were coming under increasing pressure from their customers to work to a much higher standard of performance than ever before and to show more success in creating unique solutions. But because the different teams involved usually belonged to different hierarchies, those of the system integrator’s company and of the customer’s company, the organizational hierarchies often got in their way. As a result, greenfield projects often ran into difficulty, took longer than planned, or could not ultimately deliver the hoped-for business benefits.

The Opportunity and a Strategy to Seize It

We knew that in those trends lay our opportunity: to define HCLT as an IT provider focused on aligning solutions with business strategy, a company that, through the use of innovative tools and technologies (but no more innovative than necessary), enabled customers to cut down the cycle times in their most critical business processes, including these:

Order to cash: from the moment of accepting a customer order to the receipt of payment for delivery of the order

Desire to hire: from the definition of an open job position to filling it

Concept to manufacture: from new-product prototype to finished production unit

In other words, we would shift our focus from the stuff we were selling to the results we could help our customers achieve.

Getting multiple teams to work closely together on a complex business problem is easier said than done, of course. However, it is not really a problem of teamwork. In my experience, when teams focus on an objective, they eventually find ways to collaborate. The problem was much more a matter of what we at HCLT call the “Hand of God.”

That is to say, the bosses get in the way.

The senior managers, sitting at their lofty remove from the real action, are the ones who can exercise the Hand of God decision that often puts at risk everything that is happening in the value zone. Why? Because bosses genuinely believe that by virtue of their position at the top of the pyramid, they have a better view of the landscape and are the best situated to make decisions that will benefit the entire organization.

This logic is hard to dispute. We do need to consider the forty-thousand-foot view, after all. We need to try to see what lies beyond the mountains. But, I thought, this is the conventional wisdom. This is how our competitors think. It is how our customers expect us all to think. This rationale will not lead us to a new strategy or provoke fundamental change. It will only keep us toting the eggs in the same old baskets.

So, we began to think about some of the questions that were coming through U&I and that were being asked in our town hall meetings—questions like these:

• “I don’t understand why I report to this particular manager. He does not really understand my job. What value can he add to what I do?” This interesting question made me think about the link between reporting structure and the creation of value.
• “Why must we spend so much time doing tasks required by the enabling functions? Shouldn’t human resources be supporting me, so I can support customers better? They seem to have an inordinate amount of power, considering the value they add to the customer.” This question suggested that organizational power should be proportionate to one’s ability to add value, rather than by one’s position on the pyramid.
• “Many managers have far more influence on how much value I can deliver than the ones I actually report to. But we have no formal connection, no way to evaluate each other. Does that make sense?” No, it did not make sense that a manager’s span of hierarchical control should limit his or her influence on those beyond that span.

Nor did it make sense that employees reported to a manager who could not add value to their job or that people who created little value could wield a lot of power.

The more we thought about it, the more we realized that very little about the archaic pyramid made much sense anymore, given the trends we had identified and the aspirations we had defined for ourselves in the IT landscape.

That’s when the radical idea of the inverted pyramid came back to my mind. What if we made the boss as accountable to the value zone as the value zone was accountable to the boss? What if we made the boss accountable not just to his or her own team but to all the other team members in that value zone whom the boss may be positively or negatively influencing?

If we could do those things, would they create the kind of fundamental change we were looking for? Would the change ignite the passion of our employees in that value zone? Would they then be driven to deliver far greater value than our competitors could? Would our customers see that was happening, understand it, and value it, too?

Was I dreaming? Possibly. But if so, I was hardly the first person to have followed this train of thought.

C. K. Prahalad, the well-known author and management guru, wrote a book titled Fortune at the Bottom of the Pyramid, in which he predicts that “the bottom of the pyramid is going to become the biggest opportunity for innovation in business models.”¹ Prahalad is thinking mostly about the commercial opportunities of serving emerging economies with large populations rather than opportunities of corporate structure. Still, the concept has relevance for the way companies organize themselves. The “bottom” represents a huge untapped opportunity for driving customer-focused innovation.

Research by Gallup supports this idea. According to the findings of polls Gallup has conducted over many decades, customers switch from one supplier to another because they are attracted by one of the “four Ps” of marketing—a better product, a lower price, an attractive promotion, or better placement (a. k. a. location).

However, the four Ps—as attractive as they may be—will not create a strong and lasting relationship between customer and partner without the fifth P, which stands, of course, for people. Placement, promotion, price—and even product—cannot make up for a lack of engagement, execution, commitment, and close relationships between the people in a customer organization and those in the partner or supplier organization.

So if all this were true, as I believed it was, what implications would it have for the pyramid we called HCLT? How could we build collaboration into the organizational structure?

Another Lesson from the Family Model

As I have discussed, I believe that the institution of the family has gradually made a transition from a command-and-control hierarchy to a more collaborative enterprise and so can serve as a good model for us to follow. But how has it done so? And what are the main characteristics of this new family unit?

In addition to trust, I realized, one of the most important changes had to do with an issue we were now considering at HCLT: accountability. In the traditional family, children were completely accountable to the parents. They were accountable in minor things, such as doing their chores and getting good grades and being polite, and accountable in major things, as well—their educational path, the careers they followed, and who they married.

Now I saw that the accountability had been reversed. Many parents felt accountable to their children. Yes, adults still shouldered the traditional responsibilities of feeding, clothing, and providing shelter for their kids. But they also began to see that their own actions or inactions, behaviors and habits, beliefs and prejudices, had a tremendous potential for influencing their children—in how they did in school and socially; in their mental, physical, and emotional health; and in how they looked at the world. Parents had also begun to make a direct connection between what they themselves did and how their sons and daughters might turn out in the future. Would their children succeed and be happy?

So there was a different kind of accountability going on in the new family.

Obviously, a business organization is different from a family. But it was important to ask why the corporate organization seemed so much more outdated than other structures in our society. Why do so many people disdain corporate structure, in general, and dislike the companies where they work in particular? Conversely, why do they so revere the family unit, even if theirs is dysfunctional? What makes people believe in democracy, even if they’re disappointed with the leaders currently in power?

We began to think that we needed to make HCLT more like the modern family. But we did not want to make a sudden and all-encompassing change, because that would destabilize the company and cause too much disruption. Nor did we want to abandon all hierarchy, because formal structure provides the discipline and accountability that organizations need in order to function efficiently.

We just wanted to make a small change in how things worked and to do so in a way that might have great and long-lasting impact.

Reverse Accountability

We knew that we had to define the term reverse accountability very carefully.

We did not want to turn this into a discussion of individuals or specific positions. We were not talking about making executives accountable to frontline workers. We did not expect that our senior vice president of engineering would have to get his time sheet signed by the cafeteria worker.

Reverse accountability simply meant that we wanted to get certain elements of the hierarchy to be more accountable to the value zone. In particular, we looked at three categories of positions: the enabling functions; the managerial chain of command all the way to the CEO; and the infuencers who are not part of the hierarchy but are critical to achieving the desired wow in the value zone.

The Power of the Enabling Functions

We started by looking at the enabling functions. We found that the employees in the value zone were as accountable to finance, human resources, training and development, quality, administration, and other enabling functions as they were to their immediate managers.

Although these functions were supposed to be supporting the employees in the value zone, the reality was sometimes different. Policies, which were supposed to be transparent and consistent across the organization, were often interpreted differently by different managers in different parts of the company, and the reasons for the deviations were not always clear to the employees. This made life especially difficult for new employees who were not well-connected in the organization; when they had a request or question, they could not be sure who to approach or how long an issue might take to resolve. As a result, many employees found that the best approach was to put on their best smiles, say “Please,” and start praying.

The employees had virtually no influence over the enabling functions. So, if there was a problem, the people generally had to look upward in the pyramid—to their manager or their manager’s manager—for help, for that Hand of God decision.

As a result, the managers became go-betweens and arbitrators and, from those roles, derived power. The manager was the one to whom the employee had to make supplication. The manager picked up the phone to make the all-important call to the enabler or someone even higher up. The manager negotiated. And the manager delivered the final answer, satisfactory or not.

Therein lay power, not value; bottlenecks, not facilitation.

“What have the enabling functions done to help you create more value in the value zone?” When I asked that question, I usually got silence from the employees. Was the picture really as bad as employees painted it? Perhaps not. But the employees’ perception of the enabling functions was negative, and we found this to be the case in many other organizations.

So was there a way to reverse the accountability between the enabling functions and the employees in the value zone? We kicked the idea around at length. At last, a team of our bright sparks came up with an inspired idea: the Smart Service Desk.

The Smart Service Desk Concept

The Smart Service Desk (SSD) was based on a problem management system we already had in place for our customers.

That system had been effective and worked simply. Whenever a customer issue arose, we would create an electronic ticket that detailed the problem and tracked its progress as it worked its way toward a solution. When the issue was resolved, the appropriate manager in the responsible department closed the ticket. This is a fairly standard procedure, one used by companies in many industries that have lots of customer contact, such as airlines, hotels, and car rental companies.

The idea was to create a similar system to resolve internal issues between the enabling functions and employees. Whenever an employee had a problem or needed information, he or she could open a ticket that would be directed to the appropriate department for handling. Each ticket would have a deadline for resolution. The system would be transparent so that all could see the contents of the tickets and where they were in the process. And the employee who had opened the ticket would be the one to determine whether the resolution had been satisfactory, or if the issue had been resolved at all.

I floated the idea with members of the enabling function leadership teams. Some took to the idea right away. Many, however, voiced their vehement “yes, buts.”

“We’re not merely power brokers and go-betweens,” they said. “That characterization is unfair. We work the hardest of anyone. And we are the least appreciated. This system will send a signal to the whole company that we are the ones who need to be monitored. That our work is unnecessary. That we are not good enough.”

I listened to these views and then asked the leaders to discuss the idea with their teams.

A few days later, the managers started reporting back to me. They had interesting expressions on their faces when they said, with some resignation, “OK. We’ve changed our minds. Let’s go for it.”

“What changed your minds?” I asked.

They started by saying rather predictable things about putting employees first and increasing trust and pushing for greater transparency. But as I probed deeper, a more important reason came out.

“Well, with the ticket system, we will be able to measure our performance, share it with people, and change their perception about us,” one of the managers finally explained. “That way, we can finally prove what we have been saying all along: that we are the ones who work the hardest and that the problem usually lies with the employee, not the other way around!”

I had not thought of it that way. I began to suspect that this small catalyst might have the larger effect that we were hoping for.

How the Ticket Works

The internal SSD approach works much the same way that a customer service desk works. An employee can open a ticket for one of three categories of issues—a problem, a query, or a work request—and the ticket can be directed to any one of the enabling functions, including HR, finance, administration, training and development, IT/IS teams, transport, and others. Employees can also open a ticket on most members of senior management, including me.

Once the employee has filled out the ticket, the system automatically assigns it to a support executive in the appropriate department. He or she will investigate the issue and take any action necessary to resolve it. The support executive commits to a set of accountability metrics for each ticket, including how long it should take to complete. The metrics are based on a number of factors, including the complexity and urgency of the request. If the support executive does not resolve the issue within the specified time, the ticket is automatically sent to the executive’s manager, and so on up the line.

The entire SSD process is transparent so that an employee can check the status of his or her ticket at any time. Once the issue is resolved, the support executive closes the ticket. If, however, the employee who raised it is not satisfied with the resolution, he or she can refuse the closed status of the ticket. It will remain open and the clock will keep ticking. The employee can also rate the quality of service provided by the support executive.

One other interesting aspect of the SSD is that the employee’s manager is always in the know about the status of the ticket (except those that concern an issue related to the relationship between the employee and manager). Consequently, the manager can’t claim,“I had no idea this was a problem!” The moment a ticket is opened, the manager gets an e-mail explaining what’s going on.

This has a very interesting secondary effect. I have seen managers reach out to the employee who has opened a ticket to ask whether there are other concerns beyond those expressed in the ticket. This can begin a deeper conversation about problems, challenges, frustrations, and possible solutions. Smart managers realize that the SSD ticket, like so many of the EFCS initiatives, is a catalyst—a way to bring about change beyond the original, intended purpose.

The Reaction

News of SSD had the desired effect. It sent a fresh, cool breeze through the pyramid of HCLT. People had a variety of reactions and queries:

• Can employees open tickets on the enabling functions? On managers?
• Will managers be evaluated on their handling of these tickets?
• Will employees have the power to reopen a ticket if they are not satisfied?
• Can employees open a ticket on the CEO?

To help introduce the system, we ran an internal communications campaign that outlined the benefits of this new way of doing things. We also ensured that the company leaders showed their support for the project. I personally sent hundreds of e-mails to people throughout the organization testifying to the benefits of SSD and linking it to our company’s larger objectives and vision.

We encouraged everybody in the enabling functions to politely refuse any requests for problem resolution that did not come through the SSD system.

At first, people continued to walk along in the old ways. When they had a problem, they picked up the phone or went to the office of a manager to have a conversation. But, within a few weeks, as the system gained acceptability and people saw that it worked, the number of tickets shot up.

Soon, people were opening tickets at an average of thirty thousand per month (at a time when there was a total of about thirty thousand employees in the company). This seemed like a huge success. We were resolving thousands of transactions each month, at an amazing rate, the majority of which would previously not have been resolved at all or even brought to anyone’s attention. Think of all the issues that had previously gone unaddressed and now were being attended to. People were embracing the system. It was a victory for honesty, transparency, and openness!

But wait a minute. We thought more carefully about the numbers. If we had an average of more than thirty thousand tickets a month, many of which concerned problems we had been unaware of, didn’t that suggest that we had a lot of problems at HCLT? Should we be celebrating the fact that so much was in such disarray?

I wondered if perhaps we were fighting the battle in the wrong way.

Going for Zero Tickets

After the SSD had been in place for a few months, I attended an open house with about a hundred HCLT employees who were working on a customer project in the United Kingdom.

I made a few informal comments about the ticket system and how I thought it was contributing to the reversal of accountability and then asked for questions and comments.

A young woman, whom I’ll call Irene, spoke up. “Vineet, I have a question,” she said. “When something goes wrong at a customer site, what does the customer want to know about the problem?”

Well, I thought I knew the answer she was looking for, but I decided to have her tell me and the rest of the people in the audience.

“Please explain, Irene,” I said. “What does the customer want to know?”

“Two things,” she said. “First, they want to know how fast we responded to the problem. The second thing they want to know is what caused the problem in the first place. Why did it happen?”

“Yes. Responding fast is good, but …”

“But not having it happen again is even better,” Irene said, cutting me off. “The same is true with our internal system. Think about it. Every time an employee opens a trouble ticket, it implies that he or she is not happy, that there is an issue. The question is, why does the employee have an issue at all? Why can’t we have a company with no issues?”

This comment struck me as incredibly important.

“Wow,” I said to Irene. “So what you are saying is that the enabling functions should be in the business of zero tickets?”

“Yes, of course, that is what I am saying,” she said, sounding a bit exasperated. “The way it works now, the enabling functions are evaluated on how quickly they respond to a trouble ticket and how well it is resolved. But they are not evaluated on whether they have fixed the problem for good. The system does not encourage them to be proactive. Just reactive.”

I was silent for a moment. We had developed the SSD system for a good reason: to change the accountabilities in our hierarchy and to begin to turn the pyramid upside down. Now the system seemed to offer us an even greater benefit: a way to identify long-standing issues so we could fix them for good. That would really take reverse accountability up a notch.

After that meeting, we started looking at proactivity in the enabling functions. In addition to quick resolution of tickets, could we have a goal of zero ticket days and zero ticket issues?

In the weeks since we had established the SSD, we had already gathered a lot of data. Now, by analyzing it carefully, we began to see patterns. We could see which issues were the most common, which employee zones produced which types of tickets the most frequently, and which enabling functions had chronic problems and pain points.

Then we looked at how these issues could be addressed. We found three root causes of most problems: an unsatisfactory policy, inadequate or unclear communication, and poor execution or implementation of a satisfactory policy or process.

We asked the enabling functions to start looking at the most frequent problems, determine their root causes, and find a way to fix them. Rewrite the policy. Improve communications. Or change a process to improve implementation.

The goal for each function was to reach a zero-ticket week.

In moving toward that goal, employees began to see that problems they had struggled with for years and that had taken up too much time and energy were disappearing. After a short time, we started tracking the leading indicators that caused the number of these tickets to rise. Over the years, the process and the system have become very effective and sophisticated.

SSD also had an impact on employees’ attitudes toward the company more generally. A few years after we initiated SSD, we were ranked number one in an employee satisfaction survey, and I came across an interesting analysis of how SSD had helped us score so well. In HCLT, as in most business organizations, the response from the enabling function to an employee’s request had varied, depending on who the employee was and how much power he or she wielded. This variance frustrated frontline employees, who believed they worked just as hard as people who were senior to them in the organization, but who did not necessarily get the same respect as the higher-ups and who may also have received different, and less helpful, responses from people in the enabling functions. The SSD initiative essentially leveled the playing field. It didn’t matter where the employee was in the hierarchy, his or her issue would be heard. This reduced the frustration and fundamentally changed the employees’ perception of the company, which significantly increased their satisfaction at work—one probable reason we received the number one ranking in the survey.

Disrupting the Zone of Control: The 360-Degree Survey

SSD sent a pleasant ripple of change running through the pyramid, but did not come close to toppling it. That was fine. As I said, we did not wish to cause complete and immediate disruption. But it was clear that the pyramid needed to be rocked a bit more vigorously.

To further our efforts in reversing the accountability, we would have to cast our net wider, to include the managers of the enabling functions as well as executives up the hierarchy in the line functions, in fact, all the way up to the office of the CEO, including me. To do so, we had to deal with the issue of control.

What is the source of the manager’s control? It does not come simply from a position in the hierarchy, a title, or a job description. Some senior managers gain control through fear rather than through respect. They ultimately have the power to say,“This employee is good, this one is bad. This one gets promoted, this one does not. This one gets resources, this one gets none. This employee stays, this one goes.”

How could we change this reliance on control? What we needed was another catalyst—the blue ocean droplet—to create a new mindset.

We found it in our performance review process. At the time, our standard process was as traditional as our pyramidal structure. Although we used a 360-degree survey, each manager was reviewed by a relatively small number of people—those who inhabited the manager’s zone of control, including his or her superior and immediate colleagues and those who reported directly to the manager.

In other words, the review was conducted by members of a kind of good old boys’ club. Because they all had to review each other, they would scratch each other’s back, give each other high marks, say only nice things, and ignore problems, and everything would continue as it had for years. Most fooled themselves into believing that they, and all their colleagues, were doing a jolly good job. Even if they did get some developmental feedback, it was more likely to be ignored than acted upon.

Moreover, the performance metrics were all about activities within the manager’s immediate span of control. There was nothing in the 360-degree review about contributing to the value zone. So, if asked about value, a manager could easily say, “Oh, well, I am way up here in the chain of command, and the value zone is way over there. I can have no effect on that. There is nothing I can do.”

Perhaps a change in the way we did the 360-degree review could bring about the desired results. We set some of our bright sparks to thinking about it. Within a few days, they came up with three important modifications to the process: openness, expansion to a broader group and to people beyond the evaluee’s span of control, and its use as a developmental rather than an evaluative tool. Would it make a difference?

Opening Up the 360

Let’s start with the problems associated with the traditional 360-degree review as it is practiced in many business organizations. In most companies, the manager to be evaluated chooses the respondents, which means that the manager tends to select people who will be biased in favor of his or her performance. Even so, participation in 360-degree surveys is generally low, because subordinates see no win for them in evaluating their bosses. And as the results of most surveys are kept confidential, the participants don’t know if their feedback was similar to that of others or if their suggestions have been acted upon. And finally, the manager’s superior often disregards the 360 altogether, because of his or her own concerns and perceptions.

Why not open it up? We decided to allow anyone who had given feedback to a manager to see the results of that manager’s 360. This had not been the case before. The rationale was that by giving authorization to all the participants to view the manager’s report, they would feel empowered and would be more likely to participate. In order to ensure the confidentiality, anonymity, and accurate data encryption of the process, we decided to bring in a third party to audit and certify the survey. Only with an outside party keeping an eye on the process would people feel comfortable enough to give honest and candid feedback. We believed that as a result, managers would celebrate positive results with their teams, which would facilitate learning and development. Finally, the manager’s boss would become far less powerful in the process, as this person would be just one voice among many. The team in the value zone would be determining the results of the survey, which would be one more step toward inverting the pyramid.

I knew this was an extremely delicate issue and began asking for feedback from my leadership team. They were quick to see where this might be heading and the benefits we could achieve. We did have a few “yes, buts” that helped us think it through and understand all that could go wrong. The concerns included these:

• Is it about popularity?
• Can I work with the team if I get a low score?
• How will I exercise control on my team after this?
• What if my rating is low because I make tough decisions?
• What if I do not want to share my results?
• Will this influence my appraisal and bonus?

These were all valid questions we would have to grapple with. I knew that it would be impossible to force managers to make their reviews public. That would be pushing the envelope too far. I could only encourage them to do so. The best way to do that was for me to lead the way. So I posted my 360-degree survey result for all the company to see. Once I did this, other senior managers followed suit.

When you think about it, how could they not? If the feedback was positive, all would be well. They would feel good. They would be motivated. They would strive for even better scores next time. What’s more, they would be able to see the results of their colleagues and superiors. They would become competitive with one another, which would lead to still further improvement.

If the feedback was negative, however, the manager would at last be forced to face the reality of unsatisfactory performance and how he or she was viewed by others. It would be a kind of personal Mirror Mirror exercise, and they had all seen how powerful and useful that could be. What’s more, the managers knew that in a culture of trust and of acceptance of change, a negative review would be seen differently than it might have been a year earlier—as an opportunity for improvement rather than as a mark of failure.

Besides, if a manager chose not to share the performance review, people would notice and would automatically assume the person had something to hide. And, given people’s tendency to assume that the bad is far worse than it usually is, hiding the result—even if it was good—would be much worse for the manager than revealing a negative one.

Gradually, the “yes, buts” fell away and people increasingly participated in the open 360-degree. If we had not engaged the leadership team in discussion about the process beforehand, there would have been a high probability of failure. The key to the success of the open 360-degree has been the willingness of managers to use the feedback to bring about a change in their management style.

Happy Feet: Expansion to a Broader Group

As the open 360-degree caught on, however, we began to see that the process was not as open as it seemed, or as it could be. We were still essentially following the traditional practice by restricting and defining who was eligible to give feedback to whom. That meant that most of the respondents operated within the same area as the person they were evaluating. This reinforced the boundaries between the parts of the pyramid. But we were trying to change all that. We wanted to encourage people who operated across these boundaries. How could we recognize and encourage their behavior?

We decided to add a new feature to the open 360-degree instrument; we called it Happy Feet.

We opened the performance review process to all our employees whom a manager might affect or influence. (This meant about 1,500 people in 2005, and 3,500 in 2009.) Any employee could choose to do a 360-degree evaluation of any of the managers they believed had an influence—positive or negative—on their ability to do their job. It didn’t matter how long the employee had been with HCLT—a month or a decade—or what their reporting relationship was with the manager.

As you might imagine, the idea of a much-broadened 360-degree performance review raised a lot of “yes, buts” from the managers. And again, the objections were valid and useful ones.

“I don’t think this kind of 360-degree survey will produce reliable results,” one manager said to me. “You are asking people who I don’t know and who have never met me to evaluate my performance. How is this possible? How does it make any sense?”

“Have you read a book called The Wisdom of Crowds?” I asked.

When he replied no, I told him about the book. In it, author James Surowiecki of The New Yorker talks about how wisdom resides in groups of people, the crowd, far more than in any one individual. The many know more than the few. Collective wisdom outshines individual judgment.

“Maybe,” the manager replied. “But won’t outliers skew the results? What if one reviewer gives exceptionally harsh marks? Or what if a group of employees bands together and deliberately tries to influence the review? What if employees randomly decide to make comments on managers they have nothing to do with? I can see all kinds of ways to game this system.”

“All of those things are possible,” I said. “It is a question of trust. Over the past few months, we have all worked very hard to create a culture of trust here at HCLT. This is another way to show that we trust each other. I believe that most employees will play this fairly. Remember, they are also reviewed annually by their managers and they, too, want to trust that their manager will review them fairly. So if they can trust us, can’t we trust them? Yes, I am sure there will be a few employees who will rate some managers in the extreme—rating them far worse or better than they actually are—but there will be few such employees. And that is the beauty of the crowd. Because so many people will be participating, the scores given by the outliers will not significantly skew the evaluation of the larger group.”

I heard another objection to the extended 360-degree survey from many managers.

“Don’t you see that the popular managers will get the highest ratings?” one manager asked. “The managers who are more disciplined, or less outgoing, or more private—even if they are more effective—will get lower marks. That would not be fair.”

“Unlikely,” I said. “The survey questions will not be about which manager you like the most or which one you would like to work with. You are not taking the manager home to marry, after all. The answer to the problem you raise lies in getting the questions right. If we are trying to maximize the value zone, then the questions have to relate to that effort.”

And so we designed a survey that asked questions like these:

• Does this manager help you enhance the value you are delivering to the customer?
• After discovering that you have a problem, does this manager help you define the problem and help you identify its solution?
• When you approach the manager with a problem, does he or she respond by offering solutions or resolving the issues involved?
• If you can’t reach the solutions on your own, does the manager enable you to reach out to other people in the organization who help you achieve the solutions?

Again, the actual practice put most of the objections to rest. As there was no restriction on who could give feedback to any manager, the traditional hierarchy was weakened. People who worked outside the boundaries of the pyramid were recognized, encouraged, and rewarded. The public acknowledgement of the value contributed by these people set an example for the rest of the organization and served as a pat on the back for them.

Replacing Zones of Control with Spans of Influence

The open 360-degree survey with Happy Feet had other remarkable effects on the organization. It started to significantly redefine the important zones within our company—emphasizing spans of results-based influence rather than traditional structure-based zones of control.

How did this happen? Let’s say that your title is vice president of operations and several hundred people report to you, but only a small percentage of them deliver feedback on you. That shows that your span of influence does not match your zone of control.

Why? Is it that the crowd doesn’t have any knowledge of you? That they don’t know what you stand for? That you’re not enabling them in their quest to create value? That they think you’re ineffectual? That they just don’t care?

Whatever the reason, the low response rate shows that you have a small span of influence in comparison to your zone of control. More than any other aspect of the survey, this finding galvanized the organization. People saw that the zone of control had become largely irrelevant. It is the span of influence that really matters.

This one really shook the foundations of the pyramid. People began to reach out to others who had never been in their good old boys’ club before—both inside and outside their traditional zone of control. They wanted to expand their influence, make a positive contribution, and further push change.

Evaluation as a Developmental Tool

The final modification we made to the 360-degree survey was to redefine it as a developmental tool rather than one of evaluation. It would be a way for the manager to gain useful feedback about his or her performance—feedback that we could use to help the person change.

Note that as an organization, we decided to disconnect the 360-degree survey from the human resources department and its activities. Although the HR group continued to conduct performance appraisals and manage compensation for the manager, the results of the 360-degree process were not taken into consideration in those discussions. The process instead was driven by a new entity called the Talent Transformation and Intrapreneurship Development team. The 360 report served as a starting point for a discussion with managers about their own set of professional development goals. The managers did not have to engage in this process; the choice was always left to them.

In 2009, we further refined the developmental aspect of the 360-degree survey and called it Feedforward. The respondent can identify three critical competencies for the person being reviewed, mark each as “strength” or “development area,” and suggest some simple, specific steps the person might take to improve. The section is optional, and the results are kept strictly confidential. The manager is the only one who sees a consolidated view of the results; the names of the feedback providers are not revealed.

Thinking of feedback as a method of development rather than one of judgment or evaluation proved critical to our ability to move away from the command-and-control environment toward one of trust, alignment, and a focus on the qualities and actions that could help people in the value zone.

These changes to our 360-degree process convinced many skeptics within the organization about EFCS, and they were beginning to see that we truly believed in it. Employees were happy that their voices were being heard and their feedback was seen as important. The younger managers in particular loved the honest feedback because it helped them improve their performance and develop their skills faster. My senior leadership team saw how much positive energy the revised process released throughout the organization and used it to create more value in the value zone.

Even managers who consistently received poor feedback benefitted from the process. They came to realize that their strengths simply did not lie in management and they would be better off as individual contributors. Managers with consistently good feedback were able to widen their spans of influence well beyond their zones of control because people throughout the organization knew they were held in high regard.

Keep Talking

It is very important to understand that throughout the transformation at HCLT, and especially during the first few years, we communicated constantly, in a variety of formats, to employees throughout the organization. The communication of an initiative was often as important as the initiative itself. My leadership team was very involved in our communications and marketing efforts, and we spent a lot of time talking about how and when to communicate and what the important messages should be.

I remember one discussion about a major presentation we were planning to make to all employees throughout HCLT—not just the managers or the people in the value zone, but everyone—about EFCS. The Employee Communications team, which had many of our bright sparks as members, wanted me to talk to everyone about the EFCS concept, how we were implementing it through activities like U&I and SSD, how we planned to restructure the company to better enable employees, and our five-year transformation plan.

“OK,” I said. “But why should we do this? What is in it for the employee?”

The team members gave me some grandiose answers about sharing in the long-range vision of the company. I asked them again. “Yes, but what do the employees want to know from us? What do they really care about?”

They gave more answers about the changing landscape of IT and helping the company transform itself. I asked the same question four or five more times, and at last the team ran out of answers.

“Just keep in mind,” I said, “that when we communicate to the general employee population about organizational changes, the messages must be relevant to them, and those messages may be different from the ones that are relevant to managers or to customers. Our employees are not so concerned about the ‘whats’ of our IT landscape or about corporate transformation and initiatives. They care about how this affects them personally—what it means to them, their careers, and their families. So the emphasis of our communication should be more about what they consider important rather than a forum to market our initiatives.”

My colleagues looked at me as if I were throwing cold water on their idea of a big, company-wide meeting, but I wasn’t, really.

“Let me tell you a story,” I said,“about making assumptions about what people want.”

A Story of Making a Wrong Assumption

I told them about my first school, which had been founded by nuns, in my hometown of Pantnagar. The teachers of the school believed strongly in social service. One of our activities was to go door to door and collect old clothes that we would then distribute to people who lived in the slums, which were fairly close to school.

My young colleagues seemed to consider my story a distraction from the discussion at hand, but I kept going.

“When I was about twelve,” I said, “I went into the slum with an armful of clothing. There were lots of kids taking what we had to give them, but one boy sat by himself away from the others. He had no interest in the clothes, but kept staring at my schoolbag.”

“What did you have in there?” asked Arun, one of my colleagues. (I have changed his name.)

“The boy was pretty shabbily dressed,” I said, ignoring Arun’s question. “It was cold, so I asked him, ‘Do you want a sweater?’ ‘No,’ he said. He kept his eyes fixed on my bag.”

“Did he think you had some food in there?” Arun asked.

“No,” I said. “At last he asked me, ‘What do you have in your bag?’ ” I opened it up and showed him: books. ‘What do you do with them?’ the boy asked. ‘We read them,’ I replied.”

“He said, ‘Can you please read one to me?’”

The point I was trying to make with the story was that I had made all the wrong assumptions about what the little boy in the slum cared about. I didn’t want us to do the same thing with the HCLT employees. I had seen it happen often. We would become so obsessed with what we were giving to our employees, or giving to our customers, that we started believing that that was what the other person truly wanted and needed.

I guess the story made its point. The conversation turned to how we could structure the all-company meeting so that it would focus on what the Employees First strategy and the transformation plan would do for our employees. Would it make them able to work faster? Would they be able to do their jobs better? Would they learn new things? Would their jobs be easier or more enjoyable?

The team soon came up with a name for the meeting—Directions—and a format that would involve a series of informal conversations around topics that were the most important in the minds of the employees. We would not be giving our people clothes when they really wanted books.

The Directions Meetings

We held the first of our Directions meetings in late summer of 2006.

We did not want these meetings to feel like the old days of the traditional pyramid, when senior management would appear on stage, make its pronouncements, and leave. I wanted the communications to have a big impact and to make a lasting impression.

So, as I prepared my remarks in advance of the meeting, I remembered a lesson from my MBA days at XLRI—one that also pertained to communication. My very first class was in basic business skills, taught by Father McGrath. He was talking about presentations, and I confess that I was having a hard time paying attention to him. I had just arrived at school after a forty-hour train journey from home. The classroom was very hot. We were on the first floor, and I gazed out the window at the air choked with dust. There were thirty-five or forty of us in the class.

Suddenly, the door burst open with a ferocious bang, and the room filled with shouts. I turned to see ten or fifteen men running and leaping into the classroom, ribbons tied in their hair, faces painted, carrying spears and brandishing knives. I recognized them as Adivasis, tribal people of India. They screamed and dashed around the room, pushing the students, throwing things, and making an uproar. One of them grabbed the student closest to the door, dragged her to the window, and threw her out. Another one rushed to the front of the room, raised his knife, and stabbed Father McGrath. Blood spurted from his stomach as he fell to the floor groaning. We didn’t know what to do. And then, after two minutes of mayhem, the Adivasis vanished as quickly as they had appeared.

Everybody in the room looked stunned. Nobody moved. Some of us were still sitting, some standing, and some looked as if they were about to jump out the window. Then Father McGrath stopped groaning, stood up, brushed himself off, and smiled.

“Everyone sit down,” he said, calmly. “Don’t worry. I staged the whole thing. Now I want you to write about what you saw in the past few minutes. Immediately! Start now. As much detail as you can remember.”

Still traumatized, we started to write. After about ten minutes, Father McGrath told us to stop.

The results of this experiment were most interesting. Everybody had a different memory of the event. Father McGrath had been stabbed in the stomach. Father McGrath had been stabbed in the back. Father McGrath’s throat had been slit. Father McGrath had not been attacked at all. A girl was thrown out the window. A girl jumped out the window. Somebody had climbed in through the window. Different people saw different things.

I learned more than one lesson in that first class at business school. The first was that you must never completely believe what you see; you must always look beyond the immediate to understand what’s going on. Even more relevant to the Directions meeting, Father McGrath demonstrated that unless you are extreme and experiential in the way you communicate, you will not make an impression or have a lasting impact.

And so I started the Directions meeting with my own version of the Adivasis’ invasion, I came on stage, looked at the three or four thousand people in the audience, and started to dance. I am not the world’s greatest dancer. People gasped and laughed. I made a complete fool of myself. I made some funny comments. And then we settled down to two hours of very serious conversation. The event ended up being as memorable to the HCLT audience as the attack of the Adivasis had been to me.

The Directions meetings pushed both reverse accountability and trust a bit further. There we were, the senior leadership team, standing up in front of the entire company, taking all questions, opening ourselves to every comment. Just by being available and by being as transparent as we could be in our comments and answers, we built trust with the members of the audience.

We conducted more than twenty-five Directions meetings during August and September 2006. We still do Directions meetings every year, and everybody looks forward to them. People expect an event that is unique and unorthodox. And they know that I will be there to listen effectively and communicate honestly about what their needs are, not mine. And sometimes I dance.

The Pyramid Begins to Invert

As the Smart Service Desk, the open 360-degree survey, and the Directions events gained acceptance and came to be seen as standard practice throughout the organization, my fears about the possibility of regression subsided. It looked as if the fundamental structure of HCLT was beginning to change, that the pyramid—thanks to reverse accountability and open review—was beginning to invert, at least a little. Eventually, we might really see the value zone exalted and the former pharaohs standing in its shadow.

Once more, the specific tools we had used to create the inversion—just like the other EFCS initiatives I have described earlier—were nothing more than catalysts. Did they really have as much effect on the organization, in and of themselves, as they seemed to have? Probably not. The message they sent, and the secondary effects they had, mattered much more.

Yes, SSD resolves many issues and fixes many problems. But the underlying message it sends is far more significant: the new accountabilities are not determined by one’s position in the traditional hierarchy.

The 360-degree survey helps people improve their performance and pushes trust and transparency. The message it sends is much bigger: a manager’s value is measured by his or her span of influence, not by the zone of hierarchical control. That includes the CEO.

These catalysts—along with the open financial information and U&I—changed the day-to-day conversations at HCLT. They communicated everything that needed to be shared about what employees were supposed to do and how they should engage.

Their fears about change began to dissipate, just as my fears about there being too little change faded away. People no longer looked at me with such trepidation and concern. They knew that the HCLT “crowd”—not I alone—would be evaluating them.

As a result, people stretched themselves more. They attempted more. Failure became acceptable. The responsibility for actions and results was not mine alone. It was shared by many. When I said that I, as CEO, was accountable for something, I knew that we are all accountable together. And the company knew it, too.

We also began to get indications that the outside world was noticing us and taking interest in what we were doing. In December 2006, I was invited by the CEO of one of our customers, a Fortune 100 company, to speak at its annual leadership conference. I had never met the CEO before I arrived for the meeting. When it came my turn to speak, he introduced me by saying that he had learned about our 360-degree survey from an HCLT employee who was working on a project that he was personally involved with. The survey intrigued him, and he wanted to learn more about it.

Four years later, that customer has become one of our largest and most important—a company whose CEO I had met through an employee who worked at the bottom of the HCLT pyramid. Since that first speaking engagement, I have been invited by many other customers to speak to their leadership teams and boards of directors about inverting the pyramid. Every one of those connections was made by an employee working in the value zone.

These introductions provided further proof that we were walking the right path. People stopped staring at the Himalayas and trying to guess what lay beyond. Instead, they looked at each other and knew that they could make anything happen.