Management by consensus

THERE IS supposed to be a hot new trend in management these days that’s called “holacracy.”

The traditional business management style consists of a strict hierarchy, a top-down management system where company owners and shareholders dictate the general policies and direction of an enterprise while managers and supervisors oversee the implementation of these policies by employees and suppliers, impacting on customers and stakeholders.

“Holacracy,” on the other hand, does away with the hierarchy, replacing the pyramid of management with a “flat organizational structure” that, writes Kristin van Ogtrop in a commentary in Time magazine, “blows up the hierarchy of any group, with things like distributed authority, governance meetings and ‘de minimis’ allocation.”

While Van Ogtrop’s essay was written with a sardonic intent—she supposedly tried out “holacracy” in her own family consisting of a husband and two teenage boys—she managed to point out the pitfalls of such a management style. Apparently, with no one minding the store, workers and customers are likely to run off with the goods, while some people (like her second-born) yearn for structure and authority to put order to their days.

Recently, I sat down with a group of mostly business reporters in a “chat” with Stan Shih, founding chair and CEO of the Acer Group from Taiwan, best-known for its “starter” line of affordable but quality laptops and cell phones (Acer also produces BenQ devices).

The subject of the sit-down conversation was not the business prospects of Acer, which enjoys a healthy market share in the country, but Shih’s own business philosophy which he has termed the “Wangdao” Way.

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UNLIKE in the West where the prevailing work ethic is “winner takes all,” says Shih, Asian companies (and managers) are more inclined toward pursuing “coexistence and common prosperity.”

But unlike the Chinese bureaucratic system (and business model) where the CEO wields absolute power in the manner of ancient emperors, Shih believes in leadership that embraces and shares rather than imposes common values and goals. It is the work of management, he says, to “build a consensus via constant top-down communication within the organization, and have it translated into words and deeds of most people in their daily life and work.”

One of the prime responsibilities of a leader, Shih says, is “to have a succession plan” even long before the set date for stepping down from the post. “We need to prepare the next generation,” he asserts, noting how, at Acer, he had planned the turnover of management reins years before his own departure as company chair.

He has since kept busy as chair of Stans Foundation, which, among its many projects, disseminates the principles of Wangdao in books and on the Internet.

“I started promoting [Wangdao] five years ago,” he recalls, convincing CEOs like himself throughout Asia that it is in their own best interests—and those of their companies—to build a cooperative culture within the organization and actively seek out future leaders and give them all the tools they need to grow into their future roles. “The leaders have to be willing to share,” he says.

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SO while Wangdao still operates within a hierarchical structure, unlike in holacracy where authority and power are supposedly distributed among the different levels of an organization (indeed, all levels are done away with), it seeks to build a culture of consensus and common commitment.

This sounds to me to be based, at least initially, on the emperor system, but with the ultimate leader presumed to be selfless and devoid of ambition. Which, come to think of it, would seem incongruous in the highly competitive personal computer market. In this setting, firms compete fiercely for market share and technological edge—not exactly compatible with consensus-building and succession planning.

But if one has a “platform for developing talent” and “enjoys delegating,” says Shih, then the company need not lose market share even when its leader chooses to walk away or give way to a new generation of leaders. But it is necessary, adds Shih, to prepare for such an eventuality many years earlier, gradually building up a cadre of successors.

Under the old imperial system, Shih points out, “the leader or master always keeps secrets to himself, working only for his own personal interests.” He points out that Wangdao calls on the sharing of these “secrets of success” and building a common commitment to the company’s success among all officers, managers and employees.

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SHIH demurs when one of the journalists points out that Acer, among other companies of note based in Taiwan, helped build the “reputation” of Taiwan as a high-tech country. Once known for shoddy fake products and copies of consumer ware, Taiwan products—specifically computers, laptops and cell phones—now enjoy an enviable global reputation.

He attributes this, indirectly, to the flexibility of Taiwanese companies which early in the game adopted outsourcing to companies even outside the country, including the Philippines. This is unlike Japan, he points out, which stuck to its protectionist policies, with the consequence that companies could not respond quickly enough to technological innovations in the rapidly expanding field of computers and communications technologies.

Could Wangdao find acceptance in the Philippine business world? And would it work out as well as it did in Taiwan?