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Manager 2.0

You can't very well have a Web 2.0 company run by version 1.0 managers, right? Yes, I'm making fun of the 2.0ness of it all, but if we're throwing version numbers around with impunity, might as well take it to the absurd.

One dramatic difference between mature tech companies and the Web 2.0 startups is the way employees are managed. Or rather, the fact that they are not "managed." Most Web 1.0 companies (like, say, my former employer Sun... they put the dot in dotcom, remember?) are not only too big, but their management practices are just too old school (and not in a retro hip way) to foster a company culture that matches the culture of the new community/user-centric Web 2.0.

[Note: I'm talking mostly about the non-VC, non built-to-flip, non whee-its-another-bubble! startups]

My favorite example of the difference between Web 1.0 and Web 2.0 management is that Web 2.0 "geek community values" infuse many of these startups at the cellular level. Never has the notion of "community" meant so much to business, so it's no surprise a Web 2.0 manager would think of employees as a community.

And that may change everything.

Yes, there has always been a startup vs. corporate culture comparison, but this is different. "Community" did not play such a central role for the bubble/Web 1.0 startups.

So, all you Web 2.0 startups -- please keep the best of the Web 2.0 spirt alive by NOT adopting the awful practices of management 1.0. There's nothing new here, of course--Tom Peters has been talking about this for frickin' ever. (And plenty of others before and after him.) What is new is that while it's always been a good idea to manage this way, this time it's virtually a given.

Yes, this is ridiculously oversimplified, does not work out of context, and you can't take things in the 2.0 column ala carte. I still have absolutely NO idea what Web 2.0 even means, but whatever it is, people are in the equation (both users and employees) in a new and more meaningful way. As my friend Nat Torkington says, "It's no longer aspergers and emacs."


[FYI--I am having a fantastic time going through your introductions! Thank you so much for letting me learn a little bit about who you are. It helps a lot more than you know.]

Posted by Kathy on March 27, 2006 | Permalink


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» We need Manger 2.0 from 2036 AD ......
This is a funny, yet smart use of the over-used 2.0 thing from Kathy.Creating Passionate Users: Manager 2.0 You can't very well have a Web 2.0 company run by version 1.0 managers, right? Yes, I'm making fun of the 2.0ness... [Read More]

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Could you explain more about the Hollywood Model you mention? It looks a bit dodgy googling for "Hollywood model" in front of my wife... ;-D

Posted by: Matt Moran | Mar 28, 2006 1:01:56 AM

Manager 2.0 describes Richard Branson and the Virgin group almost perfectly. I'm not sure what he would think of the title though.

Posted by: Alan Pritt | Mar 28, 2006 1:47:53 AM

Fun points. Management and passion should be as ONE.

Posted by: Stefan Engeseth | Mar 28, 2006 3:21:00 AM

I just don't agree with the hollywood model (or maybe I dont understand it). I think that instead of the hierachical structure, version 2 has an organical structure, where what is emphasized is not position, but function. It's not like "who's the boss?" but more like "Who knows how to do stuff?".

Posted by: Nuno Barreto | Mar 28, 2006 4:27:55 AM

The archetypal 2.0 organization is quite small - 3-5 people - and that would be the driving force behind the different management style. Larger organizations tend to bulk up on hierarchy and process as a way to create order. Also large organizations tend to work on dozens or hundreds of projects, while the 2.0 organization has just a few.

Posted by: Ben | Mar 28, 2006 7:33:20 AM

Just read this closely-related piece: Here's an Idea: Let Everyone Have Ideas

Posted by: Joshua Porter | Mar 28, 2006 7:55:59 AM

Damn, its so clear over the past several posts that I work for a Web 0.8 company. We're not even 1.0! Its so plain to see when its itemized in a post such as these. We're the startup who is moving towards being bought out. The corp lifestyle and mgmt was perfectly detailed in these posts. Its depressing. But I suppose that companies who's core competency is NOT the web but rather on-the-shelf products, such as the one I work for, this might be expected and\or forgivable.

Kathy, how do you do it with all these deadlines? Such quality... Another great post.

Posted by: mastorna | Mar 28, 2006 9:52:34 AM

this is pure fantasy. the shareholders still call all the shots. they tell the board through their buying and selling of the stock. the board lets the ceo know if the ceo can't figure it out on his/her own. the ceo will most certainly tell people beneath "what to do". when this simple "hierarchy" stops working, shareholders will head for the exits.

Posted by: fartikus | Mar 28, 2006 10:36:17 AM

Holy Cow! I'm working for a Web 1.0 company that is only 4 years old. How sad.

Posted by: A. Nonny Mouse | Mar 28, 2006 1:04:00 PM

When I sent this post out to my team, my own manager (possibly v2.1) challenged us to explore the differences between "Employee" versions 1.0 and 2.0.

Here is my contribution, for what it's worth:

Employee 1.0
/ Employee 2.0

Wrote a resume after graduation, updates it at the start of a job search.
/ Updates resume the minute a new responsibility can be claimed.

Promoted through seniority.
/ Carves out a job description and runs with it.

Attended conferences.
/ Reads blogs.

Specialized skill set.
/ Cross-trainer with diversified skill set and a variety of well-honed soft skills.

Information is proprietary, earned.
/ Information is communal, expected.

Knows their stuff from A to Z.
/ Knows B, Q, and Y. Figures coworkers will know most of the vowels and a quick Google search will fill in the rest as needed.

Finds comfort in being considered an expert.
/ Knows enough to know there are no experts.

“Boss” can make or break you.
/ “Boss” is the person who signs PTO forms.

Mentors are for sissies.
/ Prays for a “boss” who is a good mentor.

Knows everyone above them on the org chart.
/ Forges relationships with knowledge-brokers throughout the organization.

Waits for management to announce changes.
/ Brings ideas to management.

Competitive, seeking praise for a job well done.
/ Rushes to give praise and credit to a colleague.

Wants to be liked by the boss.
/ Wants to be respected by peers.

Consistently considers the perspective of management before making a decision.
/ Consistently considers the perspective of the company, the customer, the user, the manager, the team, the tester, the developer, the sponsor, and the janitor, not necessarily in that order.

Works to meet a deadline.
/ Works to kick ass.

Gets up in the morning and goes to a job.
/ Gets up in the morning because of their job.

Accepts assignments.
/ Creates assignments.

Posted by: Amy DiLisio | Mar 28, 2006 2:26:25 PM

Amy - that was a good list...

Your part about resumes got me thinking about how hiring would work in a "Web 2.0" world (can't believe I've started using that term)...

A resume itself is kind of 1.0ish... in a 2.0 world, you don't list your accomplishments - the hiring team knows about you because they've seen your work on the web. They know you have technical chops not because they've grilled you on pointers in an interview, but because they've collaborated with you on an open source project. They know about your speaking and communication skills because they saw your demo at a User Group, or your talk at a conference. They don't rely on references they've never met - they could *be* your references.

From the point of view of getting a job, 1.0 and 2.0 will seem like parallel universes. It'll take more talent and - without question - passion, to get a foothold in the 2.0 world. By the same token, it will take more talent from management to hire in the 2.0 world as well (how many managers do you know who have collaborated on an open source project ;) ). I suspect pay will be the same for both, but 2.0 will be the more rewarding place to work.

Posted by: Geoff B. | Mar 28, 2006 5:12:43 PM

Thanks, Geoff, for the feedback. Dare I admit that I am a v1.5 employee at a v0.1 company? I'm still applying more security patches than wholesale upgrades, but I'm getting there. And you're absolutely right. The resume will soon be obsolete (if it is not already) through the democratization of networking. Thanks for the kick in the pants! I need to get busy!

Posted by: Amy DiLisio | Mar 28, 2006 8:06:37 PM

The Manager 1.0 list isn't ideal, but the Manager 2.0 list isn't any better; I agree with some items. The 2.0 list may be great for a small company (less than 10 people), but I doubt such ideals can be implemented on a large scale.

"All employees are asked to help with policy decisions and solutions."

This sounds like you are suggesting that companies should be run by consensus which does not work; the company will grind to a halt.

"Employees are given as much information about the as possible, even financial"

This may work for small companies, but disclosure of financial information is more restrictive for large companies, especially public-traded companies. This theory doesn't scale (and maybe it was never intented to scale).

"Informal job roles created by employee, tailored to their strengths and interests, and changes all the time"

Employees have two possible classifications: exempt and non-exempt and must be classified as such to comply to federal law that governs wages and hours. Nonexempt employees are suppose to be paid over-time among other things. Much of the determination in whether an employee is exempt or nonexempt is dicated by a formal job description. Task-orient job descriptions generally indicate a nonexempt employee.

A former employer of mine undertook a year long project to examine job description and actual job performance to ensure they were consistent. They determined that they were incorrectly classifying certain employees, and, as a result, had to accrue for a $2 million liability for back-wages related to overtime pay.

You are asking for trouble by allowing employees to create job descriptions that are not consistent with how they are being paid.

"A Holloywood model"

I prefer the Bollywood model myself. :)

Posted by: Mike Doan | Mar 29, 2006 12:03:34 AM

Hi Kathy,

I have no idea where in Sun you worked, or who your manager was, but if you think of Sun as a Manager 1.0 company, you must have been in a different Sun than the one I happily work for -- and where manager 2.0 has been around since the early ninetees at least ....

Ah well ....

Posted by: Mike | Mar 29, 2006 3:52:18 AM

Ah, the utopian idealists march ever onwards. Sorry, but as the company ages and grows, and the amount of managerial tasks and scut-work both increase, eventually some animals become more equal than others.

Maybe that's when the smart animals jump ship to start a new utopian farm - uh, sorry, company.

Posted by: George Orwell | Mar 29, 2006 6:43:11 AM

Great comparison! Thanks!

Posted by: Steph | Mar 29, 2006 6:54:23 AM

Give me some Dramamine, I think I am going to vomit!

What does "A Hollywood model" mean?

And you quote Tom Peters, who admitted "In Search of Excellence" was a fraud!

Kathy, move to France, please.

If you want good managment strategies for a large company, look to GE and the GE apple tree effect.

GE can succeed selling some pretty boring stuff (steam turbines, anyone?).

In a word, it is all about discipline. Discipline is lacking in many startups, and often dooms them to failure. Larry Bossidy and Ram Charan's book "Execution" is the best tome on this subject.

I for one want pay for performance. I want differentiation in performance apprasials. If you want to destroy the morale of a organization fast, pay useless eaters the same as the strong contributors. If you want to destroy the morale of a organization fast, give the useless eaters the same influence as the strong contributors.

What happens if you do this is, the strong contributors quit, go the the competitor, and destroy you.

And you know what? I want the people smarter than me paid more. I want the people who work harder than me paid more.

"Generous and fair"? Pay for performance is most fair for of pay. Feed your eagles and starve your turkeys is the most fair form of pay.

Manager 1.0? Manger 2.0? I don't care for either.

Posted by: Mark | Mar 29, 2006 10:00:24 AM

A couple of posters have commented on how idealistic a lot of this sounds. To some extent, I agree. It would be naive to think that *all* (or even most) companies will be managed this way, but it isn't at all naive to think that *some* companies will.

There will always be lots of places where "senior analysts" write code that pulls financial information from one database, compares it with sales targets from another database, pulls completed factory orders from another database, runs it all through a calculation pipeline to calculate bonuses, then updates the payroll system. These days, this type of code tends to be written in Java, and it definitely pays the bills. And it isn't easy - it's complex, transactional, and people will be piping mad if a bug lowers their bonus. Programmers (excuse me, senior analysts) who get hired into these jobs will continue to send resumes to HR, which will screen them for 5+ years of Java, 2+ years with PeopleSoft, etc....

An alternate universe of hiring is emerging, where people are known for their contributions to open source, the products they have created, the essays they post on blogs, the tutorials they publish on webjournals and in books, and the talks they give at conferences. They'll still have a resume, in the sense that academics have a CV. But it'll just be a marker for information that is located elsewhere.

Massive backend legacy integration pays well, and will attract plenty of resumes, but it really isn't what got most of us interested in software development.

Posted by: Geoff B. | Mar 29, 2006 10:20:05 AM

Mike: Everything in that left-hand (1.0) column described the part of Sun I worked in, quite explicitly. But that could have been just my very tiny corner of the Sun world. I had the best managers of my career there... and the worst. And unfortunately, my experiences were ENTIRELY dependent on who my manager was, and had very little to do with the company. My best managers, in fact, were forced to subvert the policies and procedures and politics at every turn in order to let us thrive. But I'll admit I was also a little too much of a troublemaker.

I'm not suggesting that the left-hand column (1.0) is WORSE than the right-hand column -- just worse for some people, and a lot less needed or likely in the new Web2.0/Whatever startups. Perhaps I was a 2.0 person in a 1.0 world. If your experience at Sun was that they were NOT operating on that left-hand (1.0) column, I'm both very shocked, but delighted for those who get to work in that environment. I sure didn't.

Mark: tell me what you REALLY think... ; )
"If you want to destroy the morale of a organization fast, give the useless eaters the same influence as the strong contributors."

I completely agree. That's why I said just above the chart that the things in the 2.0 column must NOT be taken out of context--in this 2.0 world (utopian, sure, but lots are doing it), these kinds of pay issues aren't as relevant, because there AREN'T "useless eaters". That's one benefit of having, say, 5-10 employees.

Later I'll have to explain what I mean by "The Hollywood Model", but the idea is (loosely) that in many Hollywood productions, a group of people come together who are all professionals/experts/passionate about what they do. Nobody has to incent them to do a good job. I worked in that world for several years, where the producer's job is to keep the wheels on everything, and try to make people as comfortable as possible so that they could get on with their work. I was very disappointed to come to the corporate world and discover that managers actually have to *make* some people "perform" well. It made no sense to me, since it never occurred to me that there were people doing professional level jobs who weren't intrinsically motivated to do a good job.

And the idea of rank-ordering/sorting employees -- grading on a curve -- is just about insane to me. And when I was there, this was indeed what Sun was doing. Perhaps it was the only fair way to handle the massive layoffs, but I can think of almost nothing so demoralizing or "1.0". Again, in a company of that size, and where there ARE likely "useless eaters", perhaps there is no other way. I saw people who were devastated by the ranking system after working their butts off for ten or more years there. One great guy would be laid off while another would beg to take his place, but that was not allowed.

I recognize, though, that some people start out with intrinsic motivation to do a great job, and are then blocked from doing so by the business practices or just one bad manager. In that case, I, too, would probably eventually be a "useless eater." Fortunately, I'd rather starve, so I'd leave before that happened.

But in almost ten years of working in various roles, for various companies, on various projects, in the "Hollywood model", I'm not sure I can recall a single time when it ever occurred to me that, "I'm over here busting my ass while that guy is just kicking back." I mean, what kind of person chooses to become an artist/lighting specialist/sound designer/animator/programmer but doesn't care about the quality of their work? I'm not sure anyone starts out that way, but the kinds of reward systems used at many companies can eventually cause people to feel that way. The "I'm not paid enough to care" mentality I see in the corporate world does not exist in many smaller companies.

The new 2.0 companies -- many of them, anyway -- do not ever WANT to be big. Those without VC funding do not HAVE a board to answer to. They may measure success very differently than some of you do--by the fact that everyone is loving what they're doing--even when some of it is the non-fun grunt work (product fulfillment, tech support, etc.) Not everyone places the highest value on financial performance. No value judgement of whether that's good or bad, just another way to think about work and business and life.

And I'm thrilled to see so many people able to do it. Not all of these new startups will fail, and I've known tiny post-production shops in L.A., for example, that have been around for decades. Tons and tons of them.

Wow -- I'm trying to break a comment-length record here. Sorry about that! Perhaps this should have been a post...

Posted by: Kathy Sierra | Mar 29, 2006 11:06:28 AM

I love the intent behind your post, but I have to take issue with your use of the term "Hollywood model". Exactly why is an industry that is almost completely unionized, shrinking in terms of revenue and market share, pays star performers in some lines of work hundreds of times more money than those in other lines of work, and generates products that are primarily recycled junk worth emulating?

Posted by: Dmitry | Mar 30, 2006 5:31:57 PM

Although I really like your blog, I'm really annoyed by the web 2.0 references that are starting to get more and more frequent.

It's still the same web. There was no re-invention of anything whatsoever. The 2.0 thing sounds to me like a bad buzzword that is already becoming cliché. It needs to stop before it becomes the new ajax.

Posted by: alex.r. | Mar 30, 2006 8:08:58 PM

Alright, Alex busted me. I've definitely pushed the Web 2.0 metaphor thing too far. I agree, and now my only question is... what else can we make fun of? ; )

Dmitry: I should have clarified--when I say "Hollywood model", I'm referring only to the project-based aspect of bringing people together who are all craftsmen/women in their respective fields--from cinematrographers to sound designers to the grips and best boy and makeup and on and on it goes. Most of these folks do not need "management incentives" to inspire them to do a good job! That said, there are many other factors at work in Hollywood that have nothing to do with the "Hollywood model" I'm referring to -- most of the really bad/stupid things happen at a level completely removed from the craftspeople--the decisions made by management committees. (And as Gosling says, "Great art is not made by committee")

Which is why you often see so much more authentic quality coming from low-budget indie films (and foreign films) where there is a lot less opportunity for some big layer of upper management to get in the way of the do-the-actual-work people who are outstanding at what they do, and can come together to create something amazing.

In Los Angeles (I can't speak for other areas), a lot of software development for entertainment, games, web development, etc. has been heavily influenced by the Hollywood model--and that's why it was always so surprising to me to work on teams where there was even a single person who didn't care deeply about the quality of their own work, and no management/incentives/threats whatever were needed. The culture of people who care about their "craft" makes the "useless eater" a person who stands out quite dramatically.

For many years, I thought "managers" (which we often called "producers") were the people who made sure that the craftspeople had everything they needed to be happy--and often consisted of making sure we were well-fed and had other needs met.

A lot of people say that these things don't scale, but I have to say -- I once worked on a game project that included over 300 people on the development team. I can't remember hearing about a single person on the team who anyone considered a "slacker" -- it just didn't make sense. We were all (pick one or two):
graphic artists
sound designers
storyboard artists

Posted by: Kathy Sierra | Mar 31, 2006 10:37:54 AM

Hi Kathy ... Douglas McGregor's "The Human Side of Enterprise" would be worth a Google if you've not heard of him. His 40-year old book on "X-theory" and "Y-theory" management styles is not new :-) The interesting part (I think) is not that these two management styles exist, and are natural organisational styles for different types of people (businesspeople versus engineers), but how a company evolves and changes from one to the other -- what is going to happen to these small teams of engineers producing neat software who are ultimately taken over by larger more hierarchical organisations?

Posted by: Matthew Bloch | Mar 31, 2006 6:04:42 PM

I doubt that any company has made it to 2.0 yet, the very best ones are around 1.8.

I have posted some points how "2.0" looks like for our company.

True 2.0 companies would not need managers at all. Everyone contributes what he likes, the company takes what it needs from the contributions and pays what it considers fair. Well yeah, that's how open source works.

Or is that 3.0 ?

Posted by: Carl Rosenberger | Apr 2, 2006 6:41:21 AM

Ricardo Semler is inspiring on all of this. Mostly because he appears to have taken an old industrial company and turned it into an organisation in which the power, hierarchies, structures, rewards - everything that defines an organisation - has been inverted. He was 2.0 way before 2.0 and it's good to see these ideas spreading.

Posted by: Simon Lidington | Apr 10, 2006 12:22:12 PM

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