We’re thrilled to introduce you to the winners of the Beyond Bureaucracy Challenge—the second phase of the HBR/McKinsey M-Prize for Management Innovation.
Managing Beyond the Organizational Hierarchy with Communities and Social Networks at Electronic Arts
From bureaucratic, divided, passive and exhausted to productive, creative, autonomous, and happy
From bureaucratic, divided, passive, and exhausted to productive, creative, autonomous, and happy company
- a volunteer-driven project aimed at breaking down organizational silos and creating a more collaborative culture.
- three internal social networks, including regular postings from board members on their activities and thoughts.
- self-generated "invent the future" projects
- a dramatic reform of HR policy to eliminate internal competition and expand individual autonomy.
The result: now, TMNS is not only a truly "happiest place to work"; it is an organization equipped to respond quickly and change with the times, and in which innovation is every person's job.
Tokio Marine Nichido Systems ("TMNS") is a solution provider 100% owned by Tokio Marine & Nichido Fire Insurance Co.,Ltd. Located in the suburbs of Tokyo, it has 1,440 employees.and 17 billion annual Gross Sales.
It was originally founded in Sept. 1970 as a subsidiary of Tokio Marine and Fire Insurance. It merged with Tokio Marine System Service and Nichido Fire System Development in Oct.2004.
Although TMNS had successfully completed the consolidation of two computer systems of "Tokio Marine" and "Nichido Fire" when they merged in2004, employees were “burned out” in the course of hard and stressful work. Stagnant and dismal mood proliferate all over the company and several employees even suffered mental disorder resulting from heavy stress.
The transformation movement was initiated by Mr. Hideki Iwai, then a System Engineer and now the General Manager of Human Resources Dept. In 2005, Iwai-san proposed to take a corporate culture assessment by an outside consulting firm. The outcome was far worse than he imagined.
The report indicated that
- TMNF Systems was vertically divided
- The work style of the employees was passive
- Employees held less interest in new technologies or end-users who use the system,
- There were no spontaneous activities
- The employees didn’t feel the sense of accomplishment for their work.
The analyst even said “I have seen a lot of bureaucratic organizations. The most bureaucratic one I had seen was a municipal office in a local government. But TMN Systems is worse than that”
Shocked by the report, Iwai-san formed a voluntary group of 30’s and 40's employees named “Work Style Reform committee” in 2005.The committee aimed to change the corporate culture beyond the barrier of organizational silos. The senior managements, who also held a sense of crisis by the report, agreed to proceed the reform project.
Since 2005, TMNS has been undertaking a lot of projects.The objectives are summed up in 6 elements; Motivation, Autonomy, Innovation, Diversity & Inclusion, Communication, and Fun.And the final goal is to make society, country and the world happy.
The themes include
- Create the world's best Communication platform(Future Center project)
- Become the world's best Innovative Saving Guru (Save Electricity project)
- Hack the world's coolest "Positive Cut Corners"(Kaizen Camp)
- Invent the worlds' coolest Environment aware Logistics (Green Logistics)
- Establish the world's hottest collaboration with agencies (Collabo Next) etc.
- Become the worlds' most aggressive General Affairs Dept.(Smart&Agressive Soumu) etc.
40 teams were established."No.1" should not necessarily be subjective.If they feel confident that they are the No.1, they are the No,1.People's' mindset changed appealingly through this project.There's a huge difference between "better" and "No.1".You should have strong will to aim No.1, and the team members put 120% energy to the project.It brought positive effects to their daily jobs, too. The management will NOT
- Poke any nose into the themes or activities.
- Control progress of the projects.
- Filter the projects by ROI
- Evaluate the team with monetary gain.
Budget for the project is distributed first come, first served basis.
Q.Did the teams work on the projects beyond work hours or was it part of their work?
A.Actually, there's no clear distinction between work hours and after-work hours, nor formal and informal.Teams can do their activities anytime they think it's appropriate.
If you draw a strict line between work and non-work, people tend to think work as something non-pleasant, stressing duty and try to spare power.But if work and play is integrated, people are willing to put their 120% power into the project.
The entrance-lounge is a gateway to the world of unlimited imagination.It is equipped with ambient light and music.Abstract pictures painted by the board members are hung on the wall.Attendees are expected to unleash their mind in this room before discussion. Discussion room is surrounded by white boards on the wall.Tables are not in the usual rectangle shape to avoid "square" way of thinking.Sometimes, clay or paintings are used to visualize the ideas.
Anyone can use this facility anytime when they have (or doesn't have) topics to discuss.But there's one strict rule; "Do not use it for usual business meetings"."This rule makes Future Center a special place", Said Mt.Takanori Sunahata, a manager in charge of operating Future Center."People are accustomed to think differently without any considerations of their affiliations or titles when they enter this room".
Future Center facilitates 10 meetings a month in average. The Future Center is operated by special organizing team and now there are 30 facilitators in TMNS who had special training to navigate vivid and open discussions.To date, TMNS is an only Japanese company which has an exclusive facility and trained facilitators for the Future Center.
The flexible thinking fostered in the Future Center triggered many breakthroughs in the business.
One example is the reform of operation rule for mainframe system.There are 7,500 programs running every night.They are called "Batch programs" and operated by "Batch Operation Team".There are some programs which should not be run on the certain night because of maintenance, upgrade, etc., Program Development teams were responsible for sending a cue to run their programs by 4:00 pm.Batch Operation team waits for the "OK" mails from 38 Program Development teams and then type "GO" commands for 7,500 programs.Approximately 30% of the OK mails didn't arrive by 4:00 pm by the circumstances of Program team.Batch team was very busy prompting the Program team.It took three and a half hours to get all the OK mails and type GO commands every day. Two young SEs, Ms.Yoshida and Ms.Takada changed this.They proposed a new rule.All the batch programs start automatically at 4:00 PM unless they receive "Stop" mail from Program team.After the change, what they have to do is type "STOP" command for several programs requested by the Program team.The process was shortened from three and a half hours to five minutes. It sounds like an obvious idea, but the old process has been around 20 years and no one dared to change.It was no easy task to assess the impact and risk of the new process, persuade people who are accustomed with old rules and implement changes, but Yoshida-san and Takada-san made it.The flexible and positive mind fostered by the Future Center and other projects made this happen.
Another example is the reform of Internal Audit Team. Usually, internal audit team is a "sniffer dog" to find small errors and omissions in the business processes, and points out risks of changing processes.They tend to be a resistance force to any innovative ideas.Internal audit team of TMNS changed this attitude.They try to find and report as many "Good points" as possible, support changes and cooperate with audited to address the issues they find.So, audited are very grateful for the audit.President Mr.Yokotsuka reads the audit report intensively and praise good initiatives in the articles he contributes to various computer magazines, his presentations and internal blogs."The audit report is my eyes.The point is which direction you see with it", Yokotsuka-san says.
Software development is conducted by several numbers (differs according to the size of the software) of Scrum team.It is a small (not more than 5 people), self-organizing and cross-functional team.It doesn't have a team manager who controls everything.Instead, it has a "Scrum Master" who helps team members to perform at their highest level.Team members as a whole decides task assignment, system design and problem solving.Progress, ideas, problems and issues are shared within the team by daily meeting called "Stand-up meeting".Everyone stands up during the meeting to make short and vivid
The length of a Sprint cycle is one to four weeks.At the end of each Sprint cycle, the team demonstrates the functions and interfaces to the product owner and receives feedback for the next sprint cycle.
Compared with the conventional software development method called "Waterfall", Scrum is very fun and exciting workstyle.In Waterfall style, software development team is just writing programs according to the pre-defined and documented requirements.In Scrum style, people work with autonomy, and there are a lot of opportunities to take their new ideas and opinions into the software.
But Scrum is a two-edged blade, If you use it under the "blaming" culture, Scrum may become a "tight management" tool, and the daily meetings will be unproductive and stressful, looking at the list of troubles and finding persons to blame. "Early stage of our Scrum implementation, we sometimes failed into the bad pattern.We just tried to mimic the Scrum style and forgot about the spirit", recalls Mr.Kusume, who leads the implementation of Scrum method."Some managers required detailed report when, how, why the trouble happened and who is responsible for that.It took a long time to make the report and the action for fixing the troubles often delayed, which made things worse". "After the series of reform project including the implementation of Scrum, the mood has changed.People focus on fixing the problem rather than blame and offer help.Under that "care and cooperate" culture, Scrum became a strong tool for sharing new ideas, feel the progress, and solve problems together.The morning meetings turned into fun and productive ones.To make Scrum a happy and productive tool, you have to change the culture and mindset of the people", Kusume-san concluded.
Reform of Human Resource Management
- Banned result-based payment system.
- Payment is determined 50% by the competency of the employee, and 50% by his/her age and years of experience in TMN systems.
- Competency is measured by 5 factors: Conception, Action, Communication, Teamwork and Engagement.Each factor has detailed descriptions.Different competencies are required according to the employee's career path, Producer and Expert (described afterwards)
- Dual-line career path.
- In many companies, IT engineers go up their career path from a Member, Group Sub-Leader, Group Leader, Deputy Manager, Manager, General Manager.Each time they go up the hierarchy, the percentage of "Management job" goes up.But not all the engineers want to be a manager.So TMN Systems set up two career paths, Producer and Expert as shown in the chart.There's no difference between Producer and Expert in terms of payment.Staff can choose their path and can transfer their path anytime..
- Respect people's autonomy
- Staff are free to choose their work hour and workplace
- Reduce approval process by supervisors
- Staff are encouraged to choose their own job according to their ability and preference.
When TMN Systems was considering the reform of their human resource management, HR consultants strongly insisted that TMN Systems should introduce result based payment.President Yokotsuka turned it down.He had been inspired by the education system in Finland.In Finland, they don't give exams to students until they become 17.They don't let the students compete nor rank them by the score.What they do is to teach students how to think by themselves and let them experience the joy and excitement of studying, not threating them to study by doing exams.In this way, Finland is scored world's No.1 in OECD's student assessment, PISA.Yokotsuka-san was confident that it is not competition or scorering that motivate people.It's the fun of work, autonomy and freedom.
Q.If your work results won't affect your salary, what makes you work hard?
A.Money is not only the source of motivation.Sometimes it drive people to the "Dark Side".In result based payment system, people would be reluctant to collaborate with their colleagues or even try to drag them down because others' success may lead to their demotion.On the other hand, "Create", Grow", "Help People" are healthy instincts of human.TMN Systems' various initiatives are related to these "Light side of the Force". Please refer to Enhance the Light Side of the Force", not the "Dark Side"
Recently, TMNS had a serious system trouble.When the news was announced via intranet, all the members who participated in the development of that system but now working in other divisions gathered voluntarily without any orders or approval from their managers and settled the trouble in a very short time before it caused any inconvenience to the customers.This kind of autonomic movement would not have happened if TMNS had applied strict job descriptions and result based payment system.Autonomic action transferred the disastrous trouble into the victory of teamwork.President Yokotsuka was very proud of this.
|Q&A Q: If all the people are free to choose their job, won't everybody want to take high profile job or easygoing job? How can you fill all the positions?
A:The reality was that the jobs people took were surprisingly diversified.President Yokotsuka takes football as an analogy."If I were a football player, I definitely want a Forward position.But some people are brave enough to take Goal Keeper position and others prefer to take Defender position.People are diversified.Their talents are most unleashed when they are working at the position they like best"
Also, they reviewed thousands of internal rules and banned unnecessary ones.For example, if you wanted to put a poster on the wall, you had to get permission from General Affairs Dept.They changed it so that anyone can post anything on the wall without permission.This initiative changed the mindset of people.Everyone started to think "is this rule really necessary?", and hundreds of rules were banned or simplified.They changed their role from ruling people to actively supporting people.The department won "General Affairs Dept.Grand Prize" and "Japan Facilitate Management Grand Prize (encouraging prize)" in 2011.
- "Waku-Waku(Exciting) SNS" Facebook-like SNS.Staff are free to post any messages, private or official, anytime.Individual timelines (diaries) are linked to the internal who's who directory.
- "Otasuketter"(helping twitter) In-house built Twitter-like system Anyone who need help can tweet his/her problems and those who know the solution will offer help.
- "Open Terrace" Bulletin Board System (BBS) for Board members.Board members post their day-to-day activities and thoughts, such as whom they met and what they talked, what they thought about current system, or how they made their decisions.Everyone can access the site and leave comments.By sharing what board members have in mind, staff are expected to make their own decisions autonomously in consistent with the company's policy and goal
Ms.Mikiko Kawano took the responsibility to plan, built or upgrade and operate these systems only two years after she joined to TMNS as a freshperson."Approximately 90% of the entries in "Waku-Waku SNS" are about private affairs.We think it's OK.Sometimes such kind of informal information is quite useful", says Kawano-san."TMNS is a big company.There are a lot of people I don't know well.Whenever I meet someone in TMNS for the first time, I check the person's diary.It makes me feel very familiar with the person, and the communication goes very well", she says. "To the contrary, "Otasketter (Help Twitter)" focuses to help people with difficulties or questions.I named the system to make sure the people understand its purpose.Many issues were solved with "Otasketter" in a very short time".
Information posted on "Open Terrace" or "Waku-Waku SNS" is a very strange mixture of business and private.To name some episodes;
In between those topics, there are business discussion trees about new technology, new project, or new ideas, etc. The secret of TMNS' free, open and vivid culture lies here.
- A coffee shop named "Smile Cafe"
- A massage room named "Smile Relaxation Room"
- General affairs office named "Smile Office Services".
Initially, those facilities ware established to employ and empower people with disabilities.But it turned out that other people are often encouraged to see those staff working with pure passion and sincerity.Mr.Toshitsugu Hisai, Director, Member of the board of TMNS says, "I always drink iced coffee, even in winter.One of the Smile Cafe staff learned my preference and always gets an iced coffee ready for me whenever I show up to the shop.They work very proudly and happily.I feel very happy to see them"
Q: were these initiatives "Top-down" or "Bottom-up"?
A: Most of the initiatives could be said as "Bottom-up".Some ideas such as HR reform and "Open Terrace" were proposed by the management. But neither "Bottom-up" nor "Top-down" is appropriate to describe these initiatives.Usually, Bottom-up" meet "Top's" objection and/or resistance, and vice-versa.But in TMNS, management buyspeople's ideas instantly and take action immediately.Also, people understand management's proposal and collaborate to make it better.In other case, initiative such as "Scrum workstyle" started in a division and then spread horizontally.So, most suitable expression would be "Resonance".Just like tuning-forks, when a party stats singing, other parties start humming and make beautiful harmony.It is only possible when they share the same goal, trust each other, and know each other including the very personal aspects.After all, a Flat-organization doesn't have Top nor Bottom, by definition.
The initiatives shown above may correspond to the three points "Total Passion"," Outside in", "Managing without managers" stated by Dr.Hamel in his article http://www.managementexchange.com/blog/m-prize/beyond-bureaucracy-challenge-creating-inspired-open-and-free-organizations
- Vertically divided organization.
- Passive workstyle.
- No voluntarly activities.
- Lack the feel of accomplishment.
- Create horizontal communities.
- Ban the internal competition.
- Trust employees: let them do what they really want to do.
- Encourage employees to talk with end-users directly. Let them see how their systems help end users.
- Keep every information open
The key factor for success is "Be Flexible. Do not push hard.Trust!".
Although there were tons challenges in TMNS and many initiatives were quite radical, it looks like that the transformation went smoothly. There was no banging on the table, no shouting, no blackemails. Mr. Shingo Sakamoto, the leader of "Waku-Waku (Exciting) Work Style Reform Project, reveals the Secret. "I know not all the people are participating in the reform movements. Maybe there are some "silent resistance forces" says Sakamoto-san. "We don't worry about that. Japanese tend to think that everyone should participate in the company project. But it is not realistic. There should be people who don't want to join the project team, or don't use SNS. We think it's OK. We are flexible. What we need is several small teams of passionate and heretic people. They are acting as catalysts and spreading the movement bit by bit. Human beings like to create, grow and helping each other by nature. Those who had been resisting the change gradually being attracted by the happy looks of the forerunners". "The harder you push, the harder the resistance force pushes back. Flexibility beats Force. It's the spirit of Judo", he laughs.
"I assume some of the "Next Dream" projects or "Communities" are not going well." says President Yokotsuka. "Why I say "assume" is because I don't check their activities. If I supervise the projects, some lackluster ones may go better. But supervision may spoil the passion of other well-going projects. Supervision on those voluyntary projects doesn't pay in the long run"
When I asked Yokotsuka-san "Was there any project which went in a wrong direction and had to change course?" he answered, "Wrong direction? There is no "wrong" direction. My people are always right. I trust them". The people in TMNS say, "We know that top managements trust us. We have to return their trust. We don't hesitate to change our attitude if we think we went too far or we are heading to the wrong direction."
It is hard to calculate the accurate correlation between those change initiatives and business figures such as income, profit, or productivity. Also, it doesn't seem to me that those figures represent the real value of change. But business metrics did improved and it did help TMNS a lot to turn down some criticism from outside old style management world where money is always right.
- Busienss Benefits
- Gross sales: JPY 7,611M(FY2004) > JPY 17,285M(FY2010)
- Ordinary profit:JPY -6M(FY2004) >JPY475M(FY2010)
- Increase in system design productivity: +77% (2006>2009)
- Increase in system developement productivity: +14% (2006>2009)
- Busienss Benefits
- Humanity Benefits
Also,TMN Systems successfully completed a large scale system reform in TMNF's "Business Innovation Project". The TMNF's project also won Asia Insurance Review's "General Insurance Company of the year 2008", Financial Insights'"Innovation Award 2008", and "Celent's Model Carrier 2010".
- Won various awards and recognitions
- "Great Place to Work in Japan" (2009, 2010, 2011, and 2012)
- 29th Information Technology Award: IT Procuction Department Award (2011)
- 2nd “General Affairs Dept. Grand Prize":Corporate and Organization Vitalization Award (2011)
- 5th “Japan Facility Management Award"(2011)
- 22nd “Human Resource Development Excellence Award" (2009)
- Low turnover rate : as low as 1%.
- Accomplished employment rate of people with disabilities 3.5%, which exceeds the Japanese legal rate of 1.8%
Above all, look at the happy smiles and vivid workstyle of TMNS people!EpisodeTokio Marine & Nichido Fire was very fast to react the earthquake and paid more than170,000 earthquake insurance claims (97% of the claims filed) by the end of July. TMN Systems and TMNF’s IT Dept. played very important role. They deployed 110 new terminals for claims settlement on the next day, 800 terminals in a week,and finally 1,800 in two months to support 8,800 (in accumulate) employees temporally dispatched to the disaster area. They visited agencies one by one to help agents to restart their business, deployed three “Mobile Office", a van equipped with terminals, and wireless devices. Systems developed several innovative support tools such as overlaying claims payment status on a Google Maps in a very short time. Those actions were very autonomic and collaborative, thanks to the culture fostered through various initiatives. They shared ideas, information, emotion, pictures and videos on internal BBS and videoconferences. There was no trace of sectionalism nor passive work-style pointed out in the report 6 years ago.
- Won various awards and recognitions
- People unleash their abilities when they do the job they love.
- Pure motivation come from the desire to glow oneself, help people and thanked by people.
- Desire to become rich, beat colleagues, rule people does drive people, but often to the wrong direction.
- People are most motivated when they do the job they choose by their will, not by the job assigned by someone else.
- Trusting people is the best way to guide them to do the right things.
- Performance based payment is the best way to ruin a company especially when the differentiator is innovative ideas.
- Informal communication and activities pull the walls between organizations down.
- The role of management is not managing people. It’s to help people to maximize their performance and happiness
Most of the he initiatives introduced in this article such as Next Dream, Future Center, Scrum, Happy Project (diversity and inclusion), Reform of the General Affairs Dept., were started voluntarily. The root of the series of reform projects, Waku-Waku workstyle reform project started voluntarily, to begin with. Top managements never try to control, distort or stop them. Instead, They encourage people to do what they really want to. But that doesn’t mean TMNS is totally in a freedom. TMNS is responsible for building, maintaining and operating Tokio Marine & Nichido’s huge mainframe system, which requires 100% accuracy and no fault. In that part, strict top-down type project management and detailed quality control are required. So, it may be said that TMNS is propelled by two engines. One is an old style engine governed by conventional-style management. Another is a new type of engine with autonomic control system and fueled by voluntarily passion. This report focuses on new type engine, but actually TMNS has both. Yokotsuka-san calls it “Hybrid System”. “I understand we still need old style management in some part of our business. But in the future , I want to dismount old engine and run TMNS with 100% autonomy”, he said.
|Column:Agricultural people and Hunting people
When discussing about the business practices or mindset with European and American people, I can't help but thinking about the difference between agricultural people and hunting people. In agriculture, people work together in the farm It is very difficult to measure the difference of contribution of each individual farmers, because they work almost in the same way. Also, it is difficult to measure the correlation between the amount of harvest and the effort of farmers, because the outcome depends more on the weather conditions, rather than the productivity of each farmers. To the contrarily, hunting people go to field individually or in a small team. It's quite clear who got the game and who didn't. So productivity of the hunters are obvious. The difference of agricultural people and hunting people explains a lot of Japanese people's characteristics. My private feeling is that one of the reasons why most of us feel uncomfortable with performance based payments is because we are agricultural people in origin.
Hiroshi Yokotsuka, President of Tokio Marine Nichido Systems Hideki Iwai, General Manager of Human Resource Dept., Tokio Marine Nichido Systems. All the members of Tokio Marine Nichido Systems and their families All the supporting companies of Tokio Marine Nichido Systems