A Conversation WithCharles Handy

On the Futureof Work and an

End to the^'Century of theOrganization "

Interviewed byBarbara Ettorre

C harles Handy has been an oil executive, aneconomist, and a professor at the London

Business School. But he is now best known forhis books—chiefly. The Age of Unreason, The Ageof Paradox, The Gods of Management, and, mostrecently. Beyond Certainty: The Oianging Worldsof Organizations. Handy is unflinching in his be-lief that societies and organizations must

change—and change profoundly—or theywill not endtire. And these changes have far-reaching implications for the way people man-age their lives and careers.

The interview was conducted by BarbaraEttorre, senior editor for Management Rei'iew.A shorter form of the conversation appears inthe July issue of that magazine.

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A lot of people are fascinated with your comments on the future of workand organizations. For starters, could you glance into your crystal ball andtell us some of the changes you're seeing?

Of course. I don't mean to frighten people, but I see a withering of the"employment organization." A lot of scripts will need to be rewritten, in-cluding the script that includes job security in a corporation followed bya comfortable retirement. A lot of us will become "portfolio workers"—selling our skills to a variety of clients. And all of us will be looking be-yond work to find meaning and identity.

Those are all ideas I would like to probe further. But first, let's get a pic-ture of where we are now. Your book. The Gods of Management, makes cre-ative use of Greek mythology to describe current organizational cultures,and how these are changing. First, could you just summarize the mythol-ogy for otir readers?

Yes. The Greeks had many gods. And you chose to worship the ones thatstiited your style and circumstances, as it were. And I think that, to a large

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extent, marriages and organizations should choose the style that suits theircircumstances and their purposes. I selected four Greek gods as tj^ifyingwhat you might call the "choice of managerial cultures" that are available.

And you say that every organization will blend these in some way.

Right. The four, very briefly, are Zeus, who was the king of the gods inancient Greece, and he ruled by a thunderbolt and shower of gold. Hewould either beat you over the head or seduce you.

And act like an occasional bull in a china shop, as well.

That's right. And the Zeus style is the typical—somewhat autocratic—owner/manager. But there's a positive twist to this. In Zeus organiza-tions—Zeus cultures—the method of communication is empathy. Theydon't write things down. They surround themselves with people whomthey know very well and can trust. That allows them to work very fastand to be very cohesive. They could have lieutenants in different parts ofthe world, and the lieutenants don't have to communicate with head-quarters.

Because they know what the person in the center is thinking.

Right. And so, in a positive sense, these organizations are based on trustand empathy. The down side of this, of course, is that these organizationsare very much dependent on the whim of the man at the center—or thewoman at the center. And if you don't get on with the person at the cen-ter, then you better get out—in fact, if you don't get out, you're chuckedout.

So they're quite tough cultures.

They're also nepotistic cultures, so you find these in family firms, in trad-ing organizations, in some banks—it used to be. These cultures work veryeffectively where the personality of the organization is important, such asin small family businesses, where speed is of the essence.

Okay. The next god?

The next god is Apollo. He is a god of many things, but particularly of har-mony and order. And Apollo organizations are what 1 call the "role orga-nizations." In other words, the philosophy behind them is that you dividethe work up into discrete segments, which eventually become roles foran individual actor.

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I see how that fits.

And then you link the roles together into systems, with rules and proce-dures. And provided you, as an individual, fit your job description, andprovided you obey the rules of the systems, everything works beautiful-

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ly. And you'll find, therefore, this kind of culhire working very well in bu-reaucracies and anywhere where there is a stable environment. So, large,traditional firms tend to be dominated by Apollo, particularly if the in-dustry is old, like the stee! industry or the paper industry. The problem,of course, is that they're very slow to change because they'd have to re-organize the whole system. A second problem is that Apollo is also thegod of sheep.

Sheep?

Yes, sheep. The people who find themselves in these organizations are abit sheep-like. In other words, they don't like taking a lot of initiative.. .In-deed, it's bad news if they do, because this upsets the system. Youshouldn't act beyond your job description. For instance, within the ac-counts department, you may well want rules and procedures and peopledoing what they're supposed to, and no more than they're supposed todo. The same is true for airlines. In this setting, you need Apollo.

The third god I chose was actually a goddess—Athena. She is the goddessof wisdom, but she's also sort of a commando goddess. She's the patronsaint—or patron goddess, rather—of Ulysses.

She's my personal favorite, by the way.

Of course. Born, I may say, out of the head of Zeus.. .which is importantto remember. So, there's a bit of "oomph" there. But basically, she is thegoddess of the task force, the goddess of expertise. And the philosophyof the Athena organization is that, if there's a problem, then you shouldgroup all the relevant talents around it, give them the resources theyneed, and say, "Go to. Solve that." So, every MBA student that I knowwants to join an Athena organization because basically life is a continualcase study. And every professional who works inside an organizationwould like to work in an organization that values their expertise. In theseorganizations, the person who is best is in charge. At the same time—re-membering that Athena came from the head of Zeus—there's got to be alittle bit of entrepreneurial zeal to push the projects forward.

That's interesting. But I also like Dionysus.

Of course. Dionysus is the fourth. And like all the Greek gods, he is a godof many things—wine, drunkenness, and all this sort of stuff. But, for me,he's also the only god that is, in a sense, existential—that basically says,"You make what you will of your life. You are free to choose. You are noman's slave, no woman's slave." And so he is the god of the real profes-sional—the independent craftsperson, the independent thinker, the re-searcher, and so on. These people don't acknowledge anyone as theirboss. They value freedom. On the other hand, organizations need thembecause organizations need their creativity, their irreverence, that type ofthing...so bureaucratic ApoUo-type organizations find Dionysians verydifficult.

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But I would think Athenians and Dionysians might work nicely togetherin certain ways.

They do, provided it's a fairly loose kind of Athenian organization, sort of"network" organizations—project groups. And when you do that, youend up with fewer people—better qualified, more expensive, and moreindependent—grouped around projects, and with rather few elements ofApoUo.

Right now, there's a lot of talk—and effort—to change organizational cul-tures.

A large reason for all the downsizing and layoffs that we see in Americaat the moment is that we are changing from Apollo to Athena, which Iwould say actually is inevitable and good news. It's just rather sad for thepeople who thought they had safety in Apollo, which is the reasonableexpectation, because in Apollo, if you just do your job alright, you're okay;and suddenly they find that the god has let them down and they be-grudge their own god, and that's tough.

How should managers in the Apollonian organizations respond?

Well, if they're still there.. .A lot of the people who lose out in the shift ofApoUo are the middle layers, and they are basically information proces-sors and checkers.

What you're saying is that management skills used to be collating, record-keeping, tracking, so forth.

Yes, used to be. Because in the past, one of the manager's main jobs wasto pass relevant information to people below them, and then collect dif-ferent relevant information from those people and pass it upwards, andto check that everybody was doing their little bit in their little box. Now,if you shift to independent task forces in the Athena style, and if you usenew technology to give them all the information they need or they want-ed, then you don't need these intermediate layers. So what should themanagers in the Apollo organization do....

Yes. What should they do?

Well, basically, get out—get out and tum themselves into Athenians orDionysians, which is very difficult. I often say that many managers Iknow have been promoted to a level of personal incompetence. Theyshould either leam the new cultural language or....

...get out of the organization.

Yes. The problem is, even if they try to change, it's very difficult to changein the same place. People know you as you were. You may wear differ-ent clothes; you may say, "I'm a free, jeans-wearing Dionysian type." But

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nobody's going to believe it because they knew you as a whole.

Can teamwork help Apollonian organizations survive and prosper?

Well, teamwork is Athenian, you see. So, basically, what Apollo organi-zations have to do is to tum into Athenians.

Have many companies made the change successfully—or is it lip service?

In many cases it's lip service; in other cases, in order to become Athenian,they have to change their personnel. So, you will see a company like IBMgetting rid of lots of people and hiring lots of people at the same time.They get rid of ApoUonians and bring in Athenians. So, yes, teamwork isthe answer, or Athenian culture.

You've written about what you call "the federalist organization." Just toclarify for our readers, how is federalist different from decentralized?

Federalism is one of those paradox words. It's not "either/or," it's"and/and." A federal organization is decentralized and centralized. Insome respects, an organization needs different bits—local, if you like—that do things more or less autonomously. But in some respects the orga-nization needs to be centralized, doing things in the same way. For in-stance, purchasing should be centralized.

The trick about federalism is to get the right balance. The trouble with fed-eralism, as a concept, is some people think it means total decentralization,and therefore, anarchy—which it doesn't. Other people, notably theBritish, think it means centralization—^but somewhere else other thanBritain—which it doesn't. It means a mixture of both.

A global organization would likely be federal. Right?

A global organization, by definition, has to be federal. If an organizationhas its headquarters in Pittsburgh, and every branch around the world isa branch organization from Pittsburgh, then it will not succeed. It will notreply appropriately to the Chinese situation, or the Japanese situation, orthe African situation. On the other hand, if it is totally decentralized, thenit's what I would call a commonwealth—a group of individual organiza-tions that happen to like each other, that come together occasionally.Whereas the centralized one is an empire. Neither one is right.

You have to be a bit of both.

Yes. So you might, for instance, centralize the information system so thateverybody can communicate with everybody else. That's always a prior-ity because otherwise people can't talk to each other, and the bits get tooindependent and autonomous.

What else might be centralized?

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You would probably also want to centralize research and development;but you mightn't put it in the center. You see, the interesting thing aboutfederal organizations is they have dispersed centers—that is, bits of theorganization will do something for the whole of the organization. In oth-er words, they might do the research and development for the whole, butit might be located in Switzerland because that's the most sensible placeto have it.

That sort of thing links the whole together so that the units feel interde-pendent. You probably would keep advertising separate—decentral-ized—because each organization will want to do its own thing. Thisdoesn't please the advertising agencies who, in response to this, have hadto go global themselves. So, for instance, J. Walter Thompson will say thatthey can offer you a service around the world because they have an officein every country. So you could have an individually tailored campaignfor your own individual operations, but yet have a common message. Inother words, it's a federal approach to advertising—centraUzed and de-centralized.

You cite ABB—the Swiss company—as one example of federalism. Howare decisions made in that company and in other federalist organizations?

It depends on the type of decision. ABB is in some respects highly de-centralized—five thousand independent business units.

Independent?

Independent—with their own accounts. And when the decision affectsonly their accounts, and doesn't affect any other bit of the organization,then they, alone, make that decision. And provided it's within the gener-al guidelines under which they're operating, that's fine.

But some decisions at ABB are far too big for any one of these relativelysmall units to take on themselves—so if they're building an undergroundsystem for Mexico City they will have to coordinate a number of differentunits in order to deliver that; and in that case they have a product orga-nization, which is a coordinating organization. The product organizationmight be responsible for building underground railway systems. Thatdefinitely exists as a function of the central office. It exists as a small coreof competence in one of the operating countries.

So the company is clustered around core competencies then—"decision-making-appropriate" core competencies.

It's clustered in three different ways: around a business unit (an operat-ing unit), a set of core competencies (which we'll call a product division),and around a country. And it works because people have linked roles. Forinstance, I was talking to an ABB man from Italy, and I said, "What's yourjob," and he said, "I'm head of personnel, Italy, and management devel-opment, world." So, he's not at the head office, but he's responsible for

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management development worldwide. The key people in any one coun-try also have a group responsibility. And that holds the whole thing to-gether so that they are not only working for a local Italian company,they're also working for ABB.

But they can all be linked up with things like e-mail and teleconferencing.

High tech is wonderful if you know the person at the other end.... Themore you want to use remote control devices such as e-mail and radioconferences, faxes, and telephone, then, perversely, the more you need tobe in touch with people personally. So, airplanes, and conference centers,and hotels are going to go on doing very good business... I don't thinkyou can build trust if you don't know the other person enough to trusthim out of your sight... and know they can cope with the unexpected.And so my argument is that wise organizations will build relatively smallgroups of people who get to know each other quite well, because whenyou could do that, then you could operate as an Athenian team—goingback to that metaphor—out of sight of each other. You can't do that if youdon't rely on each other very well. I use the metaphor of a rowing crew.They can effectively go backwards without talking to each other.

The corporation as we know it is approximately a hundred-year entity.Will it survive the twenty-first century?

Not in its present form. The twentieth century will be known as "the cen-tury of the organization"...and we're seeing the withering of the em-ployment organization. It won't totally disappear, but it will be reducedto an organizing core. Organizations will literally live up to the name—they will organize. [They won't] have to employ everybody who is beingorganized. You only have to employ the employers, or the organizers. Sothe formula that I use is half-by-two-by-three: half the workers, paid twiceas well, producing three times as much.

The other half wilt be outside the organization. And because there is acore on the inside working very hard to be paid twice as well, they willhave short lives in the organization. Twenty or 30 years. Instead of 50years. Actually, it could be as short as 15. It's a hell of a reduction. So I'mtrying not to frighten people too much. But yes—I would say 15 to 20 ifyou really press me.

Then what happens?

Then you will move out—now we're talking about this whole upper halfof society, those ones with competent skills. They will become indepen-dent workers, selling back into the organization for the most part, but intoseveral organizations at the same time. At the bottom level you will stillneed people because most of the jobs for the less skilled will be in the ser-vice world, giving people food and drink.

Keeping places clean.

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Yes. Taking care of kids, keeping places clean, caring for their own folks...that sort of stuff. And they will be, in my view, probably organized bywhat I call intermediary employers.

Are these companies that provide temp and contract workers?

Yes. Only if they're wise, they will upgrade these people. They will regardthem as a qualified set that they hire out to projects. You're seeing execu-tive leasing. CEOs have actually been hired out for projects. People at thebottom of society are not very competent to sell themselves as independentworkers. They need agents. Since the/re not earning enough money to jus-tify an independent agent, they will have a collective agent. They will havetheir health insurance and pension paid by these individual employers....

If from the company's standpoint, the new contract—the new impliedcontract—is "We will use you only as long as we would need you," the in-dividual should say, "Well, I'll only use you as long as I need you." But of-ten, employees don't feel strong enough and capable enough to say that.And so they feel conned, and you have to do a hell of a lot to make themcomfortable with their contract. And also I'm saying organizations will ac-tually rethink this.

Now that's interesting. Can you take it another step?

WeU, they will rethink it because under this new contract-—implied con-tract—the best workers are leaving. So they are being left with the secondbest, who don't have the courage to go out on their own but who arethere, feeling cheated, and that's demotivating. If they don't do it, it willall come down, because basically companies are founded on intellectualproperty these days, on the skills and energies of their special people.

I'll bet you if you took a thousand of the so-called best and brightest com-panies in the mix of large and small, and asked them the question, 'Whatis your strongest asset?' they probably will say, "People are." Actually,however, intellectual capital is a notion that I don't think most companiesnurture.

Well, all they've got to do is take a look at their market value today, andlook at their balance sheet and see the price of their fixed assets. The mar-ket value is probably 10 to 20 times higher than the fixed assets.

Now, has the market gone completely bananas, as we say in England? Or isthe market actually gone sensible—is it saying that the real value of this com-pany lies in the things that sit inside those buildings. At Microsoft, for ex-ample, the buildings are probably on loan or lease, the computers are hired,carpets are worn out, cars are hired. Assets are in Microsoft and people.

So, I worry about the implied employment contractors—that we are in-creasingly just using people—and people don't like being used, and I be-lieve that is the implicit contract behind capitalism—that the corporation

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is the instrument of the owners; that the individual is the instrument ofthe corporation—and I don't think that is a sustainable position in thelong term.

But, if the future consists of virtual corporations, portfolio workers, andknowledge as the competitive edge, what will happen to the vast major-ity of people who cannot be a part of this? Are we creating an even larg-er underclass—large groups without salable portfolios?

To some extent, there's no way out of that. In an information society,wealth doesn't trickle down as it used to. You see, in the past, when it wasbasically an employment society, if you got richer, you employed morepeople—wealth did trickle down in some way. Now, wealth gets trappedby the people who make it. So if you want to actually enrich society,you've got to make the poor richer directly, because otherwise the richare not going to have any customers before long.

One of our presidential candidates advocated Fortress America to pre-serve jobs. We've got a lot of anger and fear because it is a time of inordi-nate change, which is what you have said all along.

Yes. It's a funny kind of fear because if you look at America, you have fullemployment effectively; you have no inflation; you have a slow butsteady, growing economy. When I came to America last week I expectedto find a bubbling, self-confident country. I found completely the reverse.So, I really have only two questions. One, is the fear of the future greaterthan the reality? In other words, the number of layoffs are not an excep-tion, but they get featured, somehow, more largely. Or, are we really wor-ried, deep down, as individuals, about the kind of society that I believe ison its way, but which politicians refuse to acknowledge? And so whatwe're really worried about is that no one seems to be able to help usthrough what we think is a very different future.

Will all of this access—the emerging access to information—level theplaying field.. .or tilt it?

No, tilt it. These people will get rich and they will not distribute theirwealth because they don't employ any more people as they get richer. So,what we have to do is to worry about the bottom, I would say, 30 percent.It's that bottom 30 percent that I'm worried about. For those who are al-ready in the work force, they have got to be regrouped so they don't haveto operate as independent workers, but they then have these intermedi-ary employers, as I call them. But their children. We really ought to startwith their five-year-olds now and explain to them that the skills you needfor an independent worker society are rather different from the skills youneed as an employee society.

Tell me.

Well, for one thing you've got to have a salable skill, so you've got to have

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that credentialed, in some way; in other words, this is not passing read-ing/writing examinations—this is actually saying you're good at some-thing. And by the time you leave school you ought to know what you'regood at so that you can go on to enhance your competence in that; so thefirst duty of school should be to find out what you're good at—which isnot necessarily just reading and writing, or doing history, English ormath, but it could be life saving, it could be playing the guitar, it could be,you know, driving a van—it could be whatever.

Basically, I'm very hooked on Howard Gardner's theory of multiple in-telligences—he's a professor at Harvard. The basis of his theory is nowwidely accepted, even if people quarrel with the details—which is that in-telligence can be perceived and measured in different forms—logical in-telligence has to do with reasoning; creative intelligence has to do withcreativity; there's a musical intelligence; there's a linguistic intelligence;there's a mathemahcal intelligence; there's a physical intelligence. Ath-letes have a kinetic intelligence. And they don't correlate, so you can be abrilliant athlete and lousy at exams.

How should a school help you discover your talents? Are we talkingabout enlightened testing? Exposure to the outside world, which is some-thing you also said before.

I suspect it's a mixture of both. Can I just develop the theory of horizon-tal fast track for you, because it applies at school and in organizations?The Japanese, when I asked them what they did with their most talentedpeople—"Don't you have a fast track?" 1 said. They said, "Yes, but it's hor-izontal. That is, we move them around from experience to experience asquickly as we can, and because they're very good we can move themquicker and that allows us to test out their talents in different situations,with different managers, different cultures, until they can discover whatthey're really good at—as well, of course, as getting a lot of experience."

A lot of us will be out there, seUing our portfolios of skills. What advice canyou give to help managers prepare?

I would say, step back and try to work out what the qualities are thatmade you a good manager but might also be combined in a different wayto define you as something else. I had an advertising account executivecome and see me once, aged late 40s. He'd been made redundant, as youdo in that industry at that age, and he said he couldn't find another job,and I said, "Well, what can you do?" And he said, "I can be an account ex-ecutive in an advertising agency." And I said, "You must be able to dosomething else," you know. He said, "I haven't done anything else," So Isaid, "Go and talk to 20 people who know you well, and like you—friendsor work colleagues—and ask them each to tell you one thing you're goodat. They don't give you a character analysis, just one thing you're good at,and come back and show me the list."

ETTORRE: And what happened?

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Anyway, he came back with a list of 20 things and he said, "It's amazing,1 have a wonderful list," he said. "I'm just trying to think, though. Nobodysaid 'account executive.'"

My last book is called Beyond Certainty because basically, we're movingbeyond certainty in all respects of our lives. What politicians are trying todo is to offer certainty again, by saying, "Vote for me and I will restore lifeto where it was," I think nobody believes them.

So, my feeling is we've got to reinstitute the truth in politics, and the firstresponsibility of government, in my view, is to tell the people the truth.When I said this to a BBC interviewer on television, he commented, "Andas Charles Handy said this, I looked out of the window and I saw somepigs flying by."

But isn't it hard to find a vision these days because life is so chaotic?

Yes, but Hfe has always been pretty crazy. The problem for America par-ticularly is that Americans have been brought up to believe that the futurewould always be brighter and better. If you go to old countries—China,Japan, Europe—there is a sort of deep cynicism about life. It's a mixedblessing, really. I think that the disappointment in America will be muchstronger.

In America, many of us gain our identity through employment.

Right. I believe that for the most of this century, most people have madeidentity from their work—from what they do. And in so doing they in-herited a script for their life—it was written out. When I left college Ijoined an oil company, and they had actually prepared a script for me, anoutline of my career with them for the next 50 years.

After ten years, and having married Elizabeth, I realized that this was nota script that was right for me. Actually, I had given my life to people I'dnever met. They would tell me where to live, what to do, even give methe permission to marry. And success in my life was clearly going to meansuccess in their company—being promoted. I had handed my life over topeople I'd never met.

Looking back, 1 thought that was quite extraordinary. But the problem is,we have al! lived scripted lives, whether we like the script or not. We ei-ther put up with it or we left it, but most of us put up with it and lookedforward to retirement. Now, what is happening at the moment is that weare being asked to write our own scripts. And we don't know how to doit. And we're not sure, if work is going to be quite so perilous, if we wantto attach our identity to work.

I'm saying that actually there are four strands to identity, and we will bewise to write a script that includes all those strands. One strand is work,yes, a second is relationships.

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Do you mean traditional relationships—friends, family?

"Significant others," which have traditionally been family. That strandhappens to be terribly important. And the third is place. A lot of peoplein the old days were known by where they lived—that's Mr. Jones fromsuch-and-such a place. But when work became dominant, we found our-selves having to sacrifice place. We became mobile; we moved every threeyears, you know. "Yes, I was born in Kansas but now I live in New York.I go home at Christmas and Thanksgiving."

And the fourth?

The last is a belief system. Some people have in the past built their iden-tity from a particular creed, a set of convictions and so forth—a religion,if you like. I'm saying that in the last 50 years, in our societies those lastthree—place, relationships, and religion—have given way to work as amain component of the script that was handed to us. I'm arguing, now,that in the future, when we have to write our own scripts, we would bewise to build in the other three as well.

Yes. So my hope for the future is that we will compose our own richerscripts for life, we will therefore become more interesting people and so-ciety will be a little more stable place. Work will still get done, but we willdiscover what I call the doctrine of "enough." Do you know about thedoctrine of "enough?"

No, but I can imagine.

The point about enough is if you don't know what "enough" is, you don'tknow what "more than enough" is, so there never is enough. Only if youcan say what enough is—of money, ambition, fame, whatever— are youfree to do anything else. Now, there's another side to this. The other im-perative is to make sure that everybody is free—everybody has enoughin some way. And, of course, not by giving it to them, but by educatingthem and scaling them up so that they can earn what is enough. That be-comes my social priority.

To wrap up—is there any important message you would like to leavewith American business people—or business people around the world?

That's hard. I think if s something like, "Believe that you have somethingreally important to contribute to the world. Work out what it is."

And if you had endless resources, and the power of a Zeus, what contri-bution would you make?

The first thing I would do is find a way of telling people the truth aboutthe future...so that they could begin to prepare themselves for it.

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