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4/11/2005
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You're Not As Good As You Think You Are, 'Fiefdom Syndrome' Author Warns

People tend toward inflated self-assessments, which is one of many reasons to break down corporate fiefdoms and rotate jobs regularly, former Microsoft chief operating officer says.

Bob Herbold has a habit of making people uncomfortable. Like this: Your company or department probably isn't as good at as you think it is. Or, if you've been in the same job for three or four years, you're probably a "legacy person" who's unlikely to innovate, because you're protecting the systems or products you helped create.

Bob Herbold, author of The Fiefdom Syndrome and former chief operating officer of Microsoft and CIO of Procter & Gamble.

Bob Herbold, author of The Fiefdom Syndrome and former chief operating officer of Microsoft and CIO of Procter & Gamble.


Photo by Sacha Lecca
That tendency toward an "inflated self-assessment" is one of three key personality traits people have that cause them to build up fiefdoms, Herbold contends, and one of the greatest risks of allowing fiefdoms to thrive. Herbold, author of The Fiefdom Syndrome (Random House; 2004) and former chief operating officer of Microsoft and CIO of Procter & Gamble, spoke to the InformationWeek Spring Conference on Monday.

People "think their stuff is better than it is. This is how they go to sleep at night," Herbold said. Herbold cited Digital Equipment's mini-computer success and failure to acknowledge the PC's advantages as a measure of what's at stake: "This is the sort of thing that can cause entire companies to go down. ... You're blocked from being sufficiently paranoid to what might be around the corner."

Herbold cited three traits that drive fiefdoms:

  • Inflated self-assessment.
  • Desire to control the data: If evaluations depend on data, everyone wants to control it, so they can change it to what they see as unique to their circumstances. "It's better to have the data defined differently so you can't make apples to apples comparison," he said.
  • Organizational independence: People don't want oversight, and they want to keep their best people.

In avoiding fiefdoms, he offered three areas in which companies should concentrate: process disciplines, behavioral disciplines, and creativity.

In process disciplines, he cited two areas:

  • Lean, global processes based on easily accessible data. Herbold cited his experience at Microsoft, which he joined in 1994 to manage business-operations issues so "Steve Ballmer could sell and Bill Gates could concentrate on products." Microsoft at the time took three weeks to close the financial books because each country had its own IT systems, which they used to tweak the cost categories and allocations. The German division, for example, had 72 IT people and its own data center to support its efforts. After consolidating on a single SAP financial system where everyone had to follow the same cost structure, the company could close the books in 12 hours. And Germany was allocated two IT people.
  • Standard templates and data. This lets executives make apples-to-apples comparisons and avoids creating expensive systems to support individual practices or data systems.

In people disciplines, he cited two areas:

  • Standardize performance appraisal. This not only forces managers to address under-performers, it prevents fiefdoms from hiding their best people: "Fiefdoms hate performance-appraisal systems because it's possible that someone might find my best performers and pull them out into another organization," Herbold said.
  • Personnel rotation: "Legacy people protect legacy systems," Herbold said. He recommends rotating people every few years, and creating new organizations to tackle new opportunities. The risk of people staying put and protecting old ways of doing business is especially high in IT-intensive roles, because business executives fear moving those people because they don't understand the technology involved. "The probability of innovating after you've been at a job three or four years is very, very low," Herbold said. "That's because you've got to develop pride in what you do in order to sleep at night."

In citing creativity, Herbold highlighted a point of tension and risk in his emphasis on discipline: A company can't set its industry in a new direction if it's so disciplined that it squelches creativity.

So, Herbold encouraged managers to look at creativity and discipline along a spectrum, where activities such as product development and marketing need a lot of creativity, and activities such as procurement, human resources, and IT need a great deal of discipline.

Herbold warned that breaking fiefdoms is a task that's never completed, because the personality traits that lead people to create fiefdoms never go away. Said Herbold: "There's something wired in human beings that make us do these things over and over and over."

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