Author, professor, and organizational psychologist David Burkus shares insights from his book “Under New Management”, including why salary transparency shouldn’t be scary, tips on setting email limits, being in the business of elimination, and why great leaders don’t innovate the product, they innovate the factory.

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David Burkus is the author of Under New Management. His

work is basically talking about why so many of the common day

business management principles have become outdated and they

just, they just don't work anymore. And anyways, David,

welcome to the show.

Well, thank you. Thank you so much for having me.

So the whole under new management thing, like, where

did that come from? Like, why? Why? Why this book? Why now?

Yeah, I was an undergrad English major, of all

things. But in college, I fell in love with social science and

thought, like, okay, there's got to be a way to put these

together, popularized insights from social science with good

storytelling. And one of the phenomenon I found actually was

was in the process of promoting my first book, The miss of

creativity. You can't, you can't write a book about creativity

innovation, and not be talking about your Googles and your

three M's and all of these companies that have, you know, a

little bit different workplace practices, a little bit

different management practices. And those get a lot of questions

from people. Well, should we do that? Should we do 20% time, or

should we give everyone free food, or that kind of thing? And

this is where the idea for under new management came from. Is

okay, let's tackle those. Let's actually look at what are the

things that a lot of newer companies and even older

companies that are trying to be more creative or innovative,

what are the things that they're doing that's different from

business as usual? And is there an explanation for why it works?

And so we started with probably 20 or 25 different leadership

and management practices, and then narrowed it down to Okay,

these are the ones that we can see through the lens of social

science. Are actually a really good idea, and also maybe some

ways that you can be in the spirit of those ideas without

going full on Google and giving everybody 20% time and free

food, right? You might actually be able to kind of tap into it

without going the full way.

Can you explain? I don't think everybody knows what 20%

time is.

Oh I'm so sorry. So 20 Google, it actually

started with 3m But Google kind of made it more famous. So it

actually came from the senior leadership of 3m realizing that

they were terrible at judging what ideas were going to be

amazing products and which ones weren't. And so one of the

things they said is, if you're an engineer with us and you're

doing research and development, you can have 15% of your

calendar every week to work on whatever project you want. If

you think it's got potential, and we don't agree, you still

have this protected space to work on those ideas. And Google

picked it up when they started working, they actually increased

it to 20% so now you could have essentially one day out of every

week. Of course, some of the over tax engineers joke that it

actually should be called 120% time, because it's sort of like

you can do it, but you got to get everything else done. But

the idea comes from exactly this, this realization that in

senior leadership and in management, we might not have

all of the information anymore, and it may be a better idea to

give them some room to make decisions themselves, because

they might have a better idea of what's going to work than we can

tell from our Excel spreadsheet in the conference room, right?

So give me the goods. Like, what is the thing that

like blew your mind that you said, Oh my gosh, I can't

believe people are doing this and it actually works. Or what

are some of those practices that are really radical?

So I mean, I'll tell you two. I'll tell you the

easier one that everybody says, like, I can't believe that that

works well. And then I'll tell you the hill that I didn't think

I was gonna die on, but I did, which is a big setup. I hope I

can deliver on that. But one of the ones that immediately

everybody started asking me about is, what about these

companies that have unlimited vacation, right? What about

these companies that just say, ah, you know, you can take off

whenever you want. You know your work, etc. It seems like sort of

a management nightmare, because you never know who's going to be

at work when. But when we live in an age where most people are

doing incredibly creative work or problem solving work, even

you know everybody but accounting these days in a

company is charged with doing creative work or solving

problems or something like that. We still don't really like

creative accounting, so that's, you know, that's okay, but so

when we're doing that, what we need is a little bit more

autonomy, a little bit more control. And what was happening

at Netflix is probably the one that popularized us the most,

because there was a feeling that you're not controlling what when

I'm working and where I'm working when I'm on days, on why

do you need to know and sort of nickel and dime and keep track

of all of my days off. And the the senior leaders of Netflix

said, you know, you're, you're exactly right, and that's they,

they picked up on the fact that it was communicating sort of a

distrust for employees that they wouldn't act in Netflix's best

interest. So they said, so we'll, we'll just get rid of it.

And you know how much time you need this year. You know your

family life and your home life. You know your objectives for the

company get those done. And they're very, very true on that.

But what I found most interesting is you dig into it,

and one of the biggest complaints is everyone's either

going to take too much vacation or they're going to take not

enough. And when you look at the data on how many vacation days

companies that switch to this take, it's actually about the

same as before. The difference is that the trust. Piece. The

difference is the company saying to its employees, we trust you

to act in our best interest with all this stuff, and we're going

to put the ball in your court. And the power of sort of

autonomy and responsibility that brings makes a much more

motivating workplace. So it's not actually about the vacation

days at all. It's about trust.

Amen, that one's really cool. Tell me about the other

one.

The hill I didn't expect to die on? Salary

transparency, letting everybody know in the company what

everybody else gets paid. I get it. I get people's fears at it.

Because when I first started looking at this, I was sort of

like, yeah, that makes me uncomfortable. I don't want

people to know what I get paid, etc. But the truth is, I believe

I'm an optimist. I believe that most companies are trying to

find a way to pay all their people fairly and equitably and

in relation to how much effort and value they're creating for

the company. And if that's the case, then there's not much to

lose by sharing it. The fear is, if we share it, everybody's

gonna get all crazy. Well, the truth is, everybody's crazy when

it's secret, because we're terrible judges of what each

other get paid, right? We make, we make all these assumptions

based on what car they drive. Well, they might, you know, have

a really well earning spouse, and they don't make a lot of

money, right? So we can't judge it by that or clothes or things

like that. We're we're terrible when it's a secret at judging

what people get paid, and as a result, we're more miserable,

because we're more likely to assume that somebody is overpaid

or somebody else is underpaid, etc. But when you can point to

the system and go, here's how we determine everybody's salary,

and you know, it's fair, and now you can trust us, there's

actually a huge increase that happens in morale, because

people believe that if they work hard and provide value, they'll

get some of that value in return. Now they're directed at

the formula or the algorithm we're using to determine pay,

and not Larry, who's been here 10 years, but doesn't work as

hard as I think I work, you know, on day one, etc. So now we

can have a much more realistic conversation about, okay, well,

we weighted experience at, let's say, 30% of the formula, and you

think it should be weighted less, because you think if you

bring them more, that's this is a conversation we can have now

in a secrecy condition. You have no recourse. You might know that

Larry gets paid more because he's been around 10 years, but

you can't bring that up with anybody because you're not

supposed to talk about it. So it might not make everybody happy,

but at least we can have an open conversation, and we can make

refinements to the system when there's a kind of a consensus

that you're right. We overweighted something or

underweighted something in our formula.

Do you put executives in the same category?

So some of it is public. What's interesting is,

with stock options and things like that, it actually is a

little more murky than it than it should be. And I think you

know, the best way to answer that question is to say that I

don't actually advocate that companies go from zero to full

transparency right away. There's sort of a sliding scale, right?

And so you might be in in total secrecy. And if you can take the

step to going, well, here's how we determine how everyone gets

paid, and we'll share the formula. And I mean, if you

wanted to plug in the numbers and do the math, you could, but

at least you know there is a uniform system. That's a pretty

big improvement. And that's that's a lot to ask of people to

adjust to in the course of a year or two years. So just take

that first step, and then if you feel like you need more, take

the next step very I don't think a lot of companies can manage

the transition to sort of full on transparency, especially for

that reason, but I think everybody can take a step

towards it and benefit from it. The culture of sales is actually

a really good example. There's sort of that friendly rivalry

that goes on. You know that so and so got paid more than you,

but you also know that you can point to what they're getting

commissioned on and that they produced more, and it creates

kind of a friendly rivalry that I think is good. I think when

it's not a friendly a rivalry is definitely a bad thing. But

sales is a great example of it sort of working pretty well.

Are you finding that most companies are resistant to this

stuff?

So there's 13 practices in the book, lucky

number 13, which really came about from the process of

elimination. That was definitely not a goal. And I've yet to find

a company that does all 13, some all out of New York City. Dane

Atkinson is their founder and CEO. They do I think eight of

the 13 practices. And really that's because there's no I

would love to be that consultant that's got kind of the four box

model and the slide deck, and I can travel around and be like,

this is perfect. Every company is a little bit different,

right? So you've got to kind of tailor it. So, you know, I don't

say everybody should do all of these. The goal is to kind of

show, here's why it works in a very public, sort of famous

example, like in Netflix. Here's the science behind it. Here's a

couple other smaller examples of companies that are in line with

it. And if you feel like it's right for you, this would give

you a place to sort of try it. The one thing I advocate almost

every company begin to adopt is set limits on their email right

there. We're in this 24/7 world, and I think it's killing us, so

I think we need to either set limits on evenings and weekends,

giving those back to people, or even setting hours in the day,

like from 10 to two, we don't do internal email because that's

when our people are focusing in on the work. I think that's one

that almost any company should should really think about, is,

are we overloading our people with too much communication

because of email? So a lot of it has to do with settings, right?

And one of the things I actually love about Slack is the very

first time I ever used it, about two or three days in, it

actually said you're getting too many notifications. So we're

gonna scale it down a bit, which I love, right? Because it's,

it's the anti email, right? And that's really, that's really the

issue is, what are we gonna do to our settings? We switch it

over to slack. That's great. We could keep it as email the

different. Says we've got to, as a company and as a culture, kind

of say, what are our communication times, and what

are the times where we have off to focus on the, you know, as

Cal Newport would say deep work, or what are the times we have to

focus on friends and family, et cetera? So that's the biggest

thing is, is making it a choice when people go to the well to

drink and to communicate, but also setting limits on when, as

a whole company, we decide these are off limits times.

Yeah, that's, I mean, that's pretty out there. So you

mentioned there is a line, it's about the reinvention.

Yeah, great, great leaders don't innovate the

product, they innovate the factory.

Yes. So say the line again and then tell us what it means.

So great, great leaders don't innovate the

product, they innovate the factory. And yes, obviously

great companies are built on innovative products and

services, but those are the result of great leaders looking

at, what are the ways that we're structuring our company, what

are the ways that we're leading and managing our people? Our

people are going to create the innovations. And so what we as

leaders need to do is innovate the way that we're letting them

work. You know, I opened the book, I opened under management,

with the story of Frederick Taylor, who sort of invented the

first management Bible, if you will. And really was that

epitome of, kind of the micro managing manager got a lot of

efficiency done, but kind of drained the soul of it. And ever

since then, the great leaders have been finding ways to

reinvent sort of his work for their specific company. And as

we get to doing more creativity and innovative work. We need

more and more people looking at what works and what doesn't work

for management literature, and being willing to innovate their

practices so that their people can be innovative. Okay, how do

I innovate the factory? How do I know which one to tackle? I

think leaders should be especially for large

organizations and big bureaucratic organizations, but

also entrepreneurs who are kind of using their old companies as

a model for how to run their new company. Should be in the

business of elimination. In other words, like the number one

piece of advice I give to leaders and the managers is

figure out what are the things that are blocking your people

from doing best, their best work. It might be the vacation

policy, it might be email, it might actually be the secrecy

culture, whatever it is, and eliminate that. And so that's

one of the reasons I say that it doesn't, not all of it works for

everybody, because some companies didn't need to

eliminate it in the first place. But that's really what I think

leaders should be about, is what's keeping my people from

doing their best work, and then how do I eliminate it or negate

it?

I think one thing that every leader who's listening has

to ask themselves is, what is leadership going to look like in

the future? What do you think are some of the next big

changes, and what would you tell leaders in terms of what they

can be doing to prepare for what's coming? Because things

are changing so so freaking fast?

So there's a couple things to unpack there.

So to kind of answer the second part of the question. First one

of the things I wish I wrote, I wish great leaders don't

innovate the product they innovate the factory was my

idea, but it stains so stains. But one of the things I wish I'd

thought of before the book was published is someone said it to

me this way, that the future is already here. It's just not

evenly dispersed. And that's really what a lot of these

practices are. They are glimpses at this is where the future of

work is headed, because it's being demonstrated by those

companies. And so take a look at them, and you might want to sort

of turn your nose and go, that would never work here. Well, it

might, but no one may end up working here if we don't make

some of these changes. The other question really speaks to clay

Christensen's work on the innovators dilemma, the idea

that companies like Netflix get big because they noticed a small

part of the market that bigger company said, and it's not worth

it, right? Netflix actually attempted to get bought by

blockbuster, right? Attempted to say, like, We'll handle all of

your what will be your online demand for movies and

blockbusters like, that's not worth it, right? Now, we're

making way too much money in these retail stores, so it

wasn't worth them investing in. But to a small company, that

little niche of the market is enough to sustain themselves,

and then they use that niche to scale up and to and to move up

market, as Clay Christensen would say. And so that's the

biggest piece of advice for leaders in big established

companies, is don't neglect those small things that might

might look like they have a justifiable ROI if you can kind

of break even on it, but still establish a foothold, you'll

have a better sense of where the market is going, and you'll be

able to sort of adjust with it. It's the companies that do that

that's that have sort of Netflix insurance, right? Because they

already do have a foothold in that area. So when the market

shifts that way, they can make the pivot way easier than a

company like Blockbuster that's just been ignoring it for

decades.

So if there's one thing people could take action on,

right? Action catalyst podcast is like, what is something that

we can do now to prepare ourselves or to better ourselves

as leaders? If there was, like, an idea or a practice or

principle that we could we could do today to prepare for, you

know, what may be a completely new set of management

philosophies and beliefs coming out in the next few years, what

would that be?

So I'll give you a small scale one. I mean, the big

one is great leaders don't innovate the product, they

innovate the factory. But the small scale one that really sort

of changed my life as we were talking about email and not

being on all the time. And one of the things that I did was I

developed a two device strategy, so I have an iPhone and I have

an iPad Mini, and when I get home from work. I switched them

out. And the difference is, the iPad Mini is just entertainment

and friends social media. It's nothing work related. And it's

been amazing. Just that ability, that physical routine of

switching them out and telling myself I'm officially off for

the next few hours and it's time with friends and family has been

huge for resting and re energizing, so that the next

day, when I wake up and I take my work one I'm far more focused

and more able to get everything done which is, which is awesome.

Been a huge decrease in stress, increase in productivity. And

it's weird because it's sort of the anti tech solution. But I

think the future of work is really having to figure that

out. How do we not be always on so we can do that deep work that

creates value?

Very cool. DavidBurkus.com, and David, we

appreciate you pushing the envelope here.

Love it. Love it. Thank you so much for having me.