Everyone seems to agree that the command-and-control model of corporate organization will not survive into the next century, and a number of new models have been suggested as replacements. One such model has been devised by Bruce A. Pasternack and Albert J. Viscio, the founding partners of Booz Allen & Hamilton's Strategic Leadership Practice. Unlike other management thinkers, Pasternack and Viscio do not believe that only small companies will have the agility to compete in the coming century. Their model considers the advantage of size and is based on people, knowledge and coherence. It is built around a global core, which provides strategic leadership, helps distribute and provide access to the company's capabilities and knowledge, creates the corporate identity, ensures access to low-cost capital, and exerts control over the enterprise as a whole. In an interview, Viscio spoke about the centerless corporation, which he and his co-author described in The Centerless Corporation: A New Model for Transforming Your Organization for Growth and Prosperity.

Copyright Faulkner & Gray, Inc. May/Jun 1998

EVERYBODY SEEMS TO AGREE THAT THE COMMANDand-control model of corporate organization will not survive into the next century, and a number of new models have been suggested as replacements. One such model has been devised by Bruce A. Pasternack and Albert J. Viscio, the founding partners of Booz Allen & Hamilton's Strategic Leadership Practice.

Unlike other management thinkers, Pasternack and Viscio do not believe that only small companies will have the agility to compete in the coming century. Their model considers the advantage of size and is based on people, knowledge, and coherence. It is built around a global core, which provides strategic leadership, helps distribute and provide access to the company's capabilities and knowledge, creates the corporate identity, ensures access to low-cost capital, and exerts control over the enterprise as a whole.

JBS recently spoke with Mr. Viscio about the "centerless" corporation, which he and his co-author described in The Centerless Corporation: A New Model for Transforming Your Organization for Growth and Prosperity (Simon & Shuster, 1998).

jbs You define the centerless corporation as a distributed business in which business units act autonomously. But you point out that there is also a need to cohere and to communicate across business unit boundaries. How do you reconcile those two needs?

viscio Historically, there has been tension in organizations between providing direction from the top but also pushing accountability down into the ranks. The question they ask is, should we centralize or decentralize? We think that's the wrong question. You want to treat the company as a system just as your own body is a system-each part is a contributor, acts on its own, but yet there's overall direction and maintenance at the system level.

After all, what's the sense of being big if you can't use your size? In fact, we decided to write this book because we think that companies can be big and still grow and be profitable, and that the stagnation that one sees at some big companies occurs simply because they're too hierarchical and really haven't developed a systems approach to the business. The top doesn't let go and empower employees and doesn't focus on the key things the company has at the system level-namely its people, what it knows, and what ties that together. Achieving this focus is the real mission of senior management.

jbs In the organization you describe, it's essential that people cooperate with each other. But cooperation is an unnatural thing, as you point out in your book. How can companies ensure the necessary unity?

viscio The model for the centerless corporation is a cooperative model-people must be willing to participate as part of a team to make it effective. That's a mindset change. That's a leadership challenge. The leaders have to ensure that the system has cohesion by making sure people understand not only what the corporation is trying to do but also that each person must contribute to those goals.

If we look at the performance of big companies, say the Fortune 100, we see they've shed a million-and-a-half jobs. That's not a very successful model. But if you take a look at the economy, it's creating jobs like gangbusters. This suggests the Fortune 100 are not taking advantage of their size. So companies now are working to create more cooperative models. They look at the benefits they can derive from sharing services and coordinating purchases to take advantage of their size and leverage.

Companies that have done this well have forced change. Let's take Wal-Mart, for example. Wal-Mart will tell Procter & Gamble, "I'm not going to deal with 100 people in your sales organization, I want a single point of contact." So P&G might have to reorganize in order to provide that point of contact. But the benefits flow to both. The improved process reduces inventory and makes ordering more efficient, which means both partners enjoy lower costs, higher profits, greater stability, and greater flexibility.

Centerless companies are really tearing the business apart and saying, "We have to focus on the two or three things that are creating the value." Everything else you can share or do outside the company and just focus on the key things that are important.

It's unlike the old-fashioned company, which would do everything itself. Most old-fashioned companies are fortresses, and they're inward-looking. But the need to build coherence forces companies to be outward looking. And once they start looking out, they see market opportunities and potential links with other companies.

jbs What companies do you think are closest to being centerless corporations?

viscio At the top of my list are GE and Hewlett Packard, because they're very coherent companies. People know what the company is up to. Both GE and HP have unique systems for developing people and pushing the frontiers of performance. They have cultures that don't tolerate any bad performance and do encourage innovation. But they do it different ways. Jack Welch charges ahead, saying, "Here's what we're going to do," and he gets people to follow him. HP accomplishes the same thing through its culture-the HP Way.

jbs Does it take a special kind of leadership talent to run centerless corporation? And how prevalent do you think that talent is?

viscio Nowhere near prevalent enough. People are trained at early career levels to be managers, which means you're given a task and you execute the task. What's required in the future is more leadership-you see what has to be done and you initiate it and get it done. Now the challenge for any large corporation is to create a cascading of leadership, so that there's leadership at the top, but also leadership down at the bottom, and all the leaders are marching to the same tune.

The real job of the CEO is to build that kind of leadership throughout the organization. That's why we're seeing more and more companies worried about executive development, people development, giving greater accountability. You have to empower people to get leadership; you need greater coaching to get leadership. And not all companies have the ability to do that effectively. Over time more will.

jbs How do you build a deep bench in an era of downsizing when the middle management ranks, out of which you would get your future leaders, are now decimated?

viscio You need different roles at different levels. You need to create leaders not at middle management levels but early on. You need to train people to be leaders, leaders of tasks. And once you start building and creating leadership skills from early on, there's not much of a role for this traditional middle management anyway. Middle management should be a networking function, tying different pieces of the company together, coaching. It's not hierarchical, where you had seven layers of middle management. That's just not going to fly.

jbs How would you sum up the leader's role in the centerless corporation?

viscio A leader's role is really to serve the people. And a leader has to come up with a vision that makes people say, "I want to follow that. I believe it. I think it's valuable. It's the kind of life that I want to live. I want to work in this company because I like its values, I like the opportunity it affords me, it's career enriching."

We find in our own experience if our staff are not happy, they go someplace else. Why work someplace if you're unhappy? Motorola, for example, in its performance reviews, asks people, "Do you have an enriching job? Are you happy with what you do?"

So part of the leader's role is to provide that vision, the meaning in the work environment. Part of the leader's role is to knock down barriers blocking the vision. And part of a leader's role is to empower people to work toward it.

I don't think this is especially hard to do; I just think the talent for that kind of leadership wasn't often cultivated in corporations in the past. But now companies are looking for people who can work across the network and see opportunities outside the boundaries, the emphasis is on being more creative and feeling there are opportunities there. That means you need to promote the people with the attributes that you want.

This is not something that you're going to turn on a dime. You're really changing the role of senior management, and these people have to become leaders in a very different sense. The really good companies are already doing that.

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