The 4-D theory

The 4-D theory
Nitin Nohria

All human beings are driven by four basic needs say Nitin Nohria and Paul R Lawrence, two Harvard-based professors. Talent will always be attracted to companies with organizational cultures that nourish these needs. So what are these four drives and what would an ideal organization look like?

Management education and research has focused mainly on models of human behavior proposed by various social scientists. But what about new knowledge from biologically oriented scholars such as neuroscientists, anthropologists, evolutionary biologists linguists, historians, economists, psychologists etc? As we learn more and more about human evolution and the workings of the mind, it is perhaps time for these streams to come together for a fuller understanding of organizational behavior and to answer key questions such as why we work or why we act the way we do.

We act the way we do because of the conscious choices that we make. However, these deliberate choices are fueled by the internal battle constantly raging among our four innate, subconscious, brain-based drives:
· the drive to acquire objects and experiences that improve our status relative to others
· the drive to bond with others in long term mutual relationships of care and commitment
· the drive to learn and make sense of the world and of ourselves
· the drive to defend ourselves, our loved ones, our beliefs and our resources from harm

Given that these drives are hard-wired in us, how do they play out in everyday life? What are the implications of the 4-D theory in organizational life?
The business firm represents a collection of physical resources – the property of the owners – assembled carefully to enable employees to work together to create products and services of value. These outputs, in turn, fulfill the acquisition drive of customers (who purchase something of value), employees (who receive salaries), and of owners (who receive profits).
But a firm is more than this. It is also a complex, interwoven set of personal relationships.

These relationships provide the firm’s members with a way to fulfill their drive to bond, as they engage in cooperative and productive work. The firm also has a purposeful identity, both symbolic and legal, that people can bond with directly in an implicit social contract.

The firm is also a setting where members have a chance to fulfill their drive to learn new things, to make more sense of the world around them, and to demonstrate their creative capability. Finally, the firm is a setting in which people can join others in defending their valued accomplishments.

An organization for 4-D people

What would a firm look like that was explicitly designed to engage the drives, the skills, the smarts and the emotions of people so that they would work well together to design, produce and sell products and services of value to the wider world? How would individual jobs be designed to best engage the 4-D person?

Once this question is asked, it is amazingly simple to answer. Every job would need to provide an opportunity to fulfill, to some reasonable degree, all four drives. This means that every job should provide an opportunity for the employee to acquire, bond, learn and defend. A job that fulfills one or two drives only, regardless of the degree of fulfillment, would not be a substitute for a job that provides a balanced opportunity to fulfill all four drives.

One would assume that once a blueprint is identified as a desirable target, it should be easy to hit the target. Not so. First, some core production technologies are less amenable to applying the rule than others. Secondly, firms and individuals have a tendency to veer towards one drive to the neglect some of the others. Over time, this leads to the frustration of all drives. Maintaining a reasonable balance among the drives requires hands-on steering by the firm’s leadership. Let us assume that the leader has done her design work and every job has 4-D potential.

Further we will assume that the jobs are planned to achieve the firm’s overall objectives in relation to customers, investors and regulators. People are chosen to step into these jobs and the firm is set into motion. What do we predict will happen in real time?

The drive to bond
Once on the job, every person’s bonding drive will lead her to search for others with whom she can evolve mutual caring commitments. These others will, in all likelihood, be in her immediate work area. When these one-to-one bonded relationships form a cluster, employees will begin to see themselves as a group, their bonded group that is distinct from other groups. If the individuals in this primary group have interlocking tasks, bonds of trust will facilitate their joint task performance and they can be officially recognized as a work group or team. They will also bond, if such opportunities have been wisely provided by the leaders, with their department, plant, division and even with the entire firm. Other things being equal, these multiple bonds will lead people into friendly support of one another.

Dave Packard: “One of the things we have tried to achieve, and I think have achieved thus far, is this concept of teamwork. The only way this company is going to run success-fully is if we can ensure that there is maximum flow of information and cooperation between all its elements.”

However, this would in time lead to a tension-free, collusive set of relationships with everyone attending to everyone else’s comfort instead of focusing on job performance. But the drive to bond is not alone in our psyche. The drive to acquire will unsettle any such cozy equilibrium.

The drive to acquire

The drive to acquire will lead every employee into competitive relations with others to improve her share of scarce resources. This competitive drive to excel is the greatest source of restless energy that individuals bring to the workplace. If this were the only drive in play, it would lead inevitably to an all-out struggle, a winner-take-all contest. Opportunism and selfish political behavior would be rampant. A great deal of frantic effort would be expended but this energy probably would not be harnessed efficiently to the goals of the firm.

Dave Packard: “Early in the history of the company, while thinking about how this company should be managed, I kept getting back to one concept: If we could simply get everybody to agree on what our objectives were and to under-stand what we were trying to do, then we could turn everybody loose, and they would move along in a common direction.”

Individuals try to balance drives in their personal lives but often need the help of well managed social institutions to succeed. The leader must align competitive energies of individuals with the firm’s goals. The leader also has to moderate the competitive energies of D1 with the mutual caring generated by bonding, D2, in every key relationship in the firm. Think of it as seeking tension of respectful competition in all relationships.

HP Group manager: “We use a lot of task forces. It’s an important vehicle for getting things done. It’s a way we get along with a relatively small staff. We sometimes call this real people involved in solving real problems. It is a very, very important part of the way we do business. But is also gives a lot of visibility to people.”

Relationships can all too easily slide from the extreme of cut-throat competition to the extreme of collusive bonding. These extreme swings occur because each of the four drives was created by evolution to improve the odds of gene survival. When any one drive gains dominance, it becomes self-reinforcing. A race can be created with everyone seeking more and more of a ‘good thing’.

There never seems to be enough of the good thing – until a crisis breaks up the vicious cycle. To achieve balance, the leader can use several structural devices like financial and symbolic rewards to help balance individual achievement and teamwork. The physical layout can be arranged so that interdependent groups are located in adjacent space to encourage trustful bonding.

Individuals can be assigned full-time for maintaining balanced relationships within and between groups. Of course, these devices can be misused. For example, offering large financial incentives to the winner of inter-group competitions would pull these relationships into cut-throat competition.

HP managers
They invested considerable time and energy ensuring that an individual’s pay level within their salary range reflected their performance when compared to others. Individuals whose performance was ranked in the top quartile, for example, were given larger and more frequent raises… Those whose performance had declined were given small or no increases.

Constant placement in the lowest quartile resulted in job counseling and quick improvement or repositioning or finally involuntary termination. HP went to great lengths to build an egalitarian atmosphere of rewards beyond salary. Executives didn’t have the usual privileges of position like enclosed offices… Nor did they have special executive incentive plans.

All employees were on the same profit-sharing plan and all were eligible for stock options. There were no annual executive performance bonuses... The share of profits was the same percentage of pay regardless of level, but no one contended that the stock options should be the same for everyone – that was purely a function of contribution.

The leader can reduce collusion and cut-throat competition by fostering the identification of every employee with the firm as a whole and its overall goals. Remember that the 4-D theory argues that people are predisposed to bond with their firm both in a mutual caring way and also in helping their firm to excel. This can be encouraged by fostering firm-wide symbols, rituals, and norms. However, to be effective any such social contract must be by mutual commitment and leaders must lead by example.

Vice President, HP Group: “You don’t think making printed circuit boards is much different here from other places. I think it is. People making PC boards here don’t punch time clocks and haven’t for the many years I’ve been here. They have flexible work hours and got them as soon as I did. They’ve got considerable freedom of input about their job to make suggestions for changes. They have every bit as much access to HP’s president as I do.”

The drive to learn
Jobs offering learning opportunities would have in them novel or problematic situations that trigger the itch of curiosity. It is this itch in the incumbent’s mind that activates the drive to resolve the gap between the previously ‘known’ and the new perception. Of course, the variety can be too great and the gaps so large that confusion results. But if the variety is in a zone of moderate stimulation, creative solutions will be fostered that can gratify the individual and be useful to the firm.

Bill Hewlett“At HP we believe that a manager, a supervisor, a foreman, given the proper support and guidance (that is, the objectives), is probably better able to make decisions about the problems he/she is directly concerned with than some executive way up the line, no matter how smart or able an executive may be. This system places great responsibility on the individuals concerned, but it also makes their work more interesting and challenging. It makes them feel that they are a part of the company and can have a direct effect on its performance.”

Such learning also does well in a group or inter-group context where the participants are diverse enough to trigger the curiosity itch, but not so different as to be threatening. What constitutes ‘too much’ diversity is moderated by the quality of the social skills participants are able to exercise in keeping the learning dialogue open and flowing.

HP employee“There’s a conditioning period for people who have worked other places. Maybe it’s the informality they see or the nondirectiveness of HP. Instead of being told point by point what you’re supposed to do, your boss is relying on you to use your head. I think maybe that’s sort of frightening to some people.”

HP manager“When I first came to HP, I started to wonder how I was going to get any work done with people going by my office and telephone conversations going on around me. But I got used to it. It’s really about creating a learning organization… Best practices are widely talked about and spread around the organization.”

The drive to defend
To stay productive, work groups must have the means to fend off external attacks. They must be able to press legitimate claims for necessary resources and support from the firm. They should also be able to defend their identity and reputation from slanderous attacks. A firm should have similar defensive capacity in its dealings with hostile competitive firms, community groups or governmental agencies.

HP’s policy
It has been HP’s policy to finance its growth entirely through profits it generated by regular operations and thereby undertake only a minimum of long-term debt. HP’s self-financing policy was intended to support its human resource philosophy and policies, particularly employment security. Although employees could be fired for poor performance, HP has never laid off anyone even when its profits suffered in an economic downturn.

During the 1970 business downturn, when electronic companies across the US were laying-off employees, every HP employee took a 10% pay cut and worked 9 out of 10 days, taking every other Friday off. There were no layoffs. In the mid 1980s economic dip, HP adopted two other remedies: downsizing and redeployment. Downsizing was accomplished through voluntary severance incentives and early retirement packages. Employees with the least amount of seniority where chosen for redeployment. They were given three paid months to find another job within HP. If they were unsuccessful at doing so, HP found one for them anywhere in the company, if necessary at another location and/or at lower pay. If the employees did not accept the new job, they would have to leave the company with a severance package. While HP had still been able to avoid outright layoffs, the CEO at the time explained that HP could not guarantee never to make layoffs. In the final analysis that depended on individual and company performance.

Both the learning and the defending drive can veer to a dysfunctional extreme. Firms and individuals can become defensive to the point of paranoia. A fortress organization has trouble learning about and relating to its customers and investors. Individuals can also become obsessed with learning and forget to eat or sleep or take vacations. This can even happen to firms.

The leader looks for ways to balance D3 and D4. The goal is to encourage prudent risk taking, not reckless exploration. Leaders encourage permeable boundaries between groups, not those that are impregnable. Work shared between individuals or between groups can best be conducted without a heavily defensive mood that inhibits the spirit of mutual learning and inquiry between the parties.

A critical role of a group leader is to facilitate open-minded relations with others in the firm and simultaneously defend the group from outside challenges. Part of the challenge of firm design is to lay out the architecture so that too many barriers between groups, such as physical distance, skill differences and organizational boundaries do not pile up at any single interface to handicap the relationship.

HP manager
“HP takes the extra step to make the open door policy truly effective. It was not enough to sit and wait for people to come through the door with their problems and ideas– they probably wouldn’t in many cases. The managers had better get off their chairs and go out and get in touch with people. In that way, people would know the managers were accessible whenever they had something important to communicate.”

Beyond the question of drives, every job in our theoretical 4-D firm would offer an opportunity for the incumbent to utilize some personal skills, for which they not only have an innate head-start but also a history of further developing and refining. Since individuals will differ in regard to their skill sets, this step will necessitate a one-to-one matching of incumbent skills and job requirements.
Once people with needed skills are selected, they will further evolve skills on the job. Differences appear between people and groups that tend to complicate the process of sustaining healthy relationships.

HP model maker“I thought these people are putting me on. Why, there’s not a shop in the world where someone isn’t bad-mouthing the management. So it bothered me that no one was saying anything really bad about HP. I still can’t say I really understand why it works, but it does. Peer pressures has something to do with it. New people with bad attitudes quickly learn that it is not acceptable to be that way at HP.”

All firms have design issues posed by the innate nature of employees as well as that of its customers, suppliers, investors and regulators. For example, most firms depend on repeat sales. In order to achieve this, the product/service needs to help customers fulfill all four of their drives. Hence firms need to cultivate identifying brands for products that represent a kind of social contract, a promise of a certain mix of quality, service, novelty and reliability that adds up to a value that justifies the price.

Firms can help people fulfill to some degree all four of their basic drives when the design is consistent with the 4-D theory of human nature.

We predict that to the extent real live organizations manage to follow this blueprint they will achieve long-term success in terms of all the major outcomes by which organizations are judged. All these changes have a common theme: they are structures and processes designed to help all participants fulfill all four of their drives on the job. As this takes place, it is possible to achieve simultaneous improvements in productivity, in work satisfaction and in innovation. There are also creative ways to work around the constraints that have historically gone with the core technology of mass production.

Several US manufacturing companies are already moving in this direction. The changes have arrived under a number of different banners such as total quality, job enrichment, team building, empowerment, gain-sharing, quality of work life, management by objectives, re-engineering etc. Firms unable to move down this reform road are simply no longer competitive.

Source: The Smart Manager