We work with large organisations that have typically optimised their management structures and operations over time to become very efficient at doing what they used to do. The cost of micro-managing downwards by KPI and reporting is huge, but this is offset by scale advantages and efficiencies lower down the pyramid. It is a highly inefficient and wasteful system that somehow manages to produce marginal returns at the end of the value chain.
There are three main change models for complicated, multi-level management hierarchies of this kind. Typically, either a benevolent dictator has the vision and power to drive change from above, as Ricardo Semler or Zhang Ruimin have done; or alternatively, change begins from below and manages to spread until it becomes the new normal. The third pattern is that a company gets hit so hard by unexpected disruption that it starts to break up, and the surviving pieces can be re-assembled into a better structure.
Our work targets are usually of the change-from-within kind, but augmented by leadership development and engagement to create some momentum and support from above. But this is hard. Few people have the courage, incentive or the financial security to speak truth to power. Individual change agents often start to spend more and more time at conferences where they can meet like-minded people and not feel like outsiders, or seek to change what they can – themselves – through self-help techniques. Even the most intelligent and dynamic managers who are committed to improving the organisation and supporting their teams better often cannot escape the suffocating short-term KPIs they are required to optimise for, and give up.
Rather than focussing on changing every aspect of the old organisation, which is sometimes impossible, it often makes sense to build out, connect and map a new organisational infrastructure that is natively digital, networked and service-oriented, rather than just an adjunct to a ‘manual’ process-driven organisation. But this will require a new approach to organisational technology, one that aims to create operating systems that can coordinate work better than hierarchical management, rather than just tired old enterprise software that calcifies and makes permanent the worst aspects of command and control management thinking.
Some links that got me thinking this week:
- Build and optimise platforms and services, not processes, to scale an organisation that is not dependent on being driven by managers.
- Platforms and aggregators – Big Tech’s two rival philosophies for growth.
- The work graph is an area of development that could help obviate the need for hierarchy as a coordination function in large organisations – good Twitter thread on this topic.
- Even where the case for new institutions seems overwhelming, such as creating better digital services for citizens that are less prone to huge project failures (like the UK’s NHS IT programme or the US Healthcare.gov debacle), initiatives like GDS in the UK can still be pulled apart by the old guard.
- “Does it make sense to think of a development path for organisations where they reach a level of maturity in which they can sensibly consider reducing their reliance on the childish concept of management?”