In my last post I presented in
graphical form my ADVISE model of generic organizations, after a short review
of some alternative models that are still widely in use in the field of
organizational design. Before moving on I would like to reflect on why I’ve
taken things like technology, resources and specially processes (being
initially so heavily indoctrinated to think in term of input, output and
transformations happening in each organizational substructure) out of the model,
as they are obviously important, and it may be judged an impoverishment not to
consider them when purportedly describing how organizations work. In defense of
my model, I’ll remind my readers that many of the mentioned things are
important only for a certain, very particular subset of organizations, namely
those devoted to improve de social status of their members through the
provision of certain goods or services to anybody willing and able to pay for them
(what we termed productive/ commercial, or previous to that, “economic”
organizations), and within them they are considered mainly to assess the
viability and response to an exogenous change (as opposed to provide the “thick
description” I mentioned previously), whilst I’m pursuing a “general” theory of
any kind of organization. We normally do not care much about technology, style,
resources or processes within the Catholic Church (an example we may have
abused a bit by now), within a marriage or within a lama monastery, or even
within an old fashioned university (meaning a medieval one, modern day
universities, if they want to get a ISO 9001 certification, need to document
their processes, measure their “performance” and be able to “continuously
improve” them, silly as it does indeed sound).
If we talk specifically about
processes, this may go a bit against the grain of some management trends, that
see them as the ultimate source of competitive advantage for certain
organizations (again, economic ones), as products can be duplicated, customers
can be lulled away, technologies can (and frequently are) copied and
transplanted without much ado, but the glue that links it all, the processes
and the internal mechanisms that connect everything together are famously
difficult to transplant from one organization to the next. Although we get in
murkier and murkier terrain here, as processes are inextricably intertwined
with the culture, the informal organization, the people’s skills and general
outlook (motivation, beliefs, personality), etc. so any of those factors can be
considered at the end of the day the “secret sauce” that lies in the origin of
an company’s success as much as the processes themselves, when in reality every
one of them is just the residue that is left unexplained by the analytical
tools employed to analyze such success. Suffice it to say for now that I’ve
grown more and more skeptical of the importance of processes (as they are
typically understood, embodied in detailed flow charts where every step and
activity is described, along with who performs it, when, how, why and with what
tools, what they produce and how they are measured) as they are highly
dependent on a host of other (typically unacknowledged) features that seldom
get much attention but in the end determine to what extent they are followed at
all. Indeed the management trends I mentioned as being heavily oriented towards
process improvement (the Michael Hammer school) has been a tad out of fashion
lately, as analyzing and documenting good ‘ol traditional processes fits poorly
with the current focus in disruptive innovation, blue ocean design and
reinventing traditional structures. Of course people of a process persuasion
can retort that you can equally well model and monitor a process of “innovate
and disrupt” (what previously was more modestly called “define and deploy new
products”, or even before that “portfolio management”, which doesn’t sound
nearly as glamorous), but following a process defined and documented by someone
else doesn’t sound as the best recipe for having groundbreaking ideas or paradigm
shifting insights.
At the end of the day models are
models, and they are only as good as the validity of the predictions they allow
us to make. But before starting to make predictions we need to understand the
principles (the “rules”, or for those with a scientific bend, the “laws”) underlying
the evolution of the model, something which all the models examined sorely lack
(beyond “changes in a box –or in an oval- somehow influence the rest of the
boxes –or ovals”). Not to fall in the same trap, I’ll present then the
fundamental rules of organizational change (or rather, of organizational
evolution) that go along with the ADVISE model:
·
R1: With
time, the ability of any organization to achieve its ends gets worse. This
is the organizational equivalent of the second law of thermodynamics, entropy
in this case being the opposite of that ability (so as “organizational entropy”
increases, the ability to achieve the pursued end decreases). There is a number
of reasons why this is so: normally the pursued end is also pursued employing
different means by competing organizations (“competing” because there is only
so much of the end to go around, so the extent to which it is achieved by
organization A necessarily detracts from how much of it organization B can in
turn achieve). As machines, organizations also experiment the wear and tear
associated with continuous functioning, and an increasing amount of their
internal “energy” (resources) is lost in the equivalent of friction (either degraded
energy that can not be applied to produce work, or waste –resources that do not
contribute to the attainment of the goal, what in lean methodologies is designed
with the Japanese word “muda”).
So with time educational organizations become worse at discovering
(this-worldly) truths, and may end up just repeating the received wisdom
without being able to add nothing new to the existing canon; religious
organizations become worse at communicating (other-worldly) truths, and either
stop expanding and become less and less relevant to the remaining faithful or
become a bureaucratic enterprise centered around improving the material well
being of their members with the thinnest veneer of transcendental aims to mask
their true interests; political organizations become worse at reproducing, and
grow at an ever slower pace until they finally implode (more or less violently
depending on the force and status of their neighboring groups); economic
organizations, lastly, become less successful at enhancing the social status of
their employees (their salaries stagnate compared with those of the
competition, their products loose market share, their profit dwindles, they
have to cut back production and lay off people… you get the idea). Distinct as
the experience of increased friction/ waste may be in the different types of
organization, the degradation of their abilities to achieve their ends almost
always have the following impact in some of their features:
R1.1 Their Dominance increases, as the universal response to the failure
to get the desired outcomes (or to get them to a lesser extent, or a lesser
portion of them) is to make members of the group try harder, devoting a higher
percentage of their waking lives to the enterprise
R1.2 Their Isocracy diminishes, as power tends to be concentrated in
those most able to exert it (and those differences become more marked in an
environment of greater dominance, where the activity within the organization
becomes more important relative to that outside it)
R1.3 Their Simplicity decreases, as the organization becomes more
complex in an attempt to better achieve its end through grater job specialization,
and thus through the creation of more differentiated roles
R2.4 Their Egalitarianism decreases, as there are less rewards to
distribute (a direct consequence of the diminished ability to reach their
stated goal) and there is Isocratic deciding structure, most times the elite
where the decision power is concentrating will act taking a greater share of
the remaining bounty
·
R2: There are only three responses
to the diminishing ability to reach an organization’s ends: acceptance, growth
or innovation. The
first two are quite uninteresting (we will have a bit more to say about growth
later on, right now we will just point out that as a strategy to improve goal
attainment it fails at least nine times out of ten), so we will explain a bit
more of the third. I define innovation as the systematic accumulation of
changes that improve the organization’s ability to reach its goals. There are a
number of features within that definition that merit a closer look: 1) it is a systematic
accumulation, not a haphazard occurrence that happens, to everybody’s surprise,
to translate in some improve. Being systematic means being preceded by some
analysis of what the consequences are going to be for each of the dimensions of
the organization, and of its impact in the elements of it (its people and the
roles they play, the relationships between them, the resources it uses and its
viability within the existing environment). And do not forget it is an accumulation
of changes, not the result of a simple, time bounded effort that can afterwards
be discontinued and forgotten (we’ll see why in a moment). 2) when we speak of
change, of course, we mean doing things differently, not just talking about it
or writing about it in a blackboard. Some of the elements within the model have
to be modified… and not return to their previous configuration. 3) the change
has to have a measurable, meaningful impact in the ability of the organization.
Change for the sake of change does not qualify. Neither does, of course, destructive
change that actually impairs the organization’s efforts towards its goals. With
that we have probably eliminated 90% of the organizational “changes” that have
afflicted modern corporations for the past three decades, regardless of how
well they were sold back in the day to the respective boards.
Now regarding the intensity, timing and need for accumulation of changes
I will recur to a concept developed originally in the first half of the XXth Century
by an Austrian endocrinologist (Hans Selye) named General Adaptation Syndrome,
and which has recently known a surge in popularity thanks to its adaptation to
the powerlifting world through the work of Mark Rippetoe (whom with readers of
this blog should be pretty familiar by now). Selye posits that organisms try to
stay in a stationary state (homeostasis) unless disturbed by an external
stressor (be it the demands of a taxing training session or the launch of a
product by a competitor). In response to that stressor, the organism response
is to exert itself, and initially that exertion causes a decrease in its
ability to respond again to a similar stressor. However, if left enough time to
recover, it not only recovers its ability to respond to the previous level, but
increases it a bit for a period of time afterwards (the phenomenon known as “supercompensation”
in the training literature):
Of course, if we want to actively combat a consistently decreasing trend,
we have to keep on applying judiciously timed stressors in order to reach a
slightly higher capability level in each supercompensation cycle.
We will deal in more detail with the implications of Selye’s model later
on, right now we have to consider that the sustained application of innovation
has a number of desirable effects in some of the dimensions we use to
characterize the organization:
R2.1: Their Adaptability increases (indeed, it could be said that it is
the other way around, being adaptable in the first place is what enables
organizations to apply sustained, beneficial innovations to combat the pull of
increasing entropy)
R2.2: Their Voluntariness increases, as people naturally feel attracted
to positive changes (it could be argued that if changes were shown to be
detrimental, and to hinder rather than foster the attainment of ends, they
would reduce voluntariness, as people is naturally reluctant to accept change
if it is not accompanied by a clear, tangible reward)
We should note at this point that the first rule affects dimension D(ominance),
I(socracy), S(implicity) and E(galitarianism), and is indeterminate regarding
how it impacts A(daptability) and V(oluntariness) which may go either way
really, while the second rule does the opposite, modifying A and V in a
definite direction, whilst leaving the potential change in D, I, S and E
undecided.
·
R3: There is a direct correlation
between the amount of time an organization has been declining in its capability
to reach its ends and the amount and intensity of conflicts within it. We define conflict as any
divergence between the end of any member of an organization and the end of the
organization itself. As individuals have to renounce to some goods to join any
organized group and obey their rules (that renunciation takes the form of time
devoted to the organization, lack of liberty so rules are followed and other member’s
rights are respected, material resources whose enjoyment is foregone as they
are rendered to the group, like member’s dues or the like, etc.) there is always a certain tension, a certain
expectation of a modicum of reciprocity, so the individual enjoys in exchange
of that renunciation something (the furtherance of the organization’s ends)
that is for him at least equally valuable. Now as the organization becomes less
capable of ensuring those ends are met, and has less to give back to its
members in terms of rewards, the original covenant between them may be
threatened and their commitment may be weakened. Thus each member may disagree
with the rest about:
o
The
current level of Adaptability (how much change there is)
o
The
current level of Dominance (how much work is being demanded from him)
o
The
current level of Isocracy (how decision power is distributed –normally claiming
more for himself)
o
The
current level of Simplicity (how complex work has become)
o
The
current level of Egalitarianism (how the decreasing rewards are distributed)
There you are, then. With the
elements we identified as belonging to the model in the previous post, plus
those simple three rules I maintain we have the conceptual tools required to
explain, and to a sufficient extent predict, the likely evolution of every type
of organization (I admit that is quite a tall order). We will apply them to a
couple of example in the next posts within this series to see how well the
framework holds up against the dirty and complex real world, and we will see if
there is some tweak needed.
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