Faced with uncertainty leaders, especially ones far away in head offices, respond with increased control: alignment is sought, standards are mandated, discretionary spending slashed, and variation from pre-planned budget must be explained. The result - too often - is an organisation in the periphery that is more brittle and clumsy; unable to respond as fast as rivals to emerging opportunities, harming its capacity to survive and thrive in challenging times.
Despite having 21st century tools, management mindsets are stuck in the 20th century. Economies of scale and scope, effectiveness through efficiency, and survival of the fittest dominate. But even a cursory glance at any ecosystem (a natural or manmade one - like an economy) shows that it’s not the fittest that prosper but the ones best able to adapt to local conditions. This explains why giant tortoises have prospered for millions of years (an ability to adapt to a changing environment - not because they are a master race) or why Nokia and RIM didn’t, despite being market leaders.
Centralised decision-making - the 'head office head lock' - makes succeeding on the front line harder
For a century management thinking has been shaped by the metaphor of ‘the organisation as machine’ with the fastest and most efficient best placed to succeed. Aspirational targets are imposed, performance tolerances (KPIs) established, processes re-engineered for optimisation, and the people (the cogs) aligned. But when driving a speed boat in a storm the sea usually wins. Reaching safe harbour requires a ship for all seasons, but this would be a major feat of engineering - and prohibitively expensive in this climate. Yet there is a natural, cheaper alternative.
An organisation, like any organic group (e.g. a bee hive, a human brain, a stock market, the global economy) is a complex adaptive system (CAS). This means it has an inbuilt capacity to adapt intelligently to change at high speed (think about brain functionality, or sudden shifts in stock prices in response to good/bad news). It’s change management without the coercion and resistance.
A CAS is best understood in three parts (see the picture above):
The major insight here is that increased organisational variation (loosely-coupled alignment) improves the range of locally appropriate options leaders can select from to respond to unpredictable circumstances
Like human consciousness, each organisation has it’s own higher system (it’s culture, or health) that enables it to rapidly and appropriately respond to local circumstances. And just as attempts to re-engineer a brain would destroy its consciousness, head office attempts to engineer local organisational capacity from afar risks retarding local capability to better adapt to local circumstances than rivals - something needed now more than ever.
It’s time to stop engineering organisations and start cultivating them instead.
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