Intellectual In-Breeding and Mutations of Corporate Governance

Why do people resist change?  What causes stasis in organizations? Why do groups run for a while and do really well, then get bogged down?

(And why do I feel I can answer this in a blog post?)

The meeting of social forces and business forces sets the stage for answering the questions above. Social forces usually take the form of a new group of people in a team ready for action. They have a task and they are geared to complete it.

So far so good.

Business wants to be successful. But business is harsh. We have employment laws, EEO laws, labor and industry laws, OSHA standards, Sarbox, HIPPA, insurance requirements, competitors spying on us, on and on.

When this happens, businesses find it easiest to spout rules.  Rules aren’t all bad, but many of them are created with an air of expedience and a core set of assumptions.

Chain of Command and Flow of Information

Perhaps, the biggest assumption is that chains of command and information flows are in some way synonymous.  In siloed organizations, information is sucked up one silo and trickled down another.  Each link in the hierarchy is a point of information dissemination. 

Why is this an assumption?  Because historically, information was very expensive to create and usually was disseminated by large, cumbersome and specialized reports.

This meant that people who read these reports were trained in the reports themselves.  In turn, this meant that segments of the organization became highly reliant on these specialized reports.

What happened then?  The silos began to serve the reports and not the other way around.

Cost of Change Used to be High

With large costly reports and even more costly hard machinery, business of the 20th century had extremely high costs of change. It was rarely feasible to make even minor adjustments to these complex systems.

The Result

Organizations grew to assume that silos were the very definition of business. You had to have a marketing silo, a development silo, a management silo, etc.

In a high cost of change, high cost of information transfer world – this almost makes sense.

The cost of this was members of an organization were always thirsty for information.  Information became a valuable commodity within companies and therefore represented power. This meant that people made a determination every time they received information.  Do I hoard this or share it?

A very combative question and world view.

The value proposition for sharing had to be high in order to get past the opportunity cost of hoarding (saving) it for later use.

This means that teams became rigid. If you moved around too much, you had too much information.  You could make connections other people couldn’t.  You’d short-circuit the org-chart. 

The org chart became the ladder.  The ladder became predictable.  Predictability became institutionalized.

Today is Different

What we are learning now, is that in a world with a low cost of change and a low cost of information flow – many assumptions from the 20th century no longer apply. 

Agile Methodologies are creating new paradigms for the management of small teams. 

Lean thinking gives us reasons to rapidly communicate value to the largest possible audience with the least effort.

Social media gives us the principles for collaboration, ad hoc team development, institutional communication, and the broadcasting / retrieval of information.

This creates a more dynamic workplace.  Informed workers have the information at their fingertips to make decisions and improvements.  Information is now the enabler of power and not the power itself.  Power now becomes how much can we execute.

Dynamic Teams

Information in the right hands inevitably leads to conclusions that certain people need to work with certain other people not in their silo.  That’s why is was hoarded in the first place. Information is, by its very nature, subversive.  Information tells you the right thing to do.

That’s why Stalin limited information flow, it’s why corporations do too.

Ad hoc workgroups and the creation of a workforce that embraces not only change but improvement is at the core of this new paradigm.  Dynamic teams built from a diverse talent pool reduces the chance of in-breeding.

These pools can be obtained by having a large staff to draw from (like Microsoft or IBM) or from gathering the right contractors at the right time. 

Either way, you are increasing the gene pool of ideas when teams shift.  We learn from each other – new partnerships spawn new ideas.  Different viewpoints temper group think.  Complacency is neutralized.

Without this diversity, without mixing up the gene pool, we get mutations. The people in companies who cannot be fired.  The policies that no one will question but everyone loathes. The inability to change even simple things for the good of the organization.

Conclusion

The Soviet Union crumbled under the weight of its own bureaucracy and inefficiencies.  Too many resources were going to trying to withhold information and stop people from acting in the best interests of themselves and the state. 

Business currently suffers (granted to a lesser extent) from the same affliction. In a time of rapid economic decline, can we continue to support this waste?  Business as usual = bailout or collapse, eventually.  Business as usual is not sustainable.

Technorati Tags: bill tozier,brian kerr,soviet union,genetic,microsoft,IBM,10 social media principles

Blogged at My House AGAIN due to endless snow in Seattle, WA

Comments

[Jay Fienberg]

Great post - what you are talking about has many facets. And, I think there's an ongoing challenge to present these ideas in compelling forms that we all can digest and utilize in our work with information-driven organizations.

I think this is an interesting idea, but either overstated or in need of more exploration:

"Information is, by its very nature, subversive. Information tells you the right thing to do."

I think one could just as easily assert that "information is, by its very nature, oppressive. Information tells you the wrong thing to do."

As a conjecture: when has anyone every done the wrong thing without doing so based on some information?

Also, you could look at Stalin (etc) and observe that their tyranny was possible specifically because of how they shared information--and how they encouraged others to share information.

So, again (in our larger dialog with each other), I'd suggest that there's a fundamental issue around the *quality* of information that can override any quantity information.E.g., more information can be oppressive, if it's "bad" information.

[Jim Benson]

Awesome comment. I am working on a blog post now to answer it. I love that I'm going to write a blog post in answer to a comment to a block post that was an answer to two comments.

[Bill Tozier]

Pushing a little harder: I'm not sure but I think that there is often some set of circumstances for which any strategy will outperform any other. Some folks I know piss people off when they point out that Extreme Programming or "Agile" (whatever that is supposed to be) cannot be better in all cases.

It's a useful exercise to objectively explore realistic business cases where being (or becoming) "agile" or "lean" are bad ideas. There's nothing new in what we do, and we are not revolutionaries except insofar as we can understand more cases of the real world and arguably communicate them better.

The 21st century still involves moving metal objects around, and communication networks don't ensure efficient communication, and archives don't ensure knowledge capture, and politics don't transform smoothly into communitarian panarchy. And that's as it should be.

Nothing technological, cultural, social, or even philosophical happened after 2000, that didn't have a counterpart in 1900. Telegraphy and telephony and electrification and corporatization and stuff made Scientific Management possible... why should not our latest, super-enhanced versions of the same stuff not make Super-scientific Management the next big craze?

Or, shorter version: Every advantage from doing things "differently", for any difference, must have risks as well. And lacking universal adoption of the difference, there must be cases where these costs outweigh the benefits.

[Jim Benson]

Bill,

Nothing is universally applicable. In fact, we don't presuppose any methodology is universally applicable.

We use principles to guide the creation of processes that apply to specific realities. Different teams require different processes.

Scrum or XP are fairly rigid in the out-of-the-box application. This ridigity is what people are bucking against - this one-size-fits-all approach.

The principles behind Agile - dynamic teams, frequent and short group meetings, ritualized communication, limiting work in progress - are all, I believe, universally applicable.

Some groups will want time boxed work-limiting mechanisms, others will be better suited for a kanban capacity style limitation. In the end, the principle is what needs to be kept in mind, and not the dogmatic application some guy invented for his particular project.

[Bill Tozier]

"The principles behind Agile...are all, I believe, universally applicable."

Hmmm. Nope. Can't give you that.

I agree that these principles have been underused in recent history, especially in business, and that there are fewer costs to changing in that direction nowadays.

But my challenge to you (and me) is to describe a scenario---which must exist, since agile practices are not ubiquitous and the world is full of diversity---in which the costs of agility outweigh the benefits. Or where the benefits of a traditional approach outweigh those of agility.

Besides Stalinism, that is. Something a little more local.

We could, for instance, think about whether oligarchies are still stable in agile organizations. And I think that in some cases they might be moreso.

I wholeheartedly agree that the costs of agility have been reduced, as communication and information-sharing costs are lower now (in real terms) than they used to be. And that opens up and changes a bunch of niches.

But if we're going to invoke biological metaphors, maybe we should think a minute about community assembly dynamics in real life. There's room for a lot of life history diversity in any biome. There are niches for "agile", nimble wanderers, and also slow, steady specialists. Predators and prey, producers and saprophytes.

In a natural community, big disruptions (like innovations) tend to open chances for new lifestyles. But these disruptions can also reinforce and enhance the old, established interactions as well. They can reduce diversity; give benefit to the big fish and stabilize the status quo.

Used to be the only people who were agile (in the sense we mean) were entrepreneurs. Now we can argue that bigger, more mature institutions can be agile too.

But the biological metaphor is sitting there instructively.

I'll buy a hat and eat it, if the complex changes in the economy and in business culture can't also make it more profitable and less risky (Pareto optimal, in other words) for some firms to become less agile. Under certain circumstances, in certain relations with other institutions.

I'm not arguing for some kind of conservation rule. Just saying that there have to be cases where agility is not the best thing for a firm. And so I'd like to hear when. :)