Bureaucracy is not a bad thing. As Gary Hamel points out in his blog on Fortune, “bureaucracy was a major advance in solving the problem of efficiency at scale. If you have a couple of cars in the garage, a digital device in every pocket, and don’t spend 80% of your time growing your own food, you owe a huge debt to those early management pioneers who laid the groundwork for the modern industrial enterprise.”
But bureaucracy has served its purpose. We have pulled all of the productivity levers available and organizations are sometimes even beyond Six Sigma. Now, we are in a new world: a global, real-time world of customers, partners, suppliers, regulators and competitors where the organization needs to change as fast as change itself. And that pace only continues to accelerate. We have entered the zone of performance that is outside of the attributes and capabilities of a bureaucracy.
The limits of bureaucracy
Information technology began when the first scribe put stylus to clay somewhere in Mesopotamia. From that day forward, IT and Management (with the capital M) were inseparably linked. Transactional record keeping, followed by the communication and enforcement of decisions based upon that information, were the primary purpose of the information technology. In order to access and communicate that information to make quality decisions, an almost universal bureaucratic management structure came to be. The hierarchical order of executives, middle management, supervisors, workers, specialists and even interns has existed since the Roman Legions.
By having details remain at the point of engagement, progressive levels could consolidate, filter and add value (opinions, analysis, summarization) so that executives could know progressively less and less about more and more areas and still make decisions. Once a decision was made, middle management and supervisors could communicate it to those engaged in the actual work. The inverse was also valuable as workers and specialists—those at the tip of the spear, so to speak—could know more and more about less and less, and could better focus on the job at hand.
We have made a number of changes in management practices. (For instance, we no longer decimate failed business units as the Roman Legion did.) But take all of this to its logical conclusion. First, executives know progressively less and less about more and more until they effectively know nothing about everything. This is not conducive for good decision-making. Likewise, workers know more and more about less and less until they effectively know everything about (almost) nothing. This results in actions and optimizations that are good in a very specific circumstance, but could be catastrophic in either a macro or long-term perspective.
Successful next-generation management must enable all information to be available everywhere someone might need it and to anyone who might use it, and accessible by whatever means at the point in time and space where needed. This very concept is antithetical to the idea of a bureaucracy, in which access to information is limited by the organizational chart. With luck, in the future, organizational charts will be as popular as decimation.
Replacing standardization with creativity
In order for organizations to reap all of its benefits, bureaucracy requires complete control of everything possible. More control means more standardization, which means less variability and therefore fewer exceptions to try management’s attention. Bureaucratic thinking is ideally rational, quantitative, sequential, constraint-driven, objective and focused on specific details.
However, the cost is in agility and adaptability to new problems and opportunities. In the Darwinian crucible of business today, innovation, serendipitous mutation and variability drive the future. The enterprise has to become more creative, intuitive, qualitative, subjective and holistic, exploring possibilities and giving equal consideration to hard facts and abstraction concepts.
The success of open source software like Apache and Linux, open innovation initiatives like those being practiced by P&G, open information models like Wikipedia, collaborative business models like TopCoder and Tongal, and management-less organizations like Morning Star all argue the days of the existing bureaucratic management model are short. Dan Pink has effectively described the need for this state in his book Drive. All that transactional information is still needed to make decisions and direct actions, but now to a much larger, dynamic and distributed group of information consumers. Transactional record keeping and reporting becomes superseded by collaboration, cooperation, orchestration, sharing, consensual decision-making and action.
Efficiency is no longer the penultimate goal of management. Innovation is.
We’ll be exploring these ideas and more in the Dell MIX Busting Bureaucracy Hackathon, where progressive thinkers, management practitioners, and technologists from around the world lay the groundwork for the post-bureaucratic organization.