It's time to reinvent management. You can help.
jim-stikeleather's picture

Bureaucracy-Busting Strategies for Today’s Innovation Economy

By Jim Stikeleather on August 7, 2014

In The Busting Bureaucracy Hackathon, we’ve established that the reign of bureaucracy has run its course. Org charts, memos, forms, legal agreements—all of the mainstays of bureaucracy are increasingly irrelevant and a hindrance in the new global economy.

In The Busting Bureaucracy Hackathon, we’ve established that the reign of bureaucracy has run its course. Org charts, memos, forms, legal agreements—all of the mainstays of bureaucracy are increasingly irrelevant and a hindrance in the new global economy. There are times when bureaucratic processes are still useful, but in this economy, constant and aggressive innovation creates jobs, drives profits, and quite literally transforms the ways in which we create, produce, consume, and recycle.

But knowing that bureaucracy and its trappings need to be rethought is one thing; proactively deconstructing it in your own organization is quite another. Bureaucracy, after all, is—or at least appears to be on the surface—safe. We know it. We’ve embraced it for millennia. It makes people feel important. Its paths are clear. You could even argue that it helps us to interpret and navigate the world around us. But in order to keep up with and ahead of the new global economy, chief executives need to shift out of the “safe zone” and rethink some of the most basic concepts that underpin their businesses.

Here are a few ways to start:

1. Cultivate IT departments that are stewards of information flow, veracity, and security rather than deliverers of services.

Companies that are really on the ball these days have IT departments that are aware of the obsolescence of their old ways of working. You know what a really smart IT department says these days?

“I should not be involved in the delivery of IT anymore. There are other people and entities out there that can do many of these tasks—such as transactional record-keeping and reporting—smarter, better, and cheaper than we can. Let us focus on the things that are unique to our company and do them better than anyone else can.”

How do you do that? It could be that the IT department focuses more on the enterprise architecture function, understanding and managing the origination, flow, and proper use of information within the organization, but not actually delivering it. In that scenario, they’d in essence outsource services (software, infrastructure, platform, and even some business processes).

Another great way to rethink IT is to recognize that Google, Amazon, and any number of cloud providers provide the very best preventative or prophylactic security because they’ve poured so much money into developing it. Coupled with all the research, tooling, and services they have applied to the detection of breaches, then it is clear that an enterprise’s IT should focus on how they react to security breaches because that’s much more specific to the company. (How valuable is the data? What’s the exposure associated with the data? How can you reroute people, systems, and information to get their jobs done in the event of a security breach?)

With respect to IT and busting bureaucracy, it’s about understanding that we need to move from a model where IT isn’t delivering technology, but rather focusing on information and information management—the procurement, provisioning, monitoring, and management of the creation and consumption of information resources—and on security. In effect, IT, the delivery of and technology implementation therein—the way we traditionally think of IT—should become invisible.

2. Shift the focus from engineering efficiency. Make your next great innovation your driving force.

For the past hundred years or so, management has focused on engineering efficiency at scale to counter the major economic frictions of time, distance, and information. It’s been all about things like management control, standardization, specialization, centralization, hierarchy, conformance, variance reduction, and predictability. But we’re fast approaching a tipping point where because production often co-resides with consumption, and business ecosystems rely on collective interest, efficacy is dependent on things like engagement, freedom, diversity, experimentation, community, cooperation, collaboration, and even serendipity.

It won’t be long before it’s the norm to have a 3D printer at home, as well as devices that will transform raw, recyclable material like liter Coke bottles and bubble wrap into material that the 3D printer can use. If you don’t have the precise expertise to create whatever product you want with that 3D printer at home, you can call upon people to help you—no travel necessary. Suddenly, the preoccupation with efficiency that bureaucracy is created for is dismantled by unlimited access to intellectual property. You can modify the intellectual property and manifest it without leaving your home. Bureaucracy only works with the economic friction of distance. Remove that friction, and bureaucracy is purposeless, friction of distance basically bought businesses time with consumers to indulge in bureaucracy. Today’s consumers want what they want—often the next new best thing—now. They have no patience for bureaucracy, so businesses shouldn’t either. Bureaucracy also only succeeds when there is an information differential between producer and consumer. Remove that friction as well, with information, intellectual property, education, directions, help and assistance just a click away and bureaucracy is without value.

Success now relies on creating or delivering something that is truly innovative, not necessarily on the never-ending march toward increased efficiency or the proprietary marshaling of information, skills, and resources. If you make innovation the driving force of your business, bureaucracy should appropriately take a back seat.

3. Develop a mindset that accommodates and encourages experimentation rather than prescriptive problem solving.

The shifts in how business is done, and what drives it, have replaced what was essentially a simple system with a far more complex system. In a simple system, bureaucratic behavior follows the sense-categorize-respond trajectory. You look at your business. You see an XYZ problem. The solution for the XYZ problem is this best practice. So you implement that best practice.

But that prescriptive approach doesn’t work as well in a complex system. In a complex system, you likely have few clues to what’s going on, so you try an experiment, and then you extract the solution from your understanding of what you learned from the experiment. If the experiment fails, then you go back and try another one. That’s the whole basis of innovation: a quick succession of failures that teach you and inform your next steps.

Executives in bureaucracy rely on their ability to standardize, drive scale and efficiency, eliminate variance, and introduce predictability and repeatability into the process. But we’re in a world now where if you do that, you’re going to fail. The transition isn’t easy—it’s basically like learning a new language that maps the way you think in a completely different way.

This transition to more metaphorical, experimental thinking is going to be a massive challenge for consulting companies in particular, which are basically repositories for best practices. Best practices are essentially ineffective in a world of innovation, because all competitive advantage and profits are generated by trying something that hasn’t been tried before. That’s not to say that parts of organizations will still need to be governed by efficiency, standardization, and governance. But the areas that create revenue, profits, and growth have to transition to a more experimental model in order to be competitive.

Ultimately, the dismantling of bureaucracy demands the recognition that innovation-driven economies are foggy: Cause and effect are only coherent in retrospect, and don’t repeat. One of the biggest challenges facing executives today is how to operate and succeed in an environment where “what works” constantly shifts beneath our feet. Audits of the usefulness of a company’s bureaucracy should always start with its executives’ disciplined consciousness of the denseness of the fog as well as the merits of experiment

You need to register in order to submit a comment.