In Part I of The Rise and Fall of the Bureaucratic Empire I explored where Bureaucracy came from, how it’s been applied to corporations, and why it’s having issues – if you haven’t read it yet, it’s a good idea to look through it first!
Now in Part II, I want to explore some examples of why moving away from Bureaucracy can work, alternatives such as Entrepreneurship, and how we can begin moving over and scaling.
Remember, as ever – this is exploratory, but it is being done by consultants and self-awakening organisations, and it’s being done successfully.
The hinderance of Bureaucracy – and an answer
A great example of how bureaucracy can be problematic has been shown time and again with road rules; certainly in the UK we have very rigid, strictly set road laws for driving and parking, and adults driving 1.5+-ton death-machines break them regularly despite in most cases knowing better.
Research has shown that road laws and regulations make roads safer and more efficient – up to a point.
Research has also shown that too many of them make roads less safe and efficient. If you overconstrain, people will fall back on reliance and operating in a less accountable fashion. I see far more dangerous speeding and aggressive, entitled driving in the strictly regulated UK than I do in, say, the Philippines (which can also be dangerous, don’t get me wrong!).
Greater car safety and performance than ever lulls us into driving closer to our limits, negating those advances (we drive closer, faster, with less attention); road rules for everything remove accountability, allowing us to simply follow them without consideration (and at the same time, game the system); and expectation, convenience, and a combination of luxury and status induce entitlement and an attitude where we only care about ourselves (where we deserve more than other road users).
It doesn’t help that warning signs or markings in the UK require a KSI (Killed/Serious Injury) before they are put up, rather than common sense; if there are warning signs outside a school, it means a child has likely been harmed by traffic there. My local council saw evidence that cars regularly sped down my old road at up to 50mph through houses with children as a shortcut, but could not put up preventative measures unless someone was badly hurt first.
This is the insanity of heavy bureaucracy – requiring real justification rather than pre-empting issues in a human fashion. But it gets worse – in some areas, speed cameras are quite openly not being used for accident prevention, but revenue generation, meaning people game the system instead of focusing on safety of others. A cyclist in the UK who wears a helmet is less likely to suffer head trauma in an accident – but more likely to be in a bad accident because cars assume they are safer and pass much closer and more dangerously compared to a cyclist not wearing a helmet. Mental patterns and accountability, again.
So how did we become over-constrained? Well, bureaucracy creeps. Perhaps one person crashed somewhere, so a rule was introduced to account for preventing this again. This rule then spreads, often from other harm; and you reach the point where the existence of the rule perhaps causes more problems than the lack of any, but by this point the rules are an institution rather than applied within context and reason.
What’s really interesting is when you remove most road laws and introduce uncertainty, forcing accountability again. Cameras used for costly fines don’t reduce speed overall; but removing road markings cuts speed by an average of 13%, because drivers are less certain and more careful:
Behind this demarking lies the concept of “shared space” and “naked streets”, developed in the 1990s by the late Dutch engineer, Hans Monderman. He held that traffic was safest when road users were “self-policing” and streets were cleared of controlling clutter. His innovations, now adopted in some 400 towns across Europe, have led to dramatic falls in accidents. Yet for some reason Monderman’s ideas remain starkly uninfluential in the world of “big” health and safety, especially in Britain.
Monderman’s principle is that freedom to assess risk for ourselves is what makes us safer. Rules, controls, signs, traffic lights all reduce our awareness of our surroundings and thus our sense of danger. On roads, he said: “When you don’t exactly know who has right of way, you tend to seek eye contact with other road users. You automatically reduce your speed … and take greater care.”
This has also been seen in towns where all road markings and rules were removed. Traffic self regulated to drive safely and efficiently because suddenly blame and certainty of risk were fuzzier. This isn’t conjecture; it’s been tested.
By lessening the bureaucracy and making all drivers invested in safety and driving accountability, in other words making the roads more of an ecosystem, the efficiency and safety rises – exactly what bureaucracy wanted to achieve, and worsened. You’ll still get the occasional accident, but it’s not everyone gaming the system (note: this may not apply for people parking discourteously, but then correct punitive action and processes help here).
These are clear but consistent examples of how bureaucracy inhibits humanity in just one area. A certain amount of hierarchy may be important; but too much, and the system is exploited or ignored, and ends up acting against itself, and we remove accountability and form reliance. When we treat adults wholesale like children, they will act as such. Invest them and treat them as adults… and they will act as such.
Against all we’ve been taught, less bureaucracy doesn’t automatically equal anarchy, and that’s an important thing to understand. We automatically create systems and order our worlds; that’s what humans do.
Ecosystems are constantly adaptive, learning, and reactive, so why do humans form bureaucracies? Well, I think part of the answer is the comfort zone, and laziness. Once we set up a structure to do things for us, it’s comfortable and we can focus on other things, or don’t have to expend so much energy. But as discussed before, this often ends up problematic when the structure itself begins to take precedence.
Ecosystems require a little more effort, or rather investment, because everything within an ecosystem affects everything else; but the overall effort is less because all agents quickly align to deliver value, so there’s much less friction, whereas bureaucracy is… well. It becomes a grind, and we often forget the majority of us are the grain. And I believe we are individuals gain far more personal achievement, worth and value of our own from working within an ecosystem.
If Bureaucracy is focused on power, authority, and control, an Ecosystem approach is focused more on delivery of the value within the system. That value is the product, but also the people that make the company, the ecosystem itself. I refer back to my friend and colleague Liz Keogh, a talented consultant who does a great talk on how Value Streams are made of People.
In Cynefin terms an Ecosystem is complex and doesn’t try to order complexity. The structure is emergent, what works, not categorised, what is forced;an ecosystem develops according to feedback, not initial dictation.
In Part I, we saw this:
So, if we moved to an Ecosystem, how would this work?
We don’t NEED to be sets of fish in different tiers of down-linked aquariums, where a single fouled pipe can cause problems down the line, and as we’ve seen, this actually creates more inefficiencies.
But put us all in a lake, and we develop a functioning ecosystem; the big fish still take up more space and dictate the culture and balance, because ecosystems conform to apex predators within the system.
If all fish are invested in the operation of the fishbowl, the success of all fish benefits all fish… and the whale!
This is a critical concept to understand – you can move out of a structure which focuses on power, authority and control so much that ego, policy, power struggles, and dehumanisation (amongst a horde of other issues) actually make business incredibly less efficient… and still retain decision-making ability, structure, and gravitas.
An ecosystem isn’t chaos. There’s still hierarchy, but it is reactive, fluid, contextual, invested, and now it has enabling constraints, not rigid constraints. Ecosystems also self-regulate to some degree, and that’s something that (hypothetically at least) adult humans working together can do. For an example, I refer you back to the “towns with road rules removed” above.
Entrepreneurship – the reactive structure
When we speak of Entrepreneurship in business, we are usually speaking of two types: Institutional, and now Millennial (there are also many other sub-cultural and social types). Both of them have a number of perceived qualities; innovation of new ideas and business processes, strong leadership, people management skills and team building abilities are considered essential. These are obviously not limited to startups and small companies – but are perhaps more common there.
Institutional Entrepreneurs are defined as collective and collaborative. Edith Penrose says that “in modern organizations, human resources need to be combined to better capture and create business opportunities.” Paul DiMaggio furthered this view, saying “new institutions arise when organized actors with sufficient resources see in them an opportunity to realize interests that they value highly”.
An entrepreneur is willing to take risks in the name of an idea, even putting financial aspects on the line and spending time as well as capital on what may seem uncertain ventures – but often they will judge the risk to be less than other people might because they have vision and drive, and often operate outside the Comfort Zone in the Optimal Performance Zone. They are adaptive and reactive enough to often mitigate a lot of the risks should they arise.
Millennial Entrepreneurs further change this by adding more qualities; far greater acceptance and knowledge of new technology, new business models, and a strong grasp of the business applications of digital media. They have less work/life identity split. They also face greater challenges – less of their generation are self-employed, but with higher expectations from employers, and the current economy, higher education debt and several other factors means that those who choose to be entrepreneurs are focused, driven and very aware of the new marketplace.
I usually find more initial accessibility to coaching and mentoring an Entrepreneurial mindset, because it tends to want to learn and grow and achieve a vision, not stay comfortable. There’s also a greater ability to take risks, more flexibility to change what doesn’t work, and less ego if something isn’t known or is required.
To be a successful entrepreneur requires creativity, accurate decision-making, and conceptualisation. Innovation is easier and quicker; adaptation and exaptation are easily committed to. Reaction times are quicker. Networking and system building is a true skill. The company has fast, direct and clear communication lines. Information is accurate. People are often quite invested, and there’s little or no gaming, sycophantism or cynicism because these can’t be hidden easily when everyone is involved.
It’s very difficult to simply switch from a massively ingrained, traditional approach like Bureaucracy straight into an Ecosystem, but Entrepreneurship has elements of both that could be considered as interim (or indeed endpoint). It requires a different skillset to Bureacracy, which is often satirised by boring, methodical, rubber-stamp obsessed faceless automatons. In contrast, an Entrepreneur is often seen a energetic, dynamic, interesting, world-changing, and eager.
There’s a reason personal, likeable people often build companies and remain entrepreneurs, even if they take this into corporate sized companies; you get the odd sour apple who still thinks like a bureaucrat (usually through ego and a false equivalence of years=better entrepreneur), but by and large these are people people, and they have a vision they need to enact.
That is traditionally seen as a problem as a company grows and “matures”; people automatically believe that the company must then transition to become more “serious”, gain “corporate culture” as if it’s a requirement to be taken seriously. I’ve seen it happen over and over, and often think… why did you lose what you had!? But it is possible to still retain the culture of entrepreneurship. I’ve seen entrepreneur-style leaders take over SMB/SME or even large parts of large corporations and still have this culture, and be very effective.
So is an entrepreneurial mindset the best balance between pure ecosystem and bureaucracy, with just enough of the latter to appeal to everyone? It’s got some hierarchy, but a lot of the benefits of an ecosystem, and it’s very focused on human culture and delivery of value.
It’s certainly worth considering, and far easier to transition into from rigid structures.
Transitioning and Scaling Entrepreneurialism and Ecosystems
This also means from Shareholder to Stakeholder, because rigid hierarchy typically prevents and even discourages internal stakeholdership, and marginalises valuable outlier stakeholders. As mentioned by the Roundtable referred to in Part I… for a long time, the only matter of consequence has been shareholder profit at the expense of all else.
That has now changed, but flipping from corporate culture in one go is just not possible in a large company. Instead, you have (at least) two important things that need changing to begin with:
- Culture – how things are perceived. This is set partially by interactions between people, but primarily by the actions and inactions of leadership. Some of these are informal, “unwritten rules”, or as Dave Snowden calls them, Dark Constraints. If you want to change Culture, this needs to be from the TOP DOWN, and is holistic. You change it all for everyone, or none of it.
- Processes – how things are done. You can change units or departments at a time, because they essentially are small ecosystems of their own – they have their own intra-company culture, methodologies, and requirements. Much of this starts with the people and the mindset, and using enough policy for direction but not enough to stifle innovation, delivery, and investment. The focus should always remain the results not the methods (within reasonable bounds).
So it is possible to scale a change through even a large company, but it requires a very interesting motion where you change from the top and the bottom simultaneously – two waves that cross through each other, if you like!
Obviously scaling an ecosystemic, entrepreneurial approach is possible – at least in part. Google is, again, a classic example. A huge company that has hierarchies, it nevertheless ensures that its employees are invested where possible, given their own time, judged on outcome vs output (for example, results vs hours), and as far as I know still holds regular meetings for employees to highlight where it is becoming too bureaucratic so the issues can be resolved.
Part of this successful structure is the fact the founder was never indoctrinated into believing bureaucracy was required, or the only way. Larry Page’s life has apparently been hugely influenced by four factors, according to interviews; his grandfather’s history struggling in the early labour movement, his education, his admiration for Nikola Tesla who was a hero (and is one of my most-admired as well, as it goes), and his own participation in the leadership institute at the Engineering School of the University of Michigan.
He has further said that the hardships of his grandfather’s story encouraged him to make Google a totally different kind of workplace – “one that, instead of crushing the dreams of workers, encouraged their pursuit”.
If you look at the Big 4(/5) in tech at the moment (Facebook, Apple, Google, Amazon, and somewhat Microsoft), as well as past giants like IBM, or even smaller multinationals like Computacenter (who are still big!), you will mostly see huge trappings of Bureaucracy. This is interesting in Microsoft given the founding of some lean/agile principles there, but remember hierarchy usually wins over time! Apple still retains some of its entrepreneurship in some ways but it’s lost reactivity and innovation; Google is the most entrepreneurial of them all.
So it IS possible to do, to a point! I think as size increases it is inevitable you will need some strong hierarchical structures to support the facilitation, delivery and decision-making, but at the same time, if you can view units as are ecosystems in themselves, and the company as an ecosphere – an organism, perhaps – made of systems composed of invested people, you gain a better understanding of how it can work together. All areas of the company affect all others; traditional company management tends to view company structure as more modular, and is definitely not always as grounded in reality.
And that’s another key – decision-makers need to ensure they have time enough to decide well, using disintermediation for accuracy and grounding themselves by listening to everyone within and without, outliers included. There is a balance point between leadership needing to focus on decisions and not having time for irrelevance, and considering your time too important to spend long on it. Much of this comes down to trust, accuracy, and grounding in reality – something entrepreneurs are far, far better at than bureaucrats in my experience.
As I always, always say: there isn’t a templated, simple answer. It’s going to be highly complex and contextual. Each company, bluntly, will have to find its own way if it’s going to work. But that doesn’t mean people can’t advise and help guide that understanding and discovery. Again, that’s what I’m there for – to help a company sustainably understand this for themselves.
In fact, this is why I work holistically using multiple, contextual frameworks; this is like trying to untangle a huge knot, and pulling one part invariably affects another.
I hope you’ve enjoyed this exploration of what could lie beyond bureaucracy. If you need to talk more, or discuss engagements, DM or call – that’s what I’m there for.
But one thing is evident: like it or not, in the current market, with the current workforce and consumer set made from a new generation, and with 4IR so prominent in the next leap forward… Bureaucracy as we know it isn’t just struggling, it’s a dead-end beginning to grind to a slow halt under its own friction in many industries. It’s time to explore new emergent avenues of better business.
Let’s get Involved.