Bureaucracy No Longer Works

Let’s face it: Bureaucracy has lost much of its effectiveness. The entire system needs a dramatic overhaul. Many aspects of bureaucracy actually cause reduced organizational effectiveness. Hierarchy, which implies power based on position, limits the impact of new research and expertise in decision-making. Even Max Weber, one of the original advocates of bureaucracy, understood that it could be threatened when focusing on “the rules” overshadows the actual goals. This happens constantly, which means the system is broken. When things aren’t getting accomplished because we’re stuck following ineffective procedures, it’s time to change the process. We’ve all experienced this. How many times have you found yourself unable to complete (what should be) a simple task because of a flawed system? Ever find yourself passed around from person to person and no one seems to have an answer for you?

We find this model works better for us!

Bureaucracy also lacks the vision and flexibility to deal with innovation and the increased pace of change in our environments. In short, bureaucracy, rather than performance, becomes the goal. My worst nightmare regarding bureaucracy is the phrase, “We’ve always done it that way.” It’s a refusal to consider alternatives and, thus, a recipe for failure.

Even more perplexing is the fact that we continue to ignore some proven models of success. Open systems and collaboration, in my opinion, are like winning the trifecta at the horse track. They have been around for a long time, but are just now becoming the norm for success. They reject bureaucracy, authority, hierarchy, and closed decision-making processes. They encourage participation, diversity, new rules, and to some extent, chaos.

It should come as no surprise that open systems are superior and continuing to do things “the way we’ve always done it” is a dead-end. But, society as well as businesses fail to recognize that old paradigms and structures are failing:

  • Large corporate structures (print publications, big banks, and brick and mortar retailers) are all gradual losers, or even worse. Even Jamie Dimon of Chase recognizes that banks have allowed Fin-Tech startups to threaten their future growth.
  • Companies and society continue to do what they have done in the past, often with poor results. Despite massive economic and political efforts, issues like income inequality, healthcare, and infrastructure investment will continue to hold our economy back.

How do you move away from bureaucracy and toward open communication?

Innovation and Discipline

Innovation and discipline can coexist. It requires improving autonomy at all levels as you simultaneously increase discipline. For example, Google, among other big corporations, are developing artificial intelligence (AI) programs to write and develop artistic works like music and art. They argue that this technology will greatly enhance an artist’s ability to create. Others disagree, saying that it will just replace artists.

My own experience in the knitting industry showed me that automation greatly enhances an artist’s potential and reduces mundane tasks. (At one time, mechanics had to spend hours making chain links to design a new sweater.) I believe that similar improvements are evident in areas like digital photography and inventory management.

Focus and Diversification

Some businesses try to randomly pursue diverse options by simply throwing s**t at the wall and seeing what sticks. Others complete so much research and planning that, in the process, aspects like goals, probabilities, and outcomes are overshadowed or forgotten. Business owners need to identify priorities and focus. From there, test and adopt or change as opportunities or issues arise. It’s important to remember that many plans are based on wrong assumptions or are poorly executed and, therefore, do not succeed or are unable to adjust to change.

For example, I was working with a client who was trying to execute over 15 different educational programs and was stressed out, over budget, and not managing effectively. We simply cut out the least effective programs, which saved money and, as a result, were able to allot additional attention and resources to the more effective ones. Focusing your strategy can be accomplished with a few simple efforts:  

  • Measure, Estimate, Prioritize, and Adapt.
  • Follow the 80-20 rule.
  • Make mistakes and learn from them.
  • Be open to change and feedback.

Experience and Expertise

In his book “Outliers,” Malcolm Gladwell became famous for stating that, “10,000 hours of practice are required to become a world-class expert.” I am not sure it is 10,000 hours, but my experience indicates that experience and expertise are probably the most important factors in achieving success. That doesn’t mean you need expertise in everything, but it does mean you need at least a hook in the field you are pursuing. And if you know you are lacking expertise in a critical area, I suggest hiring someone to help.

For example, right-brain creatives typically don’t like financial analysis so it’s usually a good idea for them to hire an accountant. In the last couple of weeks, I have had clients with seemingly great ideas and passion who overestimated their gross margins by 10-20%. They simply didn’t do the detailed financial work and didn’t understand that those numbers could make a huge difference between profit and loss.

This argument is not intended to ignore the importance of passion, commitment, innovation, testing, and even mistake making. I’m just saying that both individuals and organizations need to realistically assess the risk of failure and the reward of success. Expertise and experience are critical for accurately evaluating opportunities and new innovations.

Risk and Evaluation

Are all of the aspects of a decision understood? Do you know the probability of reward, the amount of the reward, and the value of the reward? For example, what are the goals of your efforts? My clients are usually small businesses who need to make a profit and earn a living. Thus, they frequently pursue less risk. 

In contrast, venture capital firms are frequently pursuing growth and worry whether the enterprise will be large enough to generate large returns. Therefore, they expect a certain amount of loss as well as some lost investments in order to generate large growth and profits in other areas. Where does your business stand? And how much can you afford to risk?

Analytics and Intuition

The increased use of analytics over intuition has been significant in improving the understanding and results of decision-making. While there are no quick and simple resolutions, there are a few simple rules to improve the decision process using both analytics and intuition. 

‘Outcomes…normally we just measure the height of the files.’

Analytics is simply the increased use of research, models, probability, risk, numbers, and analysis to improve decision-making. In some cases, it has proved to be a valuable tool to understand and improve decisions or simply validate prior intuition—particularly where there is plenty of stability and historical data. For example, I have helped several of my clients improve their businesses by focusing on the 20 percent of customers or products, which we know, statistically, accounts for 80 percent of their sales.

Forget Fear.

Few sports teams, sales calls, or competitions achieve more than a 50 percent success rate. Rather than dwell on and sulk over losses, analyze your mistakes and research how to improve. Additionally, cultivate a business culture that values feedback, encourages communication, and supports collaboration. Open and honest communication on all levels is the only way to move past mistakes in a productive manner.

Empower Employees.

Giving your staff and management teams the freedom to make decisions and take (reasonable) risks can result in improved productivity. When you hire and train talented and trustworthy people, you can rest assured that they will do their jobs to the best of their ability and, ideally, add value to your business. When employees feel trusted and are given the autonomy to take chances, they’re more likely to think outside the box and offer alternative solutions. This authority in decision-making also means that employees will make mistakes at times and it’s important to remember, once again, that without failure, there is no success.

Look Beyond Your Circle.

It’s imperative to have external resources for obtaining information and receiving feedback. You need people who will tell you the truth without sugarcoating it. Make sure you have a reliable network that understands your business needs.

In general, I recommend more consideration of the process of decision-making. How good is our information, what are the consequences of mistakes and how much risk can we afford? I believe with the exception of issues like safety we can afford more risk and openness. We generally are overly concerned with the consequences of mistakes rather than the potential of risk.

And finally, let go of bureaucracy. Yes, it can be scary to transition to something new, but familiarity doesn’t equal success. In fact, sticking with something just because it’s comfortable usually isn’t beneficial. And, shockingly enough, sticking with something that doesn’t work (i.e. bureaucracy) also doesn’t work. It’s broken and it’s not worth fixing. It’s time to replace it.

Related: Embrace Uncertainty with Positivity