The global networked economy presents new challenges for our organisations and brings about dramatic changes. We need to be clear that the tools of the past may not serve us well in the future. Four past tools are so deeply engrained in our thinking that they are carried into our organisations without discussion. These four are the four horsemen of the Organisational Apocalypse.
I’ve been following the changing discussion in organisations for some time. I was a passionate supporter of the Responsive Organisation Manifesto. I was at Disrupt Sydney when Adam Pisoni launched the concepts behind the Manifesto. In my own work and own practice I have seen the challenges traditional organisations face when adopting new ways of working to meet the needs of the digital economy. I have also been surprised at how many new practices, like agile, lean startup, design thinking, flat organisations, and so forth, are repurposed to suit the demands of the Four Horsemen of the Organisational Apocalypse.
The four horsemen of the organisational apocalypse are:
- Obsession – Shareholder Value: Shareholder value is a measure of organisational performance. Make it the sole measure of organisational performance and you will have a negative effect on those that the organisation needs to survive: customers, employees and the wider community. Alienating these critical elements of success in the interests of shareholders opens the organisation to all kinds of threats and weakens loyalty and engagement in the networks around the organisation. The focus on shareholder value at all costs sets up organisations for short term thinking and creates the danger they will be disrupted by someone with new measures of success.
- Efficiency – The Machine Mindset: Management has long strived to see the organisation as a machine and to manage it as a machine with a linear process of inputs leading to outputs. That machine focus has made people an uneasy fit and since FW Taylor we have worked to make people fit the machine model. People don’t work like machines. We need our organisations to recognise this and seek to leverage human capability not replace it.
- Reductionism – Oversimplification: Data and Analysis is useful when it leads to new ways of understanding the world. Data and analysis for its own sake or for the the wrong goals creates risks and can limit our ability to understand the world. If we allow our simplification to interfere with a human engagement with our world, then our organisations will be more fragile.
- Control – Hierarchy: Any management model where most of the people have no say, no power and no autonomy and people are divided into silos of goals, information and activity will be suboptimal. Even if the smartest and best people are at the top, a hierarchy will be at risk of being outperformed by the networks around it. The danger is that hierarchical power reinforces itself and reduces the responsiveness to threats.
Individually each of these approaches creates some risk for organisations. Working together they create huge dangers for our organisations. The greatest danger is that when these values become unquestionable the organisations literally cannot see the risks that they create. Take for example shareholder value, how many organisations have dismissed a new competitor on the grounds that they were loss making?
Let’s examine some of these interplays:
- Control + Reductionism: Organisations delivering the emperor’s new clothes of simplistic solutions where everyone has doubts it will work but nobody has the power to stop the project.
- Shareholder Value + Efficiency: Value cost savings over revenue growth. Maximise the extractive nature of the organisation at the expensive of effectiveness, social value and purpose.
- Efficiency + Reductionism: Ignoring systemic effects or wider complexity can cause widescale environment, social or even effectiveness issues. So much corporate policy is counterproductive because it fails to understand and influence systems. These two values are also at the heart of much of our corporate obsession with speed.
- Shareholder Value + Efficiency + Control: Humans are unpredictable because they have the potential to create their own change. Remove humans and replace them with controllable and predictable machines. We may have created corporations to harness the potential of collaboration between humans but for many the goal of the corporation is humanless, but fragile.
- Shareholder Value + Efficiency + Control + Reductionism: Dumb and fragile organisations that are out of touch with their systems and environments and often can’t see their way to a new way of working.
Most digital disruption is not solely the outcome of technology transformation. Most digital disruption is the result of new businesses being created that challenge these values with new business models and new economic models. Not every disruptor challenges every value but increasingly we are seeing new players who look to leverage wider measures of value, effectiveness, distributed leadership and systemic understanding of their organisation, its customers and its business. If you are clinging to the Four Horsemen of the Organisational Apocalypse in a traditional organisation you will not see what is coming. Resilience in a fast-moving digital and global economy requires us to question the values at the heart of our organisations.