Focus on the targets that really matter, speed, decisions taken under vast uncertainty, agility to try and fail fast until a breakthrough has been achieved, decisiveness and execution excellence – these are all requirements on the design of companies work organizations in the digital revolution. These qualities can’t be brought into existence by hierarchical command & control. They need to be designed into an organization.
All three forces described above create a demand on companies to create new work organizations, let’s recap first:
- Force 1: The use of IT. To benefit from IT, it must be used “wisely”, i.e. in a way that is aligned with the business. IT to Business “Alignment” has been a hot topic in IT Governance for at least 15 years and deserves to be discussed in an extra blog post. The quintessence of IT alignment is: Without new work organizations, there will not be much benefit from the use of IT.
- Force 2: Customer centricity. Every product or service offered to the customer must have an optimal problem – solution fit. Every customer communication should be speedy and accurate. The challenge to existing work organizations is to cope with all the experimentation, with the speed and the ever present uncertainty whether the current solution is right, is still right or can be improved.
- Force 3: Big data. Making decisions fast under uncertainty is hard to do in autocratic hierarchies, as failure will be punished. How to build tolerance for failure into existing organizations?
The point is: Without new work organizations, none of the wonders of the digital revolution will become reality. Let’s start to understand why organizations did become the way they are. Bare with me, it’s a small historical excursion. But I think that the change is so fundamental, that it will not be understood if not approached from a historic angle.
With the industrial revolution, small-scale workshops were replaced by ever more complex companies. These companies were primarily manufacturing and needed masses of people to do repetitive labor, e.g. textile or steel mills and later automotive plants. All these unskilled masses needed someone to tell them what to do: Born was the modern day manager. The most convincing systematic guideline to management was provided in the year 1911 by Frederick Winslow Taylor in his book “Scientific Management”. Taylor postulated that work should be broken down in the smallest possible unit, reassembled into jobs which allow for individual specialization. Then management’s task is to enforce this organization and continuously measure it: Welcome to today’s Command & Control work organization.
Management Guru Peter Drucker wrote in the year 1973 in his book “Management: Tasks, Responsibilities, Practices” about Taylor’s work: “Nothing much has been added since”. Drucker himself contributed a lot to the advancement of organizational and managerial theory until his death in 2005: Decentralization, Knowledge Workers, Outsourcing, Management by objectives to name a few. His ideas answered the needs of the time: Overly complex conglomerates, emergence of the knowledge based economy and service sector and globalization being amongst them.
His ideas also influenced the emergence of Business Process Reengineering in the 1990’s, one of the fundamental theories of business transformation to this date. With a saturation of markets and a slowdown of economic growth in the 1980’s to the early 1990’s this theory provided recipes how to – for example – achieve efficiency through scrapping of good work that is not value adding (“unnecessary excellence”). The term “Process” became the central point of focus for the corporate organization. The old line hierarchies were still there, but they were now to set-up in such a way to make workflow in seamless processes, with maximum efficiency. Seamless is the key word here: Reduce work hand-offs from one organizational unit to another, avoid data being retyped, avoid interfaces. It is no co-incidence that ERP Systems, SAP and Oracle, were taking off at this time during the early 1990’s. Quintessence is, that work is still to be arranged as efficient as possible and still designed and managed in a command & control manner.
Nowadays, with the digital revolution, companies face the 5 forces of digitalization. The essence of these can be distilled into the following challenges to the Command & Control form of work organization:
- Speed – the speed of decisions and speed of change must match the speed of change of customer needs or competitor maneuvers
- Initiative – bold creativity and local initiative instead of waiting for HIPPO approval
- Uncertainty – Inputs and Outputs are not as clearly defined, lending themselves far less as a starting point for a process design
- Tolerance for failure – as all this speed and initiative will result in more failure: Failure is punished
- Learning – just going for speed, initiative and failure tolerance will lead to nothing in the long run, if the organization is not constantly learning and improving
Meeting these new challenges with Command & Control organizations provides poor results. Command and Control organizations are simply not built for speed under uncertainty, neither for initiative, neither for uncertainty at all, neither for failure nor for learning. They are built for efficiency, with given inputs and outputs and a clear process how to get there. It is still unclear which form of organization will rise to these challenges. But there is one organizational theory which looks like a strong contender: Mission Command, a term borrowed from military theory. Mission command allows each unit of an organization to define how it will achieve commanders intent. The unit may be the individual employee or a group of employees.
There are some companies which allow us to take a glimpse of the elements of this new type of organization, but a deeper explanation will be left to an upcoming post on Mission command.
It is ironic that Taylors “Scientific Management” meant to scientifically analyze and organize work. And what is lacking today is “Scientific Management”. Taylor propagated a scientific view on the company: Let’s organize work in a rational, “scientific” way. For Digitalization to succeed companies still need to be organized rationally, but a new perspective needs to be added. Now the company needs to view the outside world (especially its customers) and scientifically interpret their needs and how to optimally serve them, too. The way to do that is to constantly create a new hypothesis, experiment, test and learn. Things that command and control organizations are so bad at everywhere, except in product related research and design. Given the slowness of public listed companies to come up with breakthrough innovations compared to young start-ups, one might argue that this inferiority is visible even in R&D units.
Command & Control and Mission Control are not mutually exclusive. We still need Command & Control for some parts of the organization, but those who fail to implement “Mission Command” into the brains and nervous system of their company will be left with dumb & deaf organizations and that will eventually fall prey to competitors.
Implanting Mission Command in a company will only be successful if company culture changes and starts to support this style of managing and working. After over 100 years of working in a command and control mode, this will not be an easy task – but there are examples of success. Let’s take a look at them in the next post.