CW gives his perspective. I had never really considered this point, that government agencies, with their Byzantine bureaucratic structures, are committed to
“creating new layers of bureaucracy in order to make promotions for themselves.”
A self-sustaining in-grown ineffective bureaucracy … committed to the furthering of its own existence.
Corporate bureaucracies, also, have a tendency to grow for reasons that benefit the incumbents rather than the business as a whole. The difference is that in business, competition, combined with limited funds, tends to keep things from becoming completely insane, while in government, these limiting factors are much less operative.
The lower in the organization the responsibility for profitability can be pushed (in business), the better the pressures for bureaucratization can be resisted. For example, if an auto company operates as a single profit & loss center, and has a single market research department, you can bet that department will become a huge and costly bureaucracy with an inflated sense of self importance. Whereas if the company operates with each model as a separate division/P&L center, each with its own market research department, the division general managers will keep market research (and other functions) on a much shorter leash and constantly review the benefits of putting an addition $ there versus an additional $ in (say) engineering or styling.
Often in business, but much *more* often in government, the benefits of centralization tend to be overplayed.
Sorry if this is OT, Sheila…just started writing & kept on going…
No, not OT!
Like I said, I never really thought about it before. I can see how it works in corporate America (even though my experience is dot-com corporate America, which is a whole different ballgame, with its own set of problems.)
Dot-com America does indeed have its own set of problems. One common issue I’ve seen in start-up companies is that the founder tends to assume that he is responsible for all thinking and decision-making, and everybody else there is just “arms and legs” for execution of his ideas. This may work for a while, but as the business grows to a certain size and complexity, it doesn’t work anymore. Either the founder changes his ideas, the business stalls, or new management needs to be brought in.
Sometimes founders can grow beyond this behavior pattern: Bill Gates, for one, seems to have done so. But in general, they don’t.
I will write a book someday about my experience in the dot com world. It’s fully written, in my head.
I know there are a ton of other books out now about people’s experinces in startups (I’m excited to read the latest – Amazonia) – but I’ll throw my hat into that ring.
Dot Con is a really good book about the entire internet bubble. It’s insane. Just insane – some of the stupid ideas (web van???) that had enormous IPOs, and companies with no products, no inventory, nothing – were suddenly worth more than American Airlines … or all the airlines put together.
Insane!
Oh and David: have you seen the documentary Startup.com? Fantastic.
“A self-sustaining in-grown ineffective bureaucracy … ”
I resemble that remark…
As a long-time government employee, I can attest that this phenomenon is real. What was most discouraging in my long-ago days as a social worker was that merit really had no place in the promotion picture. Because we had no real “bottom line”, brown-nosing and social relationships were the most important factors for success. Layer after layer of management spent their time trying to justify their jobs by finding ways to make life more difficult for the front-line workers. Anyone who spoke out against the insanity was guaranteed not to move up in the organization.
When I switched over into the IT department of my agency several years ago, one of the most appealing aspects was that we did have a bottom line – not in terms of profit, but definitely in terms of keeping the network available and functioning properly. Initially, there was much less fixation on bureaucracy and more on getting things accomplished. I used to really look forward to coming to work every day.
Sadly, that situation has changed radically in recent months. We’re currently undergoing a huge reorganization that involves adding management positions (many of which have been given to less-than competent people), moving all decision-making UP the management chain, and imposing a thoroughly inscrutable rearrangement of job responsibilities that makes sense to no one other than (presumably) those making the decisions.
I think our network will eventually start showing the effects of all this mismanagement, but there is a considerable lag-time and of course there will be attempts to shift the blame to the lower levels when things do go to hell. It’s just not a happy story…
Very very interesting.
When you say that decisions are moved UP the management chain … well, I’m not sure what my question is – but could you talk more about that? Why is that bad?
Someone once said that the four most dangerous words on Wall Street are “this time, it’s different.” It never is, but we always want it to be, and people invariably convince themseleves that it is. At the height of the Dutch tulip craze in the late 17th century, there were individual bulbs that could fetch a price greater than a four-story gabled townhouse on a fashionable canal in Amsterdam. Plus ça change…
I read that book about the tulip craze … Tulipmania, I think it was called. Did you read it??
My main interest in all of this stuff – (and the South Sea spectulative bubble) is the crowd aspect of this behavior, how crowds morph and change and run towards something and then retreat – all as one … I cannot get over my fascination of it.
All rationality gone.
Dot Con is a fantastic telling of the loss of rationality in an entire culture. Great stuff.
A lot of the ideas (the dot-coms, not the tulips) weren’t crazy, they were just overdone. The idea of home delivery of Internet-ordered groceries was a sound one…but it didn’t need to start out with hideously expensive automated warehouses in multiple cities. The whole “get big fast” thing was way overdone.
It’s interesting…most societies have had a problem with too much resistance to change. We have a different problem, in that whenever a trend starts, everyone wants to jump behind it, especially academics and consultants.
Sheila, moving decisions up a management chain is not in itself bad if the layers of management are few and the decsion involves many departments whop don’t see the big picture.
But in government and big business, that is not the case. Two factors then come into play. One is that decisions are now made by committees of managers, rather than people. Blame and credit can not be clearly assigned, which makes the organization unresponsive to either negative or positive stimuli, and meritocratic promotions go out the window as a side effect.
The other factor is the filter effect. Each layer of management gets its information from the layer below. At each stage, the CYA process wipes out vital information content. After being passed up a few rungs on the management ladder, the information used to make a decision bears about as much relation to reality as a Michael Morre film. This gets even worse in a matrix organization where each line in the business has a representative on a decision making body, and can hide or misrepresent problems when communicating to the other lines.
In general…if you want *speed* it is best to keep the level of decision-making low. If you want *concentration of resources* you want the decisions made higher up. A military example is helpful here. You can give each unit its own artillery, or you can centralize all artillery at a higher level. If you do the first, the unit commander can instantly select targets and have them fired upon..whereas with centralized artillery, his requests will go in the queue. On the other hand, when it is necessary to concentrate very heavy fires on a single target, the centralized approach is better.
I believe that one of the many reasons for the French defeat in 1940 was that coordination of air and ground forces occurred only at a very high level…if you were a company commander who desperately needed air support, the request would have to go all the way up the chain of command on the Army side, over to the Air Force, and then down the AF chain of command until it reached a squadron leader somewhere….there are certainly business defeats that have occurred for the same reason.
David:
I still think that 90% of the ideas themselves were insane. And the wild embrace of Wall Street was a result of a mass psychosis, greed completely putting blinders over people’s eyes. I knew some people who worked for these crazy sites, during that helium-filled time. Some of the sites were pretty cool, but nobody ever seemed to ask the question: “Will people PAY for this stuff? Where will the MONEY come from to pay for our cool feng shui’ed office and our payroll?” Also, back then, everyone still thought that all the $ would come from advertising. Heh heh heh. Well, THAT bubble burst.
Something like “web van” actually could have provided a service, but the business model was terrible, unweildy, unrealistic …
Amazon has lasted and flourished because it actually provides a product people want. People will pay for books online. I’ve got to read Amazonia. The whole topic fascinates me.
In the great book Down with Big Brother, (the story of the collapse of the USSR) – Michael Dobbs uses Chernobyl as well as the shooting down of the Korean airplane filled with civilians as evidence of the flawed decision-making process in the Soviet bureaucratic behemoth. People were constantly having to call Moscow, to ask for permission to do this and that … so when the crises came, nobody could act responsibly – and nobody wanted to take responsibility.
I’ll give you maybe 60% of them were insane…and even for the good ones, a high failure rate was inevitable because the market will only support a certain number of companies per segment. But still, there has been a lot of worthwhile stuff done. If it weren’t for the explosion of entrepreneurial activity, we wouldn’t now be at the level we are at with Internet commerce, information availability, (and blogs)…
We are very, very fortunate that the “National Information Infrastructure” did not develop in the way it was initially envisaged, with tight centralized control, but turned out to be the Internet instead.
Testing. I keep getting an error message when I try to comment.
David: If you come up to 75 percent, then I might concede. :)
Oh, and you are so right: Thank God it didn’t become this centralized controlled thing and was allowed to explode every which way. So exciting, and I am thrilled to have been a part of the whole thing.
I think a lot of the stuff done was worthwhile, too – cool ideas, etc. – but I still wouldn’t pay for it. I watched what happened with Salon- and I was ADDICTED to Salon, but I still knew: I will not pay for content. I just won’t – and most people won’t. At least not the kind of content you could get on Salon.
Oops, and this is an addition to the comment I just posted:
Also, in the frenzy of that time, there was this assumption that everyone would want to do EVERYTHING on the Internet. There was absolutely no research to back this up. It was part of the bubble mentality. But it has turned out to not be the case, obviously … People still want to go out into the world, and shop in real stores, and browse, and touch and feel the products before buying … The Internet hasn’t changed that.
I don’t know – I have personal experience in all of this. I remember those early days, when everyone talked like a fundamentalist preacher in a tent off the side of the road. The Internet gleamed in their eyes with an unholy glow of fanaticism … the company meetings were more like revival meetings … but nobody asked real questions … I ATE IT UP, because I found it all so interesting. I was detached from it enough to see the unreality.
It was kind of cool – in a psychological way.
“Fundamentalist preacher”…yep, there was quite a bit of that.
One other thought. The dot-com boom was similar to the U.S. railroad boom in the late 1800s. Dozens of railroads were built, often in places where traffic wouldn’t support them…Toonerville to Pipsqueak…and the name was usually the “Toonerville, Pipsqueak, and Western,” implying a great future of western expansion.
But yet, with all the economic waste this involved, it was probably better than the alternative. In Spain, for example, where RR building was more centrally-controlled, I understand that the whole rail net pretty much centers on Madrid..so if you want to ship between two locations in the industrial north, your shipment will probably have to be routed through Madrid. A hundred years later, this is still doing economic damage to Spain.
The railroad boom. An area of inquiry I don’t know much about – even though I took a great class (one of the best classes I have ever taken) on the Industrial Revolution, taught by Maury Klein – who is a railroad historian. He came out with a book last year, I think, about them – but I never read it. Perhaps I should! He was the best teacher I had in college.
Red,
John gave a pretty good description of the general phenomenon.
In our particular case, I see two huge problems. First, the people making the decisions at those higher levels usually do no have a solid, specific understanding of the technical issues they’re now making decisions about. Even the most competent managers can’t have detailed knowledge about all the systems under their purview. Second, moving decision-making up the management chain unavoidably leads to a “dumbing down” of the lower positions in the hierarchy. That MAY work out OK for a business like Wal-Mart, which can easily slash wages and eliminate jobs whenever it likes. It’s not nearly so simple to do that in government, or in jobs that require considerable technical knowledge. When you dumb these jobs down, you end up paying people the same wage for lower-quality, less productive work. Not to mention the fact that morale goes through the floor.
Contrary to belief in some circles, government employees are human beings. When you try to engage us in the life of the organization and allow us as much responsibility as is practical at our level, we ususally respond in a positive way. When you remove responsibilities and tell us we’re too dumb to do anything other than what we’re told, we tend to respond in a negative way.
“This gets even worse in a matrix organization”
Funny you should mention that – becoming a matrix organization is our official new guiding principle…
“Contrary to belief in some circles, government employees are human beings.”
Government LAWYERS, however… ;-)
“Government LAWYERS, however… ”
The best thing I can say about that group is that I’m not sure they’re much worse than their non-governmental brethren. ;-)
having worked in both government and corporate america as well as owning my own business and running one for an acquaintence …. i’d like to offer some insights…
the best companies keep the layers of management between the top and the bottom as minimal as possible and the person at the top is accessible. additionally, the person at the top gets out into the floor to see what’s actually happening… keeps getting his/her feet wet periodically….
i worked in an auto company where the chief exec for our division (a massive one) had “skip level meetings” where people from various levels and sections attended. i was at one of these. she listened and acted on what she felt was appropriate. she was also the only chief exec i’ve ever known to go onto the plant floor and participate … getting her hands dirty… in a teardown and rebuild of our product…. i’d work for her again in a heart beat….
additionally, we did have access to other top execs and on occasion could give them input. 3 of my requests to the top were implemented immediately…. saved the company money and saved me time/energy.
good execs who have an interest in the bottom line also give a rat’s fanny how their employees are treated and make sure there’s respect and integrity involved… execs or government officials who get sexually involved with minions, allow sexual harassment to occur… and when sexual harassment occurs other things happen too…. like theft, bribery and lying…you have to keep morale high…. and you can’t do that unless there’s real respect.
and honesty. the auto co. i worked for went through several rounds of cutbacks… cutting some of their best and brightest… now they can’t do the work because there aren’t enough qualified or experienced people… and instead of remaining at those levels, they brought in cheap labor and shipped some tasks overseas. who wants to work for some company where the company doesn’t value their people?
all we ever heard about was shareholder value… well, there is no shareholder value when the best people are cut, the staff left don’t have time or talent to get the job done…. and things which shouldn’t be cut are…..
being a company exec also doesn’t mean that you finally have your own personal lottery….. it’s not a license to rape and pillage the company coffers… and boards of directors who permit that should be held legally and personally liable.