3.6 million years of organisational culture
So, 3.6 million years back we’re living in caves. We hunt, we gather, we maybe relax of an evening, watching whatever’s on the fire. Early continuous improvement experts note the waste and inefficiency, and from the Palaeolithic through the Mesolithic and into the Neolithic age (impressed?) we see the transition to the domestication of plants and animals, and living in huts. Nice. And it only takes about 3.5 million years. But a bunch of people think this farming thing will never catch on.
Time rolls. 2100 BC. Stone is out. Bronze is in. But not for long. Only about 1500 years later (date varies according to your postcode) Iron’s where it’s at. But then, around 100AD the Iron Age kinda fizzles out. The Romans rock up. Trade becomes more widespread, communities get bigger. Ongoing innovation in infrastructure and farming continues. But a bunch of people think that metal will never catch on.
Manufacturing remains pretty small-scale, largely the preserve of specialised crafts-folk until …. About 1760 when the Industrial Revolution gathers momentum. The eighty years to 1840 see machine production replace hand production, and early capitalist economies emerge. Factories appear, cities grow as the work in factories, most notably textiles, draws in people from rural areas.
So popular was the first Industrial Revolution they had a second one 1840 to 1870. It’s all kicking off now with the increasing use of chemicals, steel, more mechanisation and more use of power from water, and steam, and of course the coal required to produce it. Transport of goods and people leaps forward with the advent of railways and steam powered ships. Back end (circa 1860) the internal combustion engine is invented – heralding the next revolution. But a bunch of people think mechanisation will never catch on.
20th century
Enter the Machine age. A seismic shift from craft production to mass production. Craft production of complex machines like cars was inefficient. A skilled craftsperson was needed to do almost every task. It was hard to make precision parts, and time had to be spent adjusting them to fit: And there was wasted motion moving around the workshop and the product being built.
Engineering improvements made it possible to manufacture, in volume, precision parts that are uniform, interchangeable, and assembled easily. This enables Henry Ford, guided by FW Taylor’s “scientific management” principles, to simplify and standardise many tasks so that they could be performed by lower skilled workers. The more complex and skilled work, including designing and improving processes, being handled by specialist professionals and managers. Highly significantly, this introduces a separation between those doing front-line tasks and those designing and improving them.
The moving assembly line is also introduced to cut down wasted movement of people. This all radically enhances productivity, improves quality, and reduces costs. Reliable, quality, technically-complex goods can now be mass-produced.
Ford, a fascinating and controversial character, also doubles wages and cuts the working day to 8 hours. This is part of an expansive vision to use technology to provide reliable goods at prices everyone can afford, and to pay people enough to participate in, and benefit from a growing economy. His ultimate ambition is to reduce poverty and release people from drudgery, freeing them to enjoy and expand their lives beyond the factory.
“We want to create for everybody the best life conditions possible, a high level of opportunity: a life that people will be glad to live.” (Ford)
Identifying himself firmly as an industrialist, not a capitalist, he spoke of “devoting business to the service of all of society instead of to service of the few”.
A view, comprehensively rejected by the next major innovator of organisation culture. Alfred Sloan of General Motors. His view was crystal clear: “General Motors is not in the business of making cars, it is in the business of making money.
Sloan ratchets up the rational thinking, breaking the business into divisions and departments, and relentlessly segmenting and de-skilling processes. His belief was that the whole enterprise could be optimised by isolating, controlling and optimising each individual component.
He drives centralised control. Top level managers set short-term financial and productivity goals. They analyse and interpret data in reports they demand from managers. They make decisions to be cascaded down the hierarchy and followed. It is assumed that all the important information is in the numbers and that top managers do not need to know how the operation works to make effective decisions about it.
Good performance against short-term goals is rewarded by bonuses, increased budgets and promotion. Poor performance is punished by denying these rewards and through criticism, discipline and dismissal. Departments are played off against each other in the fight for resources, in the belief that internal competition will sharpen their performance.
White collar experts design all processes and make any changes. Front line people must follow this “one best way” and have no autonomy to make changes or to show discretion or judgment in following procedures.
This approach conquers all before it, and reigns supreme for decades. It provides the structural and cultural template, and arguably the moral standards, for large parts of the corporate world. So much so it is still known as “traditional management” as well as it’s more descriptive names “command and control”, or the “financial results model”
However… all was not well.
“Command and Control brought great initial progress but created other significant problems and limitations which prevent it reaching an even better world”. (Seddon)
Critique of the ‘traditional’ model
“Command and Control has created organisations which are full of waste, offer poor service, depress the morale of people who work in them and are beset by management factories that not only do not contribute to improving performance but actually make it worse”. (Seddon)
There have been many excellent (and lengthy) commentaries about the limitations and problems of the ‘traditional’ model. Here’s a brief summary. They are characterised by:
- Frenetic activity/constant firefighting (e.g. an end of month rush to achieve targets) that does not translate into sustainable, consistent and continuously-improving performance
- Multiple, constantly-recurring, preventable problems
- Departmental silos (vertical hierarchies) with constant friction between them, while nobody is responsible for managing the process that serves the customer (which runs horizontally across departments)
- Ever increasing bureaucracy, rules and initiatives that increase cost, delay and distraction but add no value for the customer
- Fear and blame that stops problems being properly explored, understood, and permanently resolved
- Managerialism – constant reporting and analysing of data, and issuing of directives but little real management/communication, far less leadership
- Out-of-touch senior teams (especially at corporate level): remote, aloof, disinterested in front-line colleagues and the problems that stop them doing a better job. Also often arrogant, complacent and change-averse.
- Failure to thrive. Regular setbacks and crises stymie sustained profitable long-term growth
After surviving crises in the 1980s and the 1990s, on June 1, 2009 at 8:00 am, unable to supply an acceptable viability plan to the U.S. Treasury, GM filed for Chapter 11 bankruptcy. It reported US$82 billion in assets and US$173billion in debt.
Significantly and symbolically they had been overtaken in 2007 as the world’s biggest car manufacturer, by Toyota, a company at the vanguard of the next evolution in management and organisational culture. Business Excellence.
The next generation: Mid to late 20th Century: Business Excellence
The Business Excellence approach was framed by the Quality Movement in the middle of the 20th century (including Deming, Juran and Crosby) and taken forward by organisations including Toyota. It achieved prominence with Womack, Roos and Jones’ 1990 book “The Machine That Changed the World”. It offered ways to improve not just profitability but also the customer and employee experience. (See Steven Spear’s “The High Velocity Edge” for more examples in a range of organisations, including the service sector, public services and healthcare).
The key principles are:
- Quality comes first – because if the quality is wrong, delivery performance, cost, customer satisfaction and productivity will all suffer
- Quality is defined as what the customer wants in terms of quality, cost, delivery and service
- Focus on the process – i.e. the means by which results are achieved. The process is relentlessly improved by identifying and removing anything that wastes time or money, or causes quality problems
- People are led: All colleagues are recognised and respected as the experts in their role. They are empowered to solve problems and drive the continuous improvement, and they have tools and training in practical problem-solving techniques to allow them to do this
- People are engaged and accountable. All colleagues are regularly given the facts and data to allow them to understand and improve processes and performance.
This is the approach now followed by the truly world-class organisations (i.e. those leading all genuinely competitive, global consumer-led markets for quality goods and services.)
Given its straightforward common sense principles and level of success, we might expect that every business is now following this more evolved approach. But we’d be wrong. A bunch of people think it will never catch on.
In reality, there are a range of responses to it. The majority don’t recognise that these two distinct models exist, or fully appreciate the significance of the differences between them. Many have heard something about business excellence and dabble, trying out some techniques on a pick and mix basis, making little progress. Some implement the production tools and techniques without changing the underlying management system and organisation culture, and consequently fail to achieve significant sustained improvement. The few that fully grasp it commit to the painstaking, challenging, but ultimately rewarding process of developing a more effective management system and culture.
It is still possible of course to survive with the traditional approach in markets which are not as globally competitive (i.e. where there are few providers, all much of a muchness, so there is really nowhere else for an unhappy customer to go- for example utilities, telecoms and banking), and in public services where, despite repeated failings and political and public pressure to change, there appears to be little real sign of it.
So the traditional model and all its attendant problems trundles on. A key reason is that people don’t fully recognise that better alternatives exist.
This is partly because the traditional model is simply what many of us grew up with, and assumed to be ‘normal’: Like it always was and always will be. But that’s my whole point. It’s not, and recognising this matters. A lot.
“Most people imagine that the present style of management has always existed, and is a fixture. Actually it is a modern invention.” (Deming)
“By the 1950s it had become general practice at US corporations and at companies around the world. Today it is so pervasive that it is essentially invisible. It is simply how things are done.” (Seddon)
So…. Where are you and your business? Are you limiting yourself with a previous-generation management system and culture, or moving confidently into a future of sustainable success?
Spear and a loincloth anyone?
Cheers
Peter
Written by Pete Rogan
