Welcome to the fourth post in our seven-part series on the “modern wastes” that are killing most companies’ productivity and profitability. We’ve already discussed the first two: Degenerative moods and not listening. This week, we’ll examine the third silent killer—bureaucratic styles. To most people, bureaucracy is a bad word, synonymous with “red tape” and wasted time. Yet, despite the negative connotations, most companies still operate bureaucratically—insisting employees work inside of increasingly complex structures with processes and procedures designed to standardize or control everything. While this might have been the most efficient way to train assembly line workers during the Industrial Era, human capital is now the greatest resource for most companies. In other words, we’re paying people to think, to innovate, and to collaborate with others to produce the best possible results. You can’t achieve this level of performance if you attempt to dictate their every move with rigid policies and procedures. The fall of many of our great companies—including GM, Chrysler, AT&T, DEC, and a host of others—is a testimony to bureaucratic blindness. Unfortunately, contemporary management theory offers no alternatives to this style of organizing work and designing organizational structures. Current hierarchically oriented systems—no matter how lean and “matrixed”—are relics of the bygone era of WWII industrialization and manufacturing. In the new business world, bureaucratic practices are becoming increasingly dangerous. They not only kill productivity and profitability, they also kill the generative moods of ambition, confidence, and trust that are essential to building consistent competitive advantage. Shift Your Understanding Rather than designing complex structures that dictate how employees must complete tasks, today’s leaders should be focused on providing platforms for people to come together, address their concerns, and invent futures together. This process is called commitment-based management, and it will be as powerful for the next generation of managers as quality was for the last. With commitment-based management, people learn to build structures and processes that enable the smooth flow and tracking of commitments, as opposed to activities—the current norm. While everyone knows organizations are more than just lines and boxes on a chart, the commonly expressed idea that “the people are the organization” is misleading. It is not the people that make up an organization; it is the network of commitments they make to and with each other on a daily basis. Companies generate value when these commitments are clear and crisp and are fulfilled on time, on budget, and as scoped. But when the commitments are unclear, late, over budget, or scaled up or down, companies generate waste (what we call “coordination waste”). The vast majority of companies are blind to this underlying phenomenon and have no means to intervene other than to cut costs, declare new rules and processes, or reorganize—none of which will make a difference. Commitment-based management is a radical departure from the current standard practices and will require some dramatic changes in the way that we think about and design work, structure organizations, reward and recognize performance, and shape cultures.
Our mission is very simple. We intend to revolutionize the practice of management!
Central to our work is the belief that the world does not exist as a permanent fixed reality. We human beings are not merely passive observers. We are intentional players, inventors, designers, and creators of our world. And to accomplish anything, we depend on everyday coordination with others. This is where HP2 makes its mark.