Friday, March 21, 2008

To Tree or not to Tree that is the Big Co Question

I have talked about innovation on this blog before but a book that I have been reading and a recent post by Paul Graham stating You were not meant to have a boss got me to thinking about the topic of innovation as it pertains to management.

Paul says that there are consequences that happen when any company gets big. I believe he was pointing out that there may be a tipping point to the size of a company at which time the standard way of thinking about organization and management starts to break down leading to an inevitable slow down of everything that the Big Co. is attempting to do. He says the following:

"...companies will inevitably slow down as they grow larger, no matter how hard they try to keep their startup mojo. It's a consequence of the tree structure [of management] that every large organization is forced to adopt."

So my question(s) are thus: IS this tree structure, the org chart, really a necessity of getting bigger as a company? Is there really no innovation to be had in how companies organize themselves and the tasks at hand such that the 'tree' is the only way to go? My answer is NO on both counts - there is some empirical evidence for this in the world so let me see if I can back up my answer.

Ah the wizdom of crowds

Crowds as a whole are really quite something; they have a mentality all there own. One of the things about crowds is that they are really really good estimators. They are good estimators because no one person in the crowd has to be dead on they just have to be close. Taking a look across a broad range of answers to a given problem almost certainly provides a more accurate picture then having a few people (managers) making all the 'big decisions' for a company. This should be self obvious as just common place statistics yet every company I know is set up in the reverse and pays little attention to information to be 'gathered from the masses'. Provided the right information disseminated across a large group of people in an effort to estimate say growth of a sales unit within Big Co. the avg. answer has a much better chance to be closer to reality then the answer that a single smaller group of managers might be. There are a number of reasons for this, not the least of which is the pure and simple fact that the managers of a big co. by and large do not have all the information that may be needed to make an accurate estimate. You could argue that it is possible for the management folk to gather this information, my counter is that the instant it is gathered it might not be pertinent to the estimate. Only the frontline employees have a good feel for certain types of things, thus making them good estimators for a whole plethora of items. Big Co. being typical in most cases will however ignore the wisdom of the crowd in favor of a select few. This is a good case for not organizing in a tree and utilizing the information of the people to get things done. Those people however are going to need additional information that typical management holds tight to the vest.

Free and available Information

Information control is one of the ways that management types can maintain the tree structure and the management dogma. However the free and available information about all corners of Big Co. might spark a line of thinking in someone bringing about ideas that management might not other wise have thought of. Information pertaining to budgeting, staffing, pricing, sales and product can be very useful tools to the entire company. There is however an unwritten rule that this information is reserved for the management elite, those who have been shown to make good decisions in the past. What if those management types were armed with an army of people backing them up? What if that army had the same information management did and were allowed to essentially do what Paul says people (programmers in particular) do best which is invent new things rather then what is typical in Big Co. which is a stifling of what could be great new ideas:

"If you're not allowed to implement new ideas, you stop having them. And vice versa: when you can do whatever you want, you have more ideas about what to do."

All ideas should be welcome, radical ones perhaps more so. However if you lack the information about what direction you want to go in or where there have been problems in the past your new idea could meet with roadblocks and other preventative items. Information, good information is at the base of a great number of really great ideas. Share it far and wide.

Being Democratic

One of the HUGE draw backs to the way in which most large organizations is put together is the tree, the non-democratic way in which people are put into management positions. In a great number of cases people are promoted because they have pleased a singular person - their boss. In reality the person promoted might actually be a complete and total ass but that information did not weigh into the decision because only a small handful of people were involved in the promotion decision. In this particular case it might be an individual’s boss and that bosses boss who made the final call. You could argue that better managers of course might talk to people that have worked with said ass before but the tree structure of it all has the tendency to force that idea to the back burner as unnecessary. Be democratic, just like with the freedom of information and let everyone see what everyone else’s ideas are. Let everyone have a vote on what the company should be doing to increase profits, cut costs etc. Let everyone suggest what the best way to get and retain customers is. Let everyone have a vote. There is certainly no harm in letting the masses vote - you may just find that their wisdom was well worth a small effort to solicit the feed back in the first place.

Challenging Dogma

The problem with most of the items above is that they all challenge the dogma in management and organizational structure that has existed in companies now for a long time. There is some evidence in the world that this dogma can be changed (Whole foods employee based store management as an example) but there is certainly not enough of this type of trend setting work being done. Is the tree the only way? is it the case that your ability to change a company from within is limited based on where you are in the tree as Paul points out:

"...when you're part of an organization whose structure gives each person freedom in inverse proportion to the size of the tree, you're going to face resistance when you do something new."

I say the tree is not the only way; the items above should point that out. There are ways to organize that allow people to feel empowered to make decisions. There are ways in which Big Co. can allow people to THINK and ACT and INNOVATE to keep the company fast. It is however going to take changes in how management thinks to get there. Go Grass roots - take the discussion to the masses let us innovate management and eliminate the 'boss' as Paul thinks of it today.
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