As Gary Hamel has noted, hierarchical bureaucracy solved two essential problems:
getting semiskilled employees to perform repetitive activities competently and efficiently;
coordinating those efforts so that products could be produced in large quantities.
In a stable environment, it had great strengths. It was scalable. It was efficient. It was predictable and it delivered reliable average performance.
It had some liabilities. It was vertical. It was non-collaborative. Its plans were linear. It couldn’t change direction very fast. It was dispiriting to staff but at least people had a job. And the customer was noticeable by being totally absent: the focus was internal.
In a stable environment, these liabilities didn’t matter much.
Change wasn’t important. A firm could go on, grinding out the same basic product for years without much risk of harm. In a stable context, it could predict what customers would buy. It didn’t need to worry about customers. They could be manipulated by advertising.
With semi-skilled employees performing repetitive tasks, collaboration wasn’t important. And who really cared if the workers were dispirited? It was enough that they had their job and their paycheck.
In a world where workers were only semi-skilled and information was hard to come by, it made sense to put the boss in charge. In that setting, managers generally did know best.
Then the world became turbulent
But the world changed and the marketplace became turbulent. There were a number of factors: Globalization, deregulation, and new technology, particularly the Internet. The Internet changed everything:
Power in the marketplace shifted from seller to buyer. Suddenly the customer was central, not something you could take for granted.
Now the new norm as “better, cheaper, faster, smaller, more personalized and more convenient.” Average performance wasn’t good enough. Continuous innovation became a requirement.
In a world that required continuous innovation, a dispirited workforce was a serious productivity problem.
As the market shifted in ways that were difficult to predict, static plans became liabilities.
The inability to adapt led to “big bang disruption.”
In this turbulent context, the strengths of hierarchical bureaucracy evaporated.
Scalability turned into unmanageable complexity.
The efficiency of economies of scale turned into diseconomies and inefficiency.
Predictability turned into a crippling lack of agility.
And reliable average performance wasn’t good enough for customers who wanted “faster, better, cheaper, smaller, more personalized and more convenient.”
The horizontal world of Agile
In the light of these problems, managers began to fundamentally rethink the way organizations are run. And so Agile was born. Scrum was notable among the approaches, but not the only one. The approaches all had certain features in common:
Work is done by self-organizing teams that could mobilize the full talents of those doing the work.
Work is focused directly on meeting customers’ needs.
A “lens” focuses attention on the customers’ needs (when the lens is a person, as in Scrum, the person is known as a “product owner”; in large scale applications, the lens is “a platform.”)
Work proceeds in an iterative fashion so that it can progressively satisfy customers’ needs better.
The arrangement can be pictured thus
In this way of organizing work, the basic dynamics of the traditional economy are reversed.
Instead of a vertical dynamic of hierarchical bureaucracy with people reporting upwards to bosses, the firm was operating horizontally with a focus on the customer.
Instead of a controlling ideology, the approach is one of enabling self-organization.
Instead of static linear plans, plans are iterative and continuously on the move.
Instead of a workplace that is dispiriting to staff, the workplace is interesting, even inspiring, because people have the autonomy to deliver their best.
Instead of the customer being absent, the customer is now central. The goal of the firm is to delight the customer.
Steve Denning write about radical management, leadership, innovation & narrative! This article is from Forbes Magazine