Bureaucratic empowerment

I read an interesting article this week about organizational growth and how their ascent can inhibit the capabilities of those trapped in their systems. Bureaucracy expands with an organization to smother creativity and responsiveness — an archaic structure that resembles a period long passed.

Layers of structure are not necessary or effective in a modern organization. Communication is instant, and people are responsible and adaptive; shackling an organization in a hierarchy of importance is, if not insulting, stifling to the organization. Strong organizations have good people that need to be empowered not restricted in structure.

Take the example of Haier, a manufacturer of household brands such as Whirlpool, LG and Electrolux with 75,000 employees worldwide. Their approach to structure is not a siloed bureaucracy where information flows up and down a chain of command, it has designed its systems to emulate the web of the internet where flow can move in all directions (small pieces, loosely joined, as David Weinberger defined it).

Haier’s structure is like a honeycomb with units of 10-15 employees defined as microenterprises. Nimble, adaptive and collaborative with other microenterprises across the organization. It is this responsive adaptive culture that has spurred innovation, customer service and success.

These microenterprises are organized in platforms and across several core functions. Leaders are responsible for interaction across the platforms and with other microenterprises; this encourages cross functional coordination and innovation throughout a dynamic organization.

The culture that has developed inside this organization is one of small teams of entrepreneurs. A drive for innovation replaces the climb up the hierarchy. The system is open and encourages interaction, in fact it is required to be successful.

The microenterprises operate like symbiotic start-ups. Large organizations are slow to react and are easily outmanoeuvred. Start-ups are constantly testing, reacting and adapting. Most importantly they are empowered to be self-managing.

On P.E.I. there are not many organizations of a scale to be impeded by bureaucracy, but there are some. Charlie Munger of Berkshire Hathaway says of bureaucracy, “Their tentacles should be treated like the cancer they so much resemble”. Jamie Diamond of JP Morgan Chase refers to them as a “disease”.

Strong words from detractors, but those left operating under its crushing weight where decisions can’t be made, and customers can be responded to would relate to these references.

Business is competitive and full of challenge. Having a responsive organization of empowered and engaged innovators committed to a common set of objectives is a powerful advantage in markets where growth is not assured, and the landscape is always shifting.