In a recent post, Esther Derby describes a tendency of organizations towards oscillating between centralized or decentralized controls – I thought it was a brilliant insight in that she exposed that at the extreme reaches of the pendulum in either direction, there are evidence of lower performance, but for different causes. I have experienced this myself, but really never thought up the food chain to where these decisions get made, only about the local effect, and my own efforts to locally mitigate said effects.
In the article, it is suggested that centralizing controls tends to squelch innovation and creativity, slowing down decision making and reducing ability to maximize opportunistic growth, while decentralizing controls can allow decreased visibility, subunit goals to trump larger organizational goals and decisions that do not align with the mission of the organization. Both of these extremes tend to lead to lower performance, and so in reation to the downside of one extreme, we tend to lurch towards the other extreme.
Esther went on toward the need for feedback loops which would allow managers/management to detect and react to the pendulum and adjust to reduce the periods of lower performance induced by the swing.
What Esther is describing is a damping mechanism, like a shock absorber in your car. The damping factor is based on a target range of motion, and the further out of range the motion, the greater the damping force. As I thought about this, what is needed is a conversation about enough (a definition of sufficiency will be required) centralization or decentralization, and perhaps some discipline on sticking close to the definition of enough. Enough is the target range of motion we want to contain any oscillation between enough decentralization to prevent the loss of performance from those causes, and enough centralization to prevent loss of performance on the other extreme.
So the questions that management must be required to ask is:
1) How much decentralization of control is sufficient to prevent the loss of innovation and creativity in our workflorce?
2) How much centralization of control is sufficient to prevent the abandoning of corporate strategic vision for more localized goals?
I also think that this is a matter of establishing policies, aligned with rational management incentives backed by meaningful measures. This is where management usually falls down from my experience. Here are some management anti-patterns that tend to interfere with this process:
1) No measurement process is established, therefore the policy must be written in absolutes.
2) Policy is written and implemented in a “one size fits all” paradigm, which fails to contemplate how the policy might be implemented differently in different contexts to achieve a similar net effect.
3) Incentives do not go far enough down or up the management hierarchy, so the desired behavioral changes are not properly incented at the point where they are necessary.
4) Incentives do not align with the policy, creating a paper tiger – a policy that has no teeth – one that is paid lip service, but limited effort is applied because there is no perceived benefit to behaving differently. Draw a correlation between policy and compensation and you will see behavioral change.
Once we have overcome the management anti-patterns, then and only then do the feedback loops become important – because the necessary constraints and enticements are in place to ensure appropriate action when the feedback is delivered.
Esther promised a future post about feedback loops, and I am keen to read it, because she is typically very insightful.