There are many traits that can typically differentiate small and large organizations. Yes, the number of employees is obvious. But also; the internal organizational structures, the level of bureaucracy, and amount of team specializations all increase as organizations grow.
Many often observe and conclude that an increase in organizational bureaucracy is a driving factor to the typical loss of agility within larger organizations. This can be true in many cases, but many organizational traits are interrelated. To find the true cause, we'll probe a little further. In this article, we explore some high-level and natural drivers that cause large organization to lose agility and learn some ways to understand the state your organization is currently in.
Why is the organizational bureaucracy, which exists for good reasons, impacting business agility?
Our Observations
We define agility as the ability for an organization to quickly respond to business pressures and the ability to generate and adopt new and innovative ideas. The topic of organizational traits and their relationship with agility can easily open up many avenues of discussion. In this article, we would like to focus on three observations that we have noted over time:
Organizations tend to pursue specialization and not the alternative
How developing genetic optimization algorithms has provided some insights
The pursuit of optimal solutions tend to deliver fragile solutions
Specialization And The Alternatives
Specialization of roles within an organization can be defined as the narrowing of the scope of a role to gain competitive business advantages. Growing organizations tend to increase role specialization as their resources grow and their competitive pressures evolve.
Specialization in roles are often necessary to build more efficient processes or to nurture more subject-matter mastery within an organization. With more focus on specialization, an organization will acquire or develop more specific subject-matter specialists. The requirements and roles of specialists are usually clear, narrow in scope, and very well defined. Specialists often play a vital role in most businesses. As an example, the most experienced surgeon that specializes in a unique surgery will always be the preference to perform the unique operation.
Polymaths
Robert Heinlein, an American author, once wrote:
A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.
This quote speaks volumes to those who haven't followed a linear career path and/or become proficient in multiple disciplines.
When thinking of an alternative to a specialist, the first instinct of many is the "generalist" label. A generalist has varying knowledge of many topics and is useful for leadership positions in an organization. For those who have worked at large organizations however, the label of generalist can often take a negative tone and is associated with the saying "a jack of all trades but a master of none." Often as organizations grow, generalists are assumed to hold a lower value for an organization. Many are surprised to learn that the full original saying is "a jack of all trades is a master of none, but oftentimes better than a master of one."
Another alternative to specialist, which expands on the label of generalist, is the label "polymath" or historically "Renaissance person". This is an individual with deep knowledge or practical experience in two or more fields. Hypothetically, an extreme polymath would be a specialist in all areas. A polymath, which can be rare in an organization, tends to hold a key specialist position but also has the ability to be equally valuable in an alternative key specialist position.
Individuals with multiple specializations that have value to an organization should be considered as assets to acquire. However, unless the person is given a unique senior role, polymaths and large organizations often reject each other. Organizational specializations are typically designed for efficiency and often hinder individuals from working across departments. Managers may also find it hard to lead and support personnel working outside of their defined roles and responsibilities. Therefore, on average, specialists will gravitate to larger firms and polymaths to smaller ones where wearing multiple hats is more accepted and valued.
People that are able to operate at a high level across multiple organizational groups can often highlight blind spots and provide an amazing boost to efficiency and agility. We have observed, that large organizations have a hard time integrating polymath personalities. Determining how to acquire, retain, and utilize people that are fluent across multiple organizational divisions can be an effective way to prevent a loss in agility.
Is your organization truly supportive of individuals spanning their skills across departments?
What Can We Learn From Genetic Algorithms?
Charles Darwin was partially inspired by his observations of the species inhabiting the Galapagos Islands in developing his theory of evolution. In the field of computer science, the concept of evolution has also inspired an optimization heuristic called a Genetic Algorithm (GA).
A GA is computational technique that searches for an optimal solution given an objective function. An objective function is simply a function that produces a value given a set of inputs. The optimal solution is defined as the set of input values that produce the largest possible return value when given to to the objective function.
The manner in which a GA searches for an optimal solution was inspired by the concept of evolution. A GA will begin with a population of randomly created potential candidate solutions. Each solution will be evaluated against the objective function. A new set of candidate solutions will be created by using the best performing solutions as a seed for the next generation of solutions. This process will continue for a finite number of iterations and at the end, the best found solution (with the highest return value) is presented as the optimal solution. Depending on several factors, a GA may only find a near-optimal solution. With some attention to details, implementations of genetic algorithms can fit problems across many different domains.
Accurate Objective Functions
A critical requirement to effectively use a GA is a well designed objective function. Using optimal solutions to inaccurate or incomplete objective functions will usually produce unfortunate results.
When applying this perspective to businesses, each organization implicitly has an objective function they are trying to optimize. Given organization complexity, most organizations do not fully understand their objective function and as a result will generally develop issues. Objective functions can also change and need to adapt significantly when there are disruptions to their environment.
Furthermore, within an organization, individuals also have respective objective functions they are trying to optimize. Ideally, the objectives of the organization align with the objectives of the people within the organization but many factors can lead to variations. On a small scale, organizations can address and manage misaligned objectives. However, on a large scale, organizations can quickly become overwhelmed by the amount of misaligned objectives. Strong cultures can help align purpose, but if left unchecked, a collection of unique personal objectives, misaligned from the organizational objectives, will be detrimental to the business.
In short, the odds of misaligned objectives grows with the number of people in an organization and we have observed that large organizations with a lack of agility have very misaligned objective functions.
Does your organization completely understand their objective function and the objective functions of its people? How aligned are they?
Why Optimal Solutions Can Be Fragile?
The recent COVID-19 pandemic showed us how optimized supply chains were very susceptible to collapse from unexpected changes. Global product shortages were seen across many business sectors. Optimal and finely tuned solutions excel in stable environments. However, if not designed with robustness, optimal solutions are prone to fragility. It is very difficult to experience and learn from disruption in real world situations. But as we continue to experience an era of constant disruptions, organization must learn how to develop optimal solutions that include robustness.
“Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.” - Antifragile by Nassim Taleb
When we make mistakes we have a chance to learn. Organizational agility can be seen as the ability to put our business back on track after experiencing an issue that was not accounted for. However, it can be almost impossible for organizations to recover from serious failures and therefore there is never a true opportunity to learn how to be more agile.
A way to mitigate the inability to fail is to leverage external experience and innovative thinking when building agility into your processes.
When Everything is Working Well
Fragile issues that require attention are easy to see when new challenges gradually begin to impact your business. It's hardest to spot potential issues that might be brewing underneath the surface when everything is running well.
As growing organizations naturally create specialized departments and teams to manage their business needs, one should monitor the trends in communication between silos. Dysfunctional communication across silos is a key indicator that overall organizational agility is beginning to erode. As silos become more focused on their own issues, they will stop considering others issues and the impact they're having across the business. Having people well versed in the languages of different silos will always improve the health of the communication between them.
How is communication across departments trending? Do you see cross departmental frustrations on the rise?
Organizational Self Reflection
What should businesses do to ensure they maintain agility? Above are some questions organizations can start asking themselves to get a snapshot of where they stand. However, finding accurate answers can be challenge in larger organizations where individuals may be timid to share their true feelings.
Technology is a Natural Focal Point
In our experience, and given the rise in it's need, technology is often a natural focal point to observe communications and to start to understand the agility an organization. Leveraging technology is a necessity for almost every businesses today. As an organization grows, technology tends to become a core service and department that interacts with most other teams. Here are some red flags you can look for in your organization with regards to technology and its effect on agility:
1. An increase in departments wishing to look externally to address their current technology needs. There are times where this is a prudent path to take. But often, it is a signal that business agility is eroding.
2. Introduction of large scope technology projects targeted at addressing current issues. There can be important reasons to make significant changes to your technology footprint that can impact many organizational departments. However, if departments are being asked for extended patience until large projects are successfully landed, it is far more likely your organization is suffering from agility issues. We have first hand experience with these situations and the regrettable outcomes that come with them.
3. Observing a lack of integration between technology super-users and centralized technology departments is also a sign of agility issues. This is obviously dependent on your business, however, we have seen that most large organizations using technology have a small set of super-users. Technology super-users will often create challenges for centralized technology groups. Without some form of effective analysis and integration, the various departments will quickly become adversarial.
While technology department interactions are a good place to start, it is important to remember that you must look across your entire organization for signs of any agility issues.
Conclusion
There are many natural reason why organizational agility erodes over time. Ultimately, we believe their is a natural process that drives it forward inevitably. While the cause may be natural, it shouldn't stop business leaders from looking for its signs and considering how to address issues when they arise.
At MIKOBYTE, we're often engaged when organizational agility has been compromised and portions of the organization want to progress their business forward. While this is not always the ideal place to start an engagement, it is sometimes absolutely necessary and for this reason, we love helping organizations get back on the right path to grow their business and improve its internal organizational dynamics.
If you would like to talk more about this topic or discover how it might apply to your business, please feel free to contact us.
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