April 17, 2020

In Praise of the Winding Road (3)

Written by Zafer AchiZafer Achi

Although she is much sought after, my millennial daughter would never imagine working for a corporation: She is far from being alone among her siblings and cousins. My older son –borderline millennial – loves his food and his cooking but shuns all processed food: most of his siblings and cousins share his aversion. I bet that living through the Covid-19 transition will only harden such inclinations among the rising generation of workers and consumers. In this blog, I muse about how that might reshape the landscape of organizational forms and norms.

In this series, I am exploring the idea that distance ­– understood metaphorically as a detour intentionally taken away from the shortest, fastest, least costly path from A to B – might hold promise in a post-Covid-19 world as we reset the norms of our lives, nested as they are in multiple systems.

More specifically, I offered a range of parameters that account for such detours – e.g. pauses, delays, safety margins, inefficiencies, digressions, imperfections, oblique approaches, variations, redundancies, and more.  In the first two blogs of this series (here and here) I looked at the intrapersonal and interpersonal levels. In this blog, I consider the next system in which we are embedded – that of our organizations, both as workplaces and as providers of business, government and social functions.

3. The organizational level: Heterogeneity and obliquity

The relentless pursuit of administrative efficiency over the last two centuries has left us with a legacy of fairly homogeneous organizational forms and norms. Just to name a few: hierarchical structures, jobs whose holders are interchangeable, uniform working hours, rigid planning and control processes, individual KPIs and attainment-based incentives, the pursuit of shareholder value maximization, revolving mantras such as customer centricity, just-in-time, total quality, and so on.

The downside of such homogeneity is a systemic fragility at the level of the economy: when all players are alike and sing from the same book, a shock that kills one is likely to rattle many: Remember the wave of savings & loans bankruptcies in the late 80s–early 90s in the US? Or the devastation that 9/11 visited on the global airline and aerospace sectors? Or the 1998 Asian Flu that decimated banks across Southeast Asia?

By the winding road in the organizational realm I mean the divergence of forms and norms from a central model. We have started down this path in the last 30 years or so during which we have seen a rise in variations around the standard corporate model: private equity,  outsourcing and offshoring,  micro-enterprises,  private-public partnerships, Class B corporations, VC funded start-ups, shared-economy organizations,  volunteer-based community organizations such as Wikimedia, holocracies, networks of independent entrepreneurs such as Cultivating Leadership, work from home, e-commerce, and so on.

We might like some of these better than others. As an ensemble, however, they make for a landscape of production of goods and services and a landscape of employment that are more diverse and more resilient to shocks. For example, in the restaurant sector, the Covid-19 lockdowns are threatening the survival of most traditional players, but players with a delivery-only business model are weathering the shock much better. In professional services, networks of entrepreneurs with minimal central fixed costs and no profit motive will ride the current depression more smoothly than traditional firms.  Importantly, such diversity in organizational forms offers more options for both consumers and for workers to find propositions that best meet their needs.

In this way, organizational heterogeneity provides both more resilience and more attunement to the diversity of human needs in a world that is increasingly unpredictable and subject to abrupt discontinuity. The netherworld that Covid-19 has brought to us now accelerates and normalizes innovations in how we work.  One of my tech clients observed today that “working from home is humanizing our culture.” Another client in the retail sector discovered among his largely low-skill workforce a readiness to invest in the future of the business by taking substantial temporary salary reductions to be eventually recouped when the company returns to profitability.

Another measure of distance in the realm of organizational norms is obliquity – the idea put forward by economist John Kay that goals such as profitability, innovation or customer satisfaction are best achieved indirectly. Other researchers have coined its converse in a phenomenon they call “surrogation” – when tying performance metrics directly to strategy, we incite managers to focus on the metric and lose sight of the strategy. In a much publicized example of this problem, Wells Fargo employees opened 3.5 million deposit and credit card accounts without customers’ consent in an effort to implement its now-infamous “cross-selling” strategy.

I wonder how we can sustain the momentum and provide even more incentives for experimenting with novel organizational forms and norms as we transition into the next world.

So, what might you do to get going now?

  • Notice helpful patterns that emerge as you improvise working remotely during the Covid-19 confinement and commit to carrying some of those into the future.
  • Notice how some our erstwhile sacrosanct norms around employment, profit sharing and so on are being helpfully loosened and consider retaining that flexibility far into the future.
  • For a sense of what future organizational forms and norms might hold, seek inspiration from – among others – Frederic Laloux’ Reinventing Organizations.
  • If you wish to further explore the virtue of obliquity in the corporate world, take a look at John Kay’s book.
  • If you wish to read more about the dangers of surrogation, see here.

In the next blog, I will turn to the merit of the winding road in the institutional and the infrastructural domains.

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