BUREAUCRACY IS A STATE OF MIND
Bureaucracy is a culture completely different from that of a free market.
Its structures and rules shape more than just the behavior of the organization,
they shape the character and personalities of the people who inhabit them.
Millions of people who started out being decent and honest
have been transformed into something completely different
by the organizations that employed them.
Bureaucracies reward and punish behavior completely differently than do free markets.
Bureaucracies systematically eliminate people who do not conform to their values.
Employees of bureaucracies either conform to the culture, or are removed.
Most people conform.
Most tragically, bureaucrats tend to internalize bureaucratic values so completely
that those values become the governing principles of every aspect of their personal lives.
Their homes, their families, their communities, and even their churches
become bastions of bureaucracy, instead of havens from it.
This is all about values. It is not just about government versus private sector.
The comic strip Dilbert portrays very well how thoroughly
bureaucratic values have permeated many companies.
The most prominent feature of bureaucracy is what some call "diffusion of responsibility."
Each person is responsible for only a tiny piece of the organization.
Nobody is responsible for the whole organization.
Each person acts in ways that benefit their own selfish interest,
and ignores the long term survival of the organization.
It's like the crew of a ship acting to make their own jobs easier and more lucrative,
and not even wonder if their actions endanger the ship.
An entrepreneur always has his whole business in mind.
He has to look after every aspect of the organization.
A smart businessperson tries to hire employees who will care for the whole enterprise
because they know that everyone's well-being depends on it.
Oddly, the shop level employees of large companies
often care more for the company than do their managers.
The shop level employees know what it takes to get the job done,
because they're the ones who have to do it.
Many managers hop from one company to another every few years climbing the corporate ladder.
They don't care about the long term survival of the organization.
They tend to do what makes them look good for the short time they're there.
If they can "cut costs" and save the organization money, they do it.
Never mind that the "cost" they cut
was the investment that would have kept the company competitive in the future.
Rewards for denying responsibility are sometimes built into the system.
A program manager in the government dares not allow into the file
any record of knowing that a problem exists with his program.
Problems get covered up and are left for the next manager to deal with.
The problems get worse and more expensive to fix.
And contractors get paid more to fix them.
The contractors finance the politicians
who approve the appointments of the top level managers
who perpetuate those lucrative problems by covering them up.
Simply having employees in the same organization for a long time
doesn't provide complete protection.
"Ambitious" people tend to act to make themselves and their own department look good,
even if it damages other departments in the company.
In some cases, ESPECIALLY if it damages other departments!
Many managers see the managers of other departments
mostly as competitors for the next promotion.
If a manager has an opportunity to act unilaterally
to save his department money while creating a problem for another department,
many managers see that as an opportunity to reap a double benefit!
Higher management needs to be smart enough to watch out for this kind of behavior.
Some managers know this because they obtained their own rank through such chicanery.
Trouble is, instead of being on guard for it from below,
they focus on engaging in more of it to keep moving up.
Entrepreneurs need to watch out for that sort of behavior from their employees.
Many don't look out for it because it just wouldn't occur to them to do such things themselves.
"Hot shot, go getter" types tend to be the most likely to be unethical.
Someone who's a little less "ambitious" and instead more ethical
may be far more valuable (and far less destructive) to your organization.
Bureaucrats focus on optimizing existing operations.
The very idea of new products and processes is completely foreign to them.
If confronted with an opportunity to innovate,
they evaluate the opportunity using all the wrong criteria.
If bureaucrats managed explorers, they would ask the explorer:
"Where are you going to go? How far is it?
What will you find there? How much will it cost to bring it back?
Who will buy it? How much will they buy? How much will they pay?
I require a COMPLETE answer to ALL of these questions before I fund your expedition!"
Bureaucrats fail even to see the absurdity of that example.
Expeditions are the only way possible to even begin obtaining answers to those questions.
How important can this be? Here's an example:
In 1492, Christopher Columbus, an Italian,
went to the kings in Italy, seeking resources for his expedition.
They turned him down.
So he went to Spain, who provided resources.
So what are the consequences of Italy turning Columbus away?
Spain, instead of Italy, became the world's superpower for the next hundred years,
and today 400 million people now speak Spanish instead of Italian!
Bureaucrats believe that a good process is better than good employees.
They fail to recognize that
no process can ever be suitable for every possible circumstance.
They fail to see the need for good employees
who can recognize when the established process is inadequate for the situation.
And the employees need to be authorized to act outside the process when necessary.
A major difference between bureaucrats and entrepreneurs is how they view their employees.
Bureaucrats see them as subordinates and behave in an authoritarian manner.
Entrepreneurs see them as suppliers, and themselves as customers,
and remember that these suppliers are always free to seek a better environment.
Probably the most important difference between bureaucrats and entrepreneurs
is that a bureaucrat builds his career by hopping from one job to another
(whether it be in one company or different companies) climbing the corporate ladder,
where an entrepreneur sees his company as his creation, his life's work, his legacy.
Entrepreneurs have a great advantage in that
they have almost complete control over who they hire.
(An investor sometimes will insist that an entrepreneur hire certain people.)
Bureaucrats are for the most part stuck with
whoever happens to be in that department when they take the job overseeing it.
The person at the top of an organization has the power to determine its culture.
Entrepreneurs need to always be on guard that
bureaucratic values don't infect the company and gradually change the culture from below.
Even the best entrepreneurial organizations tend to
gradually drift toward a bureaucratic culture.
The original creators either aren't aware of the need to avoid the tendency,
or they sell the company to a larger company,
or they retire and are replaced by less devoted people.
The "legendary" CEO Jack Welch was once asked on television what advice he has to give.
He replied, "Cut, cut, cut! Don't be afraid to cut!"
I'm afraid that's the prevailing attitude of today's corporate leadership.
No longer do they want to build great industries.
Instead they want to cannibalize them!
Obsession with "leanness" is just as unhealthy in management as it is in life.
"Corporate anorexia" is just as deadly to business as physical anorexia is to young women.
An anorexic company is just as weak and unhealthy as an anorexic body.
In both cases, it simply cannot perform.
Cost, schedule and performance are the three main issues in any organization.
Corporate anorexia sacrifices schedule and performance on the altar of cost.
Customers also care about convenience, courtesy and compassion.
They stop buying from companies that provide bad customer service.
Many avoid altogether buying from companies that
mistreat their employees or their communities.
Bureaucratic values are not just toxic to the work environment,
they can be fatal to the bottom line!
Below are some comparisons between bureaucrats and entrepreneurs.
"B's" and "E's" are used as abbreviations.
INNOVATION
B's demand that everyone follow them through the known.
E's invite everyone to explore the unknown.
B's (at best) see only what exists.
E's see what doesn't exist, and create it.
B's refuse to develop any product
until someone has already placed orders for it.
E's recognize what would be good products,
and develop them because they know people will like them.
B's make all decisions by how efficiently one travels established pathways.
E's explore new territory and build new pathways.
KEEPING UP TO DATE
B's attend seminars to keep up with "the cutting edge."
E's create the new products and services. They ARE the cutting edge!
B's keep up with all the latest trends.
E's don't FOLLOW trends, they SET them!
MANAGEMENT
B's divide the mission into small tasks anyone can do,
then hire the cheapest people possible to do the tasks.
E's seek to hire the best people available,
who will creatively improve the operations.
B's hire the cheapest people possible and manage them in excruciating detail.
E's hire the best people they can find and get out of their way.
B's perform the minimum task required.
"If you want more, you need to provide more resources."
E's do as much as possible with what they have.
They create new resources.
B's cover up problems.
"Let the next guy deal with it. Just look good right now."
E's solve problems as soon as possible.
If he doesn't, they will still be his, and they will become harder.
B's see in people only the official credentials awarded to them by The System.
E's see in people their unique qualities and abilities
created and developed by the individual.
B's systematically eliminate the organization's best people
by evaluating them only by how fast they perform predefined tasks.
E's seek the best people,
who will create new tasks that have never been done.
GROWTH & DEVELOPMENT
B's acquire existing companies and cut jobs.
E's start new companies and create jobs.
B's see people as interchangeable parts, like in a machine.
E's see people as unique individuals with unique abilities.
B's pigeonhole people forever.
E's know that you can always reinvent yourself.
B's train people to do specific tasks.
E's educate people to help equip them to create new tasks.
PROCEDURES
B's slavishly follow the procedures, regardless of what it does to the mission.
They are process oriented.
E's design the procedures to fit the mission. They are goal oriented.
B's focus on compliance with procedures. "Stay within the lines."
E's focus on innovation, which inherently consists of going outside the lines.
B's waste people's potential by demanding that everyone do everything the same way.
E's encourage the best use of people's potential
by encouraging each person to do the things
that not one of the other 7 billion people can do.
B's require that procedures be followed in excruciating detail.
E's know that the agile leader wins the market.
RELATIONSHIPS
B's can be surly because their customers
HAVE to take whatever the B's dish out.
E's have to be eager to serve because their customers
can do business with someone else.
B's see employees as subordinates, and dictate to them.
E's see employees as suppliers, and negotiate with them.
B's focus on building their own resumes. Every job is just a stepping stone.
E's focus on building the business. His job is his life's mission.
B's see colleagues as competitors for the next promotion.
E's see colleagues as partners in the enterprise.
B's direct all their attention to
seeking favors from the established and powerful.
E's give attention to searching for and mentoring talented newcomers.
THINKING
B's require yes men to massage their egos.
E's want straight talk to help them avoid pitfalls.
B's idea of "team spirit" is to have an echo chamber of self-congratulation.
E's idea of team spirit knows that
when everyone thinks alike, no one is thinking at all.
B’s try to simulate a great mind
by collecting several mediocre minds into a committee.
E’s know that a great mind can't be simulated.
They seek the best minds they can get and nurture them.
B's are authoritarian. "Obey the procedures. The System will dictate your destiny."
E's are inspirational. "Follow your passion and you will find your destiny."
B's lack initiative. They plod straight ahead along the officially ordained career path.
E’s show initiative. They look for unmet needs and CREATE new career paths.
RESPONSIBILITY
B's wait to be "officially notified" like FEMA after Hurricane Katrina in New Orleans.
(For several days, FEMA did not know that starving people were gathering at the Superdome,
in spite of widespread news coverage of that fact.)
E's show initiative and gather their own information.
They don't wait to be told through official channels.
B's deny responsibility. "Not my job!" "Not my problem!" "That's above my pay grade!"
E's embrace responsibility. "If this organization fails, we ALL lose out!"
When a Bureaucracy fails,
the institution keeps inflicting its failure on society forever.
When an Enterprise fails,
the institution vanishes and is replaced by others until one succeeds.
