Posted by steve on April 19, 2010
Working together, groups of people can present a formidable force – so you had better be clear that you are headed in the right direction before you set off. As a manager organizing work you need to make strategic decisions about the capabilities of the organization. One of them is the level of resilience against external challenges verses operational efficiency. All networks, be they of living organs and cells, of living things, computers or other machines, can be described in terms of how resilient they are, and how effective they are. These two qualities are opposites of extremes by their nature.
Simply put, resilience describes an organization’s rebound capability, that is to say to what extent and with how much effort an organization can “bounce back” after a “knock” from the external environment. The better the ability to absorb various “knocks” the better the organization gets back to its intended state.
Plants show an amazing rebound capability. You can neglect to water them for a while, cut leaves off, etc and they are still capable of carrying on living.
Machines on the other hand have an inherent lack of rebound capability. Just lift the bonnet and make a few cuts in wires and tubes and your car will probably not function at all.
But on the other hand, the car is only designed to withstand a narrow range of outer challenges, collisions being one of them.
As you see from the diagram, you can describe the ability of organizations, or networks, in terms of their resilience and their efficiency. For living organisms, which themselves are networks of organs and cells, there is a Window of Vitality or range, within which the organism can rebound. Outside of this range, there is the risk that the system be pushed into another state. Perhaps one clear example of this is that of desertification. An area can withstand severe droughts and other extremes of weather, but a point comes when the system “flip flops” over to a desert. It is very hard to get it to go back, even if weather conditions are reversed. Another example is addiction to alcohol. Psychological pressures and other imbalances in a person’s life coupled with heavy alcohol use do not always result in addiction, but the greater the pressure, the more the likelihood that addiction will arise. Overwork leading to “burnout” is also an example, where a person can go for a long time but, sooner or later the exterior pressures result in a breakdown.
At the opposite end of the scale is efficiency. The more a network can specialize and streamline, the better it can get at doing one or a few tasks effectively. Of course, the trade off is that it cannot withstand a wide range of challenges, especially if these challenges are not factored in when designing and putting together the network.
Let us turn to management of organizations. Most consultants work to increase streamlining, most managers would consider it their priority.
Some examples of how to work with streamlining: automation, process development, and cost cutting using the one slice at a time.
Just the “once slice at a time” method of cost cutting is quite common, and a good example of how an external challenge can be put onto an organization without it failing. It is only after a number of slices are made, and a number of years, that the organization breaks down completely on encountering an external challenge.
Process streamlining is another tactic, especially using automated IT systems and machines. Here again, the process will work well until an external challenge upsets the whole thing.
And that is what Corporate Management is all about: it is a gamble that the unlikely outer challenges your organisation faces will not affect profits for the year you are responsible.
And after all, if the awareness of any external challenges is not present, a manager cannot be blamed for not factoring it in. The recent Icelandic volcano ash surge is a good example. No one could have been expected to factor it in, and therefore the European transport network is unable to cope with an air traffic ban. Companies go bust, people get forced to take paid leave, and huge debts mount up. But there is no blame on management.
This, though, is a very short-sighted way to see things. If the purpose of work is to provide food, water, clothing, security etc for everyone on the planet, optimizing corporations to make profits in a very narrow window of operation, with the minimum of resilience and maximum efficiency, is the wrong way to go about it.
The challenge we are all facing if not now, very soon, apart from the one created by an over dependence on the airline industry, is that of rising fossil fuel prices. Although many experts have warned that the consequence can be disastrous, few are looking deeply into and even fewer are creating a capability to deal with it. As long as there is no “official” acceptance that it will happen, it is every manager’s responsibility to carry on as if nothing happened.
When the effects of oil production peak reach the organization, the manager will rightfully claim it was not within his remit. If international oil companies no longer have any fields to explore and open up, thus reducing their output, it will not be blamed on management if they had only a short-term profit goal to maintain.
Unfortunately, whilst these managers scale back operations and run on reduced bonus, we could be looking at a large part of the population starving, bringing it home to us that most corporations are set up to totally ignore basic human needs in favour of streamlining in a temporary niche to maximize profits. Now you could say I am being unfair, as corporations only work within the premises of the current system. On the other hand it is unwise to trust corporations to take care of basic human needs. We have corporations in this world with economies larger than many nations, and still, one billion of six billion are starving and without water. Corporations are set up to do one thing and we cannot expect them to do otherwise. What we need to do is redesign work to fit human needs.
To me, that is what business should really be about: using the gifts we have been given – including ingenuity and innovation – to respond in a human way to human needs. I would be proud to be part of such a noble initiative.
What to do long term
We require a political change and rules on operating corporations, requiring them to contribute to the resilience of society rather than them relying on it.
What to do today
Ask yourself in your business how you can increase resilience of your organization to be able to ensure food, water, clothing and shelter for your stakeholders.
What can you do to identify the risks of external challenges and assess rebound capability. Is there a system in place to review this regularly?
Can you measure resilience vs streamlining? Consider the advantages of, for example, being able to create an organization that will withstand the rise and fall of market trends, or the pressure of fossil fuel prices.
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