Tuesday, February 12, 2019

Bureaucracy as a Business Management Pitfall

Debureaucratization is a management practice and starts at the mindset level.

The root of the word "bureaucracy" is: bureau(fr) = desk and kratos(gr) = rules/ power. Generally speaking, bureaucracy is a system based on a hierarchy of authority and division of workforce functioning in a routine manner. Though organizational bureaucracy inherited from the traditional management discipline brings a certain level of business efficiency. It is criticized by the lack of system perspective, with characteristics such as inflexibility, inefficiency, silo, stagnation, unresponsiveness, or lack of creativity, etc. Bureaucracy is correlated with a mechanistic view of the organization and reductionistic management discipline. It is the opposite of systems thinking and one of the big digital management pitfalls.

Bureaucracy causes stagnation: The majority of organizations at the industrial age are manipulated by silo thinking, hierarchical structure, and bureaucratic management styles. It often causes unhealthy internal competitions for limited resources, and organizations will lose their collaborative advantage as the whole. Silo thinking, bureaucracy, inflexibility, inefficiency, rigidity, dysfunctional systems/processes, etc, are root causes of missing synergy and business stagnation. When productivity is low and synergy is missing; when people are not working via the system to solve the real problems but play the system to stifle innovation or build “comfort zones” and create frictions to changes, you know that there is the serious problem. From the management perspective, does bureaucracy cause stagnation? In many cases, business managers don’t understand their ever-evolving dynamic business environment because they never look outside the problems boundaries. In today's volatile economy, nothing impedes progress more than protective silos which are simply a form of bureaucratic management hierarchy designed to preserve the status quo.

Bureaucracy generates inflexibility: Bureaucracy is often caused by overly rigid structures or business processes. The larger the organization and inputs are, the larger the amount of 'rules' are necessary for its functions, to keep dependent variables and outputs delivery stable. However, too many rules will stifle business change and information flow. Ideally, the digital organizations should be a complex, but flexible social system starting to appreciate business attributes such as readiness, ownership, integration, open communication, customized structuring, and multifaceted partnerships. Many organizations today are running in between - the mix of old and new; the different departments or divisions within an organization have different speeds. The flexible digital organizational structure is implemented via the virtual team setting well mixing with the physical structure. Digital platforms enabled by emerging technologies, efficient apps, and tools, help to lubricate processes, flatter business hierarchies, allow people across the business ecosystem to share knowledge for solving common business problems, These democratic processes will overtake hierarchical control, and that flexible digital culture will become a more fundamental organizational asset.

Bureaucracy stifles innovation: The digital era upon us is the age of innovation. Innovation is about utilizing what you already have in a unique and creative way that has not been done before and using that thing to make a profit. For many organizations with bureaucratic cultures, innovation is perhaps just a buzzword, very few people, especially leaders live with it. More specifically, most companies fail at innovation execution because they have no clear process, nor understand the linkage required to work horizontally across departments, or a holistic approach to managing innovation. The organization must step out of the “comfort zone,” battle bureaucracy, and understand innovation as a process, a management discipline, and capable of delivering the organization-wide innovation competencies. Innovation execution requires a systematic approach with clear stages, performance thresholds, and decision-making parameters combined with an iterative and experimental learning process that supports wide-ranging explorations at each stage.

Debureaucratization is a management practice and starts at the mindset level. The bureaucratic thinking (cause of change inertia) and irrational thinking (creating the blind spot in decision making) are the pitfalls at mindset level to stop organizations from a seamless digital transformation. The more effortlessly you can align, integrate, and optimize the important business factors inside an organization, the closer you can accelerate performance and lead changes smoothly.


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