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| ===The illusion of significance=== | | ===The illusion of significance=== |
| Because we can see the formal structures easily we tend to imbue them with significance, and assume the static connections between the formal structures are what matters. For example the [[org chart]]: this places every person in a firm in a logical, hierarchical relationship to everyone else, and can be neatly and easily controlled, that’s not to say many organisation charts become positively Byzantine.
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| There is much management theory around the relationship of “spans” and “layers”<ref>[https://www.google.com/search?q=spans+and+layers Let me google that for you].</ref> optimal organisation charts no more than 5 layers of management; no more than 5 direct reports and so on. This, from [https://peoplepuzzles.co.uk/news/ive-got-too-many-direct-reports/#:~:text=Around%20five%20direct%20reports%20seems,really%20hold%20the%20business%20back People Puzzles], is pretty funny:
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| <small>{{quote|'''How many is too many?''' <br>Around five direct reports seems to be the optimum number, according to Mark and Alison, although there are some scenarios where up to nine can work.<br>When it comes to the senior team in a company, however, too many people reporting directly to the owner manager can really hold the business back. Alison recalls working with someone who had 13 people reporting directly to her. “She had to do 13 [[Performance appraisal|appraisals]] at the end of every year!” she says. “It simply wasn’t an effective use of her time.”}}</small>
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| Witness the formalist disposition, when the most significant thing you can do is carry out a formal process. The ethos is this: look after the form and the substance will look after itself full stop take care of the pennies and the pounds look after themselves. But this is the reverse colon this is to look after the pounds and assume the pennies will take care of themselves.
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| In any case you can’t encode mandatory small teams ''and'' a flat structure. There is a mathematical relationship between them: the smaller the average team, the more management layers there must be.
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| And besides, this is to miss [[The map and the territory|the map for the territory]]. An organisation chart is a static map of the firm configured in the abstract, in theory, ''before it does anything''. This is how the machine functions when it is idling. [[Org chart]]s are the plan you have ''before you get punched in the mouth''. Formal reporting lines are often the most sclerotic, rusty and ''resented'' interaction channels in the organisation. Communications up and down them — usually reluctant, strained, for the sake of it — are at best responsive to commercial imperatives, and derivative of them: the firm’s business is done only when the gears are engaged, and that means its personnel communicate with those who are ''not'' in their immediate hierarchy. The business unit is a cog: what matters is the effect a cog has when it is engaged.
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| But as the complicatedness of our organisations has grown we have developed more and more internal engines which engage not with the outside world but with each other in in heat generating, vibrating, noise emitting, wasteful energy consumption. Of course one needs compliance but when NZ compliance needs its own chief operating officers and and its own internal audit it drift away from optimal efficiency. I know of one internal audit department that has its own internal auditor. Who audits ''that'' function? We approach an infinite regression. But the buck must stop somewhere.
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| You can understand the wish to focus on reporting lines — formal organistional structure — because it can be easily seen. It is is legible. It is measurable. Auditable. But it misses the organisation’s real arterial network: lateral communications that ''cross'' the organisation’s internal and external boundaries: these are the communications that employees ''must'' make — between internal specialists in different departments and with the firm’s clients and external suppliers — to get their job done and move the organisation along. Note: it is ''in'' these interactions, themselves that things happen: it is here that tensions manifest themselves, problems emerge and opportunities arise, and that these things are resolved. It is not the drill, but the hole in the wall.
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| These are informal interactions. They are not well documented, and from above, not well understood. They are hard to see. They are not legible. Yep everyone who has worked in a large organisation knows that there are a small number of key people, usually not in significant formal roles, who who get things done. They know histories, they have networks, they understand procedures and and, more importantly, workarounds. These are the ad hoc mechanics that keep the the superstructure on the road.
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| They are hard to see precisely because they do not derive their significance from their formality, but from their function. From the frequency of interaction and the comprehensiveness of connection. These people are the super spreaders. They are the informal hubs of a multiple hub-and-spoke network. They earn their authority not from their formal position, nor their formal grading, but their informal reputation, earned daily, interaction by interaction.
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| A map of interactions is not a top-down, God’s-eye view. It disregards the artificial cascade of formal authority, in favour of informal credibility. It reveals the organisation as a point-to-point multi-nodal network, is a far richer organisation than that revealed by the org chart. This is how the firm actually works, and and inevitably the formal organisation will frustrate it.
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| Yet no firm I know of even considers it. Yet, with data analytics, it would not even be hard to do: Log the firm’s communication records for data to see where those communications go: what is the informal structure of the firm? Who are the nodes?
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| Typically, ''vertical'', staff-to-manager communications don’t have those qualities. Reporting lines are more an interaction ''constraint'' rather than an indicator of productivity. They ''impede'' the firm from interacting freely.
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| The [[modernist]] theory is that the firm is a unitary machine that must be centrally managed and controlled from the top; therefore the more organisational structure the better.
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| The “agilist” advocates removing layers, disestablishing silos, and decluttering the organisational structure.
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| The agile theory is that risks and opportunities both arise unexpectedly, come from places unanticipated by the formal management structure, and therefore the optimal organising principle is to allow talented people at the the coalface the maximum flexibility to react to those risks and opportunities. Thus, the imperative is to have the best people, with the best equipment, in the best place to react skilfully. Those people aren’t middle managers, the optimal equipment isn’t the one that leaves the best audit trail, and that place is not the board room, much less the [[steering committee]] or the [[operating committee]]. It is out there in the jungle. the fewest number of formal impediments to their creative use by those people.
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| For a [[modernist]], this is inevitably a scary prospect. The [[modernist]] view is that as long as the structure is correct the quality of the people in any of the positions on the organisational structure is immaterial as they have predefined roles to perform.
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| So to understand a business one needs not understand its formal structure, but its ''informal'' structure: not the roles but the people who fill them: who are the key people whom others go to to help get things done; to break through logjams, to ensure the management is on side? These lines will not show up in any organisational structure. They are not what {{author|James C. Scott}} would describe as legible. They are hard to see: they are the beaten tracks through the jungle: the neural pathways that light up when the machine is thinking. They show up in email traffic, phone records, swipecode data.
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