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Friday, August 27, 2010

The Business of Bureaucracy

One of the most discouraging aspects of working in the corporate world is the realization, which comes slowly and surely, that you are not working in a business, but in a bureaucracy. The larger the company, the less like a business it becomes. A business is the line between A and B. The A is the owner, the B is the client. The business works to create value for A by creating value for B. The shorter and more direct that line, the closer the owner is to client and the more closely aligned their interests can become. The longer the line, the harder it becomes to align interests of owner and client, harder to strike the best deal that serves both parties. 

The mom-pop shop is the pure business. The owners face their clients in the flesh. The feedback is instant, and not always polite. In vast organization the feedback mechanism is byzantine. The delivery of a complex product requires hundreds, if not thousands of workers. Co-ordinating such activity means spending more time focused on the internal workings, and politics, of the organization than focused on clients who sit outside the organizational bubble. 

The executive, the proxy for the owner, will try to step outside of the organization bubble with market research, focus groups and customer service feedback. But this is only one element of the data flow that comes to him. The executive is overwhelmed with data. Sorting the trivial complaints from the vital criticisms is challenging. His perception of client needs may vary with others within the organization. He is constantly being distracted by the machine of which he is a part. There is little energy left over for potential client needs, what client doesn't know they might need or want, yet meeting those needs is the future of the organization. Yet the discipline of the market is there, punishing the least able, rewarding the best fitted at riding the albatross. Added to the enormous complexity of the modern private organization is the demands of the modern state.

The power suits and walks belie the fact that the executive is highly circumscribed, by their immediate superiors, and the mass regulations that surrounds and infiltrates the firm. Companies drown in the forms they produce. There are even forms to obtain more forms. Why? Because the auditors want it! Why do the auditors want all these forms? Well to give themselves cushy jobs is the immediate answer. Why do executives keep auditors around? Because they are afraid. Afraid of regulators and afraid of ravenous class action lawyers. Culturally the end product of this fear is bureaucracy. Bureaucracy is the standardization, and routinization, of behaviour so as to minimize risk. The more bureaucracy, the less risk, as well as innovation. A bureaucratized businesses becomes more interested in making sure they don't get sued or fined, than worried about what their clients need or want. 

The executive knows this. They know they can't serve their clients the way they should, so they engage in a elaborate game of distraction, this is called marketing. New products are launched, which no one wants. But the people who launch these products have cushy jobs. The executive who approve them can point to their superiors, and clients, and say that they are doing things. Motion is all important. In what direction? Doesn't matter. Direction is too long range. Purpose is too abstract. Just keep moving and hope you hit something. Hope people don't notice that you aren't addressing their needs or wants, just trying to distract them. 

Look at this bell and whistle, neat, eh? Yes, neat, but no wants it. They want X, but X might cause problems with the auditors, so forget about X. Keep up the song and dance. The link between executive - the proxy for the owner - and the client is no longer simply distorted, it is largely severed in the bureaucracy. The executive, and so the whole organization he directs, becomes rule focused rather than customer focused. An irony since the government controls are often enacted in the name of the customer. 

Without purpose and meaning, a business ceases to be a business, it becomes a game of deception. We pretend to provide value, and the clients pretend that they are satisfied. Sometimes they'll complain, they'll stamp their feet and threaten to take their money elsewhere. The bureaucrats, for at this point they are scarcely recognizable as businessmen, find the complaints amusing. You see the competitors have auditors too. They think the same way that our auditors think, because all auditors are alike, because the laws apply to all. They are the enforcers of the paper pusher world. You certainly need them, like you need traffic cops. But how many do you need? And how many rules are really required to get on with the business of business?  When the rules become all, where is the client? 

Posted by Richard Anderson on August 27, 2010 | Permalink


Bang on! Big business and big government have one thing in common God awful bureaucracy. But at least with business there are still some checks and balances, if the bureaucrats get to stupid the whole thing will go under.

Posted by: Farmer Joe | 2010-08-27 8:29:49 PM

There is only one solution: the elimination of servitude ..er...I mean employment.

Posted by: xiat | 2010-08-31 3:27:26 PM

At least a big business will eventually go under if the product does not sell. Government simply makes more rules, hire more auditors/enforcement officers and diggs deeper into our pockets with impunity and no consequences.

Posted by: peterj | 2010-09-01 12:04:33 AM

With big government failure is considered success. Job not getting done? Simple just add more bureaucrats and funding. Still doesn't work? Repeat ad infinitum.

Posted by: Farmer Joe | 2010-09-01 9:14:35 AM

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