Enthusiastic skepticism is not the enemy of boundless optimism. It’s optimism’s perfect partner.Astro Teller
When a company is young it is agile. Decisions are made by small groups and if things don’t go exactly as planned, they quickly try something else, they iterate, or they die.
This works for a time. But as success expands the amount of people working on stuff, coordination is required. At some point, decision-making is centralized in a management system. Decisions large and small are scrutinized on a cadence.
Companies tell themselves a story about how light the process is but it’s not light to anyone who participates. It’s slow. Decision horizons are long. Once something is approved it rarely dies. It is the opposite of what companies need to compete in a digital world.
All large companies need to find their way back to the place where they were fast, iterative, and agile so they can compete with a greatly decentralized competitive landscape.
Slow. Slower. Slowest
I was working on a project a while ago. It was one of those projects the business was really excited about but I knew challenged the status quo from a Finance and IT perspective. Regardless, it was a heresy that needed support in order for the business to make a leap.
To progress the work, I kept this project relatively quiet; no need to awaken the immune system until necessary. I kept my up-line informed but didn’t make too much noise. I made it a priority and shifted people and funding to the project.
The project wasn’t perfect, but it was small, self-contained and it was successfully iterating towards something doable and meaningful. As you would expect the modest success, increasing budget needs and growing interest eventually aroused the interest of the “management system”.
The project still progressed, but now it was slower. The scope got bigger which risks even more “help” from management. And someone figured out that instead of a small software license we should negotiate a global license wrapped together with a partnership and a co-marketing deal.
Big. Bigger. Biggest.
You’re doing it wrong
Jeff Bezos captured this affliction with corporate management systems in his 2015 Letter to Shareholders delivered last April. He compares Type 1 decisions — those that irreversible, go through that door and there’s no going back— with Type 2 decisions — changeable and reversible, 2-way doors.
What he says is essentially that as companies get bigger they tend to treat all decisions as Type 1 decisions even though most decisions remain Type 2.
“As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.”
I saw this in numerous projects including the project I described earlier. As the project grew, it was perceived to be a Type 1 decision requiring a heavy management system. But the project was only Type 1 because of a key assumption: that the door was one-way. But it wasn’t, it was a two-way door. The only thing that would prevent a team or business from going back through the door was inertia.
So how do companies get back from the Type 1 nuclear option? First, it requires a commitment by senior leadership to recreate the culture they lost.
It’s not just words that are needed — some video blog of how important agility is — but actions. They have to dismantle the root cause of the problem. Cancel the review boards. Stop asking for prep for the prep for the prep meetings. Simplify.
The halcyon days of lightness and speed can return if you:
- Fire the bureaucrats — Strong language, but if you have people who review other people’s work, other people’s work will be reviewed.
- Organize work in small teams — “Type 2 decisions can and should be made quickly by high-judgment individuals or small groups”.
- Give the teams responsibility for value creation — Coordination will be required for large projects, but the teams will figure that out.
- Decentralize the budgeting and financial management system — Without the power of the purse, the teams are still beholden to people highly vested in Type 1 thinking.
- Eliminate layers — Layers are the insidious management system of any organization. Even though there may be no formal review board, reviews still occur.
- Reduce planning horizons — Annual Plans create Annual Builds. Make the planning horizon much quicker, quarterly going to monthly, monthly to weekly, weekly to daily. Fast.
And most importantly:
- Fail projects — If you don’t fail projects, you are doomed to live in a Type 1 world. Letting projects live when they aren’t delivering value is essentially barring the door back to the world you left. Don’t bar the door.
If you want to know more about failing projects, check out Astro Teller’s TED talk. Stay for the end.