Saturday, 8 February 2014

The Management Paradox

There are ultimately two types of management: autocracy and democracy. All other forms of direction, government and decision-making processes are, fundamentally, derivatives of these two classes, or a grey-zone intermixing of the two (you can read about the semantic subtleties on Wikipedia or elsewhere...).

For autocracy, you have a central figure, or leader, that decides for the group according to his/her own beliefs; for simplicity, let’s assume this leader essentially ignores all other viewpoints and ideas.

For democracy, you have a decisional process that encompasses the group; there is deliberation with all members on the issue at stake and a consensus is reached. The ‘amount’ of majority required to declare a ‘consensus’ can vary from system to system and is categorized by arbitrary labels.

Both forms of leadership are problematic in their absolute form. The underlying duality is caused by an opposition of efficiency (time of decision) vs. accuracy (quality of decision). Autocracy is a much faster decisional process but can be blindsided by a lack of perspective that democracy can provide. The simplest compromise is to literally “meet in the middle”; by creating a hierarchy composed of a leader surrounded by ‘experts’, or counselors. This can be loosely defined as an ‘Oligarchy’. Without doing a scientific survey, one can presume that a majority of political systems and private management structures fall in a form of oligarchy. Furthermore, an oligarchy can function within a democratic system. But oligarchy is closer to autocracy than democracy. It is a compromise, thus it is imperfect.

That’s what our political systems are today: compromises (or opportunism in the case of totalitarian tyrannies). So how do you reconcile timely decision-making processes with a more democratic approach? The simple answer currently is that you cannot. Democratic deliberation is a time-consuming process. You have to be ready to spend the time, and resources (referendums are expensive). (Note: this could change in the future given emerging big-data capabilities),

The complex answer requires an understanding of decision-making at a smaller scale. When a boss and two of his employees face a problem, it can be resolved in three different ways:

1. The boss can dictate how to solve the problem without consulting his employees; this is essentially autocratic behavior. The boss is acting based solely on his own preconceptions, beliefs education and experience; he is acting according to his ego. This is a typical response of men that are given or achieve roles of power, but do not originally possess strong moral ethics, or at least a sufficient ‘compassionate’ sense. Ego is an emotional response to power and although successful in varying frequency, it can lead to inaccurate, brash and often damaging decisions for the employees or even damaging to the ‘whole’ or the ‘future’. The boss may be convinced that he is using a ‘flawless’ rational thought process, yet the output is severely hampered by data gaps. The reason for this is a lack of perspective. It is practically impossible for a single person to know absolutely all variables of a complex problem. Analogously, it is for a similar problem that more than one camera are used at sports events.

2. In the second scenario, the boss can leave the decision entirely to its employees and then let it happen without any questions. This could be considered as a purely democratic process, but is in fact not perfect because the involvement of everyone (including the boss) is not achieved – in a large population, this could actually be considered anarchy. The pitfall is that the employees may come up with a solution that is ultimately detrimental to the company, or even to themselves (to the whole, or future) because they lack information/knowledge/wisdom that only the boss has (the leading figure is usually not in that position because of sheer luck! and even then, there is an upper layer of information that remains inaccessible).

3. The third decisional process can be presented as the boss discussing with his employees and reaching a consensus or compromise. In this scenario, the employees can propose solutions, but the boss may put their ideas in perspective and explain why he thinks it might work or not. It is a highly logical, inclusive, rational process granted that all the information is “put on the table”. In a small group, this is probably the best way to solve problems.

It should be clear from these three scenarios, that what plagues both democracy and autocracy is information alienation. On one hand, we have a boss, or manager, that may lack some hands-on ‘nuts-&-bolts’ detailed information; he is disconnected from the ‘reality’. On the other, we have employees that may lack ‘big-picture’ or larger-scale mechanism knowledge; they are disconnected from the whole. It is only by bridging the two parties together that a truly best solution can be achieved with greatest confidence. This is what I would call complete information consolidation (CIC). I believe that CIC management is the next step in the evolution of governance of our civilization and businesses. The challenge is to achieve complete bilateral information transparency across the system’s hierarchy and protect the integrity of this information. It is a big challenge, but I believe it can be accomplished.

No comments:

Post a Comment