The known world is full of paradoxes. Paradoxi? Whatever. Having studied Physics in school I am somewhat familiar with a couple of scientific paradoxes that changed the way we look at everything. Prior to these changes the world was viewed through the lens of what was called Newtonian Physics. That is the mechanics of the motion of objects of non-zero size. Beach balls bouncing, planets orbiting, that sort of thing. It worked well until technology progressed to the point where people could examine smaller and smaller objects, like “particles”, electrons, and protons and such. Then it didn’t work anymore.
It was at this point in time that a new branch of Physics had to be created. It had to work for the macro-world of bouncing balls and the micro-world of sub-atomic nuclear particles. It was called “Quantum Mechanics”. It had to address the paradoxes that were now visible.
It had to address the paradox that sometimes light behaved as a wave and sometimes it behaved as a particle, when in reality it had to be both a particle and a wave all the time. If that was truly the case then everything had to exhibit the same characteristics of waves and particles. This is called the wave-particle duality.
There were other paradoxes that Quantum Mechanics had to address. The idea that physical quantities such as speed and energy (and others) changed in only discreet amounts, sort of like going up and down steps as opposed to the idea of smooth slopes like slides. It also had to explain why the very act of observing these things changed their behavior and made observing other aspects of the same objects that much more difficult.
So, as usually the question now is: What does this introduction have to do with anything associated with business. I think it is pretty simple. I think we have been working in a business management model that for analogy’s sake is the seventeenth century equivalent of Newtonian Physics. It has worked, or not worked as the case may be, on a somewhat macro-scale, but as we have tried to drive it further down on a micro-scale into the organization, it seems to no longer provide the solutions and value businesses need.
As we have introduced more process into the business system in order to try and drive more and more order into the system, I think we are starting to see a breakdown in the results we are expecting to see. Instead of getting better we have gotten slower. We don’t get the results that we expect. So what have we done? We have attempted to introduce still more and more process on a smaller and smaller level in order to achieve the predictability and order that we desire in our business universe.
I think we may have reached the same metaphorical boundary in business that Newtonian Mechanics Physicists had to cross in order to get to the new Quantum Mechanics model of the world.
As we layer in more and more process in order to try and simplify, streamline and make our business universe more predictable, we are also adding in more complexity to the business system through the application of the process itself. Herein lies the paradox: The very act of adding incremental process in order to simplify the business adds complexity to the business. We may actually end up simplifying the business a little, but it takes more effort in the process than we save in the business.
This incremental process complexity manifests itself in the time it takes to accomplish simple tasks. It can be seen in the number of conference calls that are now required before any actions can be taken. It can be seen in the increased desire for consensus instead of action. All of these complexity symptoms can be seen as the result of trying to drive the increased application of complex process into the business structures.
Extending the Quantum, Mechanical and Measurement metaphors a little farther into business could also give us some of the solutions to the paradoxes that business is now facing. If the very act of trying to simplify adds complexity, and if the very act of measuring modifies the behavior of how the business behaves, what do we need to change?
I think one of the first things we need to do is change what we measure. As we have seen in the quantum mechanical world, the more specifically we try to measure something the more we modify some of the targets other characteristics or attributes. This is actually called the “Uncertainty Principle” (It was actually introduced in the early part of the last century by the German Physicist Werner Heisenberg, and is also known as the Heisenberg Uncertainty Principle).
The same behavior is noted in organizations and is defined by the phrase “Expect what you inspect”. This generally means that by merely measuring something in an organization, whether it has value to the organization or not, you can change the behavior of the organization with respect to what you are measuring. If you measure the wrong things you should expect the wrong behaviors.
So perhaps we should reassess the value of ever more specific metrics and measurements. This thought seems to run almost entirely counter-intuitive to the directions that many organizations are going today. Instead of looking for ever finer and more specific things to measure we may want to take a step back and focus on the organization as a whole.
There are many metrics that the market looks at when it puts a value on the whole of a company, but the primary ones are financial: Orders, Sales, Profit, Earnings and Cash Flow. There may be others, but these should work for this argument’s sake. It is through the application of these metrics that the market usually establishes a value for the business. We might want to add Customer Satisfaction into the business metric mix, but I actually think that metric will sort itself out through the other financial metrics. If you don’t have Customer Satisfaction, or Quality or any of those derivative topics, you eventually won’t have the financials either as your customers will leave and take their business elsewhere.
So the simple baseline metric for every process, project, strategy, product or program should be: Is there a Financial Business Case that improves one of the five financial metrics that justifies the activity? By forcing the creation of that business case you have created the business representation in numbers and also the accompanying metrics for measuring the activity’s success. You can then see if the activity actually generated the beneficial behavior for the business that was targeted. If the value of the proposed activity cannot be defined, then there is a pretty good chance that the activity probably doesn’t need to be given a high priority.
Measurements against any other type of criteria will yield nothing more than some sort of a track against a non-critical objective, and will most probably drive a behavior that is not in alignment with the objectives of the business.
The Process versus simplicity paradox may be a little more difficult to counter, but again I think we can get it down to a business case. I think the idea for all those that would like to create, add to or extend a process is again to ask them to quantify what they are trying to correct or improve, and what resource they expect to expend on the improvement. In other words we need to create a Process – Simplification equation:
Man Hours required to implement the process
Man Hours saved / removed from the business because of the process
Net Business Simplification.
The nice thing about physics is that it can be clearly expressed in terms of numbers. Postulates and theories can be readily proved or disproved via experimentation or observation. I think we need to look at returning business to this sort of practice as well. There is the proposed theory to reduce and align the metrics with the financial value metrics in the business so that all members of the organization are clearly working towards the same goals. This will make sure that the behaviors on the macro-organizational level are fully aligned to the individual or quantum level within the organization.
I believe and agree that some process is required for the proper running of an organization. The question is when do we start experiencing the law of decreasing returns when it comes to adding more process? By requiring at least a business case proposal and defense of the quantified value of each incremental process I think business can begin to regain the focus on the value that each process is supposed to deliver and start to move away from the current approach that appears to be more process as the solution to every issue.
Business like Physics is a numbers oriented discipline. Good processes in business are like good theorems in physics. People may like to believe in them, but they need to be proven out in the numbers and measurements before they become accepted as natural laws.