Friday, February 25, 2011

Bureucracy - Part II

Powershift, Alvin Toffler

As change speeds up, th[e] "cubbyhole crisis" is deepened by a parallel breakdown in the "channels" of communication.

Smart business people have always known that a company succeeds only when its parts work together. If the sales force is terrific but manufacturing can't deliver on time ... or if the ads are wonderful but not tied to the right price policy ... if engineers have no sense of what the marketers can sell ... if all the accountants do is count beans and the lawyers just look at the law, without asking business questions ... the firm cannot succeed.

But smart managers also know that people in one department or unit seldom speak to their counterparts in another. In fact, this lack of cross-communication is precisely what gives mid-rank managers their power. Once more it is the control of information that counts.

Middle managers coordinate the work of several subordinate units, collecting reports from the executive-specialists who run them. Sometimes the manager receives information from one subordinate and passes it back down to another, thus serving as a formal link between cubbyholes. At other times he or she may pass information laterally to the manager heading another group of units. But a middle manager's main task is to collect the disparate information that the specialists have cut into fragments and synthesize it before passing it through channels to the next higher level in the power pyramid.

Put differently, in every bureaucracy, knowledge is broken apart horizontally and put back together vertically.

The power structure based on control of information was clear, therefore: While specialists controlled the cubbyholes, managers controlled the channels.

This system worked marvelously when business moved slowly. Today, change is so accelerated and the information needed is so complex that the channels, too, exactly like the cubbyholes, are overwhelmed, clogged with messages (many of them misrouted).

Because of this, more executives than ever are stepping outside channels to circumvent the system, withholding information from their bosses and peers, passing it sideways unofficially, communicating through "back channels" operating on "dual tracks" (one formal, the other not), adding fire and confusion to the internecine wars now tearing up even the best-managed bureaucracies.

One overlooked reason why Japanese corporations have been better so far in managing the breakdown of bureaucracy is the existence in them of a backup system lacking in American and European firms.

While Western firms are dependent on cubbyholes and channels, Japanese firms also have, overlaid on these, what is known as the dokikai system. The dokikai system is a deviation from formal bureaucracy—but one which makes it far more effective.

In a large Japanese firm all recruits hired at the same time—what might be called an "entering class" or a "cohort"—maintain contact with one another throughout their employment by the firm, rising up the ranks as they grow more senior. After a time the members of the dokikai are scattered through the various functions, regions, and sections of the firm. Some have risen up the grades faster than others.

But this fraternity, as it has been called, hangs out together, socializing in the evenings, swilling much beer and sake, and— most important—exchanging information from many different cubbyholes outside the formal hierarchical channels.

It is through the dokikai that the "real" facts or "true" facts of a situation are communicated, as distinct from the official party line. It is in the dokikai that men, lubricated with alcohol, speak to one another with honto —expressing their true feelings—rather than with tatemae —saying what is expected.

Yet this is no longer sufficient for organizational survival, and even this system is breaking down. Thus, companies race to build electronic alternatives to the old bureaucratic communication systems, and with these come fundamental reorganization as well, not only in Japan, but in the United States, Europe, and all the advanced economies.

What we see, then, is a burgeoning crisis at the very heart of bureaucracy. High-speed change not only overwhelms its cubbyhole-and-channel structure, it attacks the very deepest assumption on which the system was based. This is the notion that it is possible to pre-specify who in the company needs to know what. It is an assumption based on the idea that organizations are essentially machines and that they operate in an orderly environment.

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