07 August 2009

Awareness of System Boundaries is Necessary for Success

A system is where you define it. Sometimes it's easier for people to agree on the boundaries of the system, sometimes it's harder, but either way it's always arbitrary. In keeping with the fractal nature of systems, the subsystem boundaries are also arbitrary.

The definition of a system's performance depends on its boundary. A car's performance is measured in miles per hour because the boundary of the "car system" is between the tire and the road. We could say that the car actually stops at the axle and that the wheels are a separate system. Then the performance of the "car system" would be measured in revolutions per minute. However, car and the wheels are generally considered the system. On the other hand, when we talk about a highway at rush hour the cars are considered subsystems of the traffic jam. Alternatively, an company's organizational chart is an illustration of subsystems within systems.

People who are in charge of a subsystem will generally consider themselves in charge of a system. When they strive to do the best job possible they will usually try to optimize the performance of their system. Just like the performance of the axles in a car is measured differently than the performance of the tires, the performance of one group is measured differently from the performance of the larger group it is a part of. The person in charge of the subsystem can't measure the performance of the system, because that's not where they are; all they have to work with is the performance of their subsystem.

This is a problem because to optimize the performance of a system you must de-optimize the performance of all the subsystems.

For example, a "tuned" car doesn't have the most powerful engine because it would rip the transmission apart. If the transmission were beefed up it would spin the tires instead of moving forward. If the tires were stickier it would warp the frame. If the frame were reinforced it wouldn't leave enough space for the big engine, or it would weigh too much and it would need a bigger engine, starting the cycle over again.

The Tsar tank. More like the reTSARded tank! Am I right?

A system must have subsystems that are in balance with each other based on the performance goals of the system, not on the performance goals of the individual subsystems. This is relatively easy to understand when the systems are not people. But as soon as people get involved they start to get all pissy about being a subsystem rather than a system.

This is why the executives of companies are constantly being reminded, often by highly overpaid consultants, that they have to explain to employees how their actions affect the company's overall goals. Otherwise, all they have to go on is the performance of the system they are aware of, which is the one they happen to be in charge of. When they do their best they will actually be destabilizing the company.

BTW, this is why companies alternately claim it is better to keep their employees powerless and scared, or empowered and brave, depending on which extreme they are already closer to. A company that judges its employees on how well they aid the overall goals will strengthen the company by empowering everyone. A company that judges its employees on how well they perform on their section's individual metrics will strengthen the company by squashing everyone.

06 August 2009

Spontaneous Misorganization Stifles Innovation at Large Companies

New ideas rarely emerge from bureaucracies. Large companies are generally bureaucratic, therefore new ideas rarely emerge from large companies. This is because people suck.

Pictured: People. Sucking.

A person doesn't suck (usually), but people do. The more persons are involved in something the more likely it is to suck. Observers often say that culture is the reason small companies are better at innovation than large companies; like Bruce Nussbaum, Marty Cagan, and Jeffrey Baumgartner. (respectively)
[large companies] don’t understand the critical cultural and social science components of [innovation].

...there is much that the typical large company could do to improve the ability of their employees to innovate.

The culprit behind this discrepancy is the decision making structure in each kind of company.
It's not culture, at least that's not the first cause, it's the number of people. That's not to say it's the number of people technically grouped together. What is important is the number of people who have power over the outcome. As a general rule, people all want something different. It is impossible for everyone in a group to have the power to get what they want, but it is possible for everyone in a group to have the power to stop the process and ensure no one else gets anything. We have a built-in feeling of what is fair or not and we act on it by refusing to accept deals in which we get something, but the something is less than we feel is fair. Give enough people power over the outcome and nothing will ever get done.

Small companies tend to have few people in them. They're "streamlined." That's a nice way of saying they have fired, or simply never hired, people they didn't need. Large companies tend to have a lot of people. They're "bloated." That's an acceptably crude way of saying there are too many people involved in what's going on. large companies provide a reliable flow of income, so they attract the people who can't hack it anywhere else. That's fine as long as they do their well-defined job and nothing else.

You can have some power when the guy above you either loses all of it or gets more.

A lot of people becomes "bloat" when those people start getting the power to make decisions affecting their own job. Since their job is all they can handle, they are not going to make decisions which result in changes to their job. This is not to say that hiring more people is bad, only that distributing power over one decision is bad, and more people hanging around makes it more likely power will end up distributed.

Large companies can innovate just fine, and do, when they realize that throwing more people at a problem actually makes it worse. As groups grow larger, and more secure in their position, they become much more likely to spontaneously mis-organize themselves.

For example, as a company grows it tends to take on larger and more complicated projects, which necissarily involve more people with specific expertise than before. That's as it should be, the mistake is giving all those people power over the project. The appropriate way to organize it is to give one person power over the project, and make sure they get good advice from all the experts. This takes deliberate structuring because anyone who feels crucial to a project's success will feel it is unfair that they have no official power over it. This makes it much more likely one of them will demand, and get, some measure of power. That makes it more likely the others will demand, and get, the same.

Then they will use their power to stop the project when it doesn't meet their standards, which it inevitably won't, as I'll explain in the next post.

05 August 2009

National Healthcare Reform Leadership

A new national healthcare system is in the works, or at least a modified one. Which is good, because no matter how you slice it the country needs to do something about steadily increasing healthcare costs, says the CBO.

If rising healthcare costs were a steamroller. . .

In BusinessWeek, Nikos Mourkogiannis proposes that the new system should focus on cutting costs. He also says that, while that is a fairly obvious consensus view, actually implementing it will require prodigious acts of leadership. The general idea is to create a system that ensures the average person will have a minimum level of benefits.

As Mourkogiannis points out, the new healthcare system will not be able to do everything for everyone, it will have to make triage decisions which first reduce costs (and do everything else second). From the White House:
President Obama is committed to working with Congress to pass comprehensive health reform in his first year in order to control rising health care costs, guarantee choice of doctor, and assure high-quality, affordable health care for all Americans.
The fun thing about mission statements is that they often utilize a lot of commas. Giving commas to a bureaucrat is the linguistic equivalent of giving a credit card to a teenager. All sorts of commitments are made with little consideration given to whether or not they can all be delivered. The term "high-quality" has a lot more wiggle-room than "affordable," and the situation demands the focus be on "affordable" anyway, so "high-quality" is really only in there to attempt to placate fears that the healthcare storm troopers are going to drag you off to the crematorium when you reach 65.
Your grandpa ran off to join the circus. Here's his replacement.

High-quality will have to be secondary to low cost. The only reason we need healthcare reform is that our current approach will bankrupt us. So, at a minimum, we have to do the same thing only cheaper. Improving quality would be nice, but it is not the primary driver; cost is.

Now, try explaining that to the people who will cost too much to take care of.

This healthcare reform situation is a good example of a situation that demands attention be paid to systems, innovation and leadership. The system is monstrously complex, implementing it won't work without some innovations that no one's thought of yet, and even then the leadership challenge is pretty much guaranteed to be beyond anyone's capabilities. We (Americans) are okay with the idea that the system can't take care of everyone. We are not okay with the idea that the system will officially not be taking care of everyone because they are officially on the wrong side of the cost/benefit analysis.

That being assumed, what sort of leadership approaches have the best chance of getting people to at least let the necessary changes happen, if not get people excited about the changes?

  • "We are working hard for you, but someone/thing else is working against us." Whoever gets saddled with the job of representing healthcare reform can try casting themselves as the plucky, unquestionably-good-hearted hero valiantly struggling against an evil menace. The menace could be immigrants flooding our emergency rooms, greedy HMOs, or just the vast scale of the problem.
  • "We all know more than you and we say this is a good idea/working." Several large stakeholders in the healthcare marketplace, like the pharm-companies and AARP, have already expressed support for healthcare reform. It could be possible to present a unified front that overwhelms any attempt to claim it's a bad idea.
  • "Every alternative is worse, especially doing nothing." Proponents of healthcare reform, like me, have pretty much started here anway. This approach assumes that this will remain the primary tool moving forwards. It could be expanded upon by occasionally adding a new description of just how bad the future will/could get if things aren't done in a particular way.
  • "I was worried, but now I see there's nothing to worry about." Instead of the leaders speaking, they could get average Joes and Janes to speak for them. That way the people who need to be convinced could see people just like them being convinced, rather than Ivy-league, smooth-talking socialist puppets trying to be convincing.

04 August 2009

Leaders Are Framers

Since not much can be said about what leadership actually is, but people talk about leadership a lot, they must be talking about something else. I think they're talking about the incredibly complicated art/science of framing reality.

According to a study by the Hay Group, a global management consultancy, there are 75 key components of employee satisfaction (Lamb, McKee, 2004). They found that:

  • Trust and confidence in top leadership was the single most reliable predictor of employee satisfaction in an organization.
  • Effective communication by leadership in three critical areas was the key to winning organizational trust and confidence:
    1. Helping employees understand the company's overall business strategy.
    2. Helping employees understand how they contribute to achieving key business objectives.
    3. Sharing information with employees on both how the company is doing and how an employee's own division is doing - relative to strategic business objectives.
I think this illustrates THE thing that people in leadership positions have to do. They have to frame reality for everyone else.

There is more in the world than we can possibly perceive, and there is more in what we can perceive than we can possibly focus on, and there is more in what we can focus on than we can possibly make sense of. Appropriately, this scares the bejezus out of us. No matter how well we manage to understand the world, there will always be (infinitely?) more that we do not understand. This awareness leads us all to the obvious conclusion that if we can only understand part of the world, it should be the most important part.

But how can we be sure we understand the most important part of the world if there are things we don't understand? Maybe the most important part is one of those things we missed. This universal doubt drives all of us to the next obvious conclusion; to ask someone else.

Since we are searching for the most important thing, upon which we can focus, we naturally assume it can be known. Therefore it makes perfect sense that someone else could know it. Whether or not they actually do cannot be determined, but they could know it. We look for a framework we can use to understand the most important thing, and from there to build our life around.

Leaders provide that framework for us. They tell us what is important. This is why leadership looks the same at all levels, including personal, because everyone has some idea about what might be important. Leadership is touchy because when an organization tells us what is important we might be grateful, or we might be offended. Or we might be apathetic. It all depends on how we frame reality for ourselves and how our personal framework meshes with the leader's framework.

When the leader's framework contradicts our own one of them has to be rejected, so either we think we are wrong or we think the leader is wrong. When the leader's framework merges with our own we feel completed. It is that feeling of appropriateness that creates a leader-follower dynamic.

01 August 2009

The Consciousness Consensus

There is no consensus regarding what consciousness is, let alone whether or not it can be created artificially. The introduction to Cognition Distributed does an excellent job of walking the reader all the way around the abyss that is our lack of understanding of consciousness.

It takes a $100 book to explain that something can't be explained.

When you say to yourself, "What is seven times nine?" and then "sixty three" pops up, you are certainly conscious of thinking "sixty three." So that's definitely mental; and so is the brain state that corresponds to your thinking "sixty three." But what about the brain state that actually found and delivered "sixty three"? You are certainly not conscious of that, although you were just as conscious while your brain was finding and delivering "sixty three" as while you were breathing, though you don't feel either of those states.

We can agree that consciousness emerges from a sufficiently complex system, but not from insufficiently complex systems. While the metaphysical doubt that a rock could be somehow conscious, or a tree, or Gaia, always remains. . .it is merely a qualification made to preserve intellectual honesty. The doubt is really reserved for things like biomes and planets, not for dust and bushes. It's subjective, sure, but it's the best we've got.

This question has been addressed so often that the language for discussing it is well established. It is possible there are just things that cannot be something, kind of like how "0" and "zero" are things that represent nothing. It's a paradox, not an inconsistency.

Anywho, the really interesting development is that as we offload cognition into artificial actors we are accumulating context for the discussion that was impossible before the microchip. New innovations are being created every day that do things we previously associated only with conscious actors. Since we do not consider these new mechanisms conscious, we can no longer say those functions are conscious. If a function can be provided by purely vegetative processes then consciousness must be something else.

Consciousness is one of those leading-edge concepts because everything we've nailed down as mere complexity, so far, has failed to explain it. Like how the round Earth was just a theory until someone actually managed to sail all the way around it, because the surface that had been explored up to that point didn't fully explain the Earth's roundness. I think we'll figure it out eventually. . .probably a few seconds after SkyNet becomes conscious and tries to kill us all. . .but life's a journey, not a destination.