Sunday, 21 November 2010

Redundancy Efficiency Creativity

For centuries human organisations and endeavours have sought to be efficient, to use as few resources as possible to achieve the ends desired. It is the number one goal in 20th century management theory, underpinning that whole systems theory based ideology.

But what if this was just a symptom of an age of scarcity? In nature, biological systems are rarely efficient in the way that Ansoff (the father of strategic management) or Taylor (of scientific management fame) would recognise. Millions of sperm but only one 'succeeds' to use 20th century thinking. Gazillions of bacteria, if they all succesfully reproduced we would be buried under mountains of them.

It is the reproduction costs that have caused our obession with 'efficiency'. If the reproduction cost of a book is several years of a monk's life, you want efficiency. You don't want lots of rewrites. When the cost of reproduction is zero or close to zero, as it is in this digital age, efficiency is no longer a determining factor. Or more importantly, a commercially significant factor in competitive performance.

Think about this. To be competitive in the 21st century, if you can change your business to be information based (and most can be shifted towards selling information with the hard goods being a decreasing part of the operation. The classic 70% customer facing ; 30% backroom personnel split), you no longer need to be efficient. Because it doesnt matter, because you aren't wasting anything. If redundant activity generates benefit, you are in net gain.

What is the advantage of this? Creativity and novelty. In nature, redundancy is the necessary by product of evolutionary change. Novelty arises due to inefficient reproduction. Not all sperm are identical. In some, reproductive mistakes have occurred to create variety and novelty. Just as Nature cannot predict which 'sports' (as farmers call accidental mutations) will be more 'successful' until they are tried in practice, the sperm which due to a 'malfunction' in its chemical pathways is able to swim a tiny bit faster than others, so we cannot predict what new ideas will be successful in business. Many have tried. Many 20th century strategic choice theorists, Michael Porter for example, have tried to design 'betting systems' by examining the form of the market and betting on specific directions for business development.

In practice, the evidence of the effectiveness of these games is slight. In my practical experinece (30 years across public, private and social economy sectors) they just dont work. They don't predict the future in any meaningful way. Analysis, review, hindsight, certainly, but looking into the future they are no better than good old MOTS (do More Of The Same). This is the view of post-systems management theorists such as Ralph Stacey and 'just do it' pragmatists like Tom Peters. Planning works for dinosaur businesses which can dominate markets but not for the little mammals trying to get out from under their feet. And when the environment changes......

In my prevous blog I wrote about swarm intelligence, how ants use seemingly redundant behaviour, wandering about 'aimlessly' plus good communications to construct highly complex behaviour patterns. They find something good or bad, communicate it and provoke a collective response by communicating the information.

Humans have spent many years avoiding this. Stuffing our fellow humans into non-complex processes in factories or call centers, causing stress and unhappiness as a consequence. Because we can't use swarm intelligence? Because our class based society has a horror of redundant behaviour (if it costs the boss money 'stop the talking on the production line'. Even though much of this apparently idle chat may be about correcting the errors that otherwise clog up Quality Control at the end of the line.)

The problem for bosses is that self-initiating, self-directed behaviour undermines control. Who can tell what would happen if operatives were encouraged to talk to customers and suppliers and design their own work? Is this another reason why executive directed, elite controlled businesses are so 'last century'?

And what would businesses which behaved in this organically redundant fashion be constructed like? Instead of linear business information processing we would have to see 'at the point of need' flexible IT support with underlying and automated billing procedures. So that the operative/ marketeer wouldn't need to know anything about how the business admin is going to get payment or effect delivery for that little bit of extra business. If he did it would not be efficient.

So what should we be looking for as our guiding light in an age of redundancy and low/no cost production. Roberto Verzola, at the International Conference on the Commons, Berlin, Oct 31 – Nov 2, 2010, says it is reliability.

He says that in an age of abundance (of information, data, relationships, networking) what people now want is reliability. He says we live in a new age of information 'commons'. Unlike old style grazing grounds our e-commons cannot be degrade by over grazing (although Nobel prize winner Elinor Ostrom showed that the 'tragedy of the commons' was a fabrication if commons based economies were left to find an equilibrium). The more these new data commons are used the stronger and more sustainable they become.

Reliability means customers get what they actually want, when they want it and whenever they want it. Personal service, at their convenience, predictably for an indefinite future.

The law of requisute variety says that the onlt way to ensure this complexity of demand is satisfied is to use a systems controller of equal complexity, human minds. Any IT system must be less complex (the human mind is the most complex thing in the known universe).

Wasteful processes are often more sustainable because they are, like natural processes, more diverse. 'Duplication' that horror word for old style business process engineers, can actually be a good if it ensures there are alternative channels for production if the main one 'goes down'.

Many 1990s management studies highlighted the importance of social capital in maintaining sustainable business processes. The implicit knowledge actioned by participants in their organic relationships with colleagues, without thinking, that keep business processes running. For example, Jenny just knows that if Johnny is on holiday she had better check that Jilly knows about Jackie's foibles in how she wants her order. You can't keep track of the complexity of those kind of relationships. Implicit knowledge cannot be 'surfaced' and written down, Many attempts at doing so have failed.

These elements of the complexity of human thought and behaviour can only be practiced, they cannot be prefigured and designed. But we can design dehumanising production lines.

This is why business process re-engineering was such a disaster with 80% of BPR initiatives resulting in decreased performance, because it destroyed the social relationships and social capital that kept old 'inefficient' processes running. BPR is fine for production line drones but not for any creative customer facing business. In that you need the complexity of human behaviour to meet the complexity of human behaviour from customers.

In an age of redundancy and ever faster change, production lines are too slow to change. We must rely more on duplication and redundant behaviour to find new and better ways of doing work. Even work which is resource costly.

For example a warehouse collating orders for customers. It can be designed so that order pickers just do as they are told brutally efficiently. But what the customer wants is the best fit with their current requirements. A brutally efficient operation delivers what the customer thought they wanted when they placed the order. It is conceivable to have the order pickers wired up with real time stock levels for different products, new 'just in stock' products, and with access to the latest CRM information for specific customers, in real time communication with customers and collating their order in collaboration with the customer.

Undoubtedly many suggestions would be redundant but this active relationship marketing could generate far higher sales than the production line of 'old information' order fulfillment of today.

What would you do if the Amazon order picker rang you up on your mobile as you were on your way to work and said, I can give you your favourite author's new book at 50% off because I'm about to pick his old book to fulfill your order and the new one is in the next bin and did you know this author likes that music and you might like it too. This is already done by Amazon of course using IT intelligence at the ordering stage (when it is easy to ignore). Many other businesses could do it using humans, a vastly more complex tool than any software.

But the core of this argument is that prefigurative , simplifying, predictive, set, business processes are no longer fit for purpose, even in normal business, that is, outside of information reproduction enterprise.

Business which are class based, with controllers and controlled, are less likely to be able to adapt to this new redundant work style.

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