The New Business Operating System
COVID has underlined the need to upgrade our Victorian business methods.
The Modern World Needs Discerning Methods
Right now, your company has 21st-century Internet-enabled business processes, mid-20th century management processes, all built atop 19th-century management principles.
— Gary Hamel
At the turn of the 20th century, Frederick Winslow Taylor created the theory of Scientific Management. The theory focused on the continual optimisation of workers’ productivity, enabling factories to vastly amplify output - culminating in the industrial revolution.
Over a century later, the principles of Scientific Management are still in use by businesses to determine how to organise people around work. Business Schools still teach these principles. We still carry and apply them — often without realising.
There is nothing inherently wrong with Scientific Management. However — as with all methods — it is context-sensitive: in some contexts any given method may help us, and in other contexts the same method may harm us. We must therefore be conscious of our context before we choose our method. The Cynefin framework is a wonderful reminder of this.
Scientific Management helped increase efficiency in a context of wider stability, where we could see:
- Slower market change in customer demand and emerging competition
- Abundance of loyal workers due to limited job opportunities and social security
As we know, the world has since changed and stability is now often limited. Technology has been a primary disruptor: the institutionalisation of air travel and instantaneous information flow no doubt impacted the rapid spread and geographically coordinated response to COVID.
New technologies have created an unprecedented proliferation of opportunities for small, historically disenfranchised actors to have a butterfly effect.
Some of this has positive consequences, like entrepreneurial success. Other manifestations are devastating: terrorists, insurgents, and cybercriminals have taken advantage of speed and interdependence to cause death and wreak havoc. But it all exhibits the unpredictability that is a hallmark of complexity; today, we all find ourselves surrounded by hurricanes.
— McChrystal, General Stanley; Silverman, David; Collins, Tantum; Fussell, Chris. Team of Teams: New Rules of Engagement for a Complex World
In the context of such volatility, Scientific Management’s approaches may often be unsuitable: the separation of thinking versus doing between managers and workers, the focus on improving part of the organisation to improve the whole, and the belief that overall productivity is governed by the ability of workers versus the structure of the organisation.
Success in the modern world requires us to choose our methods to match the context. Scientific Management is one such method that may flourish in stability and suffer in volatility.
Dimensions of the New Operating System
The new operating system recognises that there are several important dimensions to how a business operates. Each dimension is like a slider — your business will employ different method depending where it sits.
Upgrading your operating system is therefore not about topping the scale in all dimensions, but rather to understand the context of your business and thereby intentionally choose where your business should sit and the methods it should employ.
Below are brief descriptions of the dimensions, with each being expanded upon in future articles.
- Decision-making: do we make decisions at the top of the organisation or proximate to the customer?
- Motivation: do we provide our staff with extrinsic rewards, or shape our organisation to unlock intrinsic motivation?
- Trust: have we designed our processes and structure around a belief in authoritarian management (Theory X) or participative management (Theory Y)?
- Strategy: do our goals demonstrate a finite game focusing on short-term measurements, or an infinite game focusing on building a stronger organisation?
- Planning: do we invest more effort in planning and predicting, or instead in increasing our ability to adapt to external change?
- Optimisation: do we improve part of the organisation to improve the whole, or do we understand the whole organisation to improve the part?
We are in the middle of one of the most profound shifts in human history, where the primary work of mankind is moving from the Industrial Age of “control” to the Knowledge Worker Age of “release.”
— Marquet, L. David. Turn The Ship Around!
The new operating system is about ensuring your business operates in a way that is congruent with its context. Whilst we are often only taught Scientific Management, there are many methods across multiple dimensions. The trick is to be intentional in our choice of method given the external context.
The Curious Coffee Club is a gathering place for leaders who are serious about preparing for our new world, helping them learn and exercise tools for survival. Interested? Let’s connect!
