Why do start-ups usually have a dynamic network structure and grow into bureaucratic hierarchies through the start-up stage? Two driving factors are briefly discussed here, as shown in the left cantilever (1,5) in the figure below.
Figure 1: why does organizational complexity increase
The first driver is the leader’s expectation of professional efficiency. After going through the start-up stage, one tendency is to optimize for efficiency in order to reap the benefits of its successful products as much as possible. The traditional way to improve efficiency is to refine the division of labor. From everyone is an all-round fighter in the entrepreneurial period, it turns to “professional people do professional things”, as shown in the B1 loop (2-3-4-9-2) in the figure: the pressure of improving the efficiency of specialization (2) leads to the refinement of division of labor, which improves the efficiency of specialization, and the improvement of professional efficiency improves the output of professional fields, so the pressure is relieved. The mental model of leaders behind this dynamic is: refining division of labor is conducive to improving efficiency and increasing output.
However, the detailed division of labor also brings about the increase of integration cost (including the waiting waste and integration investment caused by division of labor). This, at least in part, offsets the increase in total output caused by specialized regional output.
(the improvement of specialization efficiency caused by the meticulous division of labor is also restricted by the dependence caused by the division of labor. For simplification, it is not shown in the figure).
The second driving factor is the leader’s expectation of the degree of control. The control tendency of leaders brings pressure to enhance the degree of control. This kind of pressure will increase the meticulous degree of division of labor to increase the clarity of roles and responsibilities, so as to enhance the degree of management and control and relieve the pressure of management and control (loop 6-3-7-8-6). The leader’s mental model behind this dynamic is: clear division of responsibilities can bring about effective control over the organization and employees.
In the process of company growth, these two driving factors often lead to the increase of division of labor, but the increase of division of labor brings a series of other consequences. Division of labor will lead to the increase of departments, which will lead to the growth of organizational level and the decrease of adaptability (3-15-16). At the same time, division of labor also leads to organizational barriers (3-12). Organizational barriers tend to promote the growth of personnel (caused by the decrease of site awareness and mobility), while personnel growth is easy to further strengthen organizational barriers (for example, all teams of modules tend to complicate modules).
The emergence of organizational barriers and the decline of adaptability lead to the organization more difficult to grasp the opportunities in the market, so the innovation ability decreases, which leads to the decline of total output (13-10) in a longer period of time, and the organization goes downhill.
From the above analysis, we can see that there are internal reasons for the increase of organizational complexity, some of which are related to the leader’s mental model rather than value driven. From the perspective of lean concept, if the goal of the organization is to create value for customers, the complexity of the organization is often beyond the necessity. Therefore, there are often calls for “simplifying the organization” in the process of transformation.
The improvement of organizational adaptability and innovation ability depends on the upgrading of leaders’ mental model. If the leader can’t touch the head and foot of the transformation, it will be difficult for the leader to achieve the goal of innovation. Only when the leaders understand the root cause of the problems they are facing, can they change from the management and control organization to the enabling organization, correct the one-sided pursuit of professional efficiency, and make a fundamental change in the system dynamics, as shown in the two red lines in the figure below.
Figure 2: the mental basis of organizational transformation
Ma Linsheng / 20200420
- [mental model]
- [organizational transformation]
This article starts from Bob Jiang’s blog. Please contact Bob Jiang for reprint