Organisational politics and decision making

It should come as no surprise that rationality is correlated with more effective decisions and politics is correlated with less effective decisions (Dean and Sharfman).

If you think about the role your managers play you’ll see that it is mostly social and political rather than fundamentally analytical. By the way, this raises a question on how we promote and recruit managers.

Everyone states that they do not like internal politics yet almost everyone plays the game. Stop it because you are damaging the business you rely on and creating a work environment that is hurting others and yourself.

Silos in company

Contemporary organisations are still seen and treated as merely collections of silos and as a result the biggest mistake top managers and business owners can do is to manage the silos and not the business.

We have experts in Marketing, Logistics, Sales, HR, etc. but there is rarely anyone who understands that the components are not independent but in fact they are in dynamic relations and that it is the relations between them that produce effects.

We have to complement the analytical approach with something which enables us to see the big picture of business i.e. its context, stakeholders, purpose, external environment, network of business functions and so forth. In other words, we need to look at the business from holistic perspective. We need to see it as a system.

Before you bring the experts in, you may want to speak with someone who can see the business as a whole, someone who can integrate the experts’ advice into your business.

Creativity in Workplace

Before you decide to employ a creative person think about if your organisation offers suitable working conditions for the creative process to take place.

Creative ideas do not develop in a vacuum; creativity is a multi-level phenomena requiring individual, team and organisational creativity to flourish. Mumford (2012)

  • Do you have a positive organisational culture and work environment?
  • Do you provide freedom, discretion, autonomy and time to decide how to perform tasks?
  • Is the organisational structure flexible, not bureaucratic and without excessive hierarchies and centralised power?
  • Are you open for a change and risk taking but also criticism and challenge?

And how are you going to recognise creativity and then evaluate it? And how are you going to manage creative people who are usually misfits, mavericks, outcasts and nonconformists deviating from the collective and suppressed by orthodoxy, bureaucracy and authority?

Today’s business is not ready for creativity – to the detriment of both the business and the creative person.

Financial vs Strategic Control

Companies ensure efficiency using either strategic or financial control system.

The strategic control relies on cooperation, sharing, coordination and close working relationships. It requires a vision, direction and execution of business strategy but it is a very expensive system to manage.

The financial control leverages the internal competition to reach efficiency by turning parts of the business into profit centres or entities whose performance is measured with financial methods. It is an inexpensive system but its internal pressures and competition can be counterproductive.

Which should you choose?

Unfortunately, the hybrid control system is not a good choice either because the strategic and the financial control systems are not compatible with each other. (Bergh, 2006)

External vs Internal Orientation

Companies should find balance between internal and external orientation.

Focus too much on the external environment and you will start loosing control over your company and its performance. Focus too much on the internal matters of your organisation and you will miss the opportunities and you will be surprised by changes in the market.

So how to balance the orientations?

Develop your marketing, sales, R&D and innovation departments and activities to become more open to the external environment. Develop your finance-accounting, production and operations activities and departments to improve your organisation internally.

Patching instead of redesigning

After implementing a new process, technology, system or practice, it transpires that there are slight imperfections, small limitations, there is inadequate performance or it just does not work as smoothly as expected.

The usual reaction is to fix it but not by changing what has been implemented but by patching it, adding extra steps, involving other people, and so forth. Initially, the patching seems innocent, simple and quick only to grow to a complex, expensive, dysfunctional burden of workload which becomes unmanageable, spreads and affects organisational performance.

Any examples?
How many spreadsheets does your company use because the IT system does not have the features that the user needs? How many extra steps in the process do you have to take to place and ship a simple order?

If you notice many patches used to fix a dysfunction consider a redesigning approach. Don’t be parsimonious or impatient and do it right the first time. Get the best help you can afford because continuous fixing increases complexity of a system and results in more costs.

The future is already here

“The future is already here – it’s just not evenly distributed” (William Gibson)

Think about these megatrends, or rather the world we have just entered, and your business in this context:

Surveillance, monopolies, automation, telecommuting, next generation warfare, universal basic income, future of work, retail apocalypse, online dating, anti-vaxers, the student debt crisis, supply chain vulnerabilities, green tech and climate change, urban homelessness, college equivalency certificates, biohacking, the retreat from globalisation, the collapse of mainstream journalism, Chinese ascendance, social engineering, moving away from fossil fuels, inclusive stakeholding, political realignment and the problem of gerontocracy, end of naive capitalism economy underpinned by Chicago style economics. (list by Pia Malaney)

How to compete with big firm

How a small business can compete with a big firm? In the first instance, the small organisation must understand what advantages it has over the big one. And it has a few:

  • Speed – big firms are complex and slow; small firms are simpler and fast which give them an advantage in reacting to changes or being first in exploiting an opportunity;
  • Flexibility – smaller firms are more capable of adjusting to new market developments and doing so is less expensive for them;
  • Stealth – there is a small amount of data and intelligence on small firms in contrast to big firms whose actions and plans are monitored by many and on whose data and intelligence are available in public domain or can be gathered easily.

The small firm can benefit from the characteristics by being the first mover, ‘stealing’ the customers who are not well served by the big firm, imitating the big firm’s solutions or processes, etc. The advantages can be used in both attack and defence.

HRM too often being Personnel Management

Most HR functions in SMEs do not operate within Human Resource Management paradigm and they should be called Personnel Management instead.

What they do is short-term with an ad hoc perspective rather than long-term and planned contribution, serves administrative rather than strategic purpose and involves managing employees collectively rather than individually.

And although they may seem sufficient for your business, they do not contribute much in your becoming a bigger player because they, like all administrative functions, are a stabilising force whereas to grow you need progressive forces.

Reactive SMEs

Rarely do SMEs act in a calculated, planned, strategic and deliberate way. Most often, they only react and do not consider consequences of the reaction.

This prevents them from successfully competing in the market as they lack three aspects of being a serious competitor:

  1. Ability to act which requires understanding of what the company can do with their resources. Hence the necessity for internal analysis;
  2. Motivation which accounts for incentives that drive the company. Hence the need for business planning;
  3. Awareness of the rivals and general competitive environment. The organisation must understand what changes and reactions are likely to take place. Hence the need for competitor and external environment analyses.