Chapter 8 - Bureaucracy and Culture

8	Bureaucracy and Culture

He gains consciousness from sensuous slumber, sees that he is a man, looks around and finds himself to be living in a state. Force of need cast him there before he was capable of freely choosing this condition.

—Friedrich Schiller, On the Aesthetic Education of Man

“But I’m not guilty,” said K. “There’s been a mistake. How is it even possible for someone to be guilty? We’re all human beings here, one like the other.”

“That is true,” said the priest, “but that is how the guilty speak.”

—Franz Kafka, The Trial

The enemies of digital transformation are often taken to be entrenched bureaucracy and culture. This is a misunderstanding. Bureaucracy and culture are both the starting and ending points for the transformation. In their current states they provide crucial information for anyone who wants to transform the organization. In their envisioned states, they will institutionalize the digital way of working. Moving them from the status quo to their envisioned states is the goal of transformation.

Once I was working with an Agile software development team of seven people. It held a retrospective meeting every two weeks to reflect on its performance and find things to improve. At one meeting the team pointed out to me that if they had a certain piece of documentation* easily available to them, it would make their process go faster and smoother. So as an experiment I pinned a copy of that document to a corkboard in the team’s meeting room.

Several weeks later we were back in the team room for another retrospective. The document on the corkboard had been a great help, they said. But at some point it was no longer there when they went looking for it. It turned out one of them had taken the document down and forgotten to put it back. In the spirit of continuous improvement, one of the team members proposed a solution.

“How about if we put a signup sheet next to it on the corkboard? Whenever someone borrows the document they can sign it out, and put down the date and time they took it and which cubicle they’re working in. That way, we can always find it.”

Thus is bureaucracy born. To fix a problem and standardize an ad hoc process, the team was willing to add extra work for everyone each time they needed to borrow the document. This connection between process improvement and bureaucracy is important to understand. Bureaucracy is a natural way to solve a problem and has value if its benefits outweigh its costs. Which, unfortunately, they often don’t.

I had a counterproposal: “How about if every time someone takes it they remember to return it?”

Max Weber, one of the founders of sociology, wrote about bureaucracy in Economy and Society, published in 1922.

Experience tends universally to show that the purely bureaucratic type of organization . . . is, from the purely technical point of view, capable of attaining the highest degree of efficiency and is in this sense formally the most rational known means of exercising authority over human beings. It is superior to any other form in precision, in stability, in the stringency of its discipline, and in its reliability. It thus makes possible a particularly high degree of calculability of results for the heads of the organization and for those acting in relation to it. It is finally superior both in intensive efficiency and in the scope of its operations.1

For him, bureaucracy was an entirely rational solution to certain types of social challenges. It wasn’t just Weber with this peculiar view. Sociologists Daniel Katz and Robert L. Kahn said that bureaucracy “is an instrument of great effectiveness; it offers great economies over unorganized effort; it achieves great unity and compliance.”†2 “Indeed,” said Daniel Wren and Arthur Bedeian in The Evolution of Management Thought, “almost all the benefits we take for granted in today’s society—modern medicine, modern science, modern industry—rest on a bureaucratic foundation.”3

One reason for Weber’s enthusiasm was that bureaucracy, particularly in government, replaced the arbitrariness, capriciousness, nepotism, and other undesirable characteristics of public administration that had been typical since the time of monarchies. In contrast, bureaucracy offered impartial application of rules as a protection from arbitrariness, a formal hiring process based on merit and expertise, a career orientation that was free of external pressures, and greater efficiency through the division of labor, a management hierarchy, and formal controls.

The essence of bureaucracy is that its rules are applied impartially and impersonally, or as Weber put it, sine ira et studio, without anger or bias, or without regard for persons, where “‘without regard for persons’ is also a watchword of the ‘market’ and all naked economic interests.”4 In other words, bureaucracy is consistent with—one might even say demanded by—the capitalist economy. As with bureaucracy, the invisible hand of the market (a core principle of capitalism) sweeps all human concerns aside and is a purely mechanical force. Firms can do business better knowing that the bureaucracy will treat them according to rules; they can predict what the results of their actions will be.

The more bureaucracy is “dehumanized,” the more completely it succeeds in eliminating from official business love, hatred, and all purely personal, irrational, and emotional elements which escape calculation. This is appraised as its special virtue by capitalism according to Weber.5

Bureaucracy solves certain business problems: ensuring consistency across a large enterprise, establishing compliance, enforcing whatever has been discovered to be best practices, and ensuring fairness when human prejudices might otherwise interfere. The marketing function in an enterprise creates branding and style guidelines to ensure consistency in the use of the brand, so that the brand can establish trust in the minds of the consumer. Marketing’s guidelines create economic value for the company because the power of the brand lets the company charge more for its products and negotiate better deals with its distributors. What are these brand guidelines other than bureaucracy?

Are impartial rules any less bureaucratic if we implement them as automated controls? Instead of having a rule that all developers must have their code reviewed by at least one other developer (definitely bureaucracy), what if we set up our systems so that a developer is automatically not able to deploy any new code until another has reviewed it (arguably bureaucracy)? Contemporary IT practice, with its automation of compliance and security controls, is in a sense a huge automated bureaucracy.

No, the problem is not bureaucracy per se. Bureaucracy is just a form of institutional memory, a way of recording good practices—and being able to establish to auditors that good practices are being followed. As Hirotaka Takeuchi and Ikujiro Nonaka wrote in their 1986 Harvard Business Review article (considered to be the inspiration behind many Agile ideas), “Knowledge is also transmitted in the organization by converting project activities to standard practice. . . . Naturally companies try to institutionalize the lessons derived from their successes.”6

However, there are two problems that arise in bureaucracies that make them frustrating and destroy business value:

Are those not what drive you crazy when you bang your head against a bureaucracy?

But neither of these is an essential characteristic of bureaucracy. In his study of Toyota-influenced Lean manufacturing at the NUMMI auto plant, Paul Adler distinguishes between “compliance bureaucracies” and “learning bureaucracies”7—the latter of which allows rules to evolve based on employee input. The essence of bureaucracy is that it applies its rules rigidly. But just because the application of the rules is rigid, the formation and evolution of the rules need not be.

The second problem, wastefulness, is a serious obstacle when we’re trying to shorten lead times. In our IT oversight process at DHS, project teams were required to complete a document called an Analysis of Alternatives (AoA)8 before proceeding with an initiative.‡ For large programs, an AoA could run to hundreds of pages and was one of a hundred or so documents that had to be approved by several oversight bodies. It was also the one that took the most time to prepare (usually about eighteen months). Its purpose was to consider program requirements and decide on the best high-level solution for meeting them—or rather, to justify a decision, since one had invariably been made before its AoA was prepared.§

An AoA was required to include a comparison of three to five alternatives. To prove its case, the document generally listed a large number of desired characteristics of the solution with a weight assigned to each. Each of the alternatives was then scored against each characteristic, usually on a scale of one to five, then the results were summed up—behold, a winner.

Since the decision had already been made before its AoA was written, it was a simple matter to adjust the weights so the chosen alternative always came out ahead. Although this sounds like cheating, it wasn’t—in the sense that the decision was usually well thought out, so it was more a matter of bringing out the logic of its selection and expressing it in matrix form. So an AoA played an important role by explaining why the project team had proposed the solution it had, and by ensuring they had considered alternatives. The AoA, though a piece of bureaucracy, added value and ensured that compliance was documented—that best practices had been applied.

Now the problem. The document cost eighteen months and generally several millions of dollars to prepare. The right question to ask is whether its benefit justified that expense, or alternatively, whether there might be a leaner, less wasteful way to get the same benefit (or a better one).

This AoA is a busy document.¶ It looks as if its template creators tried to think of every possible relevant factor and devise an inclusive document that made every bit of thinking apparent. That’s why it often ran to one hundred pages. If instead the template simply said, “Explain why you selected this alternative and identify other alternatives you considered,” I think an AoA could be written in three or four pages while still documenting all of the factors relevant to the particular decision at hand. But that’s not the point. The document attempts to be self-auditing; by writing each section, the program team shows that it considered the relevant factors. It’s a checklist that requires a lot of words instead of simple checkboxes.

You get the idea. A section might yield interesting information now and then, but for most AoAs, the words are simply conjured up to fill the template sections. Now, there is nothing on the surface that’s wrong with the template. But the AoA is deeply wrong because it’s costly waste. The oversight bodies should demand that the program team fill out this form as briefly as possible, ignoring any sections that would add little value, because otherwise they’re creating waste—anything that doesn’t add enough value to justify its cost (in time or dollars). And waste is really what the oversight bodies are there to prevent.

Okay, it’s easy to toss out a government process as an example of bureaucracy gone wild. But what would it look like if you took a Lean scalpel to all of your own company’s bureaucracy and cut out the waste? Think of it as a bureaucracy-buster’s version of Occam’s razor.

Occam, a 13th–14th century friar and philosopher, is often credited with the principle, “Don’t overcomplicate things.” That’s not actually what he said—it was more like, “Don’t posit more entities than necessary to explain things.”

What he had in mind was something like this: If person A said, “That rock is falling toward Earth because objects with mass attract each other,” and person B said, “That rock is falling toward Earth because objects with mass attract each other, so seeing two objects with mass, an invisible chorus of bobbleheads sings the gravity song to encourage the Earth to attract the rock” . . . well, of those compelling explanations we should prefer person A’s.

Bureaucracy is not the enemy of digital transformation. It’s merely a codification of how an enterprise has operated until now. Bureaucracy has evolved along with the enterprise in order to solve problems it has encountered, to provide necessary controls, and to enforce what the enterprise has found to be best practices. Yes, bureaucracies often require singing the gravity song when they should instead be subject to Lean Occam’s turkey carver. They generally have tons of waste—extremely damaging when we’re trying to speed the flow of work for digital transformation. And yes, they should be better at changing over time.

But if you’re willing to accept my broad definition of bureaucracy, the purpose of digital transformation is to build a new bureaucracy—one that’s highly automated and consequently Lean, and that enforces the good practices we’re trying to put in place.

Similarly, organizational culture is not an obstacle—it’s another form of institutional memory that provides good information about how a company has chosen to solve problems. Our goal is not to eliminate its culture, but to reset it so as to support our transformed world. We can’t mandate culture change, but we can provide better solutions and let them be naturally incorporated into a company’s culture.

Edgar Schein has written extensively about corporate culture. He explains it as an organization’s interpretation of what works:

Culture is a pattern of shared tacit assumptions that was learned by a group as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.9

The organization as a group has learned which strategies, values, protocols, and behaviors work in its environment to support its aims, whether these are maximizing shareholder value or accomplishing mission objectives. People have had to learn what leads to success within the organization. Such learning forms the basis of tacit assumptions and norms, an organization’s collected wisdom about which behaviors are valuable.

How, then, should we go about changing culture for the digital age? Speaker and author Christopher Avery, in his work on organizational change, talks about using an Agile approach to transformation. Citing organizational psychologist Kurt Lewin, he argues that we can never understand an organization until we try to change it. He therefore suggests a “provoke and observe” approach:

We can never direct a living system, only disturb it and wait to see the response. . . . We can’t know all the forces shaping an organization we wish to change, so all we can do is provoke the system in some way by experimenting with a force we think might have some impact, then watch to see what happens.10

Avery’s provoke and observe approach is analogous to the Agile principle of “inspect and adapt.” Through it we can learn where resistance is—which aspects of the culture are hard to change and why. But remember that cultural change follows transformational activities, not vice versa. It occurs when employees find new behaviors that lead to success. In John Shook’s retrospective look at NUMMI’s cultural change, he says, “[What my] experience taught me that was so powerful was that the way to change culture is not to first change how people think, but instead to start by changing how people behave—what they do.”11

As an enterprise changes its way of working with digital technology, it will come up against resistance from both culture and bureaucracy. Such resistance is a necessary part of transformation, since both culture and bureaucracy are simply forms of institutional memory. In digital transformation, you’ll replace today’s bureaucracy and culture with improved versions of themselves that institutionalize the practices that work well in the digital world.

§ Note that the AoA was not intended to justify the selection of a particular product—there was a formal procurement process for that, which couldn’t begin until well after the AoA had been approved. It was to justify the general approach—for example, whether a procurement would be made and for what.

¶ I thought of filling out this template for my choice between a vanilla or a chocolate ice cream cone, but hesitated to waste the paper. That’s in a book that borrows from War and Peace, no less.