FEATURE – Lean provides everyone with a framework to learn continuously and do an ever-better job. Without this understanding, an executive will not be able to steer the organization in the right direction.

Words: Michael Ballé, lean author, executive coach and co-founder of Institut Lean France

Bureaucrat? Technocrat? Agilist? Entrepreneur? Leanist? Organizations are complex entities and they hardly ever “fit in our heads” in their entirety. From our education, experience, and the people around us, our minds build implicit models we use to form opinions about how things should work and what to do – often unconsciously.

On the other hand, there are not an infinite number of such structural models. They all correspond to a few deep beliefs about what an organization should look like and do, how it should behave and therefore how it should respond to performance challenges. Toolmaking is such a profound feature of being human that we instinctively grasp craftsmanship. Indeed, some researchers consider than language and cooperation evolved out of our early ability not only to make tools, but to deliberately teach others how to do so – a unique feature in the animal kingdom. We easily understand how a craftsperson interacts with the objects they’re creating and to some extent the tools or machines they use to do so. Equally, we instinctively “get” the master-apprentice relationship that surrounds craftsmanship, as well as the customer-artisan relationship. But, with scale, things soon lose their intuitiveness.

Since its invention in the late 18th century, the rational-legal model of bureaucracy has become vastly dominant. There have been many other bureaucracies before the experiments of the dynasty of Frederick Williams in Prussia, but none placed the same emphasis on rational calculation. The central idea here is that any problem can be quantified and decisions made according to a cost-benefit analysis: what benefits do I expect? What means should I engage? And how do I get the greatest advantage from the costs I’ll incur?

To be able to make such rational calculations, people need to become… rational calculators. Individuals will be severely framed by roles, rules, hierarchies, and a merit-based advancement process (merit being essentially the ability to follow instructions from above). Leaders of a bureaucracy get information from the ground through a chain of reporting, take the best decision, which then gets executed by issuing cascading instructions through the ranks. Bureaucracies assume subordination: people will do what they’re told, lest be reprimanded and punished. Bureaucracy has no need for engagement – all it requires is force.

Bureaucrats come across as cold and indifferent and often incompetent, as they favor red tape and procedures to what makes sense to people on the ground. That is precisely what makes bureaucracy work. We know now that rationality is bounded by 1) the information you get and you don’t get (what you don’t know and what you think you know that isn’t so), and 2) by faulty mental models (misconceptions on the realities of the situation) and biased decision-making (humans favor their preferred solution and self-advantage to anything different or personally costlier). As a result, many bureaucratic decisions are absurd or self-serving, and drive nuts the people who endure them.

But the beauty of bureaucracy is scalability – and stability. Roles, rules, hierarchies, and meritocracy are essential to building large organizations and no one has found an alternative yet. The addition of rational calculation has made the bureaucratic model ever more powerful, as we can see in the new digital-based tools we have developed to further control and rationalize human behavior. Many web-based systems are now making the calculation for you and presenting you with a reduced set of choices the system believes optimal, regardless of your own true preferences. It disappoints each of us in single, individual ways, but it scales over millions.

Technocrats are bureaucrats with an engineering worldview. They tend to be more focused on processes than the actual compliance with a bureaucratic order. They seek to engineer the perfect system that would work for the common good, because rational decisions are now guided by scientific knowledge and principles. The cost/benefit calculus is no longer a leader’s estimate but has to be founded on technical expertise. Technocrats are forever seeking the best process, the best system, the best incentives scheme, so that everyone is happy because the system is well designed.

They are seen as aloof and uncaring, if not downright misguided, because they deal in units and not actual living people. A century after the emergence of the technocratic ideals, history is replete with documented cases of massive technocratic blunders – design where unintended, unplanned consequences or side-effects largely invalidate the original intent. Technocracy flourished in the Soviet Union and in the US in the 1930s as a blend of central planning, reverence for engineering, and Frederick Taylor’s then revolutionary system of production, separating job design (by engineers) from work (by workers). We know how that went. Whereas bureaucracy assumes that leaders’ decisions are based on rational calculus, technocracy assumes that human behavior is computable.

Still, abandoning technocracy as an ideal need not mean abandoning learning about complex systems and how to steer them to better or poorer outcomes. Currently, bureaucracy and technocracy have come together as financial management – with a digital flavor. Once you ignore what drives turnover and consider that the top line simply “happens”, all other costs can be broken down into operational costs, financial costs or exceptional costs and investments. The magic of EBITDA is that it reduced the complexities of a business, such as its positioning, innovation, people, and reputation to a single, computable number. Activist hedge funds have figured out all they need to do is over-incentivize executives on shareholder value as a multiple of EBITDA to get the results they want, at the expense of everything and everyone else.

Agilists are not the first to resist bureaucrats and technocrats. As it grew of age, software development blended the two 1970s genes of bureaucracy and technocracy in the well-known waterfall method. The system was designed in stages (requirements and scope, project design, project construction, product testing and bug fixing) and finally launched. Each of these stages was validated by a “gate review” where hierarchical bosses would either green-light the project or impose some changes and/or rework. These principles made it possible to scale increasingly large software projects, but also made it spectacularly wasteful and failure-prone as anything could happen at each of the phases with no final feature to show for. At the time, many software geeks thought that faster loops of continuous designing development and testing could deliver working features one by one, and build systems brick by brick.

High visibility programmers came out with the Agile Manifesto, whose principles are a frontal attack on both bureaucracy (Working product over Comprehensive documentation, Customer collaboration over contract negotiation) and technocracy (Individuals and interactions over Processes and tools, Responding to change over Following a plan). Agile’s core idea is that if you get the right people, give them the right brief, and let them get on with it, they’ll be more effective than any other organized system. This is probably true, but it’s a big if – we seldom have either the best people at hand or a clear brief. And although it clearly works case by case, it doesn’t scale. Every attempt of doing agile at scale falls into the twin traps of bureaucracy (where did all these managers come from?) and technocracy (where did all these processes appear from?).

Before Agile, we had skunk works, and before skunk works we had craft workshops, with bespoke products assembled in a workshop where you learn your trade by shadowing a master. The upside is a deeply human interaction (in the best and the worse sense) with customers, workers and suppliers. The downside is abandoning quality (no mass learning curves) and costs (no volume) to the arbitrary talent of individual masters. Without standardization and specialization, results remain very uncertain.

Entrepreneurs have yet another different outlook altogether. They don’t worry much about organizational design, as they see the world in terms of opportunities and obstacles. They focus on personal goals and things they want to accomplish and use the resources at hand to achieve them. Entrepreneurs are good at gaming the system to reach their objectives (often at the expense of others) and then creating ad-hoc structures to realize new things. When successful, they often reinvest and can find themselves building organizations in their own right, but then they and are back to the age-old problem of structuring them – hiring bureaucrats, technocrats and agilists in the process.

Entrepreneurs have a different approach to risk than most people. Human nature is biased towards avoiding loss rather than seeking gains, but entrepreneurs typically are after the gain more than they fear the loss – this makes them stand out from their peers in the risks they take and the willingness to accept losses when something doesn’t pay off and just move on. The agile dream is that each autonomous team will find an entrepreneur in them, but that is statistically unlikely. Entrepreneurs also tend to be a handful for people around them because they don’t have the same need for safety. They relentlessly drive decisions (which they know they can correct if things go south) and are impatient with relationship demands or the need for precision. Many people think they would like to work for more entrepreneurial boss, but this is a case of “be careful what you wish for”. Entrepreneurs use more than they build. They are keen on getting their way and are impatient with people, roles, rules, systems, or a team’s need for safety and stability.

Executives employ all four approaches situationally but tend to center on one of these four mental models – making exceptions according to the size and scope in context. Bureaucrats want clearer roles and rules and less tolerance for individual opinions or special cases, favoring compliance over competence. They understand the system is not perfect but believe that more rigorous implementation will yield a better trade-off (if everyone did their job as planned, all would be well, and no one needs to look outside their box). Technocrats are constantly on the lookout for a more expert position to redesign existing processes, they are impatient with “resistance to change”, and they seek stronger incentives to ensure that people behave in the way they are supposed to. They struggle with the idea that the real purpose of a system is in the outcomes it is after, not in the outcomes planned by design – and so, when results are found wanting, they propose a new redesign. Agilists, for their part, would like to get rid of management altogether, organize people in self-organizing teams and somehow let them get on with it. They accept the need for higher-level cooperation and are endlessly looking for a way to achieve it without choking team autonomy. As for entrepreneurs, they’re ready to do whatever it takes to have things go their way, no matter the system in place.

One way to represent this would be to look at orientation on two dimensions: orientation towards systems or towards people, orientation towards stability or towards change. Bureaucrats are looking to keep the existing system stable where technocrats want to change it. Agilists want to keep a stable system of autonomous teams in order to get the best out of people (and have them be more agile in their delivery) where entrepreneurs want rapid change out of people in order to get what they want done.

Lean is confusing to all four categories, because it looks at the problem of organizational design from a completely different angle. Lean thinkers – I like to call them leanists – seek a sweet spot between the quality and productivity advantages of high volumes and the care and creativity of craftsmanship. They accept the need for hierarchies of roles and responsibilities. They also recognize the need for better processes and designing smarter value streams. They believe people perform better in autonomous teams that exist within a value network with clear interfaces. Finally, they’re always on the lookout for entrepreneurs who will bring new insights and new initiatives and drive the whole forward. Leanists’ challenge is different: obtaining the voluntary contribution of everybody to the improvement work.

The crucial difference is that where other approaches are about doing things to people, lean intends to 1) give people a way to self-assess, 2) so that everyone can pick a learning topic (to learn how something works you have to try and change it), 3) try-fail-analyze-try again until the issue is better understood, and 4) share this new understanding with others to, collectively, build better overall solutions.

The lean method is well known: be open about the high-level challenges the organization faces, go to the workplace and ask people to visualize their problems, solve them one by one to develop a culture of “problems first” (problem finding and problem solving), ask management to write and level up standards, promote kaizen individually (via a suggestions systems) or in teams (quality circles), support people as they experiment and learn and, finally, from the workplace visit, get executives to agree on a deeper functional model of how the organization really works. As this happens, the executive teams make better and more collaborative decisions daily and performance soars.

This approach is proven, pragmatic, extremely well documented – and yet its uptake by executives remains as slow as ever. The crucial point is that lean is a method that relies on self-directed learning. You don’t do things to people. You give them an environment in which they can self-assess and choose to learn – or not.

This goes against every executive instinct. Executives, after all, think their job is to “obtain execution”:

• Bureaucrats want to stamp any deviation from standards and norms and so are intolerant of “special case” opinions and out-of-the box initiatives;

• Technocrats look for system-level solutions and have no interest in workplace-based, detailed insights that are nevertheless key to delivering value;

• Agilists like to assume everyone knows and is good at their job and shy away from the messiness and emotional strain of giving people the means to move out of their comfort zones (what do you need to see to improve your own quality and productivity);

• Entrepreneurs have no patience for anything else than fast delivery and people giving in to their specific demands.

So, what kind of executive are you? If you’re interested in lean, are you inadvertently bringing lean back to bureaucracy (with the internal lean office and lean audits), technocracy (with consultants designing lean value streams), agile (with delivery coaching at team level but nothing else), or entrepreneurship (using lean to squeeze more resources out of the system for your own purposes)?

True commitment to lean means understanding that the lean learning system is in fact a self-assessment system you build into the workplace so that every person can pick up a learning topic every day – and share their exploration with the people around them. The Toyota Production System was described in the old days as the “Thinking People System” – and indeed it is. This is the source of both its tremendous power to respond better to challenges together and the reason so few executives make the effort to learn how to use it the way it was meant to be used. It’s about giving each person a framework to do a better job, voluntarily.

_{THE AUTHOR}