What COVID-19 teaches us about how organizations work

We are far from the end of the story and no one knows what debriefing of this episode will teach us nor the lessons we will learn from it but observing what has been going on and being said for several weeks has not failed to inspire me some thoughts.

What surprised me the most was the surprise or even indignation in the face of situations that are unfortunately common in businesses and that many of those who make their voices heard, passively or actively support them, or even no longer pay attention to them because they are so accustomed to them.

It is not a question here of judging the merits of this or that decision or of naming a specific culprit because it will take a very long time to have an objective and informed view of the situation. And it does not matter in the end because we can point the finger at what we want, we will only point to a consequence and if we do not try to understand the causes, we will not solve anything.

And as this post is very very long, here is a summary to go directly to this or that part. It puts into perspective the limits of the management of COVID-19 by the States in relation to the ills that businesses are familiar with, even if they often find it difficult to treat themselves.

Hoping also that by making this parallel, we can finally open our eyes to the malfunctions of our companies as well.

Dealing with consequences rather than causes

A project delivered late, a product that does not work, a product with insufficient reliability, an external phenomenon that hits the company (innovation of a competitor, transformation of a market …) these are things that nobody wants to see happen but happen anyway

How does one react in such circumstances? First by blaming and firing the manager and/or implementers and then by creating an entity to deal with the problem. Tons of project managers have been put on the back burner, directors have been fired, and a host of departments and departments have been created without preventing similar problems from reoccurring in the future.

A design problem has never been solved by creating a task force to recall or even repair products. Another example, in many cases the creation of a digital department has been the consequence of a lack of vision, a form of denial, a lack of transversality and a refusal to change: in mature companies the general management, IT, marketing and HR have taken the subject together from the start and when a new subject comes up we already know which organisations will have to create a new department and which ones will adapt or even anticipate.

There are many reasons why a company struggles to see its projects succeed, such as its complication, lack of vision, unsuitable performance indicators, faulty processes, conservatism… but each time the blame is put on those who executed and those who decided to replace them with others who one day will face the same situation because everything will have changed except the “mechanics” that create the problems independently of the people. In the meantime, the organization will often have become more cumbersome and complicated.

Replace “project” by number of beds, test availability, mask stock and it will remind you of a recent episode. When at the top and at the bottom you have right skills and the will to do well but everything goes wrong it is most often that there is a problem in the middle (which we will see later) or in the decision making (which we will see right away even if it can also come from the “middle”).

The difficult art of decision making

The larger an organization is, the less likely it is that high-level decision-makers can know in detail what is going on down below. The manager of an SME can keep abreast of all projects, all customers, but he is already missing a level of detail that will only be brought to his attention when things go wrong.

As the organization grows, this level of detail grows until the ultimate decision-makers have only a macro view of their organization…again until the day when things hurt enough that increasingly granular information is brought to their attention.

To put it another way, it is not up to the president of a car manufacturer to know the stock of spare parts and manage supplies. On the other hand, if a failure in the supply chain makes a major product a resounding failure from which the company will take years to recover, it will be blamed or even lose its job.

There are three ways to make a decision: on convictions, facts or expert opinions. None of the three has proven its superiority, it varies according to the context and objectives. However, once you have made a choice, you must stick to it without giving up and assume.

Deciding according to one’s convictions for an entrepreneur often means being disruptive, going against the times, against conservatism and exploring paths that no one has embarked on until now.

Deciding on expert opinions means asking experts on a subject to put together a case and make recommendations. The management of a company has little legitimacy to talk about ERP, collaborative tools, production tools in factories. It is therefore working groups made up of experts on the subject, internal and/or external to the company, who make a two-part recommendation. The first deals with the “what”, what we do, how and the technologies used, the second deals with the “how much”, i.e. the expected costs and benefits/ROI. The management will validate or not the how much, but will only rarely pronounce on the “what”, where knowledge and technical legitimacy is required, which is weak or non-existent.

Deciding on facts is most often deciding on numbers only. Management indicators and projections, market research etc.

Convictions are often the only way to bring about radical change. This is where the decision-maker takes full responsibility and where the true visionary is recognized. It is therefore the easiest decision to criticize and the one that requires the most courage. When we no longer talk about businesses but states, this is what we call a political choice, often dogmatic.

Deciding on expert opinions is the best way to reduce the risk because it mixes expertise and figures. It is also the best way to make one’ s decision incriticible because it is free of bias at the level of the decision-maker. The critics will say that it is the best way to avoid showing courage and these same critics will criticize the vision based on convictions because it is based only on dogmas and biases. But this is still the best way to objectify a decision and create consensus. Politically, it amounts to appointing committees of experts, in this case health experts.

Deciding on facts rarely allows for big decisions to be made, those that bring about major change. It is mainly used to validate the existing system and to make adjustments at the edge, keeping the system but changing the settings. Most of the time it leads to choices that are described as purely financial.

Depending on the circumstances, each of the three methods can be perfectly adapted, as long as it is free of bias.

This does not apply to convictions: in principle they are 100% biased, but in this approach they are assumed by the decision-maker.

Nothing like relying on expertise. As long as the experts are real experts, have no conflict of interest, are not under the influence of this or that supplier, do not put their friendships or enmities ahead of the objective elements, and have the right numbers. Another limitation of the method: once one has recourse to it, one cannot go back on one’s judgment or risk being reproached for refusing to accept an inconvenient truth in order to fall back into dogma.

As for the facts, needless to say, everything comes up on the quality of the information and data reported.

Typically, expertise was chosen to make many of the decisions in the COVID-19 episode. Certainly the right method in such a context, but there are strong presumptions that the experts solicited are not without blame in terms of bias or even competence. And since once we choose this path, there is no turning back, we went to the polls in full confinement. But how can we go against the experts’ word once we have asked them? And what would we have heard if the decision had only been taken on the basis of convictions?

A decision-maker makes a decision based on the assumption that he or she is being provided with reliable facts and information. It is as simple as that.

I am also pointing here to the quality of the facts and information provided…that is not the slightest problem and we are going to talk about it now.

The technostructure, a state within the state

I don’t think I’ve heard the term technostructure since I took economics in high school and then later political economy in higher education until I heard it again last week from a political columnist pointing out his responsibility for the management of COVID-19.

Suggested by Auguste Comte and popularized by John Kenneth Galbraith and then Henry Mintzberg, Wikipedia defines it as “all executives, junior executives, technicians and specialists who participate in group decision making in large corporations.” For some of those who compose it, the leaders pass but they remain… part of the real power belongs to them, and not a negligible part.

It is characterized by its permanence: the decision-makers change, the technostructure remains. It influences decisions and is capable of blocking their implementation. In this respect, enterprise and states differ little.

But whereas Galbraith’s idea was to arbitrate between the company’s interest (profit) and shareholder power, it now pursues its own objectives: to protect itself, to maintain its power and to reproduce itself. It does not work for the company or the shareholder, but for itself. No matter what changes are made at the top, it remains in place and is one of the best explanations for the fact that even if we change the leaders, few things actually change in reality, except to dynamite the anthill, which means coming up against a very powerful organization.

Technostructure is theorized in the business world, but it also exists in the state apparatus and in the administration and its weight is certainly even higher there. Some of its most influential members see presidents and ministers succeed one another while they themselves remain in place. They can wait, they can let the situation rot, they are part of the long term where others have to act in the present. They can block, slow things down, it doesn’t matter: they will still be there tomorrow, the others will not.

Has the administrative and state technostructure given the right information to the executive on our state of readiness? Did it play against or even block certain initiatives, as happened at the European Union level when the President of the European Research Commission resigned, declaring that he “had the opportunity to work directly with the President of the European Commission, Ursula von der Leyen, but that the fruit of his reflections was “nullified” by the different administrative levels. “

It is the daily routine in companies as soon as a project disturbs, disturbs habits, processes and established order. And add to this technostructure all the departments or positions created to adapt to the causes rather than the consequences, all the committees of experts around, you have an organization that decides slowly, decides badly and executes even worse without, paradoxically, the decision-makers being to blame because they are at the end of the chain and are the first victims. On the other hand, they are guilty of having let all this exist and survive.

However, the power and therefore the responsibility are not necessarily where everyone thinks they are.

If this reminds you of things you’ve seen in the workplace or more recently on TV about how the crisis is being managed…

Risk aversion, fear of the unknown and intolerance of error

But the behaviour of the technostructure, or even of management and middle management, which can block the cogs, is not only the fault of its members; it is conditioned by a number of explicit or implicit rules that the company itself has laid down.

First of all, the absence of the right to make mistakes, contrary to the fine speeches made by the leaders, whether internally or on the stage of many conferences, in good faith. They understood that in a complex environment where speed is essential, one must try quickly and draw the consequences just as quickly. But as we have seen, just because a decision-maker decides that practices change, it does not mean that they will. Hence the reluctance to implement “disruptive” decisions that may hold them responsible for failure. Hence the fact that only good news is taken up to the next level, that reality is tidied up a bit and the dust is left under the carpet…until it’s too late. And because each level does the same, management sees only green indicators until the day when the crisis is inevitable, while it might have been possible to act sooner if they had known …

Hence a strong aversion to risk. No risk = no error = no failure. A human reflex when a world that doesn’t forgive mistakes, but not only. It is a fear that is deeply rooted in the rules of business.

If I had to sum up the great principles of the industrial revolution I would say “replicate perfection ad infinitum“. Once you know how to do something, you industrialize, you put in place processes that ensure that no more initiatives are taken and that everything will be done in the future in a controlled, predictable and therefore risk-free. Predictability and the refusal of risk have been and still are the two guidelines of industrialists…and financiers.

What worked very well during the industrial revolution and for the secondary sector was applied to the tertiary industry after the service revolution. But the nature of the world and the nature of the economy have changed in the meantime, and we have moved into a complex, and therefore unpredictable world, as I explained a little while ago. And in an unpredictable world you cannot replicate perfection ad infinitum because the same causes cease to produce the same effects. Or, in other words, always aiming at the same place to reach your target no longer works when the target is moving.

Yesterday’s processes, methods and protocols are not adapted to deal urgently with a new phenomenon that we do not yet understand.

In businesses it is still very complicated to bring the culture of agility, of MVP (Minimum Viable Product), of the never finished product that is constantly tested and improved, to people who used to take 2 years to produce a totally accomplished and perfect product. Once again the demand for speed and adaptability in an unpredictable world.

On the other hand, if there are very cumbersome protocols before putting a drug or treatment on the market, it is for excellent reasons that do not lend themselves to the slightest criticism. But what to do in an emergency. To say “too bad for the patients…we have some leads but it takes 5 months, 1 year or more for us to be certain” or “we are not certain but in any case if we do nothing we know the result so we might as well try”. We know how to deal with things that obey known patterns in quiet times, without taking risks, not to deal with the unknown under time constraints. At least not by taking risks, not by making bets, not by accepting that it may not work.

When a man drowns, one cannot refuse to throw the only lifebuoy one has on the pretext that it is not homologated. But for all the reasons explained above, we stay on the dock with the buoy in hand.

Inability to act in a complex environment

I have already explained here the difference between complication and complexity. In a complex world “there is no pattern, no model that allows us to predict the future by analyzing the past. It is not possible to always arrive at the same result by always doing the same thing, it is not a world where things are replicable”.

Companies have paid the price many times by trying to apply old recipes to new problems they did not understand. The same is true for states dealing with COVID. Today we still do not know for sure how it mutates, survives, spreads, nor is immunity definitive. Its rate of spread and the scale of the contamination was like nothing ever before known.

Eventually, businesses began to heal themselves, willy-nilly. They assume that today, in calm weather, having a 3-year strategy is really the maximum and that it is often necessary to abandon it or revise it in depth before its end. They have converted to agility willy-nilly because they have understood that between the moment they start a project and the moment they finish it, the needs have changed so much that if they stay with the initial hypotheses, the need is not met.

Today, in times of crisis, they have a guideline but in terms of a plan, it is decided on a daily basis. They adjust from day to day and the farthest horizon for decision is the week. There are options and hypotheses to help us get out of the crisis, but there is no need to make choices about announcing because there is no visibility and the context changes every day, because we learn something new every day. It’s not like managing a known virus or a seasonal flu.

The same is true for COVID-19 at the state level. Every day, scientists make new discoveries that lead to reversing decisions based on what was the truth “before”. Mask or no mask? Airborne or not? Only affects the lungs or other organs. Two minutes ago I heard that smokers are less affected because nicotine would protect them. Tomorrow we’ll say it was fake news or you may see thousands of people rushing to the tobacconist’s and we’ll prescribe the nicotine, that is now being hounded, in various forms? It is necessary to make from day to day with the certainties of the moment even if it means abandoning them tomorrow.

In both cases it is easy to demand a plan to reassure oneself and to shout at the incompetence of the leaders. The truth is that there can be no plan because of a lack of visibility or else one has to accept that the plan is regularly questioned…so there is no plan. And then we’ll scream indecision. Moreover, we see the same people who are asking for a plan in France starting to criticize countries that announce theirs too early.

In this respect, companies and States are in the same boat. Asking them for precise and immuable plans adds to the confusion and does not advance anything. It just serves to reassure oneself.

The agility imperative

Agility means being able to change course regularly and quickly to adapt to one’s context. Companies have been addicted to agility for a few years, having discovered that this approach inherited from software development could be applied everywhere else. A graft that takes more or less well.

But we’ve had some excellent surprises in recent weeks, with some perfume production lines starting to make hydro-alcoholic gel, others starting to produce masks. Reconfiguring a production line and its destination is a real challenge, and to have done it in such a short time must be applauded.

What about the state? If we look at the OECD figures, France was the 10th nation in the world in terms of hospital beds per 1000 inhabitants in 2018. Not exceptional but honest. In 2015 we were 7th but the decline is not due to a drop in the number of beds (6.1 vs 6) but to the progress of others. In 2007 (I did not find any more recent figures) acute care beds were occupied at 70/75% which leaves an appreciable margin of manoeuvre to face a nice crisis but not for an exceptional crisis whose magnitude is such that it was not foreseeable.

So France was ready? We can say yes, or at least independent experts said so in 2019. According to this article, “According to this report, France ranks 11th among the countries in the world that are best prepared to face a pandemic, with a score of 60.9 out of 100. This score, called the GHS index, was created by two non-governmental organizations, the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security, with the collaboration of The Economist’s economic intelligence team. Several foundations have also contributed to the project.” Ironically, “The top three scores were obtained by the United States (83.5), the United Kingdom (77.9) and the Netherlands (75.6). China is 51st.

What does that tell us?

First of all, in a complex and unpredictable world (where, let’s remember, there is no schema, no model that allows us to predict the future by analyzing the past) the models developed in relation to what we know no longer work. Who can accurately anticipate what has never happened? So we take a reasonable margin, or at least a reasonable margin in relation to what we know. Having 5 or 6 times more beds in normal times is like taking out anti-tsunami insurance in Paris. It may happen one day but given the probability we can save that expense.

Then that if the state of preparation is rather good it is the adaptation that faulty. And now we’re in full agility. How do you turn “normal” beds into ICU beds in no time? Well we did it against all odds and contrary to popular belief. On the other hand, we did it much more slowly than others like Germany and it is the speed at which we change the destination of the infrastructure that would benefit from being studied afterwards.

Paradoxical injunctions on every floor

The paradoxical injunction is something that companies are familiar with and abuse at will. Giving an employee two contradictory objectives that are in conflict with each other is commonplace. Moreover, as Yves Morieux showed, in 1955 companies had between 4 and 7 performance imperatives compared to between 25 and 50 today.15 to 50% of these indicators are contradictory, which was not the case in 1955.

This happens in particular, but not only, when several reporting structures are superimposed, as in the case of matrix organizations: two structures, two opposing objectives.

Well, it’s the same thing with the management of COVID-19. A health expert is also a professional who may have links to pharmaceutical companies (which is logical in itself) but at some point will he or she favour a treatment that competes with the one that would bring him or her something?

We also see local elected officials blowing hot and cold, caught between the public health that is their responsibility on their territory and the necessary promise to give up ballast for electoral reasons.

Here again the similarities are numerous but in public matters the paradoxical injunction which is sometimes only managerial in the company can more quickly turn into a conflict of interest.

Culture eats your politics for breakfast

In the workplace it is said that culture eats strategy for breakfast to explain that corporate culture can completely block or even derail a corporate strategy. Even if this is an argument that is used a little too often to explain that a company has not bothered to work on the sense, to reform its structure or to reduce the number of contradictory indicators, one cannot deny its importance.

In the public sphere it will be said that “culture eats your politics for breakfast”. Not so much to stigmatize the culture of the agents, but the culture of the country, of the voter. Such a phenomenon is not managed in the same way in France, Sweden, China or elsewhere exactly for these reasons and that is why comparing what is done in one country with another is most of the time sterile, not to mention the differences in infrastructure or demographics at the base.

I am one of those who are convinced that in France a containment that would have happened too early would not have been accepted by the public and could even have ended up in a ” yellow jackets ” mode, the same if we prevent people from returning to work at a certain point while they see their business faltering.

We cannot make a decision that will have a major impact without putting the cultural phenomenon into the equation. Similarly, being surprised that what works in one company fails in another and that what works in one country fails elsewhere should not always lead to blaming the leaders but the employees or the citizens.

“Not invented here” and “My company is different”

Corporate culture is a powerful immunizer against change, but as I said, it should not lead us into denial.

In the workplace, the “not invented here” syndrome prevents the import of ideas from outside, and the “my business is different” syndrome plunges decision-makers into denial when faced with external factors.

Speaking of COVID-19, we got everything from the media, doctors, experts and politicians. We’ve gone from the “insignificant flu” that won’t affect us to the scourge of the century. The truth is somewhere in between.

The two are not mutually exclusive. Yes an external phenomenon can affect us as it affects others and yes an idea that works elsewhere can work here. Those are the facts. What the corporate culture tells us, however, is that the response or appropriation will follow different rules.

One of the business’s gangrene is the “I told you so”, an elegant way of polluting the atmosphere after a big mistake in order to draw benefits out of it or blame others.

More often than not, if the person actually said it, they were quick to say it low enough so as not to be noticed so as not to be caught out if it worked, while keeping their wild card. Sometimes they didn’t say anything at all, but let’s not exclude the fact that the technostructure and the management have hushed up the alert.

In the public sphere it is the same in worse because the opportunistic political game is not a deviation of the system but its very nature.

Who, at the beginning of March, politicians, doctors, media or experts sounded the alarm in France? Nobody I remember. Who was reassuring? Everyone. Who’s shooting at decision-makers today? Everybody. QED.

Every organization is polluted by two types of people: those who are right afterwards and those who like to come to the rescue of victory. And there are many of them.

The system always wins against the individual

One of the obvious conclusions of most of the above is that the system always wins over the individual. Changing people, decision-makers, implementers, intermediaries etc. does not change anything as long as the system remains in place. There are unwritten rules, reflexes, ways of doing things that are owned by no one, that are not embodied by anybody but remain well anchored, are implicitly transmitted and last no matter who is in place. They prevent any reform, any change, any courageous or unpopular decision. They also prevent people from facing reality, keep some in denial and deceive others.

The only companies that have succeeded in implementing strategies or projects that were really off the beaten track have done so because a manager has broken the system, often to the delight of the average employee no matter what one thinks.

At the level of the state and the administration it’s worse.

Companies are not democracies, and that’s good!

No matter what anyone says or wants, companies are not democracies and that is a good thing. There are pros, cons, infighting and disagreements, but never in a violent or exacerbated manner and rarely enough to undermine its governance.

At the level of a state and especially in a highly politicised country like France where the passion surrounding the political debate can be compared to that surrounding football in Italy things are different. The passion generates a lot of “fans” and “haters” whose behaviour is totally irrational and devoid of any reflection. Bad faith causes fake news to flourish and the lack of discernment gives it a dangerous impact. The decision of the leaders, even on an anecdotal subject, never leaves one indifferent and is an opportunity for some to show blind support and for others equally blind hatred. Reflection, objectivity and calm dialogue have no place in a passionate world.

All this to say that the psychodrama we see playing out in front of us has been seen hundreds of times on other terrains. It feeds on the same evils for exacerbated results. And if, as we have always done in business, we limit ourselves to judging people without judging the system, we will have lost a unique opportunity to make things progress for the future.

Hoping that the lessons learned from watching this drama that we are only spectators of will finally decide us to change what must be changed in our organizations as well.

Photo : gestion de crise by Nomad_Soul via Shutterstock

Bertrand DUPERRINhttps://www.duperrin.com/english
Head of People and Business Delivery @Emakina / Former consulting director / Crossroads of people, business and technology / Speaker / Compulsive traveler
Head of People and Business Delivery @Emakina / Former consulting director / Crossroads of people, business and technology / Speaker / Compulsive traveler

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