A company is not a machine
Historically, we have thought of companies as machines, and we have designed them like we design machines.
A machine typically has the following characteristics:
1. It’s designed to be controlled by a driver or operator.
2. It needs to be maintained, and when it breaks down, you fix it.
3. A machine pretty much works in the same way for the life of the machine. Eventually, things change, or the machine wears out, and you need to build or buy a new machine.
A car is a perfect example of machine design. It’s controlled by a driver. Mechanics perform routine maintenance and fix it when it breaks down. Eventually the car wears out, or your needs change, so you sell the car and buy a new one.
And we tend to design companies the way we design machines: We need the company to perform a certain function, so we design and build it to perform that function.
The machine view is very successful in a stable environment. If there is a steady, predictable demand for a standard, uniform product, then machines are very efficient and productive. In such conditions, a machine-like company can profit by producing uniform items in large lots.
But over time, things change. The company grows beyond a certain point. New systems are needed. Demand changes. Customers want different products and services. So we need to redesign and rebuild the machine to serve the new functions.
This kind of rebuilding goes by many names, including re-organization, reengineering, right-sizing, flattening and so on. The problem with this kind of thinking is that the nature of a machine is to remain static, while the nature of a company is to grow. This conflict causes all kinds of problems because you have to constantly redesign and rebuild the company while you also need to operate it. Ironically, the process of improving efficiency is often very inefficient. And the faster things change the more of a problem this becomes.
Companies are not really machines, so much as complex, dynamic, growing systems. After all, companies are really just groups of people who have banded together to achieve some kind of purpose.
A machine’s purpose is designed into its structure. Once a machine’s purpose has been set, it does what it has been designed to do. But if the environment changes, a machine does not have a way to become aware of the change and adjust to the new situation. It just becomes obsolete.
Organisms, on the other hand, control themselves. An organism’s purpose does not come from an outside designer or controller but from within. An organism strives over time to realize its intentions in the world. As conditions in the environment change, an organism responds by adjusting its behavior and improving its performance over time. In other words, it learns.
For many years the machine view has prevailed, and many companies are designed as information-processing and production machines. But information processing is not learning. Production is not learning. Learning is a creative process, not a mechanical one. Many critical factors in business cannot be easily counted, measured or controlled.
For example, what is the lifetime value of a happy customer? What is the multiplying effect of a happy customer that shares their positive experiences with friends, colleagues and family? What is the value of an authentic smile when greeting a customer, as opposed to a fake one? What is the value of a hundred, or a thousand, people who authentically and enthusiastically connect with customers on a daily basis? Imagine trying to measure something like authenticity. You can force people to say “have a nice day.” You can’t force them to mean it.
Especially in a service economy, the most important things, like authenticity, trust, and connection, are often the most difficult to measure, and they certainly can’t be controlled by traditional methods, like supervisors, policies, scripts and procedures.
To serve connected customers, it takes a connected company.