Simple rule number one: Understand what others do. What is their real work? We need to go beyond the boxes, the job descriptions, beyond the surface of the container, to understand the real content.
Second, you need to reenforce integrators. Integrators are not middle offices, they are managers, existing managers that you reinforce so that they have power and interest to make others cooperate. How can you reinforce your managers as integrators? Remove layers. When there are too many layers people are too far from the action, therefore they need KPIs, metrics,they need poor proxies for reality. They don’t understand reality and they add the complicatedness of metrics, KPIs. By removing rules — the bigger we are, the more we need integrators, therefore the less rules we must have.
Give discretionary power to managers. We do the opposite — the bigger we are, the more rules we create. And we end up with the Encyclopedia Britannica of rules. You need to increase the quantity of power so that you can empower everybody to use their judgment, their intelligence. You must give more cards to people so that they have the critical mass of cards to take the risk to cooperate, to move out of insulation. Otherwise, they will withdraw. They will disengage. These rules, they come from game theory and organizational sociology. You can increase the shadow of the future.
Create feedback loops that expose people to the consequences of their actions. This is what the automotive company did when they saw that Mr. Repairability had no impact. They said to the design engineers: Now, in three years, when the new car is launched on the market, you will move to the after sales network, and become in charge of the warranty budget, and if the warranty budget explodes, it will explode in your face. (Laughter) Much more powerful than 0.8 percent variable compensation.
You need also to increase reciprocity, by removing the buffers that make us self-sufficient. When you remove these buffers, you hold me by the nose, I hold you by the ear. We will cooperate. There are many things at work that don’t create value, they just provide dysfunctional self-sufficiency.
You need to reward those who cooperate and blame those who don’t cooperate. Blame is not for failure, it is for failing to help or ask for help. It changes everything. Suddenly it becomes in my interest to be transparent on my real weaknesses, my real forecast, because I know I will not be blamed if I fail, but if I fail to help or ask for help.
When you do this, it has a lot of implications on organizational design. You stop drawing boxes, dotted lines, full lines; you look at their interplay. It has a lot of implications on financial policies that we use. On human resource management practices. When you do that, you can manage complexity, the new complexity of business, without getting complicated. You create more value with lower cost. You simultaneously improve performance and satisfaction at work because you have removed the common root cause that hinders both. Complicatedness: This is your battle, business leaders. The real battle is not against competitors. This is rubbish, very abstract. When do we meet competitors to fight them? The real battle is against ourselves, against our bureaucracy, our complicatedness.