Stop pushing clouds up a hill

Stop pushing clouds uphillWe recently attended an offsite meeting held by the supply-chain partner of a major European retailer. There is nothing wrong with this company; in fact, its performance is enviable. But amid what its leaders call “the insidious creep of complexity,” they are concerned about the company’s ability to sustain its performance year after year. They posed it as a question: How can a highly successful, rapidly growing company maintain the insurgency?

As we often do in these situations, we asked the company’s leadership team to take a Founder’s Mentality® survey. The issues the company faces are fascinating. On the one hand, its insurgent culture is strong—all leaders knew the company’s insurgent mission, its and the critical capabilities that would lead to success. On the other, the leadership team felt the company was at an inflection point. As the head of one business unit  noted, “I joined this company because it was a rebel,  full of innovation, full of people doing the right thing for our customers. It was a game changer, a group of entrepreneurs breaking the industry rules and trying to transform the world.” He added: “But  as we grow and as we bring in professionals, I worry that we will start to favor ‘control and compliance’ over doing the right thing with speed and purpose. After all, control is boring.” Another key meeting participant put it this way: “Our people are starting to feel those first signs that getting the job done is like pushing clouds uphill.”

I love that phrase, and I love that a lean, insurgent company still enjoying rapid growth is so eager to nip complexity in the bud. The leadership team sees complexity beginning to take root and they want to deal with it now.

So we debated why complexity was growing and how to fix the problem. This company had been adding product categories rapidly, which often results in a complexity doom loop: Portfolio complexity begets organizational complexity, which begets process complexity, which begets dissonance and misalignment. But in this case category expansion wasn’t the culprit. Given that the company is a subsidiary of a much larger parent, your next guess might be that this structure was creating complexity, as it frequently does for fast-growing subsidiaries. No again. The main cause of complexity, it turned out, came down to something entirely internal—as the company grew, it became harder and harder to know who was in charge of each decision. Those with the responsibility to implement a decision felt disempowered because they thought they were expected to bounce decisions up. But those higher up who were being asked to decide were frustrated that the person they held accountable hadn’t made the decision initially.

We dove deep on one example to try to flesh out the issues. Without going into all the details, it was a decision around when to pay their people. The timing of the payment would have a big impact on the people involved. The payroll manager in charge of the decision had come up with a recommendation. She interviewed a lot of folks, understood the issues and decided on a pay date. But just before she was about to implement the decision, she was told that the issue needed to go before the company’s executive team. The payroll manager was surprised, but she sent the recommendation up the line and waited for the Exec meeting. The Exec met. They were surprised this issue was on the table but discussed it anyway. In the end they approved the overall recommendation but changed the date of the payment.

This, of course, was just what the payroll manager had hoped to avoid in making the recommendation, since she knew this revised date would cause problems for employees. No one really understood why the Exec made that decision, but everyone concluded that there must have been a reason. Therefore, and with reluctance, those lower down agreed to the new, unsatisfactory payment date.

The specifics don’t matter, but after lots of discussion, we concluded the following:

  1. No one actually knew why the Exec was brought into the decision. The executive team members were certainly surprised it had been escalated. Someone speculated that it was probably because a previous decision about pay dates had caused a problem, and someone else thought that a member of the senior team had asked to be brought into all future decisions.
  2. No one from the executive team was ever told that the new date would cause a problem. In fact, as soon as we discussed it at the offsite, the executives in the room immediately reversed the decision. But by that time, there had been a lot of energy expended within payroll about why the Exec had decided the way it did. The decision was so clearly against the interests of employees that people got distracted second-guessing motivations and speculating about a shift in values.
  3. It was also clear that throughout this whole little micro-story, no one had thought to pick up the phone to ask what was going on. The bottom didn’t call the top; the top didn’t call the bottom. And it was clear that 100 times more energy was expended analyzing the decision and the decision-making process than would have been expended on a simple phone call.

As you would expect from a successful insurgent, the leaders present at the meeting made the fix right then and there in the workshop. They agreed that next time they would pick up the phone and that they would also use case studies like this one to remind everyone that insurgents don’t overrely on systems. Real conversations with real people do a world of good. The company  put a stop to the problem before it got worse.

But this wonderful case study reveals so many things and helps us to better define insurgency. A couple of observations:

  1. Insurgency requires a simple operating principle: “Presume trust.” A related principle we’ve seen a lot with insurgents is, “Presume incompetence but never malevolence.” Sure, the Exec had a bad day. Members were surprised they were asked to make the decision and, in this case, perhaps they screwed it up. But no one should spend a second analyzing motives or questioning values—they should pick up the phone and put it right. Insurgents don’t have the time or inclination for conspiracy theories.
  2. Maintaining the insurgency is a constant activity. The forces of entropy are overwhelming and must be countered. This example is tiny, but there are hundreds of things happening like this every day. Leaders of insurgents must always be vigilant, and when little examples crop up, they must discuss them, make case studies of them and build them into their learning culture.

It is often the little things that undermine greatness, not the big things. This company operates in an industry going through extraordinary turbulence right now. A great team has weathered big organizational changes and a massive expansion of the company’s product categories. But its leaders are rightfully just as concerned with the little things. In his book The Power of Habit, Charles Duhigg talks about the positives of habits, but also about the dangers of bad habits and what he calls “toxic truces.” These are the thousand little organizational behaviors that allow people to get something done but can accumulate and destroy your culture. My guess is that the example above was the result of a toxic truce: At some point, after a previous screw up, one executive committee member likely told someone in payroll that he or she would like to review the issue. This became a toxic truce—a little side deal that evolved into a need for any similar decision to have executive approval, which, in turn, led eventually to the wrong decision. It’s like pushing a cloud up a hill.

This entry was posted in The complexity doom loop, The southward winds by James Allen. Bookmark the permalink.

About James Allen

James Allen is a senior partner in Bain & Company's London office and recognized as a leading expert in developing global corporate and business unit strategy. He is co-head of Bain’s Global Strategy practice and a member of Bain & Company's European Consumer Products practice. He is co-author, with Chris Zook, of Repeatability (HBR Press, March 2012) and Profit from the Core (HBR Press, 2001 and 2010).

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