The Myth of Control

Command and control as a management style is alive and kicking but who is really in control? And does control produce the best outcomes for the organisation?

Maybe it was the Enron and WorldCom scandals. It could have been the irrational exuberance of the dot com boom and subsequent crash. Or perhaps it’s the increase in regulations with Sarbanes Oxley, Basel II, USA Patriot Act, HIPAA and Privacy Acts to name a few. It could even be the constant focus on short term results. Whatever it is there is a shift back to placing tighter controls on employers and their managers at the coalface. Frederick Taylor would be proud!

In your organisation what level do you need approval from in order to?

• Hire a new employee
• Give one of your employees a pay rise, a bonus
• Travel domestically, internationally
• Attend a training course or industry conference
• Spend a $10,000, $100,000 or more depending on the size of the company
• Approve a customer transaction that is good for both the customer and your company but is outside the published rules and regulation.
  

If the answer is more than one level of management above the requestor then the myth of control is in place. The company has put in place rules and policies to control the decision making of the front line employee and manager. Put another way what the organisation is saying is that we are in better position to make these decisions therefore either follow the published rules and procedures or come to us. Senior management now feel safe that they are in control. When facing the auditors and the compliance groups they can quote chapter and verse of their rules and procedures and if there is a gap they will develop yet another procedure. Nothing can go wrong in their organisation or can it?

“On January 2-3 1999, a blizzard closed Detroit Airport, cancelling many outbound flights. Snowploughs kept runways open and a good number of inbound planes were able to land throughout the evening. Most carriers – United, TWA, and American – were able to bring their planes to the gates and offload passengers with modest delays. But this is not what happened with Northwest Airlines.
In perhaps one of the greatest public relations debacles in airline history, Northwest’s overwhelmed ground staff as Detroit Airport seemed paralysed in a freeze-frame photo of inaction and indecision. Eight thousand passengers (many of whom had already spent five or six hours in the air) were literally imprisoned on thirty Northwest flights for as long as eight and a half hours without food, water, or working toilets. One passenger went into diabetic shock. Mothers ran out of formula and diapers for their babies. An irate executive used his cell phone to track down Northwest’s CEO (waking him in the middle of the night) to appeal for help. Fights broke out. Passengers threatened to blow open emergency exit doors. Northwest pilots screamed at ground staff over the radio to tow planes to the gates before all control of the situation was lost.
A congressional investigation, extremely critical reports issued by the Department of Transportation, and four lawsuits all found Northwest Airlines guilty of many acts of omission. By inflexibly adhering to “procedures” for ground operations and “rules” for passenger safety, those in charge overlooked many possible solutions. They could have brought the planes near the gates and let passengers off on the tarmac; or they could have disembarked them on the airfield and bused them to the terminal. Alternatively they could have brought service vehicles out to the planes to deliver food, water, videos, baby formula, and diapers; or the planes could have left Detroit for nearby airfields.” “Surfing the edge of Chaos”, Pascale, Millemann and Gioja

You might think the Northwest case is a bit extreme but we face this maniacal sticking to rules and procedures in everyday life. How often do you find that your simple request for service hits a brick wall when it happens to be just outside the rules and procedures of the person you are dealing with even when it makes sense for their company? Have you experienced an example along these lines?
“Welcome to West Central Bank, how can I help you?”
“I would like to increase the limit on my credit card please”.
“Oh I’m sorry but it looks like you were late on two monthly payments within the last year”
“But I did make those payments, albeit late, and I always have ample funds in my savings account to cover any expenditure.”
“Yes I can see from your savings history that you are a very good customer with our bank and I would like to also thank you for having your home loan with us which I notice you have never missed or been late for a payment over the last fifteen years.”
“So, can I increase my limit?”
“I’m sorry, but our policy is if you miss more than one payment in the last year we cannot increase your limit.”
“Doesn’t missing a payment mean increased revenue to you through extra interest, and didn’t I pay all of my credit back within the last twelve months.”
“Yes it does mean extra revenue for us and yes you did pay all your outstanding credit back in the last twelve months but I’m sorry it’s our policy.”
“Can I speak to your supervisor please!”

When speaking with a call centre agent how often do you ask to speak to a supervisor? Why was it that the passenger on the Northwest aeroplane rang the CEO? Why, because we have been trained to keep going up the management line until we find someone who can make a decision specific for our situation. The reason for this is that rules and procedures put in place by senior management fall into the trap of “averages”.

When one person is making a decision for another individual person that decision is based on their situation and requirements. However when a senior manager is making a decision for hundreds or thousands of people and their possible situations they have to make that on what best fits the average situation. The problem is that the average situation occurs less than one percent of the time. In our example above a good customer couldn’t be satisfied because they fell outside of the range of no more than two late payments. If they went to another bank the new bank would be falling over themselves to provide a credit card with the limit they wanted because now that customer falls into a different set of averaged decision making; a new high net worth customer.

The problem with control is that is doesn’t lead to better business outcomes;

“A GTE survey in the mid 1990s, for example, revealed that the performance of its different billing operations, as measured by the accuracy of bills sent out, was closely tied to leadership style of the unit managers. Units whose managers exercised a relatively high degree of control made more mistakes than units with more autonomous workforces. By encouraging changes in leadership style through training sessions, discussion groups and videos, GTE was able to improve overall billing accuracy by 22% in the year following that survey and another 24% the year after.” Palmer Morrel-Samuels, HBR

As noted by Jim Womack, co-author of “Lean Thinking”, and “The Machine that changed the World” on Toyota’s Production System, when a Union wants to threaten management they say they will “work to rule”. If control is about getting people to follow rules and procedures it is interesting that following those rules and procedures is actually a threat to the business. As Jim Womack explains this is because actually following the organization’s procedure manual makes it impossible to get anything done. Employees often have to find “work arounds” of the rules and procedures to make things happen. Procedure manuals based on average circumstances turn out to be unworkable given the reality of variability in life.

But can you imagine an organization without any control? If there was such a thing would it be chaotic or highly effective?

Nature provides an example of a highly effective organization without any central control. Explained by Steven Johnson in his book, “Emergence”, in the section appropriately titled “The Myth of the Queen Ant”.

“there’s nothing hierarchical about the way an ant colony does its thinking.”
“Although queen is a term that reminds us of human political systems, Gordon [Deborah Gordon, Stanford Biological Sciences] explains, “the queen is not an authority figure…. She does not decide which worker does what… It would be physically impossible for the queen to direct every worker’s decision about which task to perform and when”
“Gordon gestures to the near corner of the top board, four inches from the ramp to the lower level, where a pile of strangely textured dust – littered with tiny shells and husks – pressed neatly against the wall. “That’s the midden,” she says. “It’s the town garbage dump.” She points to three ants marching up the ramp, each barely visible beneath a comically oversize shell. “These ants are on midden duty; they take the trash that’s left over from the food they’ve collected – in this case, the seeds from stalk grass – and deposit in the midden pile.”
“Gordon takes two quick steps down to the other side of the table, as the far end away from the ramp. She points to what looks like another pile of dust. “And this is the cemetery.” I look again, startled. She’s right; hundreds of ant carcasses are piled atop one, another, all carefully wedged against the table’s corner. It looks brutal, and yet strangely methodical.”
“I know enough about colony behaviour to nod in amazement. “So they’ve somehow collectively decided to utilize these two areas as trash heap and cemetery,” I say. No individual ant defined those areas, no central planner zoned one area for trash, the other for the dead. “It just sort of happened, right?”
“Gordon smiles, and it’s clear that I’ve missed something. “It’s better than that” she says. “Look at what actually happened here: they’ve built the cemetery as exactly the point furthest away from the colony. And the midden is even more interesting: they’ve put it at precisely the point that maximise its distance from both the colony and the cemetery.”
“I have to take a few seconds to do the geometry myself, and sure enough, the ants have got it right. I find myself laughing out loud at the thought: it’s as though they’ve solved one of those spatial math tests that appear on standardized tests, conjuring up a solution that’s perfectly tailored to their environment, a solution that might easily stump an eight year old human. The question is, who’s doing the conjuring?”

The answer is no single individual ant is in control. Rules are not handed down from management layers above. The ants however do share the same purpose; keep the colony alive and well. Each ant makes their own decisions and uses feedback loops of what is going on around them to base their decisions on. If they are on food foraging duty and come across a strong pheromone trail left by other ants they follow it to the food. If they meet too many ants on food foraging duty they change to midden clearing duty. Simple decisions with constant feedback loops create a highly organized and effective organization.

Why do we, us humans, with far greater intelligence than ants fail to create highly organized and effective organizations? It is because we believe that control should be centralized with higher authorities. When this happens chaos can occur as exemplified by Northwest Airlines in Detroit. It doesn’t even have to get to the chaos level, it is all the annoying dealings we have to go through in our every day lives as we try to negotiate the rules and procedures of organizations like, banks, insurance, electricity, telecoms, retailers, restaurants, etc.

Avoiding the Myth of Control

Control should not be centralized. What needs to be centralized and understood by all is the purpose of the organization. The purpose should not be “to make money”. The purpose is the outcome you are striving to achieve for your customers. This purpose provides everyone in the organization a basis for making any decision. That is, when making each decision I need to determine which answer is going to help or hinder my organization achieving our purpose?

Day to day decisions need to be pushed down the organization to the place where the people are in the best place to make those decisions. If you don’t trust them to make the decision find out why, don’t take the decision away from them. Maybe it is because they don’t have the right information to make the decision, if so work out how to give them the right information. Maybe it is because they don’t have the right skills therefore provide training or hire the right people.

Don’t take the decision making authority away from those who are in the best place to decide.
What is important is to create local feedback loops. People need to know the results of their decisions. Too often processes in organizations have no feedback loop. Even those where employees are following rules and procedures set by senior management. If no feedback loop exists the organization is making decisions blindly, not knowing whether the right or wrong decisions are being made.

Beware the myth of control!