The process deadlock

When a company is small and young, work is often done in a seemingly ad hoc fashion. People briefly discuss and then do what appears to be the best solution for the task at hand. As the company is small and most people in the company have a good idea what is important and what is not, this approach tends to work quite well. Sometimes, a wrong decision may be made but in general, this sort of ad hoc approach works quite well.

But when companies grow, this approach often reaches its limits. The number of employees grows and this type of ad hoc communication does not scale that well. Not everyone working for the company can distinguish relevant from irrelevant anymore. They were not part of the company from the beginning and may lack the bigger picture as specialization starts to grow with the size of the company. While the first employees are usually more all-rounders, later employees are often hired with a stronger focus on a certain area of expertise.

All this leads to an increase of subpar or even wrong decisions. Something needs to be done as bad decisions not only damage the company’s reputation. Sometimes, they also lead to revenue loss. Not good!

Hence, the company decides to replace the ad hoc approach by a more organized one.

Enter business processes!

Business processes as scaling means

Business processes define how work should flow through the company and what everyone is intended to do. Several roles are defined, and starting with either an internal or external trigger, it is defined who is doing what and which kind of artifacts are passed from one person to the next until the required result is produced.

Typically, the process descriptions are accompanied by a set of role descriptions that define the tasks and responsibilities of the persons along the process steps. Additionally, templates are defined that describe form and content of the artifacts handed over between persons. Hiring all-rounders and partial all-rounders is replaced by strictly matching the applicants’ skills with the description of the role in demand. And so on.

At least in theory it is possible to scale a company efficiently with this approach: Define all relevant processes (and support processes that augment the main processes) including the needed roles and templates. As a result, everyone knows what to do when. No bad decisions anymore as all essential decisions have been made upfront when defining the processes and roles.

Great, isn’t it!

Indeed, processes provide some orientation for everyone involved without the need of discussion what to do how and when. Processes also ensure a repeatable flow of work and results to a certain degree.

But they come at a price.

Responsibility diffusion

Processes turn humans into workstations along a virtual assembly line, cogs in a process machine. This does not only emphasize the weaknesses of humans (as described, e.g., in a bit different context in this prior blog post) but also results in sort of a responsibility diffusion. People hand over the responsibility for an appropriate result to the processes. They only care about their workstation. Everything before and after is irrelevant to them. And if something should go wrong, they blame the process: “This is not my fault. I stuck to the process!”

This way, even if things go terribly wrong and you try to figure out what needs to be changed, it often becomes a tedious and frustrating job. Everyone assures they did nothing wrong. They adhered to the processes and thus cannot be responsible – even if it must have been obvious to everyone involved that things went terribly wrong. As responsibility is mentally delegated to the process, people ignored the obvious problem and just did what the process expected them to do.

Yes, sometimes people raise their hands before something bad happens but more often they do not and hide behind the processes. Before judging them for acting this way: This is basically what they were told to do. “Stick to the processes. Stick to your role.” is what they are told all the time and they are punished for not adhering to them. They were turned into disempowered cogs in a machine. Thus, nobody should complain if they act like disempowered cogs in a machine – just bluntly doing their cog jobs according to the lines of the process description.

Finally, the people were primarily selected based on the match of their skills to the skill set, the respective role description demanded. This does not include thinking beyond the boundaries of their own workstation or even understanding what is going on there. Works as designed – unless it does not.

The complexity trap

Additionally, processes only capture the expected default course of action. If anything unexpected happens, the process descriptions lack directions. Typically, the disempowered humans will either stop working or continue working according to the processes prescriptions, no matter if it makes any sense or not. Remember: It is not their fault, if the result is not what is needed as long as they stick to the processes.

Because such deviations from the expected course of action happen time and again, two types of countermeasures are typically implemented:

1. The processes are extended to also cover the exceptions.
2. Additional roles are introduced that are meant to manage such exceptions.

Over time, this leads to process complexity creep, including more and more process steps and roles, many of them not immediately contributing to the value creation process. Instead, they were introduced for control and exception handling. More processes. More complicated processes. More roles. More templates for artifacts to be handed over.

Also, the additional roles usually result in additional layers of hierarchy because the control and exception handling roles are typically layered on top of the actual value stream roles.

Autopoiesis reinforcing the development

Then “autopoiesis” meets the already bloated organization. This is how Niklas Luhman called the typical self-creating and self-preserving properties of systems like, e.g., companies, its organizational units and roles.

In short (you can find a bit more about autopoiesis, e.g., in a prior blog post “Forget efficiency”):

Systems and its parts, like organizational units or roles are introduced to fulfill a purpose. Their purpose is defined externally – some external need, demand or necessity. Over time, the systems decouple from their original purpose and become ends in themselves. Their further evolution is then defined by their internal needs instead of their external purpose (Luhman called such systems “operationally closed”).

Additionally, these systems develop self-preservation forces. They want to persist, no matter if they are actually needed or not. Typical measures to solidify their “right to exist” is an accumulation and extension of their formal responsibilities. They inflate their scope of work.

In our context, this means a controlling role gathers more and more things it “needs” to control, turning itself into a bottleneck. Then additional employees are hired to support the (artificially) overloaded role. A new business department is established that dedicates part of its added capacity into figuring out more and more things it “needs” to do – no matter if they contribute to the original value creation process or not.

Over time, the processes become more and more complex, and more and more people are busy with handling all the non-value-creating work they originally devised to preserve their non-value-creating roles.

This has nothing to do with people being malicious. Autopoiesis is sort of a “natural” effect that tends to unfold in most types of social systems unless energy is spent to contain it (completely avoiding it becomes increasingly hard with growing size of a company).

Detached from the purpose

Based on this development, over time most processes and roles become detached from the actual purpose of the company, ends in themselves. We are surrounded by highly complex processes, most of them not contributing to the actual value-creation process. We are surrounded by lots of people, painstakingly taking care that their non-value-creating roles are not only preserved but continuously expanded.

What started as a means to scale a company and its value-creation processes in a predictable way, very often tends to become an end in itself. The effectiveness as well as the efficiency of the company shrinks over time because more and more self-occupying, non-value-creating work is added to the actual value-creating work. The expenses per Euro revenue made continuously grow while the profit margins shrink.

This typical evolution bears some unintended irony because the business processes were introduced in the first place to improve effectiveness and efficiency.

Process rigidity

Another detrimental effect of business processes is that they tend to become very rigid, especially after the effects of autopoiesis start to hit. First of all, it takes time and effort to implement them which often leads to a sunk cost fallacy that makes people stick to the introduced processes and roles even if they realize they do not deliver the intended results.

Then, people were often hired to specifically fill a certain role. With autopoiesis kicking in, most of them stop caring about the overall picture but instead focus on their little “islands” and their well-being, how to make things better for them, how to grow their islands, how to preserve them from being made smaller, made different or even being removed.

Again, this has nothing to do with people being malicious, with people consciously working against the goals of the company. Usually, those people are convinced they are doing it all for the good of the company. They do not even recognize that their acting might have a detrimental effect on the well-being of the company. Most likely, they would feel deeply insulted if you were telling them that their acting works against the good of the company.

Nevertheless, it does. And this creeping solidification process makes the processes and the organization rigid which makes change and adaption harder.

Additionally, implementing change becomes harder, the more processes and roles you have. It takes more time to figure out the changed processes and roles. It takes longer to make sure, everything is still covered after the change. New process descriptions need to be created. New roles. New Templates. Maybe new people need to be hired. Etcetera. Often, people shy away from this tedious task even if they know the current organization does not work as needed, increasing the rigidity of the processes and organization.

Finally, even if you decide to change the processes, people will resist the change – especially those who built their little islands which would be affected by the change. Often, those people fear for their jobs if their roles change. Remember: They were hired because of the match between their skills and the skill set their current role demands. It is unclear for them if their skills are adequate for the changed role. Hence, resistance, often hidden sabotage.

Even if you are able to handle the resistance, it takes time for the people to learn the work of the new role and how to interact with the other people in their new roles. The controlling roles need to learn not to overshoot (undershooting is rare). An so on.

Lots of factors that impede change. Lots of time and effort needed to implement change. All this makes it hard to change the processes. All this makes the processes and the organization rigid.

VUCA

Everything described before might be considered a nuisance but not a real problem if companies would live in predictable and slow-moving markets. However, most companies live in highly dynamic post-industrial markets that exhibit VUCA properties. I discussed post-industrial markets and their VUCA properties in more detail in my “Responsible IT” blog series. Thus, I keep it short here:

In highly dynamic, post-industrial markets with VUCA properties, surprises, i.e., unexpected events and situations, are the new normal. Under high uncertainty and ambiguity in a highly complex and volatile environment, it is impossible to predict what will happen next. It may be something expected but quite often it is something unexpected.

The problem with business processes is that they can only handle expected situations. They are useless if something unexpected happens. But that is exactly what happens all the time in a VUCA setting. Of course, not every external stimulus is a surprise. Most stimuli are still expected ones. However, a significant number of surprises is also received. And every time, the organization either does not know how to respond to it at all or it reliably responds in a wrong way.

Additionally, highly dynamic markets tend to change quickly. The surprise of today often is the default of tomorrow. This means that companies need to continuously adapt to changing market conditions. However, as discussed before, business processes typically lead to rigid organizations that exhibit lots of inertia and resistance regarding change.

This means, business processes and their usual effects backfire in highly dynamic markets because they impede the required continuous adaptation to changed market conditions and demands. In other words:

Business processes hinder organizations from becoming resilient.

Resilience is the ability to cope successfully with expected and unexpected adverse events and situations (for a more detailed definition see the first post of my “The long and winding road towards resilience” blog series). As business processes and their effects basically eliminate an organization’s ability to deal with unexpected events and situations and also impede its ability to adapt to changing market conditions, they hinder organizations from becoming resilient. Business processes will keep their organizations rigid, fragile and poorly set up to respond to unexpected situations.

To be fair: Every larger company needs a few roles and processes. Word of mouth is surprisingly successful when it comes to rumors but not so successful when it comes to run a larger company. Some structure is needed to run a bigger company successfully. Also some processes. And some roles – not at least because the legislator requires certain roles in a company.

But we should not expect to run a company successfully in today’s highly-dynamic VUCA world solely based on processes and roles. If you talk about resilience – a popular topic these days – and indulge in processes, roles and hierarchies at the same time, you are getting it wrong.

Building a resilient organization

Building a resilient organization, an organization that is reliably able to also successfully handle unexpected stimuli and that is able to continuously adapt to changing market needs requires something different. The core building blocks of such an organization are:

• Alignment – Everyone needs to understand the purpose of the company and its goals, what it is intended to do and why.
• Values – Values underpin the core ideas, the mindset that formed the company and its purpose and goals. They help everyone to distinguish what is important from what is not, what is a desired result from what is not.
• Principles – They provide general guidance how to respond to certain kinds of stimuli. This provides actionable advice without limiting people in their course of action, especially if something unexpected happens. Principles may (and should) also provide some general guidance how to respond to unexpected situations. They may also contain guidance what not to do (constraints).

This is very different from thinking in processes, roles and organizations. It focuses on the why and what of a company and not on the how. This is IMO an important reason why business processes are not suitable to build resilient organization. Business processes only focus on the how without creating an understanding of the why and what.

But if people are only told part of the how (the process steps they need to execute) without understanding the why and what of the company, its purpose, goals and underpinning values, they are doomed to fail if something unexpected happens and will just preserve and optimize their little islands. After all, it is all they know and have.

Providing the overarching picture, the purpose and goals of the company and its underpinning values, ensuring that everyone in the company shares the same purpose, goals and values (alignment), plus adding a bit of actionable advice that lets enough room for handling unexpected situations, results in a very different organization. People are no longer limited to their workplace descriptions and do not need to protect their little island anymore. They know what is important and what is not and can dynamically respond and adapt to unexpected or changing external stimuli.

Of course, this is not a sure-fire success. This is not a “Give everyone a one-day training and everything will work on its own”. It requires constant revision of purpose, goals and values. It requires continuous reflection and discussion if the company is still aligned with the market’s demands. It requires the ability and willingness to continuously adapt (especially concerning the principles), using the purpose, goals and values as north star.

It will also require a different kind of hiring. If we solely look if an applicant may staff a predefined role, it is unlikely that this person will be able and willing to continuously adapt. We also need a much higher number of all-rounders compared to specialists.

Autopoiesis and the other detrimental effects that make organizations slow, fragile and rigid are also not gone. They still lurk around the corner and wait for their chance to strike. Hence, we must continuously watch our effectiveness and determinedly counteract detrimental behavior creeping in – the sooner, the better.

All this is not easy. All this is a lot of hard work. It is easier to define and implement a set of processes, roles and hierarchies than to create an aligned organization where everyone shares the same purpose, goals and values and bases their work on them. But if we want to thrive in highly-dynamic post-industrial markets exhibiting VUCA properties, we need to build this level of resilience.

As written at the beginning of this chapter: We may still have a few processes and roles. This is okay and also useful. But we will have a lot less roles and processes than process-driven companies tend to have. Additionally, the processes only support the people instead of defining their work. They do not cover exceptions and thus remain simple and lightweight (the purpose, goals and values help to navigate successfully through the exceptions). And they are not written in stone. They are changed or discarded whenever changed market needs make them unsuitable. The same is true for roles, hierarchies and templates.

Summing up and moving on

We discussed the origins of business processes, including the accompanying roles, hierarchies and templates. We saw how they tend to grow and solidify over time, reducing the effectiveness as well as the efficiency of the company even if they were introduced in the first place to improve them.

We have seen why a process-driven company cannot properly respond to surprises and is not able to adapt to the changing needs of a highly dynamic post-industrial market exhibiting VUCA properties. Finally, we discussed what we need instead to build a resilient organization that is able to adapt and thrive in post-industrial markets.

As so often, there would be a lot more to say about the topic but I will leave it here.

If you are interested in more ideas how to build resilient organizations, I would recommend to start with the excellent introduction in systems thinking “Thinking in Systems” by Donella Meadows. Understanding systems lays the foundation for creating resilient organizations. There are more things to know like, e.g., cybernetics, complexity theory, traditional management theory, change dynamics and more. But without understanding systems and how to intervene in them, everything else is of little value.

I also wrote a lot of stuff about resilience, e.g., a little introduction into the topic and a longer blog series how to become resilient in IT. While the latter starts with software and IT, over its course it grows into the whole organization and its boundaries. Also, many of the IT-related learnings of this series can be applied to other areas and domains.

Finally, the BetaCodex network has lots of advice how to organize companies in better ways than based on lots of processes and roles, keeping them smooth, flexible and adaptable.

To finish: I did not intend to demonize business processes. They have their value. However, I wanted to point out that they come with a big package insert that lists a lot of undesired (and often unintended) side effects that especially tend to crop up in today’s highly dynamic VUCA markets.

I hope, this gives you some food for thought and I am curious where your thoughts are going to lead you …