The evolving organisation
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In trying to make itself a quantitative science like economics, mainstream management has largely ignored the findings of more human-centred branches of scientific enquiry. Evolution, for instance.
Nigel Nicholson, professor of organisational behaviour at London Business School, uses “evolutionary psychology”, or modern Darwinism, to throw light on his subject. He points out how the drive for economic efficiency is constantly undermined by unruly human nature. To put it another way, the super-rational templates we use for organisation pay so little attention to what we have learned about the how and why of human behaviour that the surprise is not that organisations so often work poorly. It is rather that they work at all.
Consider that, apart from striking, the surest way to bring any organisation grinding to a halt is for its people to do exactly what their job description tells them to – that is, work to rule. The fact is that rational bureaucracies, like machines, are stupid. “Even the most elaborate bureaucracy needs human agency,” says Nicholson.
Ironically, the only reason organisations do function is the very human nature they try to suppress: the irrepressible qualities of intuition, creativity, cooperation, anticipation and generosity, and the ability to self-organise, solve problems and face up to difficulties that allow their employees mostly to muddle through, in spite of the obstacles that “rational” management puts in their way.
Like everything about evolution, human adaptability is double-edged. If we want it enough, we can make just about anything work, for a time – slave camps, the Mafia, prisons and Enron. “Every form of organisation is an adaptive mechanism for coping with the environment at one end and human nature at the other,” says Nicholson.
Neither constraint can be defied forever. Some people take the demands of economic efficiency so seriously that they work themselves to death.
But sacrificing human nature to economic efficiency can be self-defeating for organisations, too. Few manual workers could stand the inhuman conditions on Henry Ford’s assembly lines for more than a week, and even when he doubled their wages, turnover rates were unsustainably high. Charlie Chaplin satirised the condition in his film Modern Times. If he remade it today, he would set the film in the soulless, white-collar call-centre and shared-service factories that reproduce all the humanity-cramping errors of the assembly line, with real-time IT surveillance to ramp up the psychological pressure.
Perhaps the worst excesses come when organisations end up believing in the fiction of their own rationality. Enron grew so obsessed with its own reality that it lost touch with the outside world. The banking crisis was an even more spectacular case of magical thinking in which a whole sector’s faith in the paraphernalia of rationality – equations, computers, incentives, the infallibility of the free market – blinded it to the fact that it was amplifying another human quality: overoptimism. Or consider another example of taken-for-granted rationality: the organisation as meritocracy, with talent and achievement the sole qualification for the top.
Wishful thinking, say evolutionary psychologists like Nicholson. Traditional top-down, functional organisations were designed by men to fit their penchant for tournaments, winners and losers. Those who get to the top are alphas who play such games to win. Many women, however, are baffled by such arcane rules – those who do adopt them are distrusted by both men and their own sisters.
There is no “natural”, Rousseau-esque form of organisation – even hunter-gatherers had to make compromises. But that means too that there is nothing inevitable (or even good) about the command-and-control hierarchies currently accepted as the norm. Other forms of organisation are perfectly possible and may offer a much more adaptive fit with the constraints. The “lattice” network of WL Gore, the US high-tech materials company, with little formal hierarchy and many small units, is one alternative; Semco, the Brazilian manufacturer divided into small, self-organising subunits, is another.
For Nicholson the persistence of family firms – accounting for more than 50 per cent of employment worldwide – is no accident. Its template of kinship, shared values and long-lived leadership responds to deeply felt human needs.
From this angle, conventional management itself, petrified in a century-old vision of machine-like rationality, badly needs to evolve. Evolutionary psychology puts every aspect of it under scrutiny, from leadership and strategy to reward and organisational design. Can we get it right, or at least righter? The challenge is formidable, as Nicholson admits. But given those unquenchable human qualities, he says cheerfully, we might just end up surprising ourselves once again.
This is provided, of course, that we can deploy the insights to counter the incorrigible human propensity for self-deception. We need to remember something that few business schools currently teach. “Evolution,” in the words of the evolutionary biologist Leslie Orgel’s so-called second law, “is cleverer than you are.”
Simon Caulkin is a management writer