I fought the law (of unintended consequences) and the law won

Sometimes, what seemed to be a really good idea just doesn’t turn out that way in the end.

In my opinion, a lack of a systems approach to problem solving makes that type of outcome much more likely. Simplistic responses to issues that fail to deal with problems holistically can backfire. Such ill-considered solutions not only fail to solve the original problem, but often set up perverse incentives that can lead to new problems.

An article on the Daily WTF last week, “Just the fax, Ma’am”, illustrates this perfectly. In the article, an inflexible and time-consuming database change process (layered on top of the standard change management process) leads to the “reuse” of an existing, but obsolete field in the database. Using a field labeled “Fax” for an entirely different purpose is far from “best practice”, but following the rules would lead to being seen as responsible for delaying a release. This is an example of a moral hazard, such as Tom Cagley discussed in his post “Some Moral Hazards In Software Development”. Where the cost of taking a risk is not borne by the party deciding whether to take it, potential for abuse abounds. This risk becomes particularly likely when the person taking shortcuts can claim a “moral” rationale for doing so (such as “getting it done” for the customer).

None of this is to suggest that change management isn’t a worthy goal. In fact, the worthier the goal, the greater the danger of creating an unintended consequence because it’s so easy to conflate argument over means with disagreement regarding the ends. If you’re not in favor of being strip-searched on arrival and departure from work, that doesn’t mean you’re anti-security. Nonetheless, the danger of that accusation being made will likely resonate for many. When the worthiness of the goal forestalls, or even just hinders, examination of the effectiveness of methods, then that effectiveness is likely to suffer.

Over the course of 2016, I’ve published twenty-two posts, counting this one, with the category Organizations as Systems. The fact that social systems are less deterministic than software systems only reinforces the need for intentional design. When foreseeable abuses are not accounted for, their incidence becomes more likely. Whether the abuse results from personal pettiness, doctrinal disagreements, or even just clumsy design like the change management process described above is irrelevant. In all of those cases, the problem is the same, decreased respect for institutional norms. Studies have found that “…corruption corrupts”:

Gächter has long been interested in honesty and how it manifests around the world. In 2008, he showed that students from 16 cities, from Riyadh to Boston, varied in how likely they were to punish cheaters in their midst, and how likely those cheaters were to then retaliate against their castigators. Both qualities were related to the values of the respective cities. Gächter found that the students were more likely to tolerate free-loaders and retaliate against do-gooders if they came from places whose citizens took a more relaxed view on tax evasion or fare-dodging, or had less trust in their courts and police.

If opinions around corruption and rule of law can affect people’s reactions to dishonesty, Gächter reasoned that they surely affect how honest people are themselves. If celebrities cheat, politicians rig elections, and business leaders engage in nepotism, surely common citizens would feel more justified in cutting corners themselves.

Taking a relaxed attitude toward the design of a social system can result in its constituents taking a relaxed attitude toward those aspects of the system that are inconvenient to them.

What Customer-Centric Looks Like

My last post, “Defense Against the Dark Art of Disruption”, went into some detail about notable failures in customer-experience for 2016. This week, however, I ran across a counter-example (h/t to Tim Worstall) showing that a little social media awareness and a customer-centric culture can make magic:

A baby products company is launching a special run of ‘little blue cups’ for a 13-year-old boy with autism following a global appeal by his father.

Ben Carter, from Devon, will only drink from a blue Tommee Tippee cup, prompting father Marc to put out an appeal on social media after becoming concerned the cup was wearing out.

Ben would refuse drinks that were not in the cup and had been to hospital with severe dehydration.
His father, tweeting as @GrumpyCarer, prompted people across the world to look through their cupboards for identical cups or to spread the #cupforben message. His request was retweeted more than 12,000 times.

Tommee Tippee, based in Northumberland, said it was nearly 20 years since it had manufactured that product, but has now rediscovered the design and found the mould used to make the two-handled originals, stored in a usable condition in China.

It has said it will make a run of 500 cups to ensure ‘that Ben has a lifetime supply and that his family won’t ever have to worry about finding another cup’.

 

While I don’t know what it cost them to find the molds and run a one-off batch of cups, I suspect that the value of the positive global media coverage should substantially offset it. As a father, I know that the gesture was priceless.

Win-win.

Learning Organizations – Shooting the Messenger All the Way to the Fuhrerbunker

Unless you’re living under a rock, it’s a near certainty that you’ve seen at least one Downfall parody video (although I hadn’t realized just how long these had been around until I started working on this post…time flies!). There’s a reason why they’ve managed to hang on as a meme as long as they have. The “shoot the messenger” style of management, in spite of all the weight of evidence against it, is still alive and well.

When Tom Cagley and I were recording the Form Follows Function segment for SPaMCast 407, one of Tom’s questions brought to mind the image of Hitler’s delusional ranting in the bunker made famous by these parodies. The subject of the segment was my post “Learning to Deal with the Inevitable”, which deals with the need for a culture of learning to be able to deal effectively with the change that has become a constant in our world. Tom keyed in on one point (taken from a talk I’d attended put on by Professor Edward Hess): ‘candor, facing the “brutal facts” is essential to a learning culture’. Although his leadership failures pale in significance to the atrocities that he was responsible for, the Hitler portrayed in these clips demonstrates that point vividly.

It should be unnecessary to point out that flying into a rage when given bad news does nothing to change the nature of those events. It is particularly destructive when the bearer of the news is attacked even when blameless for what they’re reporting. Far from helping anything, the temper tantrum ensures that negative information is only delivered when it can no longer be hidden, hampering the ability to react in a timely and effective manner. A vicious circle builds up where delay, spin, and outright deception replace candor.

Delusional, drug-addled dictators can be expected to operate in this manner (thank heavens). The rest of us should aim for better.

It can be inconvenient to have to deal with crises; it’s more inconvenient to find out about them when the situation is unsalvageable. Maturity, humility, and perspective can be difficult character traits to develop, but not as difficult as finding yourself under siege from a world of enemies with only the pathetic dregs of your minions for company.

Barriers to Innovation

US Soldiers crossing Siegfried Line in WWII

 

Is innovation inevitable?

Greger Wikstrand and I have been trading blog posts on innovation since last November. In his latest post, “Credit card fraud and stalled innovation”, Greger discusses the relatively slow pace of innovation in credit card security. Those best placed to increase security neglect it because they don’t own the risk (a concept called “moral hazard”).

Sometimes, a potential innovation is not the best route to take. For example, the situation I discussed in “What’s Innovation Worth”, where change was avoided because the payoff didn’t justify the cost. Sometimes, however, potentially valuable innovation can be blocked in ways similar to what Greger outlined.

Laws and regulations can introduce perverse incentives that distort economic conditions. Ironically, where this hurts some innovations (e.g. Uber and other “gig economy” companies), it can also unintentionally push others. Increases in minimum wage laws are making automation more likely for some jobs.

External factors are far from the only barriers to innovation. Technological innovations, no matter how promising, will fail to flourish when placed in an inhospitable ecosystem. If all the systems, social and technological, fail to complement each other, then effectiveness will be diminished via friction. Technology, organization (structure), and process are all intertwined and interdependent.

Culture and structure are aspects of social systems that can contribute to impeding innovation. Organizations which are highly focused on efficiency and stability will be disposed to avoid the risk inherent in experimenting. Likewise, rigidly siloed organizations will have difficulty with activities that require crossing reporting structures. This can be the result of deliberate and destructive office politics, or less obvious (therefore, more insidious) cognitive biases that lead to evidence being overlooked:

Yet ‘evidence’ literally means ‘that which is seen’. And here we hit right up against a fundamental problem of cognitive-bias, sometimes known as Gooch’s Paradox: that “things not only have to be seen to be believed, but also have to be believed to be seen”.


Inertia, the “indisposition to motion, exertion, or change”, is another social system innovation killer. In the seventh installment of our series on innovation, “Organizations and Innovation – Swim or Die!”, I made the point that organizations need constantly to adapt to their changing contexts or risk “death”. Sitting still in a changing world is a losing tactic.

It should be obvious that all the barriers to innovation I’ve listed are aspects of the social systems involved. The technology part is relatively easy compared to the social. Technology (at least at present) isn’t lazy, complacent, biased, fearful, or malicious. The upside is that organizations, being composed of people, can change.

To return to the question above, is innovation inevitable?

Perhaps. The better question is whether it’s inevitable for your organization. The more your organization is subject to the barriers listed above, the more likely an organization not subject to them will eat your lunch.

The Ignorance of Management – Deep and Wide

Iceberg

While on LinkedIn a couple of weeks ago, an interesting graphic caught my eye. Titled “The Iceberg of Ignorance”, it referred to a 1989 study in which:

…consultant Sidney Yoshida concluded: “Only 4% of an organization’s front line problems are known by top management, 9% are known by middle management, 74% by supervisors and 100% by employees…”

The metaphor of the iceberg is simple to understand. The implications of these numbers, however, require some unpacking so as to understand the full nature of the problem. Once the problem is better defined, effective solutions can then be proposed.

A naive reading of this would be that the line-level employees know everything and that the higher you travel up the hierarchy, the more out of touch you get. That reading, however, fails on two counts. Firstly, it ignores the qualification of “front line”, which will not apply to all problems faced by the enterprise. Secondly, it fails to account for the fact that while 100% of front line problems will be known by front line employees, that’s not the same as saying that each front line employee will know 100% of front line problems.

It’s a question of cognitive capacity, both depth and width. As organizations grow, the idea that any one person could be aware of each and every detail of the operation becomes laughable, even assuming perfect communication (which is an extreme assumption). This difficulty is compounded by cultural conditioning to expect those in charge to know what’s going on:

Unfortunately, I suspect the vast majority of leaders and managers believe they should have all the answers — even though they couldn’t possibly know everything that’s going on at all levels and in all departments within their organization. And even though the world is changing so quickly that what we know right this second … may not be true and accurate anymore … in this second.

But because we’ve been entrained to have all the right answers, all the time, many of us put on a brave face and pretend we know — particularly when our boss asks us a question, or when a direct-report does. After all, we want to look good. We want to seem “on top of things.”

Pretending to have all the answers is stressful. It’s lonely. It’s draining.

And what if, when we are pretending to know, we give an answer that we later discover is wrong? Yikes! Now what?

In this situation, many people feel forced to “stick to their guns,” even in the face of conflicting evidence. So they wind up suffering from stress, anxiety and fear that they’ll be found out.
They may even hide the “correct answer” to save face, which certainly doesn’t do their conscience — or their company — any good.

Can you see how this need to have all the answers, all the time, can contribute to a culture of assumptions, half-truths and even outright lies?

In this sort of environment, do you think people are connecting deeply and sharing freely? Of course not. They’re competing with one another and hoarding information, because they believe the person with the right answer wins!

This culture of denial, delusion, and deception is how organizations arrive at the extreme situation I discussed in my last post, “Volkswagen and the Cost of Culture”. Casual dishonesty, towards others and yourself, leads to habitual dishonesty. Corruption breeds corruption. Often, it’s not even coldly calculated evil designed to profit, but ad hoc “going along to get along” to avoid consequences – impostor syndrome on an epic scale.

Command and control (the term of art from military science, not the pejorative description for micromanagement) is a subject with a long history. It’s frequently abbreviated as C3, since communication is an integral component of the discipline. A pair of techniques with a pedigree going back to the 18th century have a track record of success.

In his post “Auftragstaktik and fingerspitzengefühl”, Tom Graves describes these techniques:

The terms originate from the German military, from around the early-19thC and mid-20thC respectively. They would translate approximately as:

The crucial point here is to understand that they work as a dynamic pair, to provide a self-updating bridge between strategy, tactics and operations, or, more generally, between plan and action.

In the post, Tom describes these techniques through the example of the air defense system used by Britain in WWII. In this system, information flowed into the command centers from observers, and radar installations. The information was combined and contextualized, then sent back out to airfields and anti-aircraft batteries where it was used to repel air attacks. Tom noted that this is often depicted as a linear flow:

Yet describing the Dowding System in this way kinda misses the point – not least that there’s alot of information coming back from each of the front-line units at the end of that supposed one-way flow. Instead, the key here is that auftragstaktik and fingerspitzengefühl provide afeedback-loop that – unlike classic top-down command-and-control – is able to respond to fast-paced change right down to local level.

The linear-flow description also misses the point that it depends on more than information alone – there are key human elements without which the auftragstaktik / fingerspitzengefühl loop risk fading away into nothingness. For example, auftragstaktik is deeply dependent on trust, which in turn depends on a sense of personal connection and personal, mutual commitment, whilst fingerspitzengefühl depends on a more emotive form of sensing, of feeling, of an often-literal sense of ‘being in touch‘ with what’s going on out there in the real-world

The Dowding system worked by combining effective communication and realistic command & control methods. Bi-directional communication improved situational awareness both up and down the hierarchy, providing detail to the upper layers and context to the lower ones. Realistic command and control can be summarized like this: since no one can possibly have full breadth and depth of knowledge about the situation, provide direction appropriate to your level (in accordance with the directions you received) and delegate to your subordinates the decisions appropriate to their level. In theory, as well as largely in practice, this resulted in decisions being made by those with the best knowledge to do so (again, guided by general direction from above).

A system that works with reality, rather than against it? What a concept.

Volkswagen and the Cost of Culture

Hand holding a wad of cash

Thanks to Volkswagen, we now have an idea of the cost of failing to maintain an ethical culture, roughly $18 billion US (emphasis added in the quoted text below by me):

Volkswagen’s financial disclosure on Friday, in a preliminary earnings report, came a day after the company agreed on the outlines of a plan to settle some legal claims in the United States, which would include giving owners of about 500,000 affected vehicles the option of selling the cars back to the company or having them repaired.

Volkswagen is still negotiating the size of the fines it will pay to the United States government for violations of clean-air laws, as well as how much additional compensation it will provide to owners. The money set aside by the company on Friday provides an indication of what Volkswagen expects the total global costs of the scandal to be, although the figure could rise further.

Since the scandal broke in September, 2015, the news has steadily worsened. Last December, Volkswagen’s chairman admitted that the cheating found was not an isolated lapse:

…the decision by employees to cheat on emissions tests was made more than a decade ago, after they realized they could not meet United States clean air standards legally.

Hans-Dieter Pötsch, the chairman of Volkswagen’s supervisory board, said the cheating took place in a climate of lax ethical standards.

“There was a tolerance for breaking the rules,” Mr. Pötsch said here on Thursday during his first lengthy news conference since the company admitted in September that 11 million cars with diesel engines were rigged to fool emissions tests.

Volkswagen’s executive leadership explanation at the time:

Mr. Müller and Mr. Pötsch conceded that the deception reflected organizational shortcomings.

For example, the people who developed the software were the same ones who approved it for use in vehicles. At other companies, it is standard practice for one team to develop components and another to check them for quality. Volkswagen said it would correct those procedures.

Mr. Müller also said he wanted to change the company’s culture so that there was better communication among employees and more willingness to discuss problems. His predecessor, Martin Winterkorn, who resigned after the scandal, was criticized for creating a climate of fear that made managers afraid to admit mistakes.

“We don’t need yes men,” Mr. Müller said, “but managers and engineers who make good arguments.”

I would argue that what’s needed more than “good arguments” is a corporate culture where it’s understood that refusing to break the law is not only allowed, but expected. Given that the size of the loss reserve has more than doubled since then, perhaps they’ve realized that now as well.

What is not needed, however, is the traditional response to high-profile issues, layering on additional ad hoc rules and regulations with an eye toward making sure this “never again happens”. For one thing, there’s no indication that anyone was not aware of the fact that this behavior was wrong. Additional compliance theater is unlikely to improve anything in that respect, and may actually cause new problems in addition to exacerbating the root problem, VW’s culture.

A recent study (reported on in The Atlantic) by Simon Gächter and Jonathan Schulz, University of Nottingham, reports that corrupt cultures breeds corruption. In this study, they:

…asked volunteers from 23 countries to play the same simple game. The duo found that participants were more likely to bend the game’s rules for personal gain if they lived in more corrupt societies. “Corruption and fraud are things going on in the social environment all the time, and it’s plausible that it shapes people’s psychology, what they can get away with,” says Gächter. “It’s okay! Everybody does it around here.”

This study also has implications for Volkswagen’s ability to fix the problem:

Causality could eventually flow in the other direction. “If people are dishonest or think it’s okay to violate rules, it would also be harder to fight corruption and install institutions that work,” says Gächter. “In the long run, these things move together. But to show that, you’d need a 20 year project measuring this on an annual basis.”

Volkswagen, however, probably does not have twenty years to fix their problem. In the US alone, VW will have to fix or buy back (at the owner’s option) over 500,000 vehicles. I suspect VW’s reputation is severely impaired with those that opt to have their vehicles repaired and I would be willing to bet that the majority of those who sell their cars back won’t be returning as customers. This loss for Volkwagen is only the beginning of their financial problems, and it could all have been avoided.

Back in November, Matt Balantine floated an interesting (and very plausible) theory:

That may well turn out to be the case, but I also have to agree with what Grady Booch tweeted when the scandal first broke:

There’s plenty of blame to go around, but ultimately I believe only a systemic fix, top to bottom, will have any chance of correcting the problem (not that I’d be willing to give VW very good odds on remaining in business long enough for that to take effect). Their value going forward may be to serve as empiric confirmation of Gächter and Schulz’s work. Their bad example may serve as a wake up call for others to pay attention to the culture they’ve fostered (and are fostering) before their employees, innocent and guilty alike, pay the price.

Changing Organizations Without Changing People

The Thin Red Line at Balaclava

Prof Bo Molander once pointed out to me and the other students in the class that when you try to change people, you go up against billions of years of evolution, “good luck with that” and when you try to change groups, you go up against millions of years of evolutions, “good luck with that too”. The only thing you can hope to change is the organization.

Greger Wikstrand and I have been carrying on a discussion about architecture, innovation, and organizations as systems. Here’s the background so far:

  1. “We Deliver Decisions (Who Needs Architects?)” – I discussed how the practice of software architecture involved decision-making. It combines analysis with the need for situational awareness to deal with the emergent factors and avoiding cognitive biases.
  2. “Serendipity with Woody Zuill” – Greger pointed me to a short video of him and Woody Zuill discussing serendipity in software development.
  3. “Fixing IT – Too Big to Succeed?” – Woody’s comments in the video re: the stifling effects of bureaucracy in IT inspired me to discuss the need for embedded IT to address those effects and to promote better customer-centricity than what’s normal for project-oriented IT shops.
  4. “Serendipity and successful innovation” – Greger’s post pointed out that structure is insufficient to promote innovation, organizations must be prepared to recognize and respond to opportunities and that innovation must be able to scale.
  5. “Inflection Points and the Ingredients of Innovation” – I expanded on Greger’s post, using WWI as an example of a time where innovation yielded uneven results because effective innovation requires technology, understanding of how to employ it, and an organizational structure that allows it to be used well.
  6. “Social innovation and tech go hand-in-hand” – Greger continued with the same theme, the social and technological aspects of innovation.
  7. “Organizations and Innovation – Swim or Die!” – I discussed the ongoing need of organizations to adapt to their changing contexts or risk “death”.
  8. “Innovation – Resistance is Futile” – Continuing on in the same vein, Greger points out that resistance to change is futile (though probably inevitable). This post contained the wonderful quote above.

What an intriguing statement: you can’t change the behavior of individual people; you can’t change the behavior of groups; you have to change the behavior of the organization. What?

The rest of the paragraph sheds some light:

It is the same with my sheep, I do not try to change them as individuals or as a flock but by managing their access to shelter, food and water and by managing onboarding and offboarding of individual sheep in the flock I do manage the whole organization according to my goals.

Rather than changing the nature of sheep, individually or as a group, Greger uses his knowledge of their nature to structure things so that compliance is the natural outcome. Changing their nature, assuming it’s even possible, would take millions of years. Working with the grain of their nature is considerably easier. Military organizations have recognized this since ancient times, using individual and group characteristics to promote unit cohesion.

In the post “Locking Down the Prisoners: Control, Conflict and Compliance for Organizations”, I noted something similar. You get a lot more compliance when you make it easier to comply. Conversely, making it difficult for someone to do their job well is an excellent way to kill both motivation and effectiveness. I’ve used the quote from Tom Graves before, but it bears repeating: “…things work better when they work together, on purpose”.

Matt Ballantine, in his post “Best Practice versus Good Ideas”, showed how an organization promoted innovation. Rather than imposing “best practices”, which depending on context might not actually be “best”, the company promoted learning and sharing. Because these behaviors were rewarded, people engaged in them and innovation was fostered. Both the organization and the people that made it up benefited.

Congruence between what is said and what is done is critical. I’ve seen it said that changing culture is hard. Changing culture is impossible if you claim to value one thing but your actions demonstrate that you really don’t.