Why do we still think that more control solves the problem? Various studies show that more control does not lead to better behaviour. It does lead to higher costs and less innovation. And the latter is a necessity if you want to grow a company. Another not unimportant side effect of control is the centralization of power. But most important of all, it ignores the fact that most people can be trusted.
It often starts with the best intentions. Some additional information is requested to create a particular report or to answer an executive’s question. The results than leads to follow-up questions and while you are at it, please report this data every month from now on. The impact on achieving the objectives of the organization is dismissed by the people who are collecting the data. And the executive? In the meantime, (s)he is busy with other matters and no longer uses the data that is reported.
We often talk about the impact of data gathering on the organization. The nurses, doctors, the programmer or the mechanic spend a lot of time providing the information. Systems are being implemented to make it easier and more efficient. This can help to ease the administrative burden, especially when it comes to administrative tasks such as time billing.
“Head office needs this so you need to prioritize it”
Where things go wrong is when the relationship with the customer is important to a company’s well being. As we all know, building a long-term relationship with your customer is often only possible if you listen and unburden the customer. However, what often happens when reporting takes over is that decisions are being made by people who have no relationship whatsoever with a specific customer or employee. And these decision makers create personal teams, which leads to more costs. This is solved by letting go of support and commercial staff who are close to employees and customers. The end result? Profits grow due to efficiency in the short term but turnover and margin in the longer term decline because the best employees as well as the best customers leave. The company becomes a machine and that is something that does not fit in companies with a product or customer-oriented value strategy.
An not to be underestimated consequence of all this is centralization of power. Centralization of power leads to the attraction of different type of leaders, it leads to the need to prioritize activities (partly because political interests are growing) and it can lead to large-scale fraud if the stakes are high. The objective is to reduce risks for a company, but the opposite often happens. Centralization makes the enterprise antifragile. So decentralization is best for any enterprise? Not always, but often. As long as it doesn’t involve avoidance of taking responsibility. How to ensure that this does not happen is a chapter on its own.