Decades ago, James March, the organizational theorist and Noble Prize winner, argued that the most basic problem for any organization was to “engage in sufficient exploitation to ensure its current viability and, at the same time, devote enough energy to exploration to ensure its future viability.
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As the change in sentiment starts to bite, and governments become more aggressive in challenging monopoly power, CEOs will need to find new routes to profitability and growth. Their best bet: committing wholeheartedly to creating organizations that allow human beings to do their best work, unfettered by the shackles of bureaucracy.
If our organizations are inhuman, it’s because we designed them to be so—whether consciously or not. Every institution is an assemblage of choices about how best to organize human beings in light of some particular goal. The premise of this book is that most of these choices can and must be revisited.
Our organizations are less than fully human because they were designed to be so. Writing in the early twentieth century, Max Weber, the pioneering German sociologist wrote: “[B]ureaucracy develops more perfectly the more it is ‘dehumanized,’ the more it succeeds in eliminating all purely personal, irrational and emotional elements which escape calculation.” Then as now, the goal of bureaucracy was to turn human beings into semi-programmable robots.
To paraphrase the Nobel acceptance speech of Austrian economist Friedrich Hayek:
If managers are to do more good than harm in improving organizational performance, they must learn that in a complex environment, they can’t acquire sufficient knowledge to orchestrate the desired outcomes. Instead, they must use whatever knowledge they have not to shape results as a craftsman shapes a piece of handiwork, but to cultivate growth by providing a proper environment, much as a gardener does for plants.
- James March, “Exploration and Exploitation in Organizational Learning,” Organization Science 2 (1991): 71–87.