Tuesday, November 5, 2013

'The sclerotic process by which bureaucracy blocks off the arteries of innovation'

A great description from Megan McArdle musing on another piece by Ezra Klein illuminating some of the rationale for Healthcare.gov's epic failure:  

[T]he sclerotic process by which bureaucracy and encroaching risk aversion come to block off the arteries of innovation -- is the natural aging process of an organization. It’s why companies like Hewlett-Packard Co. and Xerox Corp. and International Business Machines Corp., which were once radical disruptors, now seem like slow-moving supertankers: hard to capsize but not exactly nimble. You can see the process happening now at firms like Microsoft Corp., and even Apple Inc. And in a decade or so, you’ll see it happening at Google Inc. and Facebook Inc. It’s an inevitable part of the process of aging. 

Old organizations definitionally have a lot of longtime stakeholders. And in a sort of ecological process, those stakeholders have been selected for a certain amount of fitness for their environment, which is to say that they are good at doing things the way they have always been done, and they like things the way they are. They are averse to any sort of big change, and they will fight you with every tool at their disposal, from open warfare to passive-aggressively going through the motions on everything you ask them to do. That’s why organizations in crisis frequently need to fire the majority of their staffs to turn things around -- and, more than once, an organization that has done so has found that it’s still stuck with the same corporate culture that wasn’t working before. As sociologist Gabriel Rossman told me:

“If new entrants assimilate to whatever is the majority at the time they enter, and if new entrants trickle in slowly, then the founding culture can persist over time, even if over the long run they make up a tiny minority.” This is why Americans speak English even though more of us are ethnically German or Yoruba. In linguistics and sociology, it’s known as the “founder effect.” In corporations, it’s known as “how we’ve always done things.”

... [But] with government: It doesn’t go away. When a Polaroid Corp. or an Eastman Kodak Co. runs out of creative steam, it fails, and downsizes, and gets replaced by a different company. HHS, on the other hand, is not going to get its job taken over by a lean upstart. ...