Not So SMART: Replicating (Instead of Growing) Natural Small Organizations

drawing by hugh mcleod at gaping void

Consulting ‘guru’ Peter Drucker introduced the concept of Management by Objectives in business and government affairs a half-century ago. The idea was that if you set objectives and measure ‘progress’ against them, more will get accomplished. These objectives, he said, had to be ‘SMART’: Specific, Measurable, Achievable, Realistic, and Time-Based. Drucker was one of the last of the old industrial model thinkers, but these ideas have caused a huge amount of damage since he introduced them. Essentially, they mistake complex environments (which most social environments — communities, enterprises and institutions — are) for merely complicated environments. They assume you can control the elements that lead to achievement of objectives. They assume you can get a handle on all the variables that affect an organization’s success. They assume you can predict outcomes. They assume that, because they have been fortunate enough to have been in the right place at the right time and therefore been present during a period of organizational ‘success’, they know what is needed to achieve more ‘success’. They assume their subordinates understand and do what they are told to do.

All of these assumptions are wrong. The reality is that, in business enterprises as in other complex environments, what gets done is the sum of the collective effort of those doing the work. The ‘leaders’ produce, in real terms, insignificantly more than the most junior workers, and have the power to wreck the work of many others, but not commensurate power to improve subordinates’ work. The hierarchy is all about authority, but in fact most of us (especially in non-manufacturing roles) do what we think is right, not what we’re told to do — even if we have to twist ourselves in knots to conceal our non-compliance. We do this because in this age of specialization, we really do know our jobs better than our bosses (who probably have never done those jobs).

So Management by SMART Objective leads to this ludicrous and dysfunctional dance:

• Leaders hire ‘expert’ consultants, or huddle among themselves, or decide by fiat, what the SMART objectives should be for their organization: “increase revenues by 10% and profits by 20% next year by introducing ‘improved’ versions of 15 selected products that can be sold for an average price 25% higher than the old version, and which, through internal efficiencies, cost 15% less per unit to produce”.
• These leaders then ‘cascade down’ these objectives and command subordinates to come up with SMART business unit plans that will, if successful, collectively achieve these top-level objectives.
• The subordinates understand that their success depends on ratcheting up profits, and that the objectives set by the leaders are ridiculous, magical thinking. So they come up with alternative plans to increase profits by 20% through a series of difficult, but realistic, moves. These entail offshoring everything to China, layoffs, pressuring staff to work longer hours for no more money, and, if all else fails, firing people or leaving vacancies unfilled.
• The good people in the organization all leave, because they know this short-range thinking is dysfunctional, damaging to the organizations in the longer term, unsustainable, and a recipe for a miserable workplace. Their departure creates more vacancies that aren’t filled, which in the short term reduces costs.
• The clueless and the losers, who are left, attempt to pick up the slack. They work harder, find workarounds for the dumbest management decrees, and do their best to achieve these objectives. Those fortunate enough to be in the right market areas in the right economies get promoted into some of the vacant spots left by the good people, but without the commensurate salary increase.
• The leaders, as a result, achieve their short-run objectives, award themselves huge bonuses, profit from increases in the value of their stock options, and repeat the whole cycle the next year.
• At some point the utter sustainability of this “management process” becomes apparent. There is a really bad year. The economy is blamed, perhaps. Or the top leaders are fired, and rehired in other organizations suffering from really bad years. Or the company is bought out, or ‘reorganized’ so that all the old objectives and measures no longer apply, and a completely new set is established.

The byproduct is a blizzard of plans, budgets and strategies, which are substantially meaningless. Everyone does ad hoc things to protect their ass and try to make the best of impossible targets and incompetent, arrogant leaders self-deluded about their own brilliance and about their ability to control what is really happening in the organization and the marketplace.

There are, however, some things of real value happening in these organizations. None of them are ‘SMART’ so none is recognized or rewarded, and most of these things are actively discouraged. Nevertheless, because most people take pride in what they do, these valuable things happen. They include:

• Learning: People learn by making mistakes (that they don’t admit to), and this makes them better at doing their jobs.
• Conversations: People share, peer-to-peer, what works and doesn’t work, through mostly informal conversations, and this too makes them better at doing their jobs. These conversations are often surreptitious, since they are not considered ‘productive’ work.
• Practice: The more people work at doing a particular task, the better they get at it. Most such practices are substantially workarounds, self-developed ways to do their particular specialized work optimally, despite instructions to the contrary from leaders and published manuals, and despite the burden of reporting SMART data up the hierarchy, which has to be creatively invented and explained so that the practices aren’t disrupted by new orders from the leaders.
• Judgement: Through the above improved learning, conversations and practice, people develop good judgement. They make better decisions. The leaders get all the credit for these decision, but it doesn’t matter.
• Trust Relationships: Through peer-to-peer conversations, trust relationships develop. When people trust each other, whole layers of bureaucracy are stripped away. People are left to do what they do well. Unfortunately leaders in large organizations almost never trust their subordinates, so these trust relationships are almost always horizontal, not vertical. Despite this, these relationships profoundly improve productivity.
• Professionalism: The net result of all of the above is increased professionalism. People just become more competent.

This is why, in all my years as a manager, I always saw my role as listening and clearing away obstacles my staff were facing, identifying and getting rid of the small percentage who could not be trusted (too ambitious, too self-serving, uncollaborative, secretive or careless), and trusting the rest to do what they do best, and staying out of their way. In recent years I started to lose the heart to do this, but I still tried.

The ideal organization is therefore not SMART, but self-organized, trusting (no need to measure results, just practice your craft and the results will inevitably be good), highly conversational, and ultimately collaborative (impossible in large organizations because performance is measured individually not collectively). It’s one where the non-performers are collectively identified by their peers and self-select out by sheer peer pressure. It’s one without hierarchy. It’s agile, resilient and improvisational, because it runs on principles, not rules, and because when issues arise they’re dealt with by the self-organized group immediately, not shelved until someone brings them to the attention of the ‘leaders’. It’s designed for complexity. It’s organic, natural.

In my experience, such an organizational model can be replicated, but it doesn’t scale. This is true for social and political organizations (transition communities), economic organizations (Natural Enterprises, permaculture and renewable energy co-ops), educational and health organizations (unschooling groups and preventive/self-managed health clinics). This is why our models of a better way to live and make a living need to be small, demonstrative, and replicable — it needs to be clear how to adapt these small sustainable successes to other locations and situations.

There are some good models out there, but they are complex, and it is not at all apparent how we can replicate them. So instead, we try to grow them, until they reach dysfunctional size. If we really want to make the world a better place, we need to stop trying to grow small successes and start finding ways to replicate them, not as cookie-cutter ‘franchises’ under a command-and-control central hierarchy, but as autonomous adaptations. Drucker couldn’t fathom complexity, nor can most of the so-called business ‘thinkers’ of our day. We need some new thinking, aimed at prosperity without growth, at evolutionary cellular replication and adaptation as the means of getting more of a good thing. Small model organizations that are somehow viral, so you can just take the seed, the set of principles, of one, and transplant it and adapt it to work elsewhere. Model enterprises, communities and cooperatives.

I have no idea how to do this, but we need to find a way. Not so SMART. But really important.