Use Hierarchy to Execute; Use Anarchy to Innovate

Balaji’s Food For Thought - Apr 5, 2018

Author:
Balaji Krishnamurthy
Subject:
Leadership & Culture

Food for Thought is our way of sharing interesting concepts on corporate leadership and management with others who might find it useful. The thoughts offered are intended to be controversial and thought-provoking. They are intended to help our readers intentionally realize their potential, what we call Potentionality.

As a college student, I took pride in my bin packing. I was good at packing all our gear into the small trunk of my Toyota Corona when my friends and I went camping. One day, when I was struggling to fit everything in, one of my friends declared, “Progress requires chaos,” and started pulling random stuff out. “Why did you put all these large items in first?” he asked, questioning my bin-packing prowess. “I always do that,” I replied. “That way I can squeeze the small items into the nooks and crannies.” His retort put me in my place: “But, the large items are blocking the nooks and crannies inherent in the trunk.” I had never thought of that.

As a graduate student, I helped a professor (to be exact, I did the work, he supervised) with a contract he had with a clothing manufacturer. We had to write a computer program that would lay out a given dress pattern in various sizes onto a bolt of cloth, minimizing the amount of wasted material. I was creating an algorithm that would tightly lay out all the different pieces of patterns needed for a given dress, and then move on to the next dress to be laid out. When I explained this process to my professor, he asked, “Why don’t you mix and match pieces of pattern from different dresses so you can better utilize the cloth?” I felt so stupid. He tried to cheer me up by saying, “When we are in ‘the doing,’ we often pay the price of thinking.”

The old adage, “You can’t see the forest for the trees,” reminds us that when you are in the middle of doing things, you can’t see the big picture. 

But, in order to really get things done, you have to stop looking at the big picture. For example, the sergeant in the military, the doctor in the hospital and the pilot in the cockpit do not encourage you to ask, “Why do we do it that way?” These are real-time, mission-critical situations where hierarchy is strictly observed. And it’s observed for a reason – you want the outcomes to be reliable and predictable.

Reliability and predictability require processes and a hierarchy. Things have to be done a certain way. Subordinates must do what their superiors ask of them. Most good manufacturing operations follow this discipline. According to W. Edwards Deming, the guru of quality, by having clear written processes for all the systems in manufacturing, you can measure, analyze, control and improve continuously. As a result, most good manufacturing operations do not allow their people to simply do something differently, even if they think it would yield better results. They create strict methodologies for process improvement.

But all those processes and methodologies stifle innovation, which requires creativity and the drive to question the status quo. Why do we do it that way? Just the kind of question that process-minded, reliability- and predictability-focused manufacturing operations discourage.

In essence, you need hierarchy to execute, but you need anarchy to innovate. How do you create anarchy?

When I was at Tektronix, I would run a day-long orientation session for new college students. At the end of this quarterly event, I would encourage them to question established processes and procedures, giving each of them a figurative Golden Key. This Golden Key would open any door they felt was shut upon them.

Over the course of a year, while questioning any of the established processes and procedures, if they felt that senior stalwarts were putting up resistance, they could get their way by using their Golden Key. The key had a one-time use and required them to tell me why it was being used. What was most valuable about this gimmick was that the whole company knew about it, so the questions from the newcomers were taken more seriously. Over the course of two years, with more than 100 keys granted, not a single key was ever used.

At Planar, I implemented a version of the Entrepreneurs in Residence (EIR) idea reported in a previous Food for Thought article. I gave a mid-level employee a large sum of money, which was to be used as seed money to start a new business for the company. Again, the most valuable part of that program was the number of lunch conversations that it created. Creative employees with novel ideas attempted to further their ideas by pitching to the EIR, who had a large check in their pocket. When you take responsible individuals and give them considerable authority, they take their responsibility seriously. The EIRs went to great lengths to learn financial concepts like return on investment, weighted average cost of capital and net present value of future cash flow. They came to the realization that the channel required to reach the market was more important than the idea of a new product. The magnitude of the responsibility and the gravity of the decision to cash the check – the EIR had to resign from their current job and forego that security – certainly gave them pause. Nevertheless, four new businesses were created, with one growing from nothing to $100 million in four short years.

Both of these examples were my attempt to create anarchy for the sake of innovation. Anarchy, where you allow certain people to buck the system, question the status quo and ignore the existing hierarchy. You cannot completely ignore the hierarchy – you still have a shop to run, products to produce, services to render and revenue to be earned. All of that requires reliable and predictable execution – so, it also requires hierarchy. But, at the same time, you must instill some level of anarchy to foster innovation. Although I have no universal solution for what anarchy would look like in your company, I know you have to find a way to instill it. Use hierarchy to execute, but use anarchy to innovate.

We welcome your comments on our Food for Thought mailings and encourage you to explore the Food for Thought archive. We hope your business is doing well. We’re happy to chat about the content of this article or anything else which you’d like assistance.