It's not a headline in the Wall Street Journal or the Financial Times this morning, but perhaps it ought to be: a just-published study by Booz Allen has the startling conclusion: most companies are dysfunctional. More than 60% of respondents found their organizations exhibit “unhealthy” profiles of one kind or another. 

And larger companies are more dysfunctional than smaller companies. As companies grow, they centralize and demonstrate more military traits. Once their annual revenues cross the $1-billion threshold, operations necessarily decentralize, but often badly.

Moreoever the top of these organizations is typically out of touch and frustrated. Survey results indicate sharp differences between senior management responses and those of lower-level groups, suggesting a disconnect between senior executives’ perceptions of the organizations they believe they’ve established, and the organizations they are actually running. Although senior managers likely view their self-professed involvement in operating decisions as good, junior managers overwhelmingly report feeling micromanaged.

Bottom line: less than half of all respondents agree that “important strategic and operational decisions are quickly translated into action” in their organization.

Seven types of organization

In the study entitled, "Profiles in Organizational DNA Research and Remedies", Gary Neilson, Bruce Pasternack, Decio Mendes, and Eng-Ming Tan suggest that there are seven types of organization (interesting how often that number seven comes up - is it because there are really seven types, or is it because we can only remember seven things at once?). The first three types of organization get a passing grade from Booz Allen:. 

• The Resilient Organization. This organization is flexible enough to adapt quickly to external market shifts, yet it remains steadfastly focused on and aligned around a coherent business strategy. It attracts motivated team players and offers them not only a stimulating work environment, but also the resources and authority necessary to solve tough problems effectively. (Sounds great, but the article notes that there aren't very many of them.)

• The Just-in-Time Organization. Although not always proactive in preparing for impending changes, this organization has demonstrated an ability to “turn on a dime” when necessary, without losing sight of the big picture. Despite its frustrations, however, it can still be a stimulating and challenging place to work.

The Military Organization. Often driven by a small, hands-on senior management team, this organization succeeds through sheer force of will...that of its top executives. It can conceive and execute brilliant strategies—sometimes repeatedly—but its middle management bench can be shallow and short lived. This organization’s biggest liability is preparing for growth beyond the tenure of its current leaders. And when the environment shifts, this kind of organization has real difficulty making the necessary adjustments. 

• The Passive-Aggressive Organization. So congenial that it seems conflict free, this is the “everyone agrees but nothing changes” organization. Building a consensus to make major changes is no problem; implementing them is what proves difficult. Entrenched, underground resistance from the field can defeat corporate’s best efforts. Lacking the requisite authority, information, and incentives to undertake meaningful change, line employees tend to ignore mandates from headquarters, assuming “this too shall pass.” Confronted with an apathetic organization, senior management laments the futility of “pushing Jell-O.

• ”The Fits-and-Starts Organization. Scores of smart, motivated, and talented people populate this organization, but they do not often pull in the same direction at the same time. When they do, they can execute brilliant, breakout strategic moves, but the organization typically lacks the discipline and coordination to repeat these successes on a consistent basis. It is an environment that lures intellect and initiative—those people with an entrepreneurial bent—because the opportunities to pursue an idea and exercise responsibility are abundant. The result, however, can be an organization with a disjointed self-image on the verge of spinning out of control.

• The Outgrown Organization. This firm has outgrown its organizational model; it is bursting at the seams. Too large and complex to be effectively controlled anymore by a small team of top executives, it has yet to “democratize” decision-making authority. Consequently, much of the organization’s potential remains untapped. By keeping power centralized, the organization tends to move slowly and often finds it cannot get out of its own way. Such firms routinely miss opportunities and consistently fail to execute effectively.

• The Overmanaged Organization. Burdened with multiple layers of management, this organization tends to suffer from “analysis paralysis.” When it does move, it moves slowly and reactively, often pursuing opportunities later or less vigorously than its competitors. More consumed with the trees than the forest, managers spend their time checking one another’s work rather than scanning the horizon for new opportunities or threats. These organizations, which are frequently bureaucratic and highly political in nature, tend to frustrate self-starters and results-oriented individuals.

What remedies are proposed?

Perhaps more important however are the remedies for such a grim situation, and this is where the article is disappointing. What does it propose? On the surface there is a diverse set of remedies, couched in the language of biology ("DNA" "living organisms") but when we look closely at the actions recommended, the biological language almost immediately switches to engineering. The "DNA" is apparently composed of "building blocks" and "processes" which must be "realigned" and "restructured". "People", it seems, are also treated as things to "realigned." These approaches, as it happens, are what consulting firms traditionally make money doing, as well being what caused the problems in the first place.

Thus the remedies reflect the traditional the engineering approach,including:

• The decision rights, information, motivators, and structure) are to be "realigned and adjusted to improve organizational effectiveness."

• Steps must be taken to "align people, incentives, and knowledge to overcome organizational inertia."

• "The solution lies in adapting the “DNA” of the organization to identify, isolate, and optimize complexity."

• "The organization must eliminate the reason for 'shadow staffs', and eliminate duplicative and wasted effort for good.

• Companies must not only apply traditional supply-side cost restructuring (e.g., business process reengineering (BPR), shared services, ERP, strategic outsourcing), but also demand-side optimization strategies. 

• "Companies need to put in place more formal and engineered management systems, processes, and roles to keep diverse operations running smoothly and on the right path."

In effect, Booz Allen is back in the world of the standard management manual. Fix the systems. Re-engineer processes. Streamline procedures. Re-form and flatten the organizational structure. Analyze things in terms of grids and charts. Develop plans in which individuals are programmed to operate like so many obedient computers. Hone our interpersonal mechanics and build skill inventories. Bring to our difficulties a fix-it attitude, as though our past errors can be easily corrected with straightforward explanations.

The cheerful but deluded optimism of this thinking sheds little light on why some organizations flourish and grow and are widely admired, and then suddenly collapse with the abruptness of a punctured balloon, or why some managements endure the most severe tribulations and difficulties, while others stumble at even a mild bump. The mechanistic solutions don't fit the complexity, the mess, the jumble, the clutter, the chaos, the confusion, the living core of modern organizations. And it rarely succeeds in persuading organizations to change in any fundamental way.

Trying to fix sick organizations solely by "realigning structures, processes, roles and incentives" is like a medical practitioner trying to cure sick human beings with a hammer and a screwdriver. It may not be irrelevant, but generally, it's not going to get the job done.

The missing ingredient: narrative

For regular visitors to this website, the ingredient that is missing in understanding and solving the problems of the living organization will be obvious: narrative. Narrative is the bloodstream of the living organization. Narrative is the vehicle by which anything of significance gets communicated and how anything gets decided in a firm and how enduring corporate cultures emerge. We can only understand what is going on in a living organization by understanding its narratives, and we can only turn sick organizations into healthy ones by dealing with its narratives. 

How? How does one go about using narrative to deal with dysfunctional corporate behavior? There is a great deal of material on this website on that issue, as well the books that I've written (The Springboard) and the ones that are forthcoming (Squirrel Inc; Storytelling in Organizations). I also offer tailor-made workshops to organizations that seriously want to make a real change in their corporate story, instead of going through the motions and repeating engineering approaches that haven't worked.

Interestingly, Booz Allen has published elsewhere penetrating insights on the role of narrative in organizations, for instance Bill Birchard's article in 2002 or Jay Ogilvy's article on Sartre in 2003 

But sadly, it seems that narrative thinking has yet to enter Booz Allen's DNA in any significant way. When it does, Booz Allen may be able to get beyond diagnosis and actually solve the problems they have identified. Why? Because then, they will have understood the story.

Read the Booz Allen article

For more examples of Storytelling in The News, go to the Archive