An Open Letter to Mark Zuckerberg and Larry Page — Avoid the “Great to Good” Downward Spiral (Part 1 of 2)

Author’s 2021 update: This post was written in 2012 when Facebook and Google (and really social media in general) could do no wrong. Suffice it to say I no longer feel that way, but the points below are still interesting.

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Dr. John Sullivan is a Professor of Human Resources at San Francisco State University and a funny, knowledgeable guy who has just penned a blog post at ERE regarding how once great companies slide into mediocrity.  “My analysis indicates that there are three major areas that must be covered in this “growth without bureaucracy roadmap.” The first two are:

1) What factors indicate that this atrophy and slide into bureaucracy is underway?; and,

2) How can these bureaucracy indicators be measured? (Both of these are covered in this article).

3) What are the most effective approaches and tools that corporate leaders can use to stop or turn around the slide? (It will be covered in Part 2, which will be published next week).

I’ve listed just the warning factor as well as the suggested measure to assess whether you need to make some changes. As you read this article, recall your own experiences in organizations and contemplate whether a leadership style based on a coaching approach would mitigate many of these problems. Coaching’s foundation is based on the premise that people are naturally resourceful, creative, and whole and that anything is possible. In an organizational setting, managers using a coaching approach are light on control and act as a sounding board for people. They inspire, collaborate, and build confidence and relationships, all of which keep people and large teams happy, motivated, and productive. I’d be pleased to help you see how coaching can help your organizational results.

Measurement – Measure your average rate of product or process innovation and either compare it to your rate from previous years or compare it to the rates at agile and innovative startups that you admire.

Measurement — You can measure the level of collaboration by looking at the makeup of key teams and measure their percentage of cross-functional membership. Collaboration can also be assessed by tracking communication flows between employees of disparate functions and through employee surveys. Check to see if assessment and reward systems significantly reward cooperation, while punishing bureaucratic behavior.

Measurement – The speed in which the organization acquires critical knowledge must be measured. Organizations should also measure whether learning speed in the middle of the organization is as fast as it is at the top. And finally, the speed in which problems and best practices are shared throughout the entire organization needs to be measured. For example, if you adopt a new approach in one team and it is highly successful, track the time it takes for 90% of the teams in the organization to hear about it and adopt it.

Measurement – Start by measuring the speed and percentage of change of your product offerings. But also measure the percentage that your internal processes improve each year, to assess whether they are matching the speed of improvement in your products and in the marketplace. Overhead functions are notoriously laggards, so their speed of change and the percentage of improvement in their results must also be monitored closely.

Measurement — You can measure agility by the frequency and speed that your company moves into completely new high-margin product areas. The willingness to abandon failed products quickly is also a measure of agility.

Measurement — Calculate the time that it takes (in months) to make major product or project decisions involving seven-figure expenditures. The time it takes to release weak performers may also indicate the level of atrophy.

Measurement — Set a beta product failure target minimum, compare it to your competitors, and later measure how much rapid learning occurs after each failure.

Measurement — Identify if there is a process for accountability and tracking decision-making effectiveness over time, and if so, use it for assessing what percentage of an individual manager’s decisions turn out to be correct.

Measurement — Start by identifying the percentage of major decisions that are data supported. Also count the number of algorithms in use in key “soft” areas like hiring, retention, branding, and leadership, because this can give you a quick indication as to what extent that your management decision-making is overly intuitive.

Measurement – Measure the speed and the percentage of decisions that are made with a consensus. Then assess the degree of risk resulting from this type of decision-making. Both of these factors can be indicators of your level of atrophy.

Measurement — You can measure the number of layers of management by counting them on an organizational chart. A high ratio of managers to employees may also be an indicator of a bureaucracy.

Measurement — By measuring the number of implemented ideas and the number of products developed outside of headquarters along with the percentage of major decisions that are made “by headquarters staff,” you can determine whether you are excessively headquarters centric.

Measurement – Measuring the ratio of decisions that are made based on influence versus power can give you a heads-up indication that your organization is becoming a bureaucracy. Employee surveys and interviews can give you an idea as to whether influence or power is the dominant approach used by individual managers.

Measurement — Measuring whether your processes are “boundaryless,” the percentage of decisions that are made based on data, measuring the time it takes to get all approvals and the number of approvals required for a seven-figure project, are all indicators as to whether you are becoming bureaucratic.

Measurement — Measuring the differential in pay, rewards, stock options, and recognition between top performers and average performers can help you determine if you are becoming a bureaucracy.

Measurement – By measuring the percentage of all employees that work in overhead functions and the percentage of the total budget that goes to these functions, you can get a good indication of the size of your most bureaucratic functions. A simple survey of line managers might also indicate whether your overhead functions are fully supportive of line functions or whether they are barrier creators.

Measurement – Measuring the on-the-job performance of new hires after six months and the productivity of the overall workforce (i.e. labor costs versus the value of your total outputs) together will give you an indication of how effective your large-scale hiring has been.

Measurement — Measuring the number of meetings that are required in order to get a seven-figure project approved can give you a good indication of the onset of atrophy. Surveying innovators to find out what frustrates them can also identify whether excessive meetings are a problem.

Measurement – If you use seniority for assignments and promotions, or if you offer years of service pins, your demise has already begun. In addition, if your organization either dwells on its history, has a corporate historian, or has a large corporate history display, you have already lost the battle to avoid becoming a bureaucracy.

Measurement — You can measure this transparency by the percentage of corporate information that is readily available to the average employee or by counting the number of security levels that restrict access to important corporate information.

Measurement – You can begin to measure this decrease in open criticism by tracking the number of open employee forums that are held, the number of questions allowed, and the percentage of critical questions during them. You can also count the number of anonymous feedback processes and surveys that are used, because if you have constructive confrontation and no fear of retribution for criticism, you simply wouldn’t need them.

Measurement — If no one is monitoring your corporate culture, you are already in trouble. To find out if your employees understand what it expects, you should periodically survey a sample of your employees to see if they can list the desired values and results that make up the culture. You can also give them a problem and assess whether they “act within the cultural limits” when they solve it. Finally, periodically assess funding, reward, recognition, and promotion processes and criteria to assess whether they fully support your cultural expectations.

Measurement – Put together a process for measuring if a sample of new hires or employees acquired through an acquisition actually act in line with your corporate values/culture after six months on the job. Another assessment alternative is to give them a cultural problem to solve. Together these measures can indicate the extent that new employees have been successfully acculturated.

Measurement – Simply measure the number or percentage of external business practices and ideas that are adopted without major delays or modifications.

Measurement — Periodically measure your positive employer brand strength through Internet searches and vendors like Universum, in order to see how strong yours is, compared to your competitors. Periodically visit sites like glassdoor.com to assess your negative employer brand image and ask new hires how they assessed it.