Chapter 6. Structural change is necessary

If change is happening on the outside faster than on the inside the end is in sight.

Jack GE Welch

Growth and evolution leads to increasing specialization, which limits a company’s ability to adapt and evolve. If your company is at or near peak effectiveness for a particular purpose, and the environment around you is shifting, you may need to undergo fundamental structural change in order to become adaptive.

How Did We Get Here?

Dividing labor and standardizing work is a good thing. Right?

Dividing Work

Division of labor, as Adam Smith pointed out in the 1700s, has the potential to increase productivity. But division of labor also leads to interdependency: every worker relies more heavily on others in order to be able to do the job, and as the number of handoffs increases, so does the potential for dropped balls. As the number of divisions grows, so grows the interdependence.

This interdependence creates a need to synchronize and coordinate the work. Traditionally, this has been the job of management and bureaucracy. They coordinate the work through measurement and control.

As you increase the number of divisions, you also increase complexity—especially from a management perspective—because you have more stuff that needs to be coordinated. And so, if something can be automated, you automate it. If you can’t automate it, you constrain it to the minimum possible variation. Dividing labor makes work more efficient, more consistent, more predictable ...

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