When I was in Year 3, I won a book prize for topping my class. The book, called How Things Work, had pictures of steam engines, telephone exchanges and aeroplanes; motor cars, power stations and printing presses. It fired my imagination and curiosity for how things work, which has never diminished.
Technical systems, like the ones described above, can be understood through the laws of physics and the axioms of mathematics. Social systems are another matter. Each of us is far more complex individually than any machine, and when you put us together in an organisation to accomplish a common goal, that complexity increases exponentially.
So, what means do we have at our disposal to understand how these complex organisations work? How do we get beyond the clichés of purely behavioural approaches to the challenges of managerial leadership and come to an understanding of what separates the great from the good and the indifferent from the failures?
Before we do, let me confess that when I first discovered the Theory of Constraints (TOC), fairly early on in my work career, it had immense appeal to my natural proclivities and the training I’d had in mechanical engineering. The ‘inherent simplicity’ Goldratt had discovered fitted in very well with my worldview, and I thought it simply a matter of time before everyone was doing their work using a constraint-based paradigm. I even left my secure job to start a consultancy in TOC as I didn’t want to miss the boat. More than two decades later, I have some better-formed ideas about why it is so difficult to bring this new way of working into the world, based on the principles of systems thinking.
What helped me on that journey of understanding was the work of Elliott Jaques, a pioneer in the field of Stratified Systems Theory and author of the seminal book Requisite Organisation. Jaques was born in Toronto in 1917 and died in 2003. He studied medicine and psychoanalysis. Through his work, which analysed tens of thousands of positions in a wide diversity of organisations, he empirically established a strong correlation between mental processing ability (cognitive capacity), time horizon of work and complexity.
“Different levels of work have as different a nature in terms of modes of thinking as, by analogy, water is different to steam”
Jaques made the point that there are strata of work in any substantial organisation, and that these strata are ‘as required by nature’. Thus, the requisite organisation is not seen as being optional, but rather, as he puts it, there are only requisite organisations and degrees of variance from the requisite order:
Misconceptions lead to inept people systems, which produce unfortunate behaviours, which lead to one-sided, negativistic view of people at work, which leads to new inept people system fads, which produce unfortunate behaviours, which…
He maintained that rather than the traditional 4D world of human life—three spatial and one time-based, there were in fact three spatial and two time dimensions. There is Chronos, which we are all familiar with as time measured by a clock. But there is also Kairos (also from the Greek), the axis perpendicular to the Chronos axis in the diagram below. At any given point in time, Kairos is informed by the memory of the past, perception of the present and intention for the future.
Cognitive ability is that quality of mind which defines the outer limit of the horizon of intention. That is, not some vague notion about a future vision, but the actual mental processing ability to apprehend the future, understand the complexity associated with bringing it into being and having the wherewithal to exercise judgement and discretion in overcoming obstacles on the way to that horizon.
Jaques discovered through his vast research that different levels of work have as different a nature in terms of modes of thinking as, by analogy, water is different to steam. He found that the time horizons of the levels of work were remarkably consistent—regardless of the specifics of the industry or organisation within it.
These levels of work, he called modes, and they break down as follows:
Mode 1 – 1 day to 3 months
Mode 2 – 3 months to 1 year
Mode 3 – 1 year to 2 years
Mode 4 – 2 years to five years
Mode 5 – 5 years to ten years
Mode 6 – 10 years to 20 years
Mode 7 – 20 years to 50 years
(For Mode 8 and beyond we’re talking about ideas that change the world, such as those of Galileo’s and Einstein’s, or Gandhi’s and Martin Luther King’s, which go beyond the realm of organisations.)
Interestingly, the cognitive classes of the strata repeat in a fractal way. Mode 1 is the frontline worker, Mode 2 the supervisor, Mode 3 the manager and Mode 4 the executive. So for the frontline worker at Mode 1, the object of the work is completion of the task at hand. At Mode 2, the work is supervising the tasks at Mode 1. And so on. At Mode 5 things start to repeat where, for the CEO of the strategic business unit, the object of the work is everything contained within that business unit. And the Group CEO at Mode 6 is accountable for the superordinate organisation comprised of multiple strategic business units. This stratified systems view is analogous to music where each note of a scale repeats at the octave. And in fact Jaques call the repetition of these four fundamental cognitive classes ‘quadraves’.
The work at the level of Modes 3, 4, 5 and 6 is as follows. Someone operating at Mode 3 will be running and improving an extant system of management. It’s what the Japanese Lean practitioners call kaizen—‘change for better’, or continuous improvement. Mode 4, however, is distinguished by the fact that the work involves the design of entirely new systems of managerial leadership—what the Japanese call kaikaku, ‘radical change’, or transformation. When operating at Mode 4, you are working on a hypothesis of what the future might be, two-to-five years from now, and reckoning on all that is necessary and sufficient to bring that future into being. Mode 5 would be asking strategic questions about new lines of business, geographies and markets. Mode 6 might be charged with fulfilling the intention to establish a worldwide chain of businesses, organised in regions within every continent.
“As long as the person acts within the socially accepted bounds of temperament, effectiveness is more important than likeability.”
There’s no getting away from the fact that most organisations have too many levels, and some have strata missing. No organisation can ascend beyond the level of work practised by the most senior person in the organisation. If that senior-most person cannot operate at the level required by the role, it will cause compression in the roles below, with competent people frustrated that they cannot be effective in exercising their discretion and judgement suited to their capability. Alternately, if a managerial leader occupies a role which is too big for him or her, then they will feel stressed, ineffective and unworthy of the trust placed in them when they took on the role in the first place. If a person is in the right-sized role for their cognitive ability, they operate in flow and have the opportunity to get great joy and reward from their work.
Having the right person in a role is thus not merely a function of their experience, knowledge or affability. One doesn’t have to be agreeable to be a fine managerial leader. As long as the person acts within the socially accepted bounds of temperament, effectiveness is more important than likeability.
What Jaques’s work promotes is the idea that in any managerial accountability hierarchy, success is predicated on there being a tight fit between accountability for getting the job done and authority over the resources required to do so. Understanding the nature of levels of work means there is a much richer set of conditions to overcome the all too frequent mismatch of accountability and authority.
In discovering the work of Jaques I felt I’d finally been given the key to understanding how organisational hierarchies work and how they can be designed to work better. It’s like being given a pair of X-ray specs to look at the organisation’s skeletal structure and noticing whether or not it is ‘requisite’. So often, in the early days of my enthusiasm for TOC I would hear vacuous statements such as ‘you have to have buy-in from the top’, or even more perniciously that hierarchy was in and of itself not a good thing and that the organisation should be ‘flat’. I now know that without a solid understanding of the pioneering work of Jaques I would always be running blind, dependent on dumb luck for results. A Requisite Organisation is a necessary condition of reliably and sustainably unleashing the power and promise of systems thinking.
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[Background photo by Bernard Hermant on Unsplash]
“In a hierarchy, every employee tends to rise
to his level of incompetence”—Laurence J. Peter
In one of Eli Goldratt’s last essays, his introduction to the TOC Handbook, he wrote: ‘Can we condense all of TOC into one sentence? I think it is possible to condense it into a single word: focus.’ (more…)
In Part I, we started using Goldratt’s six questions to judge how technology might help us better control contracted resources at a mine site. Our ambitious agenda required the solution to include group functions and vendors along with the teams directly involved. (more…)
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