We've talked about strategy, we've talked about culture. In this module, we talk about organization. But before your eyes glass over, let me tell you how important organizational structures, processes, and systems are. I want to tell you a little bit about in the context of the 9/11, and the 9/11 Commission report. It goes back now a number of years obviously. But on September 11th 2001, the Commission Report that was generated based on the analysis of what went wrong and what happened, what could have been known. I read that report, it's very difficult reading, but it's powerful. It has a lot of lessons because what you discover is that different people in different agencies had different information. They knew all information, but they never put it together. It was never combined as a whole. Well, as a result, the tragedy happened. Now, we can't know for sure that if they were able to combine all that information and put together and connect the dots, put together that puzzle. We can't know for sure that the tragedy would have been averted, but I have to believe the odds would have been a lot better to either break it or disrupt the plot. What was missing is this lack of cooperation, it's lack of coordination, this lack of organization. That's why organization is so important. The problem really is one of centralization and decentralization. Decentralization is good because it enhances managerial autonomy and enables people to pay closer attention to the marketplace, the customers and employees. The more decentralized you are, the more independent you are, the more able you are to try to be close to the real world that's happening. The closer to customers, closer to situations. There's a lot of value in that. It shouldn't be a one size fits all. On the other hand, centralization also does something pretty good. Because it ensures or enhances, not ensures, it enhances efficiency, standardization, and sometimes perceived fairness. Everyone plays by the same rules. Sometimes we tend to like that, but it does reduce autonomy, it does reduce flexibility, and it does create bureaucratic barriers. Decentralization has some positives and some negatives. Centralization has some positives and some negatives. This boils down to one of the earliest ideas almost in management research and the theory of management if you will. That's the joint difficulty or challenge of integration and differentiation. Every single organization has to do both, but they're opposites. I like it intellectually. It's interesting. You got to integrate, you got to put stuff together. You got to connect the dots. You have to have good communication across different divisions. You've got to break through that silo management that we talked about at Motorola. All that integration is important. But differentiation is also and is equally important because you can't have everyone doing exactly the same thing. You have to have different people doing different things. You have to try to maintain or create some degree of entrepreneurialism in an organization. That requires people to have more autonomy, more flexibility. It's not that one is better than the other. The problem is that there's a trade off and I'll tell you something really interesting. Sometimes it's the mere fact that you shift from one to the other and it's actually better. There is a study that I saw while ago that looked at companies that were pretty decentralized, that went through a change to go from relatively decentralized to relatively centralized. Then there were companies that were the opposite. They were centralized and they moved towards the decentralization. These researchers wanted to know, which is better? Are you better going decentralization to become more centralized as a structure? Or you better off becoming more decentralized? The answer was yes. Both did better after the change, regardless of whether it made you more centralized or more decentralized. The punchline is that when you push people or challenge people to change from their comfort zone of whatever it happened to have been into something a little bit different, it knocks them off their peg a little bit. It forces them to start to think a little bit differently and to adapt and adjust. It turns out that's a good thing. Back to 9/11. That lack of integration meant that a lot of information was lost. Different reports were never connected. One of the solutions that the US federal government came up with was the creation of the Department of Homeland Security. It was created as this unified entity to at least try to avoid some of the information tracking problems that came to light in the 9/11 investigation. But of course, as you would expect, it's far from a perfect solution either because witnessed the federal government's response to Hurricane Katrina, which was spearheaded by the Department of Homeland Security. We'll have more to say about that story in the next course as well. The job of a managers is to solve puzzles, and it's tough. It's a lot tougher than the usual puzzle. I like puzzles and I'd like to figure it out. I find it very relaxing, but the puzzle that a manager has is way more difficult than the puzzle that I'm buying and that I'm spending some time on around near the fireplace in winters. Because the real puzzle for managers is you never have all the pieces. Other people in parts of your organization have pieces as we saw with 9/11, and sometimes none of those pieces are among anyone you know. Competitors might have some of those pieces, government might have some of those pieces, customers might have some of those pieces. Not only that, but some of those pieces could change. Some are missing, some nobody ever has, some are changing and nobody tells you when they're changing. Who just really complicated a nasty puzzled when you think about it. Imagine a puzzle pieces changing. Nobody even tells you they're changing, but that's what happens. Sometimes people even make up pieces of the puzzle. I'm not talking about fake news and misinformation. They're just making it up because they're trying their best to try to figure out what the right answer should be. It's a really difficult challenge. But in this module, we really take up this challenge of the manager as a master puzzle solver and it's something that we didn't see in 9/11, is something that we didn't see in Hurricane Katrina. But it's something that is absolutely critical and requires a lot of energy. But maybe right at the top, it requires you to recognize that's your job. Your job is master puzzle solver, and that's how you avoid disastrous mistakes. That's how you could avoid a lot of mistake. That's how you can increase the odds of being successful and continuing to be successful.
