Administration Makes Innovation Effective

Administration Entrepreneurship

The purpose of this blog is to capture my thoughts about the current state and future direction of the profession of management. I don't buy into the leadership vs management debate: it feels like a false dichotomy to me. Part of the problem is we need new words. So I use [.] as a place holder instead of 'manager', 'management', ‘leader’ or ‘leadership’. The idea is that by taking the word away we can see these people more clearly. I'm going to keep the blog simple and free of fiddle faddle. If you want to talk things through please hit me up on Twitter (@rl_rohan) or LinkedIn (Rohan Light).

A subject I've touched on in the last few posts has been the identity of the ‘entrepreneur’. We idolize the entrepreneur. Part of it is because we love the new. Part because we’re distracted by the success of businesspeople making fortunes selling digital products. We often use the contrast effect to shine light on the entrepreneur by damning the ‘manager’. We don’t see articles titled the ‘10 Habits of High Performing Administrators’.

Yet without effective administration, few innovations will achieve their potential. Sometimes we skirt the issue and say we’re better at starting things than finishing them. This might be true, but it is a poor businesswoman who doesn't think about how to make change effective.

This is the domain of the administrative function of business. I define the entrepreneurial function as shifting resources from poorly performing activities to high performing ones. Which means from the deteriorating present form of the business to its emergent form.

This is a continuous activity and needs a particular mindset to be successful. For the administrative function a similar but distinct mindset is required. This mindset is about ensuring maximum commitment of available resources to those few activities that are capable of producing world class results. This also means starving the greater number of activities that produce the ordinary. The ordinary can be out-sourced to people who do it much better job of it.

The challenge for the administrator is managing the host of support activities that spring up around the critical ones. These support activities all make strong cases for being necessary for business success. Many of these claims are accurate. However, the more the organization dedicates to administering the present, the less it can put to innovating its future. In large organizations this is a particular problem and is one of the reasons why working with large organizations is so interesting. Here, the innovation activities are often put off to the side, given a titular presence or just forgotten altogether.

The opposite problem can plague the startup. All innovation and no administration means it can be hard to extract those operational efficiencies that are necessary for ‘scale’. Both effectiveness and efficiency are necessary for survival. It's important to remember that effectiveness emerges from innovation while efficiency emerges from administration.

Another word we’re in love with is ‘productivity’. My view is that productivity is rehabilitated efficiency. Without achievement, productivity is empty. Achievement emerges from innovation and productivity from administration. The difference is around creativity. The innovative business is inherently creative. Businesses without creativity are simply administering their past.

The end goal of administration is to take the present form of the business and take it as close to it’s optimal form as possible. Achieving this optima will never happen, so the task of the administrator is to learn to live with the 80:20 rule. It will never happen either because of purposeful innovative activity or because the business is getting caught out by changes in its environment. One of the two will happen and hopefully most of us will choose the former over the latter.

There is a priority between innovative and administrative activities: innovation comes first. We see this priority reflected in the phrase ‘structure follows strategy’. Administration is about taking what we've created as close to its theoretical best before the next wave of innovation requires its retirement.

What’s interesting here is that many performance structures tend to reward people for administrative activities at the expense of innovation. Again: innovation is everyone’s task and not something to pushed into a department. We reward too many people for maintaining things past the point of net contribution. I’d like to see people rewarded for progressively retiring elements of the business that are no longer operating at peak.

I admit, this sort of thinking used to annoy me. That’s because I was captured by the metaphor of the organization as a machine. After several years of progressively checking my management toolbox for usefulness, I now see the organisation as a social system. And this means everything is changing and in flux. When growth and change is the normal state, then continuous retiring of the present to make room for the future becomes a valued activity.

Our focus shifts to the ability of the organization to learn its way forward and cultivate a tolerance for ambiguity. This will only happen when exploration, experimentation and testing are genuinely rewarded. Because it's the rare large organization that suffers from under-administration.

Because business success is based on making innovations effective, we want the optimal number of senior people focused on innovation. Optimal for me is ‘as many as reasonable’. What this does is change our view of what senior people are and what they do. It leads to a quick realization that the functional basis of organization may not be the best. It takes us to a place where we question what social arrangements we have in place and why. Because we can arrive at the uncomfortable realization that some organizations exist just for the benefit of a few people.

Again, this is an illness of the large organization. But for as long as startups chase ‘growth’, where growth is quantitative rather than qualitative, then startups are looking at this very future. The larger the organization, the more prone it is to sucking people into its administration. The idea of qualitative growth is one I’ll touch on later. It’s a subtle difference, like the difference between ‘more strong’ and ‘stronger’.

I've taken this post in two directions. The first is that the organization that doesn't gear itself up for strong administration won’t find the means to sustain and renew itself. The second is that ‘strong administration’ means focusing on core activities, being able to retire these core activities as innovation carries the business forward and being willing to starve out non-essentials.

There are many forces that contribute to administration becoming the opposite to this ideal state and keeping as many people out of administration is a tough battle leaders cannot shirk.