EN: I don't think the author explains it, but "shih" is an eastern concept of "the elegance of knowledge," a mystical quality by which a guru transcends what is obvious and measurable to envision a higher truth. A bit mystical for my tastes, but there it is.

The task of creating a new business, or restructuring an existing one, is daunting in the amount of information that presents itself, demanding accommodation in your master plan. The nature of the task is such that existing methodologies cannot be applied - the task is to break from the pas, and methodologies are baggage to be abandoned (they are not applicable, and are to blame for the unsatisfactory nature of the present), nor is it sage to latch on to the latest fad in management.

We cannot delve into the details - there's too much, and many of them are unimportant. Instead, we must first arrive at a platform on which to begin, a perception of the problem as a whole, even though we will be dealing only with the broadest contours of the phenomenon at hand. The sketch that we create is fuzzy - it describes a broad shape, but does not go into granular detail.

Case Study: Olivetti

From 1977 to 1990, European computer vendor Olivetti underwent constant and dramatic organizational change to adapt to a rapidly changing environment, so much so that the organization, which rivaled the largest US and Japanese manufacturers, was regarded as an "unpredictable giant."

The company began in office equipment (typewriters and calculators) and evolved into computers (to the point that other product lines became a minority interest). The organization was polymorphic, and underwent numerous radical changes in the organizational structure.

Of note, Olivetti spent considerably less on R&D than its competitors: its strengths were seen as efficient manufacture and distribution, not in pioneering new technology. Part fo the reason for its constant change was that the company was reacting in real-time to changes in technology, rather than planning a course toward an unknown future. In spite of this randomness and mediocre economic performance, the company was considered to be a pioneer and leader in managing technology strategy.

Given the pace of change, a reactive strategy (which is no strategy at all) seemed brilliant to outsiders. Internal sources conceded that the company was highly idiosyncratic and chaotic, and decisions seemed impromptu and whimsical (in the sense of being based on whim, rather than careful planning) as well as being decentralized. In spite of the posturing done by its top-level management, the company was run in a haphazard manner rather than an orchestrated one, and even many of the employees were confused as to what line of business the company was actually in.

In spite of the chaos, the company thrived: it was among the top ten manufacturers in the global industry (and at a time, rose to the #2 position).

The difficulties for the firm began when management attempted to take a firmer hand in orchestrating the activities of the firm: to choose which products it would manufacture (rather than responding to market demand), to invest heavily in research and development (rather than adopting technology pioneered by others), and attempting to stabilize internal practices in order to appease partners (such as AT&T) who demanded commitment to formal procedures.

Eventually, this influence undermined the company's ability to be nimble, with catastrophic consequences: the company failed in the market, and was eventually acquired by a telecommunications firm.

The Organization as a Platform

The author echoes the major points of the case study, which are fairly obvious: in an unstable environment, where innovation and flexibility are necessary to react quickly to change, decentralization of authority is critical - and conversely, centralization of authority and forcing the organization to an arterial methodology results in failure.

The case study is often dismissed (by those who prefer systematic approaches) as a disaster scenario, an exceptional case in which doing the unthinkable (relinquishing rigid top-down controls) resulted in happenstance success. But it is, at the same time, a model for completely handling a situation that a rigid system does not handle well: change.

Change is not inherently undesirable. The desire to grow, to become better, means a change from the current status. By its nature, system preserves the status quo. Ir prevents change. It prevents adaptation. It prevents growth. It prevents survival... all in favor of slow decay.

Theoretical Extremes

Most management methodologies presume stability: the only change that occurs is that which management intends to make, and the only consequences will be those that management intends to evoke - the only question being the degree to which the desired outcome was achieved by the course of action implemented.

In the case of Olivetti, the rules of the game were different: nothing was stable, everything was fluid, and the results of an action were often affected more dramatically by changes that are outside the control of management than those which management intentionally imposed.

The case study describes a possible extreme, one which is unlikely to bear out in reality. But so does the theory. Outside of the laboratory, there is no such thing as a stable environment, so laboratory theories are no more applicable to management than is the Olivetti case.

All organizations, and all situations, exist between these extremes, and success depends on a combination of strategy (in the sense of a defined direction imposed on an entire organization) and tactics (in the sense of unorthodox decisions and actions taken to adapt to environmental conditions).

Managers as Improvisers

How do managers operate in such a complex and elusive organizational context?

Traditionally, managers had the authority to manage - though they have since been demoted to monitoring and correcting the implementation of a systematic methodology. For an organization to be effective, managers must have the ability to engage in improvisation, to ensure that the goal is accomplished, even if that means working outside the system (or abandoning it).

Much has been said in favor of "flattening" hierarchies, but the rationale has been lost: the value of a "flat" organization is not in the number of managers between a decision made at the top and the workers on the front lines, but at the level at which decision-making authority resides. Regardless of the number of layers, an organization that is run systematically, from the top down, will not be as flexible or nimble as one where decision-making is done at the lowest possible level, closest to the action.

Ironically, the motivation for top management to adopt a flatter organization has been to make sure their orders went directly to the field, passing through as few hands as possible - or in other words, to be more efficient in doing exactly the wrong thing.

The author uses the term "platform" as a method for large-scale management: strategy provides a platform (a basis for action), but beyond that, ensures the greatest possible latitude for managers and front-line employees to act in support of the strategy. They are able to improvise and adapt as necessary to accomplish the organizational goals, and deal with the unpredictable elements that an over-arching system cannot.

A Concluding Picture

A return to Olivetti during its golden age: top management provided a platform or guiding principles and an over-arching strategy, but permitted (if only by neglect) those on lower levels of the organization to make decisions and take action in support of the strategy, without the encumbrance of a method or system that dictated what they may (and may not) do.

The author describes this as a "fuzzy" organization - not one that is altogether blurred, but one in which management at the top concerns itself with the general shape of things, and leaves those further down the hierarchy to manage the lower-level decisions of how to achieve and maintain the desired general shape.

The alternative, to try to control the most minute details from the top down, is rigid, inflexible, inadaptable, and ultimately not viable. The laboratory of theory and method produces plans that are "too tidy" - they have no tolerance for real-world conditions, and are not applicable to the real world.