The avid readers of this column will both be aware of recent diatribes I have penned, bemoaning the excessive and sometimes exorbitant salaries paid to corporate executives for performing what are essentially bureaucratic, caretaking roles.
I have nothing but admiration for business founders and entrepreneurs who create wealth and make a mint in the process, but the past couple of decades have seen a rather bizarre escalation in income creep, so that followers and functionaries get bigger bites of the cherry than do owners and shareholders.
After the GFC it was reported that bonuses paid to executives in US banks totalled more than the profits of those organisations, some of which went broke or had to be bailed out by the government. It’s bacon and egg syndrome. The hen lives on but the poor pig dies.
It’s no surprise that our cities’ skylines are dominated by buildings occupied by organisations both private and public that neither make nor do things, but who record, hoard and administer – because that’s where the money is. Sadly, such bureaucratic, non-productive activities now dominating commerce, are inherently inflationary.
Bureaucracies grow by feeding on themselves – in both the political and corporate arenas. The more rules and regulations we have, the more paper-sliders we have to administer them.
Most large organisations, including government departments, corporations, political parties, armies, churches and trade unions, are essentially bureaucratic – and probably have been since the time of Ancient Egypt, when eunuchs surrounding a Pharoah would have extolled his divinity as they managed the royal granaries, exhorting the populace to build pyramids in return for getting a regular food supply, carving a large slice of the pie for themselves and their cohorts in the process.
In bureaucratic structures, work is organised in such a way that people are regarded as interchangeable units. Bureaucracies are inevitably hierarchical, fostering rules, rigid operating procedures and impersonal relationships, with initiatives and policy directions coming from on high.
It’s worse in the government sector, where there are few profit-and-loss assessments, only budget allocations. In many cases the budgets are determined by arbitrary bureaucratic logic and by political expediency.
Inputs and outputs are measured rather than insights and outcomes.
Because scant economic evaluation takes place, politics invade to fill the vacuum.
And gallingly, in politics failure is often an indicator of success. Failure identifies where heroic intervention can be focused for political gain. The worse a government bureaucracy performs, the more money it tends to receive.
Sadly it doesn’t take much digging around to find why societies throughout history end up with burgeoning bureaucracies. The world seems to have had a perpetual over-supply of bossy busy-bodies who want to make sure everything is proscribed by systematic regulation, securing jobs for themselves in doing so.
It got me thinking about the differences between entrepreneurs and managers. In other words, what makes a creator different from a caretaker.
It probably goes back to the lecture halls of our universities. Potential managers are taught logical, sequential thinking – that new ideas move from analysis, to market research, to financial projections, to business planning, through manufacturing and finally to the market place. While budding leaders are also taught to expect a few hiccups on the way, they are seen as the exception rather than the norm. Entrepreneurs think more laterally; they know that the exceptions are the norm. As a friend of mine, a well-known rugby coach once said, “Game plans are fine until the other side gets the ball”.
Logical thinking assumes that to the extent the future can be predicted, it can be controlled. Entrepreneurial thinking assumes that because the future can’t be controlled, it’s pointless trying to predict it.
Henry Ford famously said if he asked people what they wanted, they’d have said “Faster horses”.
The problem with over-thinking business problems is that it leads to paralysis by analysis.
Many entrepreneurs live by the motto “Fire, aim, ready”. Bureaucrats need the reassurance of research – all too often their modus operandi is “Ready, ready, ready, aim … dammit, what were we aiming at again?”
Trouble is, there’s no such thing as predictive research. If it were so, researchers would be billionaires, running the world and there’d be no new product failures.
Business creators make it happen, business caretakers just make it hard.
I like the words of Robert Kennedy: “There are those that look at things the way they are, and ask why? I dream of things that never were, and ask why not?”