People vs Process

Companies base themselves on various philosophies that drive the way business is run. Companies that promote entrepreneurial work cultures are driven by empowered individuals getting creative and playing freely in even the core areas of their businesses. They are highly people driven. Such companies not only believe in their people, who are allowed to take risks on their company's behalf, but are also willing to pay for the mistakes these people might end up making, which may be pretty often. The freedom such work environment offers makes it a highly satisfying experience for a lot of employees to work for such companies. But is it good for the company? It's complicated.

The other extreme are companies that are highly process driven. And when I say 'process', I include all that comes with it viz. protocol, discipline, rules, review, chain of command, oversight, pre-defined way of working, pre-defined nature of outcome, etc. People in these companies are slaves of processes. These companies are modeled not to place any bets on people, at least in principle. But since it's people who are eventually driving processes, the system becomes a playground for power games. Inevitably, people emerge, who have the ability to influence those who have more influence. The process still ensures there is pretty good oversight on what's going on. So being powerful in such environments is a big deal, coz that means you've mastered the art of running your shady business from prison while also keeping the guards happy(... à la Red in Orange is the new Black. I love her character).

Process driven companies have a method even to playing politics. On the other hand, people driven companies have none, and so it's a sea of randomness where every individual can play his/her own games and pursue his/her own motives - be it organizational interest, personal interest or plain politics for pleasure. The randomness and chaos this presents can be detrimental to large organizations. And hence, as companies become large, the leaders tend to impose more processes to rein in the madness.

The type and nature of business is an important factor in determining what culture would be most effective for successful growth of a company. Companies which come up with great products conceptualized by people dabbling in their free time or dabbling freely in their time have impacted our lives immensely. It's hard to imagine such companies working any other way and being as successful. On the other hand there are organizations like the Army which can't be anything but process driven, with 'process' as we defined above. Imagine an army where soldiers are allowed to be 'creative', or empowered to fight their own way! I therefore believe that for certain types of organizations, there is a natural style of working that would make them the most efficient in delivering their objectives. But for many other types, the style is a choice leaders make.

I do realize that picking Army as an example, while talking about companies in general, may not sound totally appropriate. For one, an army does not have any commercial interests. But that's just one perspective, and not a very limiting one, in my view. In transactional terms, an army offers its services to the nation and gets paid for the same. In business, an equivalent company would be one offering services to clients for a price. One difference, of course, is that the army doesn't have to compete with anyone to claim the scope of work, which in fact places additional burden on it to ensure that its standards are never compromised, no matter what, since there are no competitive benchmarks to talk about within the same territory. But then an army is a fighting force by design, and it has to compete with other armies, albeit external. So, in a sense, they do have standards to meet, or they would make the whole country weak. It's more driven by competition in that sense than a commercial monopoly is.

Business leaders often get inspired by the methods of the army in how they go about their business. The Art of War by Sun Tzu was covered as part of a course during my MBA. Although the more talked about connection is on how companies draw inspiration from the army in dealing with the market and competition, I think the inspiration in designing the internal structure and workings of organizations is pretty strong. And millennia of human civilization dominated by monarchical models of governance until recently has had strong influence on leadership thinking in designing organizational DNA. Command and Control is like another name for process driven model. And it's designed to keep the lower ranks, who constitute the majority, on a tight leash. The leadership plays by different rules in sharing, exercising and competing for power.

People driven work cultures are a relatively recent phenomenon. The spirit of entrepreneurship and organizations trying to harness the creative potential of their people at scale was largely an experiment of the last century that gave us unprecedented growth in our standard of living. A lot of start-ups thrive on such environments and achieve exponential growth through lots of innovative ideas. But as companies scale, their operations become complex and excess randomness becomes risky. And they realize that they don't need creativity and innovation in everything they do. Rather, it's good enough for them to have some roles filled with entrepreneurial individuals who can wave their magic wands where they can. The rest needs to run like a well-oiled machine. Different companies do this to different degrees and in different styles based on the kind of risks they want to take, and that makes all the difference in their work cultures. Having strictly enforced well-defined processes for most of the work ensures that the organization is taking the least amount of risk in how it conducts its business. Although it kills innovation, it ensures the company delivers what it takes up with efficiency - which is especially important if the scale is big and the work is repetitive. Such culture is not satisfying for most employees as it makes them feel like slaves to the system. However it works very well for the company as it is able to offer reliable standards to customers.

People driven work culture, on the other hand, can be highly satisfying for employees, as it offers them freedom, respect and space. But as a company grows in size - and companies are meant to grow - it can retain such culture only if it keeps changing its core business to suit such work culture. If the whole work force of a large company is to work like they do in an entrepreneurial start-up, its range of products should each be of a unique nature, and constantly being replaced by new ones. Services should be totally out of scope, according to the conclusion I reached after lot of thought, as no successful service company can afford to be totally people driven. Services companies are bound to require people meeting certain standards and working in certain ways to satisfy customers' needs and expectations. I've observed a few large service companies try to be too entrepreneurial, and they only ended up being complicated mess that is beyond repair.

So, I'd like to conclude by saying that totally People driven companies are great places to work but it's extremely difficult for business leaders to shape the nature of their businesses in such a way that the work culture stays people driven even at larger scale of operations. Process driven companies are difficult places to work as they can get really frustrating for employees as the scale gets too big and business gets complex. But with such size and scale of business, it is the best model for such companies as it minimizes exposure to unnecessary risk and places the company in stronger position to deliver. And this reflects on the kinds of people various companies are able to attract and retain.

It would be interesting to hear from all business leaders and professionals out here what they have experienced and how they look at this topic. Please do share your views in the comments section.