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If you thought that managing a team’s dynamics was difficult, it gets even more challenging when you look at the whole organization. Organizations involve the coordinated activity between many teams, thus magnifying the challenges. Not only do you have a multiplicity of groups that need to manage themselves, but now you also have to manage the dynamics between groups.
This added complexity makes for a chaotic and high-pressure life for members of an organization.[1] Peter Vaill described the chaos of organizational life as “… the nonstop cascade of surprising, novel, obtrusive events that pepper (and sometimes bombard) all managers, events that often cannot be foreseen or planned away.”[2]
The immense time pressures that exist in organizations compound this problem. These time pressures prevent managers from reflecting on unfolding events and learning from experience. Consequently, managers think and act on the fly. This is hardly a recipe for wise action.
These challenges can cause many problems for organizations, which the table below summarizes:[3][4][5]
| Dysfunctions of values | Dysfunctions of rationality | Dysfunctions of power |
Unwise companies
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Unwise companies
|
Unwise companies
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Exercises
Reflect on the challenges members of an organization face as described above: chaos and time pressure. Then, review the dysfunctions caused by unwise action listed in the previous table.
- How might those challenges of chaos and time pressure lead to those dysfunctional actions? How might those pressures lead people to make dysfunctional choices?
- Perhaps you have your own experience working in this type of environment. Are any of the organizations you have worked for guilty of partaking in these dysfunctional actions? What are the pressures that led you and your co-workers to take those actions?
For inspiration, the example directly below describes a situation where managers mimicked what other companies did, even though they believed those actions were detrimental in the long-term.
An Example of Why Managers Follow The Pack
In his book, A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation, the author described the forces that led bankers to make investments in high-risk assets before the 2008 financial crisis. Despite short-term gains, most bankers knew these assets would ultimately result in losses, yet they still invested. Why?
Initially, when one bank makes a high-risk investment, they earn significant profits for a while. Their superior performance makes other banks look bad. Clients begin saying, “Bank A is earning a 15% return on investment; you are only earning 10%. Why should I invest my money with you?”
Bankers can try to explain to their clients that Bank A’s investment strategy is highly risky and will eventually result in losses. These losses, however, may take a long time to occur, and investors want to earn profits now.
When another bank, say, Bank B, makes the same investment, they,