Thursday, February 9, 2012
Gordon Gekko, DoD, and the La Brea Tar Pits
It would be good for the stockholders in DoD, Inc. to remember Gordon Gekko thundering in the original Wall Street: "You own the company. That's right, you, the stockholder. And you are all being royally screwed over by these, these bureaucrats, with their luncheons, their hunting and fishing trips, their corporate jets and golden parachutes. ... Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can't figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I'll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated. In the last seven deals that I've been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them!"
Just as Gekko wondered about what the vice presidents of Teldar Paper did, I often wonder the same thing as I look at all of the lieutenant colonels, colonels, and general officers that populate our staffs, each with twenty years or more of military experience, and each shuffling paper back and forth. This is not an attack on individual officers, but rather on their collective profusion and the resultant choking effect on the organization. Over and over again, I have heard senior officers state that certain generals are “action officers,” meaning that they want detailed cognizance of the inner workings of projects once left to majors. Paperwork and “staff processes” proliferate in these top-heavy commands, as papers and policies are staffed and staffed again, round and round to all the vice presidents of Teldar Paper. Our military, for all the centralization of control bemoaned in professional journals, rules by committee decision at the upper levels. As a result, decisions take months if not a year or more to come by, as the proliferating staff power centers guarded by colonels and general officers seek to have a cut on every policy, put their fingerprints on every initiative, and jealously guard their position and that of the bevy of contractors, activated reservists, and hapless active duty officers that chase their every whim. This bureaucratic accumulation of seaweed and barnacles slows down the organization tremendously and proliferates tasks and information requirements by the day. Thus, your government flies lieutenant colonels, colonels, and a general across the world to meet for days, costing hundreds of thousands of dollars, but with nary a decision or any really measurable progress made.
The critics of my criticism and cynicism will say that I do not understand. That below the surface, important things are happening. Understanding and “buy-in” are gained. The stage is set for future action. I say, “Bullshit!!” I understand the power of such intangible things, but the reality is that these intangibles can be gained along with real actions and decisions if we have leadership capable of action and decision and senior middle managers capable of driving a working group. In this I mean, someone who comes prepared with an agenda and a predicted outcome, but ready to be guided by the intelligence of the group, rather than standing for hours and pontificating off the cuff, spouting platitudes about crawling, walking, and running, et cetera, ad nauseum. For this to begin happening again, however, these officers must be given the power and trust to be decision-makers, or at least decision-shapers, rather than insignificant cogs in a massive bureaucratic decision machine. The lack of initiative is due to the vast scale of the institution and the remote and diffuse locus of power and focus in the institution.
Our staffs are trudging, more so every day, into deeper and deeper sections of the La Brea Tar Pits (if you haven’t been, I highly recommend the real deal). Their legs grow heavier with each step, but unlike the mastadons beset by dire wolves and saber-toothed tigers, these slow, giant mammals do not know their demise is near. They stand woodenly spouting buzz words and imagining grandiosities, many blissfully ignorant of their pathetic state. Not only have they been lobotomized, they have been neutered, emasculated even, by the incredible inertia of a pathologically bloated defense establishment. It isn't that the people are bad, it is that the institution they inhabit cripples them. It was the tar in the pits, not the big dumb animals that did the trick.
When I sit watching such things, seething through my anger issues, I do a silent and motionless rain dance, hoping for sequester rather than rain. I invoke the gods of the budget axe to come and strike down the giant choking weeds in our midsts, to end our monopoly, to deregulate our industry, and to let us start down the long road to recovery. Whether sequester kicks in or not, a house-cleaning, an undoing of the entropy is dearly needed. Even once the cuts start to come in, we have a long row to hoe. My mentor (via print) Richard Rumelt writes in Good Strategy/Bad Strategy that organizations on the rebound from monopoly positions or regulated industries have a difficult time in adjusting because of the “inertia in corporate routines and mental maps of the terrain.” They also lack cost data because they have “developed complex systems to justify their costs and prices, systems that hide their real costs even from themselves.” It thus takes years to “wring excess staff costs and other expenses out of its systems.” The first step in breaking cultural inertia is to simplify. “This helps to eliminate the complex routines, processes, and hidden bargains among units that mask waste and inefficiency. Strip out excess layers of administration and halt nonessential operations – sell them off, close them down, spin them off, or outsource the services. … The simpler structure will begin to illuminate obsolete units, inefficiency, and simple bad behavior that was hidden from sight by complex overlays of administration and self-interest.”
If you think like I do, this sounds therapeutic. If not, join the growing line of people who are hoping for my head to be lopped off. Let me tell you, though, more and more people in our esteemed defense establishment, and people senior to me in these, are hoping for a mercy killing, the sharp cut of the scythe to their neck, to relieve them of the suffering imposed by dysfunctional institutions and toxic leaders.