Why classical management of a bureaucratic hierarchy DOES NOT and WILL NOT work. Parkinson’s laws through the prism of IEM

Why classical management of a bureaucratic hierarchy DOES NOT and WILL NOT work. Parkinson’s laws through the prism of IEM

Every serious-minded observer familiar with the entrails of a big bureaucratic organism will certainly arrive at a stunning conclusion: whatever useful the organism does (if at all), it does it IN SPITE of all guidance notes, directives, and executive orders. 

How to stop hindering your company’s employees from earning money for the shareholders.

What replaces "management"?

"In any bureaucracy, the people devoted to the benefit of the bureaucracy itself always get in control, and those dedicated to the goals the bureaucracy is supposed to accomplish have less and less influence, and sometimes are eliminated entirely."

Jerry Pournelle, "The Iron Law of Bureaucracy"

At one business gathering, an employee of a well-known fashion network delivered a report on the success of innovative procedures in his company. "Innovation committees", "innovation targets" and other bureaucratic logorrhoea — it all sounded impressive if not handsome.

Yet after the writer stated expressly that NONE of the trash he’d described DID or COULD work in principle and the respective CEO was an exemplary sponger, lazy and incompetent, the speaker… suddenly and ardently concurred. That is why we omit the network’s name here.

Cybernetically, bureaucratic procedures are algorithms. While computer algorithms run on a hardware substrate consisting of silicon transistors, bureaucratic ones rely on the time-tested sheets of paper and bureaucrats proper.

Consequently, the very idea that a business can efficiently be managed via streams of paperwork and irresponsible human-like cogs (for irresponsible behaviour subject to written instructions is the essence and definition of a bureaucrat) is no different from the idea of building an "artificial intellect" based on computer algorithms. An idea whose poorly camouflaged stupidity has already been discussed here.

This conclusion is fundamental and INDEPENDENT of the quality of the bureaucrats or bureaucratic procedures. Russian or Indian bureaucracy may perform worse than German one, but NO bureaucracy can manage well.

Let’s pick out a bureaucratic office at random and pack it all with men of genius (Einsteins, Newtons, Leibnitz, etc.) The configuration of our experimental organisation will be described at any time by the superposition of only two states:

  1. total disorganisation (the individual power of the men of genius exceeds the bureaucratic procedures" limiting force), and

  2. standard bureaucratic stupidity described by the well-known Parkinson’s laws (the procedures are stronger than the men of genius and/or the men of genius leave the office).

The system’s steady state ("energy minimum") is Variant No.2.

Variant No.1 can be observed as things settle down in some business lines, but this is quite temporary. Collapse into the second variant is inevitable. The strength of the character/intellect of the men of genius who got into the system initially will only affect how long the transition to State 2 twill take.

The evolution of a macroscopic system from State 1 into State 2 is well exemplified by the history of the USSR from Lenin to Brezhnev.

Curiously enough, Stalin was just an inevitable stage of bureaucratic collapse in this regard (as shown by the history of all the Communist dictatorships without exception), and his reprisals against Bolsheviks themselves were the simplest and most efficient method of controlling the personnel structure of the closed and self-contained nation-wide bureaucracy from which no one could "step down" physically.

And the desirable situation of a crowd of brainiacs working synergistically and implementing advanced bureaucratic procedures to raise their office to an inter-galactic level of efficiency is impossible in principle: "You don’t get there from here."

In the IEM Paradigm the CEO does only two things СЕО systematically:

  • outward-looking: planning the marketing strategy. "Think of those outside".

  • inward-looking: improving the business process, which focuses on building and updating the financial motivation system for personnel. "Think of those inside."

"Management" has simply no place here; there is nobody to "manage", nor are there any means or purpose.

IEM turns the self-service principle for external counterparties (an online store for buyers, and b2b purchase floors for suppliers) into self-government.

Adequate employees impelled by adequately tuned FMS incentives will work towards the shareholders" goals.

INadequate employees will get no pay (for lack of results) and leave.

This is a self-tuning and self-cleansing system, with positive selection working in background integrated into its operating logic.

The more time passes, the better your business works — without any additional interference.

Sceptics" objections about theory detached from life are dismissed from the outset: the above message is based on both our own practical experience and on constant observation of similar principles being (successfully) applied in various companies.


It is an IEM structured organization that gives ample space for the leadership phenomenon to manifest itself (which is so much chewed over in quasi-scholarly consulting press).

A СЕО who does not manage in the traditional bureaucratic logic, "go there, do this" and other hand-waving, guides his employees with his own example.

Too weak a management channel, you’ll say? Not quite reliable technology — one’s own example instead of a club?

On the contrary.

It is the traditional bureaucratic process of managing a hierarchic organization that is totally unworkable.

Every serious-minded observer familiar with the entrails of a big bureaucratic organism will certainly arrive at a stunning conclusion: whatever useful the organism does (if at all), it does it IN SPITE of all guidance notes, directives, and executive orders.

The great mess of "departments", "divisions", "sections", a flow of paperwork, clownade meetings, etc. only hinders all useful work.

While the healthy part of the organization works to override the management’s sabotage.
And the bigger and more regulated the organization is, the fewer useful things it does.

This pattern is totally independent of the organization’s core business, ownership, or nationality, and is predicted by formal cybernetics.

So what manages organizations positively, indeed?

The market.

The customers.

In a traditional organization, every employee is driven by contradictory directing pulses: from his (external or internal) clients and from his "superiors".
In an IEM|Enterprise, employees get directing pulses from the customers only. Hence its dramatic profit superiority.

P.S. The Reasons Why Bureaucratic Management of a Hierarchy is Totally Unworkable.

Cybernetics requires a managing system to be more complicated than the one it manages (which is quite evident, if we come to think of it; a man "manages" his dog by pulling at the leash because he is more intelligent.

And the administrative apparatus of any organization, being part of it, is SIMPLER by definition than the entity itself.

That’s all.

Here’s an analogy.

Imagine a few cells in a sponge (or another multicellular organism) calling themselves the "brain" and trying to start "managing" the whole sponge.

Now replace "sponge" with "organization", "cells" with "persons", and "brain" with "management".
In terms of cybernetic science, both situations are equivalent.

Is the above to say than any company’s management actually does nothing?

Or that whatever they do is useless?

No, it’s not.

We only meant that a bureaucracy as such, one of any type, kind, or configuration, is UNFIT in principle as a management structure.

UNFIT meaning that, like no fish can climb trees, a pure bureaucracy can neither generate an innovative solution, nor can they implement a ready-made one — for quite fundamental reasons that can be reduced to formal logic.

Any innovation that effectively produces a productivity gain, when implemented in bureaucratically managed organisations (while such efforts are quite often successful), is implemented using EXTRA-bureaucratic methods, BYPASSING and sometimes OVERRIDING bureaucratic sabotage.

And the more bureaucratic is a company’s "management" (in terms of head numbers and powers), the less efficient its innovation process will be.

The ultimate useful task that an ideally organised bureaucratic machinery can carry out without external leadership is long-term conservation of static business processes that run reliably in an organisation existing in a stable environment.

January 24, 2017 by John Galt