18 Oct Coefficient of Bureaucratic Drag

Moving into a Knowledge Economy

It has been suggested that in the current era, all major companies are “knowledge” companies. Whether or not this is true for all companies, many corporate leaders and workers understand that knowledge is power. Today, the best thing most companies can do with technologies is to empower knowledge workers with more information, and require them to manually convert it to actionable knowledge. For companies to move from information systems to knowledge systems will require a huge leap – including major system and database changes, and major culture changes. This can be a major challenge because every change agent has to understand, and deftly respond to resistance to change within the organization. This resistance may be described as the Coefficient of Bureaucratic Drag.

For automobiles, aerodynamic abilities are measured using the vehicle’s coefficient of drag (Cd). “Essentially, the lower the Cd, the more aerodynamic a car is, and the easier it can move through the wall of air pushing against it” (Patrick E. George in How Stuff Works). Higher drag means more resistance, meaning it takes more energy (and fuel) to penetrate air. Intolerance to risk and resistance to change in companies makes it harder to change systems and cultures. But drag is also good, even necessary in flight and brain activity.

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Section 8 #4

Table of Context

Aircraft need a combination of thrust and drag to create lift, and companies can’t just charge forward into every new thing without risking getting burned too frequently. A little drag is necessary. Newton’s Laws of Motion suggest that when a moving flow of air is turned by a solid object, lift occurs. This lift is generated in the opposite direction from that in which the air flow is turned, because of the normal behavior of action and reaction. Thus, the control surfaces of an aircraft can be used to change its direction, provided there is a proper balance of thrust and drag to counteract the force of gravity and the weight of the vehicle.

Teleos and The KNOW Network, in 1998, established the Global Most Admired Knowledge Enterprises (MAKE) program to spot and reward companies leading the way into the knowledge economy. They attempt to identify and recognize those organizations that excel in creating wealth by transforming new and existing enterprise knowledge into superior products, services and/or solutions.

• creating an enterprise knowledge-driven culture.
• developing knowledge workers through senior management leadership.
• developing and delivering knowledge-based products/services/solutions.
• maximizing enterprise intellectual capital.
• creating an environment for collaborative enterprise knowledge sharing.
• creating a learning organization.
• delivering value based on stakeholder knowledge.
• transforming enterprise knowledge into shareholder/stakeholder value (MAKE program).

 Impossible to Avoid

Change is not easy, and the reasons are mostly non-technical. In fact, I’d go as far to say that the reasons are mostly hormonal. But hormones notwithstanding, change will occur. The coefficient of bureaucratic drag (a term coined or used by Ford’s former CEO, Alex Trotman [Zand 1997 p.15]), can be calculated by assembling a few numbers and stacking them up against need. Let’s talk about need first: In a free-market economy, the reason up-and-comers can displace well-established companies is that consumers are free to buy what they want, no matter who sells it. When companies of any size forget the customer, and forget the fact that sometimes innovation can produce something more desirable than existing products, they become vulnerable to competition.

The formula for need is: Multiply the sum of companies “C” trying to displace you in the consumers’ hearts and minds by the average innovative genius “G” of the people in those companies times their ability to influence change “I”.

Need = Ʃ(C*G*I)

Arguably, in a free-market economy, to survive companies must be competitive, and this requires responsiveness to customers for which innovation is often very helpful. The formula for drag is:

where:

  is the drag force, which is by definition the force component in the direction of the flow velocity,^[6]

      is the mass density of the fluid,^[7]

      is the speed of the object relative to the fluid and

    is the reference area.

So what about resistance to change that impedes companies from adopting or implementing good ideas that change the way they do business. I have a formula for that too. There are three key components of the formula:

1. The sum of each individual contributor’s personal resistance to change combined with their ability to influence change
2. The sum of each individual decision-maker’s resistance to rational ideas from the wrong sector
3. The collective power of wrong-headed notions such as “It has worked for us all these years” and “If it isn’t broken, don’t fix it.”

The formula for the Coefficient of Bureaucratic Drag is:

where:

•   Rcd  is the Resistance to Change Drag
•   Ls     is the combination of Legacy systems, vendors and experienced users
•   T       is the effect of tradition on the company’s culture
•   M      is the market context including its barriers to entry and competitors’ speed to market

The inertia required for a company to overcome the barriers to change (forward progress or otherwise) grows as the company grows in size, in age and in cultural rigidity. In many companies, only strong visionary leadership can overcome this rigidity to bring about positive change. Some negative changes are valuable if they shake loose some of the rigidity that creates cultural inflexibility and silos of self-interest. The change to replace information systems with knowledge systems, or to evolve information systems into knowledge systems in cases where that is feasible, is bound to create significant internal (employees and managers) and external (entrenched vendors) resistance.

Alex Trotman, former CEO of Ford, said:  “To be successful in the 21st Century, we’ll have to become leaner, faster-moving, with fewer layers of management and extremely low coefficients of what I call bureaucratic drag… The time to take action is right now” (Chicago Tribune 1995).

Now that I’ve identified the problem, what can be done? I’m not sure I know. In many companies, this kind of transformation to a knowledge economy will call for skillful and persistent change management efforts. As always, the change must start somewhere: with one division, one solution, perhaps even with one person. In my experience, the first successful implementation will lead to gradually expanding opportunities until, over time, you’ve catalyzed a wholesale transformation. It will eventually catch on, but the companies that become the early adopters of knowledge technologies will develop competitive advantages that could propel them to leadership in their markets.

Finally – brain activity, as mentioned above, needs drag. Inhibition is part of brain activity and “inhibitory synapses could control even synaptic plasticity, the basis for learning and memory” (Merker 2015).

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