I’d bet that you probably saw this headline and pictured your face on a goose’s body as you waddle around laying golden eggs and trying to find ways to spend your money all in one place. Sadly that’s not quite what I’m talking about but it’s pretty darn close.
If you’re running (or just starting) a small business the last thing you’re thinking about is a corporate structure. Employees are a big expense, especially as you adapt to someone else doing your work while you try to figure out what new stuff you can be doing. Sometimes, people never let go of their old jobs and just muddy the waters. Now that, that is something worth talking about.
The running joke at the last real job I had was our constant Org Chart revisions. Sometimes we would get a new Org Chart a few times a week. Good thing we didn’t keep up with business cards or there would be thousands of discarded ones somewhere. Our titles changed often but our jobs never really did. I think managers like these exercises because it A) gives them something to do and B) they are trying to determine how to use the organization to make more money.
The problem with all of the constant organizational changes companies have is science. Particularly, not science itself, but the lack of it. The Fightin’ Texas Aggie Class of 2010’s last year of engineering school was often spent performing various kinds of statistical analysis. When we weren’t learning how to write (thanks Dr. Creasey and Dr. Rasmussen) we were learning how to interpret data in ways that made sense and were meaningful. Meaningful, in this sense, is a case for being statistically significant. Significant a way to represent accuracy and precision. In summary, we determined if data was accurate and precise – engineers don’t theorize, we build, destroy and look at the results to improve the next design.
“Can I have some boats?”
“No.”
Where do we find data about the best way to organize a business? Who will let you see their Org Charts over the years while comparing profits and losses? Not many companies would – even fewer have a long enough history to give us a statistically definitive answer. Digging a little deeper and aha! World history! If we liken countries, and even continents, to corporate structures we can draw some pretty significant conclusions about how we can evolve to be rich. We’ll cut a blind swath and make a few rules too:
- No idiots allowed. Apple is one of the richest companies on Earth. Steve Jobs played a large part of that and he’s smart. I don’t think an idiot would have brought Apple up from its beginnings to where it is now. Think Rockefeller, Pullman, Vanderbilt, Carnegie, etc.
- All other things being equal. Yeah, this is a catch all, but we are drawing analogies here.
- Don’t apply what you’re about to read to your home life. You’ll see why later.
Isolation
We, humans of this planet, are ripe with examples of isolating ourselves. North Korea in the present day, China in the 20th century, the United States in the 1930s and so on – all the way back to the not so little island of Japan in 1543. In that year, two Portugese traders pulled out some guns and shot a duck on the wings. A local prince promptly bought those fire sticks for a small fortune. Impressed by their power, he had them copied and within ten years Japan had more guns per capita than modern day America. In 50 more years they had the best guns in the world.
100 years later, there were no more guns in Japan. You see, the Samurai were a proud sort of warrior that would spend their time waiting for battle. When two armies met and finished staring at each other across the rice paddies they would send their samurai out for single hand combat to determine the victor. Some rednecks caught on to this and started shooting samurai. Samurais were more than war leaders, they were nobles. The nobles, ruled by a Shogun, started limiting who could make those pesky guns. Eventually they only allowed gun repairs and finally, in 1853 with the introduction of Commodore Perry on a trip to set up a coaling base in Japan. Until then, Japan only had contact with one Dutch trade ship per year. You might remember a movie that picked up around this time starring Tom Cruise.
Maybe that’s why most of us don’t care about the presidential race.
Japan’s extreme isolation led to this technological demise. No one challenged them for 200 years else they would have likely picked up and used the technologies of their foes. From this example (and any other you can think of where the society was isolated) you can see that new ideas often come from the outside. Part of this is because we get stuck in our ways – we create fads within our organizations. The samurai didn’t like guns. Your boss only drinks tea and removes Cokes from the break room. Often times these fads don’t make economic sense. You’ve probably heard that you do something one way because so-and-so has always done it that way. A great way to resolve these fads is to introduce outside influences. Want a reason to have a gun? Let your neighbors attack you with them and you’ll level the playing field.
Societies in contact with each other drive innovation and more importantly the continued availability of knowledge. There’s nothing wrong with having a lot of groups within your company – just ensure that they interact with each other in ways that aren’t rigid and set in stone.
Fragmentation
Perfect. Now you’ve made some groups to help spawn creativity and growth. How big do you make those groups? Small is agile, big is powerful. If we look again at world powers we can draw some more conclusions regarding group size.
Let’s head again to Asia and Europe – and not to pick on those folks either. For as long as most people can remember, China has been ruled by a very small ruling elite. Once upon a time, China was a technology powerhouse. From my grade-school memory I recall that the Chinese invented paper, gun powder and the compass. However, even with these technological cornerstones, China is thought to have lagged behind Europe during the time of the European Renaissance. How did this happen?
One possible answer is ships. Right when Japan was getting its first taste of firepower, China was building a massive fleet of ships. These fleets commanded around 2,000 crew members – quite a few more than Columbus had. In 1432 a Chinese anti-navy faction came into power and didn’t want to spend money on boats. Just like that, China turned itself into an isolated island.
You’ll recall, during the same time in Europe, ships were a big deal. Columbus wanted to find the new world. Not having a fleet of his own, he asked the king of Italy.
“Can I have some boats?”
“No.”
Then the French.
“No.”
The Portugese.
“No.”
On and on until the king and queen of Spain granted his request. Sure enough, he found land and a bit later some guys like Cortez found riches. The inherent fragmentation in Europe led to serious competition between the member states. It’s often difficult to remember who colonized what and when. I’m not sure it is worth mentioning but geography likely had a large part to play with the fragmentation of these two land masses. China is relatively unbroken by mountain ranges and rivers. They even built a 5,500 mile long wall to make that point. Europe has three major mountain ranges and large rivers that cross it in multiple directions. It’s also composed of several peninsulas that developed into independent states. No one has been able to unify Europe for long. Brexit anyone?
History shows us that fragmented groups that clearly communicate with each other will greatly prosper. Imagine the constant gossip at court, discussing geo-political news in a near constant buzz of information. Contrast that with China’s despots and you see how a lone and all powerful idiot can bring a place down. Maybe that’s why most of us don’t care about the presidential race. We know that we are so fragmented and so well informed that no one can mess it up if they tried.
Let’s Get Rich
By now you are seeing a picture being painted of how to organize yourself to get rich. Small groups that communicate and compete with each other. Don’t let fads stifle innovation. Don’t disguise fads either – whether they are your tastes or those of the majority. Be smart, let your people and yourself work independently and with clearly set goals to achieve (colonizing) while not getting rid of their tools (guns) at the same time.
Let’s not try to get rich at home, with our families. You can’t say to your kids or spouse that because you earn more you should be working instead of scrubbing toilets. You’ll quickly find out who forgot to develop weapons (hint: it’s you).
So, hey. Evolve your company in a way to get rich. Don’t waste time that you don’t have with techniques that don’t work. Use history to teach yourself a lesson. Whether you have one employee or 10,000 – you can Org Chart your way out of this one.
**Many thanks to Jared Diamond for his 1999 speech on the same subject.**