- Leandro Herrero - https://leandroherrero.com -

The Organizational Logic: the basic people algorithms that steer the navigation. Reframing the company steering system. (2 of 5)

Yesterday’s Daily Thought [1] introduced the formula:

(1) Space in the World (Purpose) + (2) Core Beliefs + (3) Non negotiable Behaviours + (4) Organization Logic (Basic People Algorithms) = (5) Company Constitution

What is the Organizational Logic? It is the set of People Algorithms that constitute the basic Code under which the company needs to operate.

Example of the algorithm: ‘If there is problem in A, it is solved in A and not escalated to B, unless X happens’. Rule: an algorithm needs to fit into a maximum of two lines. These are like the code of the operating system. Rule 2: you must have a maximum of 10 algorithms in the company. In a large set up you may need some extra for specific areas, but you should never go beyond 10-15 basic algorithms. If you find yourself going that way, you are writing literature, not grammar.

No, this is not the complex ‘governance’ structure usually reserved to describe ‘who does what’ and who is allowed or expected to make particular decisions, a Rights System. The algorithms sit lower than that, underneath it all, at DNA (values, non negotiable behaviour) level. Organizational logic is to Grammar what Governance is to Literature.

To reiterate, ‘If there is problem in A, it is solved in A and not escalated to B, unless X happens’ is an algorithm. ‘All projects in Product Development are reviewed every month at a Product Review Committee, whose members are F,G,H’, is governance.

What is the connection between beliefs and the logic? In the example above, the belief is that people should be empowered (and that people will accept the empowerment) to deal with ‘A problems’. An opposite belief is, ‘we don’t trust people to do that, so we promote escalation’.

In an escalation system of beliefs, everything goes up and ends up with the Board. Or it does not. Interestingly, escalation cultures create their own unintended consequences of self-defence. Knowing that everything escalates, secrecy and ‘protected bubbles’ appear, and subtle (or not that subtle) conspiracies of silence are generated. Example: the banks. Ok, some banks. Despite their monolithic appearance to mortals like myself, many banks are organised in tribes: ‘the traders desk’, ‘the retail group’ etc. Many recent big fiascos have taken place at ‘trading desks’ that self-protected themselves (as good tribes do, after all, it may be you next time) and they ‘did not escalate’ issues or dealings in ‘grey areas’.

Spending time and investing serious leadership efforts in establishing ‘The (Organizational) Logic’, shortcuts months of alignment in the maturity curve. Usually it all starts with ‘it will be impossible to write the Logic down’, or ‘there will be dozens, if not hundreds, of algorithms’. Once a bit of settling in has taken place, this upfront panicking reduces and people progress, with joy, to the discovery of the very few lines of ‘code’ that should inform everything.

Next is ‘Non Negotiable Behaviours’.


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