On the common and alternative views of ‘processes’ in small startups to large corporations.

Section 1: Common Beliefs

Section 2: Alternative Viewpoints

Section 3: Lessons

Section 1: Common Beliefs

1.1 

The following is what ‘Processes’ are, and their purpose:

“Processes enable teams to take what were difficult or complex tasks and make them easier to implement, with a smaller number of errors and/or by someone more cost effective than the original operator.” 

This is analogous to automation in the mechanical world, you set up a machine to perform a job correctly and then ‘let it run’. Automation in general reduces cost and increases speed. The analogy suggests the same is true of processes.

If you can build up a base of processes, you can direct your best team members towards other problems and reduce the ‘mindshare’ of that task of those essential team members. 

This is the established belief. 

1.2  

My first job was at a company with no paying customers and with only a handful of employees. 

At this company, the setting up of processes was seen as an important goal. For example, “Processise”, the act of taking a behaviour and turning it into a process, was a common company word. As another example, the sentiment towards process was highlighted in the “culture deck”, which was a presentation they used to onboard new employees to the culture of the company. In that presentation, new employees were told that ‘Process sets you free’. (The unfortunate allusion to the phrase on the gates of Auschwitz must have been an accident). 

I was taught at this job, as many people are, that processes are a great way of creating order out of chaos. This was especially true for those higher up in the organisation. Enough processes would set the senior management free. 

1.3 

Senior staff are busy, and too often that ‘busyness’ is in the form of mundane, day-to-day activities. One of the panaceas that can be reached once you have successfully set up sufficient processes, is when all the senior team can focus on the really difficult problems, undistracted by the day to day work.

This ‘advertisement’ for a focus on process is a very old idea. William James’ landmark 1890 “Principles of Psychology” one of the first texts of the psychology, includes the following:

“The more of the details of our daily life we can hand over to the effortless custody of automatism, the more our higher powers of mind will be set free for their own proper work.”

Due to the similarity of phrasing across companies and across time, I would imagine the pursuit of the ability to do ‘proper work’ without the ‘details’ is persistent across cultures. 

1.4  

The following is a quote from a newsletter I follow, discussing how the setting of processes feel to the author:

“I’m biased on workflows over one-time wonders. Reliable outcomes are where I bet my time and money on. Systems are where I feel alive. And Processes are what I breathe.”

The author goes on to say:

“Now imagine when things are made in simple, easily repeatable steps. And those steps are openly shared and understood by everyone within the team.

Do you feel the breeze?”

The setting up of processes can apparently deliver on the promises of their advantages.

1.5 

Those in academia also feel the breeze. 

There is a whole school of thought devoted to the focussing of companies on process. If you Google ‘process based companies’ can you find books (“The Road To Excellence: Becoming A Process-Based Company”) and articles (“A process-oriented organization relies on this idea: final deliveries to its customers are the result of a sequence of internal processes that need to be well organized.”) on the subject. 

1.6 

Away from small business or startups, the appeal of ‘process’ persists in the largest of corporations. A friend of mind used to work on Wall Street for one of the largest banks in the world doing Mergers and Acquisitions. He told me every time they did an acquisition they filled out a particular form. They filled this form out because 50 years ago there had been an issue with an acquisition. This form was designed to prevent that incident from happening again. Apparently it has been successful (or perhaps never tested) as the form persists decades later. He wasn’t sure what the original issue was, but he assured me it didn’t take long to do.

1.7 

From my experience, if you line up 20 executives, 19 would rank ‘process’ as important. 

Section 2: Alternative Views

2.1: 

The following is an excerpt from the so-called ‘Lost Interview’ with Steve Jobs, which was an interview that was recorded but never aired. The following is about the downfall of IBM. Steve Jobs says,

“It’s that people get confused. Companies get confused. When they start getting bigger, they want to replicate their initial success. And a lot of them think, “Well, somehow there is some magic in the process of how that success was created.” So they start to try to institutionalize process across the company. And before very long, people get very confused that the process is the content. And that’s, ultimately, the downfall of IBM. IBM has the best process people in the world. They just forgot about the content. And that’s what happened a little bit at Apple, too. We had a lot of people who were great at management process. They just didn’t have a clue as to the content. And in my career, I found that the best people are the ones that really understand the content, and they’re a pain in the butt to manage. But you put up with it because they’re so great at the content. And that’s what makes great products. It’s not process. It’s content. “

Steve is not criticizing or complementing process, but he is commenting upon what happens if process is valued too highly at an organisation.

2.2 

The following is an excerpt from a book by Venture Capitalist Hemant Taneja, this section is about Jeff Bezos’ management tactics:

“​​Bezos’s second tactic is “resist proxies.” Scaled companies can get lost managing things that don’t matter. One example is process. To manage a sprawling empire, companies create processes for employees to follow. Too often, Bezos writes, “the process becomes the thing. You stop looking at outcomes and just make sure you’re doing the process right.”

This quote is from long after Steve’s interview – it is of course unknown if the very similar phrasing is a coincidence or if Jeff had read that specific interview with Steve. The ideas nonetheless are very similar – Jeff is also worried about the process becoming too important. 

2.3 

The following is an excerpt from a recent book of Andrew Chen, Uber’s former Head of Growth and current a16z partner:

“Something seems to happen when companies grow to tens of thousands of employees–they inevitably create rigorous processes for everything, including planning cycles, performance reviews, and so on. This helps teams focus, but it also creates a harder environment for entrepreneurial risk-taking.”

Andrew Chen identifies constructive benefits to process (focus, presumably reduced costs and mistakes), but unearths a side effect – the reduced risk taking in the organisation. 

2.4 

Dee Hock, the (sadly) somewhat obscure visionary founder of VISA, wrote this quoting an early mentor figure.

“What you don’t understand is that in organizations like this, procedure is more important than purpose, and method more important than results”

The story hilariously goes on to describe how the mentor shows Dee how highly valued process is. Dee and his mentor tackle the so-called ‘sign problem,’ (the issue of who should have their name on their office door and if those signs should vary in design or font with seniority), by diligently creating committees, writing memos and having meetings. They purposeful dragged out the creation of signs for executives offices into a process involving committees, various propositions and multiple memos. The two individuals responsible for this epic bureaucratic waste of time were praised for their hard work, attention to detail and diligence.  

2.5 

Andy Grove, the pioneering CEO of Intel, wrote the following in his book “Only the Paranoid Survive”. In it, he talks about the need for periods of chaos:

“In the middle of the strategic inflection process you [need] to let chaos reign in order to explore your alternatives, to lead your organization out of the resulting ambiguity and to energize your staff toward a new direction, you must rein in chaos.”

This balances with periods of order, as he says 

“An organization that has a culture that can deal with these two phases- -debate (chaos reigns) and a determined march (chaos reined in)–is a powerful, adaptive organization.”

Similar to Andrew Chen, there are times identified where order and process are useful, but also periods where chaos and creativity are important. 

Section 3: Lessons

3.1 

Processes have a role in organization. They can prevent catastrophes, reduce risks and increase quality. Common belief holds this to be true and it is.

3.2 

Processes become more dangerous the more the culture rewards it. ‘Process is not the thing’. Avoid the pitfall of setting up a culture where processes were highly valued, process people are promoted and processes are viewed as important. It is tempting, as a perfectly process oriented person creates a feeling of calm and order that busy executives often crave. 

3.3 

Processes are on a pendulum with chaos. The role of a leader within a company is to ensure an appropriate balance between creative chaos and ordered process. Different times necessitate different balances. In an inflection point, chaos must rein as it must when a startup is yet to find a customer. After deciding on a course, the process can be carefully increased.

3.4 

Processes should be destroyed regularly. The company should be kept lean by creating a culture where processes are queried and can be destroyed. Without destruction, they accumulate over time until they become a weight the company has to move with forever.

3.5 

Processes should be conducted by those who understand the purpose of the process and who can argue to stop it. Those who do the process must understand at what point they should argue for its removal. The following guide is my version of Chesterton’s Fence thought experience.

“Consider you have bought a property. In the property is a wide open field, but with a fence that runs through the middle. It serves no obvious purpose, and you keep no animals. Do you take it down?

The best answer is to figure out why it was originally put there. If that answer is that the property used to be two properties and is now one, you can take it down. If the fence was put up because once a year a pack of wild boar moves through the area, you might want to keep it up.”

The only person who cares enough to question the process is the person responsible for doing it, so they need that power. Otherwise, you will be like my Wall Street friend – doing a process that’s been running unquestioned for 50 years. Does it help? Who knows. But it definitely slows down the organisation.

3.6 

Processes, given sufficient weight, are a great destroyer of institutions. Within large companies – their initial breakthrough product often becomes a commodity. Competition requires the chasing of lower margins, which leads to more automation and, of course, more processes. As the company becomes process oriented, the content and the product becomes less important. It’s then, as with IBM, Apple (pre Jobs) and Intel – they will see a new company, a new innovation, but will be trapped in their processes as they watch that company become the “Next Big Thing”.