Hal Stern's thoughts on the economy, software, services, technology, and snowmen. Hal Stern: The Morning Snowman

Wednesday Oct 20, 2004

In addition to retracing the paths of my salad days I also had a speaking part at the Princeton University Career Options for Engineers panel. Most of the evening was spent fielding questions from undergrads. My favorite question was directed to Connie Cromwell, who is the Chief Engineer of the New York City Subway system: "How do you deal with bureaucracy?"

Connie gave an elegant answer, reflecting the exquisite coolness of her job -- trains, tunnels, massive amounts of electricity, magstripe cards, and 100 years of history. But I couldn't let the issue sit there -- I chimed in with my own view that bureaucracy, as we know it, is a dying art.

Bureaucracy exists where there are monopolies in paper, process or power. Replace the paper with the network, make the process transparent (and therefore accountable) and balance the power through competition, and the pointy-haired boss moments simply go away.

When is the last time you filled out a paper form? The New Jersey Division of Motor Vehicles, a long time proponent of serialized line-waiting, allows you to renew your license, registration and even protest EZPass violations online. No papers, no bureaucracy, because it's immediate. The larger corporate trend accelerating the death of bureaucracy is outsourcing non-core tasks to specific service providers.

As soon as competition is created for a task, simple minimal competence no longer suffices. Those charged with fixing payroll mistakes, or taking on the role of Raiders of the Lost HMO Form, have to perform up to a service level agreement created by their employee (a service provider) and the outsourcing company (your employer). Failure to perform frequently results in failure to renew. The monopoly of the bureaucrat has been broken by the networked business.

The key enabler to this trend is not so much the pervasiveness of the Internet and comfort with browser-based forms, but the networked identity mechanisms that let businesses carve out back office functions. If I can uniquely identify myself to my company's HR systems, and those systems uniquely tell our payroll processor the parameters for check generation and direct deposit, then we can take our payroll to the best performing, lowest cost, highest value provider.

Comments:

bureaucracy can serve a useful function, acting against radicalism, hot-headedness and underhandedness. bureaucracy is a tool - it is often where we find things like process and controls. having said that of course, as a tool it can be, and often is, abused. I reckon the future of bureaucracy is closely tied to the risk management function in the corporation or government... i strongly agree that we need automation. but we still need controls. and have you seen the size of the teams managing outsourcing contracts.... bureaucrat heaven... and i keep seeing companies outsource to the "best, lowest cost provider" and then realize they got stiffed. you think monopolies in paper, process or power are going away? or is that wishful thinking? the vision you put forward is red in tooth and claw--which leads to dominance and monopoly. which then requires regulation and bureacracy... just my $.02 worth

Posted by James Governor on October 21, 2004 at 05:22 AM EDT #

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