Policies must constantly evolve lest they become stultified

Every policy is born as a solution and dies, if nobody is watching, as a superstition.

There are major ongoing debates about the worth of policies intended to radically transform South Africa. There are diehards on both sides, detractors who want to tear them down and evangelists who want to make them even stricter.

There doesn’t seem to be any middle ground in the debate, and yet, ironically, that is exactly the life-cycle of a policy, a continuous helix irrespective of the policy’s founding rationale.

When you understand why we have policies, it’s a lot easier to see the intrinsic tension between those who swear by them and those who curse their very existence.

I always imagine policies in the context of someone tasked with making their way through virgin bush. Getting from point A to point B requires you to hack at the undergrowth with your machete, only to arrive exhausted at the end, if you succeed. Yet the bush will grow back.

If you make a pathway behind you as you go, others can follow without having to learn it all over again for themselves. They get there without the effort. And that is fundamentally what policies are: a pathway to help those behind you get the right route efficiently.

This is where policies come in, to cut out the tedious, repetitive and expensive learning curve. The problem is that just as a glass can be seen as half full or half empty, policies can be seen as either dumbsizing or an efficiency heuristic. A policy is a frozen experience, and the danger is that it stays frozen long after the weather has changed.

Ikujiro Nonaka, the father of Knowledge Management, tells the story of the brilliant artisanal chef who made perfect noodles. The problem was that his understanding of the exact stretch, feel, and elasticity of the dough, the hydration ratio of the flour, and the perfect simmering time of the broth based on the day’s humidity was tacit.

When the restaurant was bought, the new owners wanted to get other chefs to learn how to make noodles like this, because if the chef got ill or died, their investment would go with him. Knowledge that lives only in one person’s hands is not an asset, but a single point of failure and a hostage. They wanted to make that knowledge explicit and shareable. They tried asking the chef, and he couldn’t explain. They tried watching him and copying him, and they could never get it right.

In the end, the only way was to get an intern researcher to work alongside him and learn how to do it, writing out the process every step of the way, along with all their own insights about learning it, and so codifying the tacit knowledge to make it explicit, shareable and learnable by the chefs who come after him.

The problem with explicit knowledge is that over time it becomes tacit again; those who know it assume everyone else does, and so it’s never challenged, only further entrenched, like the story of the three monkeys in the cage. In the story, scientists sprayed all of them with icy water when one of them climbed a ladder to reach the bananas at the top. Over time, the scientists removed individual monkeys and introduced new ones, but the more experienced monkeys beat the newcomers every time they tried to climb the ladder. Eventually, all the monkeys were new, but none of them had ever been sprayed because they had all learnt a lesson which no longer applied. The person who once sprayed them has long since gone home, and none of them will ever reach the bananas either. It has become a superstition.

Blueprint for catastrophe

The most dangerous rule in any organisation is the one nobody can remember the reason for. Policies that are unchallenged become dogmas and superstitions that are applied even when the original rationale or situation has changed, and then, ironically, become the blueprint for catastrophe. This then sparks the conflict between those who hold them as a sacred belief and the others trying to fight for a new set of policies for the new situation.

Procedures, the steps set down to help you implement policies, are often another flashpoint between those who feel procedures stifle innovation and ossify the company and those who want to be agile.

Harnessing these two camps of bureaucrats and corporate cowboys is best achieved through understanding Dr Barry Johnson’s theory of polarity management and the competing values of corporate structure versus individual freedom. There are good and bad aspects to both. Too much structure and you build a museum. Too much freedom and you start a riot. The skill lies in never quite arriving at either. Some people love the feeling of security that structure and procedures give them; others abhor it and want to be free to innovate and create.

Properly harnessed structure leads to stability, replicability, trust, efficiency and sustainable profitability; ancient animal tracks evolve into hominid hunting routes, and from there into pathways, cart tracks and modern roads. Likewise, the upside of individual freedom is innovation and creativity.

The downside of too much freedom is chaos and ultimately inertia, just as the downside of too much structure is a sclerotic administration hellbent on a trajectory that will end in the company’s bankruptcy, or worse. When we hit the downside of chaos, we scream for a change programme and more structure; we get it, and then inevitably we reach the downside of structure and scream once more for freedom, and that is how the cycle goes.

And at every inflection point there is a consultancy firm willing to help you, for a fee. Economic cycles traverse both the continual oscillation between the independence to create new products and services, and the structure to codify them to ensure profitability and sustainability, and then the research and development for the innovation to continually meet the demands of the changing market.

This is where the role of the CEO is so vital; to manage the oscillation in the upside of each quadrant (balancing structure and freedom), without ever allowing it to sink to red tape or creative anarchy.

We need policies to make sure that we don’t waste time and energy hacking through virgin bush every time we set out on a journey that we’ve done many times before, but we can’t keep sticking to policies that no longer reflect the realities on the ground.

As the economist Joseph Schumpeter pointed out decades ago, useful capitalism develops through creative change, with destruction of the old being replaced by the new. A good leader has to be able to check the inherent bias in their own mental algorithms, continually auditing the policies they have to ensure their organisation is in the right phase of transitioning between innovation and structure, because both are equally vital to the long-term organisational sustainability.

The best leaders trim the organisation for the conditions it is actually flying in, not the ones it trained for. What’s good for companies is exactly the same for countries too, whether it’s harnessing AI in the workplace or reducing the Gini coefficient.