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Warren Bennis
Scholar

Warren Bennis

Warren Bennis is University Professor and Distinguished Professor of Business at the University of Southern California. His newest book is 'Still Surprised: A Memoir of a Life in Leadership.'

Size is no excuse

Q: This week's Washington Post investigative series on the government's burgeoning intelligence network prompts the question: Can an organization get so big and so complex that it just can't be managed effectively? Or is "too-big-to-manage" just a cop-out for flawed structure and lack of leadership?

Size is rarely, if ever, a determining factor for any organization's success or failure. We have too many examples of 'the bigger you get, the more you win.' To make matters even more complicated, there are no economic laws or theories that set optimum size for different market sectors.

When Jack Welch took over the stewardship of GE in 1982, the company had about 425,000 employees. A couple of years later, he strategically "downsized" by almost 100,000, and the company became more efficient and effective.

Still, GE was plenty big. Welch gave his 13 major divisions autonomy, and they could spend up to $25 million, no questions asked! This structural change required alignment, speed and adjusting to customer's needs. Welch's credo was if your division was not #1 or #2, close shop. When one of the 13 was stumbling, the other divisions -- say, plastics or finance or health care -- could pitch in to help that one recover. GE's overall size was critical to its success, but only because the divisions were empowered and top management did not "steal their responsibility."

So what's clear is that your question answers itself: Blaming size -- too big or too small --is a cop out! GE, Google, and FedEx have all thrived with growth. In fact, the more Walmart and Google grew, the more successful they became.

Starbucks hit their stride when they went from 6,000 to 17,000 shops. Then there was a slump and about 600 stores were closed. Now they're almost back because Schultz reclaimed its leadership by replacing the CEO (with himself).

The real culprits of bad management are lack of alignment and understanding -- deep understanding -- of the purpose of the organization. How clearly are those purposes defined, understood and rewarded? Does each division or unit know that that their fates are tied to the fate of other units? Do they share a common strategy of how to reach their goals through the wise use of their human capital? It's simple: Everyone with a stake in the company needs to know they are making the same movie.

By Warren Bennis

 |  July 22, 2010; 12:28 PM ET
Category:  Government leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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