Levels of Organizational Problems

Beware of the hidden problems

from Dr. Kenneth D. Mackenzie's The Practitioner's Guide to Organizing Organizations

There are levels of organizational problems!

"Experience in designing organizations since 1976 has taught me that senior managers almost never select the right organizational problem to solve."

"There has not been a single case in which the organizational design problem I was commissioned to solve actually turned out to be the problem that needed solving."

"Since such engagements usually begin only after a lengthy internal review, one begins to understand the need for a practitioner to pay special attention to the stages of problem finding and problem formulation before launching into a solution and its implementation. This requires new ideas as well as independent thinking. Consequently, it is good practice to insist on an independent and thorough assessment of the organization before accepting responsibility for implementing a solution."

"Later on in this Guide I'll provide specific methods and tools for doing this based on the new holonomic paradigm. But for now I need to explain the idea of organizational problem levels."

There are levels of organizational problems. Stage 1 of the organizational problem solving process is finding the problem at the appropriate level.

The Table describes the levels of organizational problems and breaks them into two groups: Observable Organizational Problems and Hidden Organizational Problems.

Observable and Hidden Problems

The experience that symptoms of a problem may not be the problem is common in the practice of medicine. For example, suppose a patient has an itchy skin rash. One "solution" is to prescribe a salve to reduce the itching. But what if the symptoms of a skin rash are due to an underlying blood disease? Then the palliative salve only masks the problem which, if left untreated, will eventually threaten the life of the patient.

Recognition that the obvious problem may not be the actual problem is important when solving various levels of organizational problems. The new model and paradigm in this book point the practitioner’s attention to the existence of such hidden problems.

[a] These levels of organizational problems are ordered in descending rings of problems. The outer rings (levels 1, 2, 3) represent readily observable problems and the inner rings (levels 4, 5, 6, 7) the hidden problems, often ignored, but sensed by astute members of an organization. There is no strict hierarchy of cause and effect. However, while problems at any organizational level can cause problems in other levels, it is generally true that problems in an outer ring have root causes in combinations of unrecognized or unsolved problems in their inner rings. This ordering of problem levels is based on the Organizational Hologram Model which is described in this Guide.

[b] Who knows what will be identified next? Issues of morality, aesthetics and character will probably become more salient as our understanding improves.]

There are three main observable levels of organizational problems. At the top are those which are visible and explicit such as rising costs and falling revenues. Just below these are organizational problems due to shifts in the organization's environments such as changes in competition, technology, and government regulations. Looking deeper, many of these are due to an inadequate organizational design which fails to institutionalize certain processes of adapting to change. Later on, I shall discuss 12 of these processes called Holonomic Processes. Even at the explicit or visible level of organizational problems we already have three sublevels. At level 3, failure of the organizational design can produce organizational problems due to a failure to deal effectively with shifts in the organization's environments. This failure (level 2) can lead to performance problems which are easily visible given the organizational information system on such items as costs and revenues (level 1).

There are at least four more hidden levels of organizational problems which, when unsolved, lead to the observable problems. On level 4, one finds organizational problems due to defective operation and/or deployment of the 12 Holonomic Processes of change. Level 4 problems curtail effective organizational learning. Level 5 includes organizational problems due to ineffective organizational learning in response to threats to the organizational commons.

An organizational commons is a resource shared by all the members of an organization. Most organizations have many commons such as the use of facilities, information systems, capital, technology, and wealth. Often a major change such as a business process reengineering project or corporate downsizing results in threats to the organizational commons. Greed by classes of Associates or owners can threaten the organizational commons. Ineffective learning in response to threats to the organizational commons (level 5) can trigger any and all of the organizational problems on the higher levels.

Level 6 organizational problems are those due to threats to the organizational commons such as sudden changes in the organization's competition, technology, government regulations, and new management bent on lowering costs despite the consequences.

The emphasis on financial data in organizations can lead to level 7 problems because they define and regulate the organizational commons. Additionally, attempts to change the culture of an organization may yield level 7 organizational problems.

The implicit or hidden levels of organizational problems are rarely accessible to managers driven by financial data. Consequently, it should be no surprise that attempts to raise profits by lowering costs through downsizing Associates frequently backfire and produce, instead, even greater losses.

The bottom line on all of this is simple. Symptoms (problems at the observable level) are often far removed from the underlying root causes (often at the hidden level). Treating symptoms as problems and, thereby ignoring the underlying causes, usually results in wasted effort, little real progress, and organizational disaster. The main task in problem finding is locating the root cause level.

Most organizational change efforts succeed or fail on the accuracy or inaccuracy of the problem finding stage (Stage 1) of the organizational problem solving process.

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