How Institutions Survive

Never give a problem to someone who will be harmed if they solve it.

If you do this, the organization or department tasked with solving the problem, will make the problem bigger and harder to measure. That is how they can justify their continued existence.

They are what Peter Drucker calls ” budget funded organizations.” A budget funded organization has no market based limit on their spending because there are no customers. They have no external measure of their proficiency either. No complaints, no repeat orders, no price competition, no requests for special services, no applause from customers. They are isolated and can only fund themselves by selling their problem to concerned people.

A perfect solution for them is to make their particular problem impossible to measure, but apparently growing.

There are several government agencies who fit this category. In 1980 I testified before the Ontario government committee on the Human Rights Act and raised this exact point. To no avail. Where are we today? The Ontario Human Rights Tribunal may have already solved their problem, because I hear them talking about the problem being more subtle and more pervasive. Could be true, but I doubt it.

The same thing happens with many (all?) medical and environmental foundations and charities. If I could reliably cure air pollution for $100 per province or state, the only way it would happen is if I just did it. If I took it to any agency tasked with fixing air pollution, they would study it for a 1,000 years before implementing the solution. Who wants to give up their corner office and the conference in Geneva?

You know that is true, don’t you?

Others have noticed this same condition. One of them, Clay Shirky, is a leading thinker of our time. Notice the Shirky Principle – “Institutions will try to preserve the problem to which they are the solution.” Preserving problems is dumb, both for individuals and for societies.

Shirky studies and writes about the effects of the internet on society. You can see his books here Shirky Books and his blog here Shirky Blog.

Worth a look.

Give some thought to institutions, and in your business to the departments, that live on a budget. Assess if they have already completed their task to a reasonable level. They will be aiming for 100% solved because that preserves the problem. You probably can live with 90% or so. At a tiny fraction of the cost.

Perfection is an expensive outcome and one we can ill-afford.

PS:  This column appeared a couple of days after this post.  It just adds the exclamation point.  You could not make this stuff up if you were trying to write a book.  It is almost too bizarre.

National Post 17 December

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

One Comment on “How Institutions Survive

  1. Pingback: Government Money | moneyFYI

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