Organizational Mediocrity is No Accident

Tim Kane’s book, Bleeding Talent, earns a review from the New York Times.

That act binds the military into a system that honors seniority over individual merit. It judges officers, hundreds at a time, in an up-or-out promotion process that relies on evaluations that have been almost laughably eroded by grade inflation. A zero-defect mentality punishes errors severely. The system discourages specialization — you can’t expect to stay a fighter jock or a cybersecurity expert — and pushes the career-minded up a tried-and-true ladder that, not surprisingly, produces lookalikes.

Pointer from Tyler Cowen. Reihan Salam has more praise for the book.

This reminds me of the Federal Reserve Board, or of the public school system. To some extent it reminds me of the way large corporations treat middle managers. As I explained almost fifteen years ago,

For corporations, encouraging middle managers to take good risks is not as easy as it sounds. Middle managers understandably do not want the same degree of personal downside risk as entrepeneurs. However, in the absence of personal downside risk, the middle manager’s incentives would be skewed toward taking unjustifiable risks. Bureaucratic controls and limits on upside incentives may be an appropriate adaptation for correcting this potential bias.

I think that mediocrity is the natural state of organizations. Only the discipline of competition serves to bring about improvement.

4 thoughts on “Organizational Mediocrity is No Accident

  1. “I think that mediocrity is the natural state of organizations. Only the discipline of competition serves to bring about improvement.”

    Brilliant.

    I couldn’t agree more.

  2. Di you mean to say?:
    “I think that mediocrity is not the natural state of organizations. Only the discipline of competition serves to bring about improvement.”

  3. It seems like every system, as opposed to the public ones in particular, is subject to this mediocrity. Whether or not competition is present, we organize to reduce risk. If we organize to reduce risk, we seem to gain stability, though it sometimes comes at the cost of innovation. At this point, the question becomes one of specific tradeoffs rather than a general statement about public vs private institutions. If finance is a risky endeavor that rewards brilliance, then we should probably pay more respect to the stability that seems to come with mediocrity.

    I also question your conclusion that only competition drives improvement. It seems unlikely to me that the military is immune to competition given that it is an industry of war and given that it seems to be fundamentally changing. Further, many competitors lose the motivation to improve over time, even though the level of competition remains high (Kobe Bryant, for example, is celebrated because he seems uniquely motivated to improve after playing basketball for over a decade). Many that do not compete are nevertheless motivated by their own goals.

    I’d direct your attention to self determination theory if you are not already aware of it. I’d also direct your attention to the psychology of creativity.

  4. But that raises the question, what is the point of a large corporation in the first place? I suspect that if one were to do a proper Coaseian analysis today, you could not justify any large firm out there. This is why I think there will be no more middle managers in a couple decades, as all these large firms will go bust in the coming years. Perhaps somewhat larger firms made sense in an industrial era, when there was large capital equipment to be owned and serviced, but these firms make almost no sense in the information era that we are transitioning to. That marks the large corporation as a dinosaur that’s soon approaching its extinction. :)