Brian’s Song
Bureaucracy is more difficult to cure than cancer.
How do you cure a problem like bureaucracy? How do you either eradicate it or make it something so low impact that you can live with it?
We’ve defined bureaucracy as an organizational and cultural problem in which the marginal benefit of the functionary (or his agency) of a particular act exceeds the marginal benefit to the overall entity. It doesn’t matter if we’re talking about government or the private sector or non-profits. They are all vulnerable to it. It exists because individuals have personal interests and they act upon them. Maybe the Director wants a promotion or more status or more power. Whatever it is, if his actions don’t benefit the overall entity as much as they benefit him, it’s bureaucracy and it’s damaging. It occurs when people hijack the resources of the collective for their own personal ends.
We’ve all seen it happen.
Every dollar they spend on their own pursuits, every hour of resources they expend on things that advance their own goals instead of those of the organization, is a dollar that could have been spent on moving the objective of the organization a little closer to fruition. Perhaps they figure they can kill two birds with one stone. But if they benefit more than the organization does, it’s bureaucracy.
It doesn’t have to be form-filling, although it can be. It doesn’t have to include the exertion of authority, though it often does.
We know it when we see it.
In previous posts, I’ve argued that organizations like companies are complex adaptive systems. They are organic in nature for all the org charts and management consultants and plans.
“A complex adaptive system (CAS) is a system that is complex in that it is a dynamic network of interactions, but the behavior of the ensemble may not be predictable according to the behavior of the components. It is adaptive in that the individual and collective behavior mutate and self-organize corresponding to the change-initiating micro-event or collection of events.”
What is culture if not an emergent phenomenon arising from the interaction of people and policies?
I’ve also made the case that the human body is a complex adaptive system and that bureaucracy is like a self-feeding cancer on the organizational corpus. It grows for its own sake without performing any system-supporting function, sucking resources like nutrients from other tissues.
Bureaucracy, like cancer, can kill the organism.
In this post, we’ll look at the ways we approach cancer and I will show that there are parallels to the way we attack bureaucracy with predictive value in assessing if and to what extent such efforts can succeed. After all, the purpose of Closest Point of Approach is to develop models that help us predict organizational behavior from our perch as investors and leaders.
There are three key lessons from cancer treatment.
One, doctors don’t cure cancer; they contain it. They put it in remission. Once there are cancer cells, there will always be some minimal number of cells. They could sprout new cancers at any time. Eternal vigilance is the cost of liberty.
Two, there are clear analogues between the way we attack cancer and the way we try to expunge bureaucracy. The likelihood of success depends on certain factors. In planning our cultural restructuring, we need to understand the type of bureaucracy we face in the same way that oncologists dictate different treatments depending on the nature of the cancer afflicting the patient.
Three, there are limits to effectiveness, but we have tremendous progress in recent decades in both curing cancer and in eradicating bureaucracy.
We Don’t Cure Cancer
To say that we cure a disease is to aver that it is eliminated. It is gone. It is not coming back. We cannot say that with cancer.
We can get to the point where we cannot detect any cancer cells, but that doesn’t mean that there aren’t still some cancer cells. It also doesn’t mean that we have eliminated the possibility of its return. We speak instead of remission: this absence of detectable cancer cells (or potentially the containment of cancer to small, non-threatening levels).
For some cancers, such as prostate cancer, the progress of the disease is so slow that it makes more sense not to treat it. The cost imposed by addressing the disease far outweighs the benefit. Doctors may diagnose that the patient is more likely to die of old age or some other ailment before the prostate cancer becomes problematic. We cohabitate with the tumor. It is almost like a parasite.
Other forms of cancer can have an aggressive vector of attack and they can kill the host if not addressed immediately.
In the same way, there is probably always going to be some low level, background bureaucratic noise because human beings populate the organization. They are incapable of distinguishing their personal interests from those of the entity for which they work at some unconscious, fundamental level. However, in some cases, the opportunity for them to prioritize their needs may not be as obvious, so we learn to live with it. In others, there is a too-powerful combination of motive and opportunity.
We Have a Variety of Tools to Attack Cancer
Cancer is a sufficiently pervasive scourge that we’re all familiar with the treatment doctors use to control it.
Surgery involves trying to remove the tumor. This makes sense if the cancer is discrete. It is straightforward to remove the offending tissue. It is localized. It has not penetrated its tentacles too deeply into surrounding organs. This is not always the case, of course.
If the cancer is limited to a particular area, we can apply concentrated beams of radiated energy to the affected region in an effort to kill the tumor in place.
Some cancers such as blood cancers spread easily throughout the body via one system or another. In these cases, we need to take a more systemic approach. This could include chemotherapy in which we administer the patient chemical drugs. These are crude tools which can impact healthy tissue, as well.
There are newer techniques including immunotherapy, gene therapy, and hormone therapy. In some cases, these are personalized.
These can be used in combination with one another as well as with other techniques. There is some speculation, for example, that intermittent fasting (or longer-term, intensive fasting) can work by starving the tumor. The theory might be that the human body can go without sustenance for a longer period of time than the cancer. This has not been validated in scientific studies, but it at least has the merit of intuitive truth.
If we look at these techniques, we can see that they have been applied to try to address bureaucracy.
Undoing Bureaucracy Is More Difficult Because It Requires Changing Culture
DOGE famously tried to excise the tumor with drastic cuts. Or was this a form of fasting? There were massive layoffs. The intention was to eliminate positions where the optionality was too tempting, or perhaps where the people had demonstrated a tendency to self-promotion. The infamous story of the United States Institute of Peace in which DOGE and the incumbent leadership fought for control. At one point, a member of the prior leadership team barricaded himself in his office.
The problem with these techniques is that bureaucracy had become too embedded. Its hooks were implanted firmly. This was a widespread cultural problem within the civil service, of varying intensity from agency to agency.
The equivalent of chemotherapy and other newer treatments might be the recission of specific policies such as DEI mandates. The Department of War has had some controversy with this. Notably, the announcement of the reversal of these initiatives has been connected to a resurrection of recruiting success. The Secretary of War has been pilloried and mocked for his attempts at turning around the culture, but he seems to understand the true nature of the problem. He has also fired and promoted flag officers based on their willingness to help him change the culture. This has presumably cascaded down the ranks.
Curing Cancer Is Far More Difficult than Preventing It
Culture is difficult to identify and define. Seth Godin, the marketing guru, has defined culture as the answer to the statement, “people like us do things like this.”
How do you define “people like us” and what are the “things like this” that are unique to the “people like us” and distinct from the function of the position?
This makes bureaucratic reform so challenging.
The corollary of this statement is that it is best to nip it in the bud. It is best to preserve a culture in which people want to subordinate their personal interests to those of the team and the organization. It is far easier to address nascent signs of bureaucratic activity than to reverse them once they have become embedded.
Unfortunately, we pay too little attention to bureaucracy. We only notice it once we see it have an impact on corporate efficacy.
We may not think we’ll get cancer from smoking a pack a day even though, intellectually, we understand the risk. But once it’s in the lungs, it’s a deuce of a time recovering.
Cancer and bureaucracy are similar and there are lessons we can learn from the way we diagnose and treat both diseases. As investors, we can predict organizational friction (like barnacles on a ship’s hull) when we examine the discipline of the organization’s lifestyle.
Just as it seems contemporary life is more health conscious with GLP-1 drugs and an intense public discourse on the costs of healthcare, DOGE has inspired an examination of the costs of bureaucracy and its persistent nature. If you can find a company with discipline on this front, they probably have discipline across the enterprise that isn’t being priced in fully.