How To Use Bureaucracies

Samo Burja at LessWrong:” …The purpose of a bureaucracy is to save the time of a competent person. Put another way: to save time, some competent people will create a system that is meant to do exactly what they want — nothing more and nothing less. In particular, it’s necessary to create a bureaucracy when you are both (a) trying to do something that you do not have the capacity to do on your own, and (b) unable to find a competent, aligned person to handle the project for you. Bureaucracies ameliorate the problem of talent and alignment scarcity.

Features of Bureaucracies

Bureaucrats are expected to act according to a script, or a set of procedures — and that’s it.

Owners don’t trust that bureaucrats will be competent or aligned enough to act in line with the owner’s wishes of their own accord. Given this lack of trust, owners should be trying to disempower bureaucrats. Bureaucracies are built to align people and make them sufficiently competent by chaining them with rules. When bureaucracies deliberately restrict innovation, they are doing it for good reason.

Bureaucrats are meant to have only borrowed power (power that can easily be taken away) given to them by the owner or operator of the bureaucracy.

Effective Bureaucracies

What is an effective, owned bureaucracy? Why are effective bureaucracies owned? To begin, we must make two important distinctions: one between owned and abandoned bureaucracies, and one between effective and ineffective bureaucracies.

Owned bureaucracies are bureaucracies with an owner; they’re bureaucracies that someone can shape. Abandoned bureaucracies are bureaucracies without an owner.

If a bureaucracy is owned, the bureaucracy’s creator is likely the owner. The creator will have knowledge about the setup of the bureaucracy that is necessary for properly reforming it. Others, unless given this information, will not understand the bureaucracy well enough to properly reform it.

The person technically in charge of the bureaucracy (e.g. the C.E.O. of a company who is not its founder) might not be its owner simply because he or she doesn’t have sufficient information about the bureaucracy’s setup to guide it. As a result, the official head of a given bureaucracy may just be another bureaucrat.

While the owner is typically the creator, this needn’t be true, as long as the new owner has come to understand enough of the function of the bureaucracy to make effective adaptations to its procedures.

Effective bureaucracies are bureaucracies that are handling the project they were created to handle. Ineffective bureaucracies are bureaucracies that are not handling the project they were created to handle.

Bureaucracies that are properly set up will be effective at the start. Changes in reality require changes in procedures, however, so a bureaucracy’s procedures inevitably need to be altered appropriately for it to remain effective. Over time, abandoned bureaucracies, having no person who can functionally shape the bureaucracy to make these changes, quickly become ineffective bureaucracies.

Owned bureaucracies, on the other hand, have a shot at making these adaptations to prevent decay. If the owner is skilled, the bureaucracy’s procedures can be modified, and the bureaucracy will continue serving its original purpose. If the owner is unskilled, it is as if the bureaucracy is abandoned — the owner’s efforts to change the bureaucracy’s strategies won’t yield successful adaptation, and the bureaucracy will become ineffective. As a result, for a bureaucracy to remain effective over time, it must be an owned, not abandoned, bureaucracy with a sufficiently capable owner.

Losing and Dismantling Bureaucracies

Bureaucracies are best thought of as an extension of their creator and as a source of power for him or her. However, the owner can lose control of the bureaucracy over time, as bureaucrats convert borrowed power into owned power by exploiting information asymmetries. While owners will try to limit the owned power of their bureaucrats, the bureaucrats will have more than enough time to study the instruments of their control and will learn what is rewarded and what isn’t….

The origin of bureaucracies lies in them extending power and effects far beyond what a single individual can do. They can do so in the absence of expensive and difficult coordination, or difficult to train and evaluate individual talent.

Much like factories can produce cheap products at scale with unskilled labor, displacing craftsmen, so have bureaucracies displaced local social fabric as the generators of social outcomes.

We find ourselves embedded in a bureaucratized landscape. What can or cannot be done in it, is determined by the organizations composing it. The constant drive by talented individuals to both extend power and make due with unskilled white collar labor (a category that economists should recognize and talk more about) have littered the landscape with many large organizations. Some remain piloted, others are long abandoned. Some continue to perform vital social functions, others lumber about making life difficult.

Much as we might bemoan the very real human cost bureaucracies impose, they currently provide services at economies that are otherwise simply not possible. We must acknowledge our collective and individual dependence on them and plan to interact accordingly….(More)”.