Tuesday, March 20, 2007

All Monoplies tend to become corrupt

This is not about I.T., but we have to work in the real world :-) It does affect us and our work.

That's a Big Statement: ALL Monoplies tend to become corrupt.
The codasyl is, given enought time.

The reasoning/explantion is very simpe - comes from feedback theory.
For any effective control system you need a controller, input and output sensors and two sets of actuators. These form a feedback system that attempts to maintain the system at a 'set-point'. There's the whole open/closed loop control thing. 'Open' means you do no control. 'Closed' systems are what I'm considering here.

The input and output sensors are needed to feed the model embedded in the controller.
- the output is the state you want near the 'set-point'. You have to know if you are on-target or not.
- input levels/rates/values are needed to drive the model the controller embodies.

The actuators adjust the controllable input - one set to increase, another to set decrease. There may be some inputs to the process that you can't control. Such environmental inputs - like air or water. You can't control their pressure, temperature, contaminants, ...

The key here is that you need two or more counter-opposing forces. If you have only one, then you can only hold a system where it is (if it's very stable) or drive it in one direction. The limiting case is the system fails or "max's out" - it goes to a maximum value and stays there. The stuck throttle problem - one that no driver wants to encounter.

Applying Control System Theory to Organisations

Management is supposed to be the internal control sytem for organisations. But who keeps them honest? Who checks the output/operations of any organisation?

The feedback system here is external to the organisation:
How do the behaviour and attitudes/thinking of organisations get held to acceptable values?

There has to be external one or more 'counter-vailing' forces that can enforce change - as well as transparent or obvious 'outputs' of the organisation.

Demoncratic Governments enshrine these principles with the "Separation of Powers". There are at least 3 opposing forces: the Parliment, the Executive and the Judicary. Within the Parliment, there are often two 'houses' - offering the possiblility of opposing forces. Within the process of Government, there are many 'checks and balances' - various bodies, such as the Audit Office, Way and Means committee and Productivity Commission, that can both observe the outputs of agencies and enforce changes.

Outside of both public and private sectors is the Media. Their role, beside pedalling 'shock and awe', is to make the 'outputs' of organisations transparent and visible/open. Democracies then rely on the sensitivity of politicians to 'the ballot box' to enforce change - eventually. Taking away/limiting 'free speech' by fiat or threat (of police/military action) or removing the effectiveness elections removes any consequences - short of armed rebellion/uprising.

Publicly held companies are required to report their financial results - and woe betide any executive that tries to lie about these. This provides some level of 'transparent outcomes' with regulatory control. The counter-vailing forces are the executives versus the regulators.

In a market with many suppliers, customers vote with their feet - they dump suppliers who's cost, quality or service are poor.
The counter-vailing forces are the supplier management versus the customer choice. The customer is free to withdraw from or got to a particular supplier. The management can manipulate the internals of the company to maximise performance against their goals in the context of market preferences and constraints.

In a business monopoly, customers are not free to choose another supplier. The external feedback system, the lose customers actuator, is removed. A commercial monopoly can do what it likes with impunity - until some natural limiter operates or another effect, such as government intervention, occurs.

But there are very large Private Sector monopolies:
- Police
- Military
- (public) Health
- (public) Education, primary, secondary, tertiary
- Local Councils
- 'Secret Squirrel' agencies - like Military Intelligence and other "National Interest Classified" organisations.
- Government bureaucrasies

These organisations are notionally audited ('opposed') by Ombudsmen and Auditors.

But the one essential management output is never reviewed independently - managerial decisions.

All these organisations tend to become overtly corrupt - money or power & influence - or covertly - lassitude, perverse behaviours, institutionalised bullying, harrasment and discrimination, structural inefficiences and ineffectiveness, and completely ignoring or disrepecting those whose service they are in (their ultimate employers) - the public.

For secret organisations, the lack of transparent outputs is even worse. The 'independent' reviewers are impossible to find - only people from within the closed community (they are 'cleared') are allowed to view the evidence and ask questions. A free-floating monoculture very different from the enclosing Society and the organisations commission, can and will develop.


Monopolies are bad.
Unrestrainted monopolies are worse - eventually becoming a Law unto Themselves - with either over or covert corruption.
Private Sector monopolies are the worst. There are no effective mechanisims to control them.

Effective, frequent independent external reviews of both managerial decisions and 'Corporate Culture' [the behaviour, values, morals and ethics shown, not espoused] are essential to prevent 'free floating monocultures'.

Ideally, three counter-vailing forces are needed, in case any one becomes too strong or one of the 'checkers' becomes too weak.

Then you are left with the problem of: "Who watches the Watchers?"
Us, via the media, transparent/open government and 'free speech'.

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