Authored by Charles Hugh Smith via OfTwoMinds blog,

Imagine an institution whose ratchet was set to relentlessly reduce budget, staffing and processes while focusing on increasing output / results.

It’s tempting to personalize our problems, as those in power tend to possess all the traits that qualify one for immediate delivery to Devil’s Island as a danger to humanity. Rather than focus on bad people in power, let’s consider the good people working in institutions and agencies, of whom there are many, trying their best to keep the status quo glued together.

The problem they face is systemic and structural: there are no self-correcting mechanisms in American institutions other than running out of money, which rarely happens as money can be printed or borrowed in whatever quantities are needed to bail out the institutions that are the social technology / social infrastructure of our economy and society.

In systems / evolutionary terms, there has never been any need to develop corrective feedback, self-correcting mechanisms, triage protocols or any other institutionalized “muscle memory” responses to sclerosis and dysfunction or to the existential threats posed by multiple mutually-reinforcing crises (i.e. polycrisis) because no recession in the past 78 years has ever lasted more than a few quarters and so the money has always continued flowing in ever greater quantities once the spot of bother passes.

The sole institutional response to failure is to replace the big boss, on the theory that a new “supreme leader” will be able to fix the mess with managerial experience, financial acumen and inspirational leadership.

If the institution lacks the structures–feedback loops, self-correction, the means to radically transform the entire institution as needed–then this is akin to dropping someone in a desert and tasking them to create the Garden of Eden. It cannot be done because the needed tools and resources are not available.

The institutional tools don’t exist because all that the employees have ever experienced is The Ratchet Effect: like a mechanical ratchet that only allows a cable to move in one direction, institutions only have the mechanisms to expand: higher budgets, more staff, more meetings, more regulations, more compliance reporting, all of which define the staff’s conception of work and the purpose of the institution.

The output and results are secondary to the demands of process, which continually expand: the task of the staff is fulfilling the processes that define “work”: attend meetings, fill out compliance reports, enter the data, pass it on to the next department, etc. Whether the mission of the institution is actually being fulfilled is lost in the tyranny of process, the assumption being that if everybody fulfills their job description then the organization’s mission would automatically be fulfilled.

Ironically, the processes that are supposed to fulfill the organization’s mission end up being the substitution for the mission: there’s no meaningful feedback on the goal or purpose, there is only feedback on completing processes. All accountability is for completing processes, not for results.

Did the university’s education actually prepare the graduate for a successful career and life, or was it little more than a rubber stamp? The answer is nobody knows because the feedback required to make that assessment–brutally honest, stripped of sugarcoating–doesn’t exist.

Meanwhile, the threshold for organizational collapse keeps ratcheting closer to the breaking point. As budgets, staffing and processes bloat, actual results falter, causing the leadership to demand more staffing and budget to “fix the problem.” The actual, unaddressed problem is the organization’s faulty structure of Ratchet Effect expansion as the “solution” to every manifestation of failure.

lacking any institutionalized requirement to perform triage, to prioritize the mission over process, the organization stumbles off the cliff once budgets are cut. Since there has never been any pressing need for triage, ruthless prioritization, slashing make-work in favor of real-world, measurable results, and the imposition of accountability on every employee not for compliance but for results, the organization never evolved these capabilities. The only capability the organization evolved was to ceaselessly expand.

Imagine an institution whose ratchet was set to relentlessly reduce budget, staffing and processes while focusing on increasing output / results. Imagine an institutional structure that focused solely on feedback of results rather than processes. Imagine an institutional structure that demanded constant triage to weed out needless regulations and processes, who left processes open to those accountable for results, a structure that enabled managers to radically re-order the structure on the fly to better serve the mission.

Imagine an institution capable of instantiating the Pareto Principle, of slashing the budget by 20% while increasing output, or even more radically, cutting the staff by 80% while increasing results. This is of course “impossible” until the money runs out or loses its purchasing power. Then there is no other option but triage and a radical re-conception of organizational structures, missions and results.

Management guru Peter Drucker foresaw the obsolescence and replacement of institutions we consider permanent. He understood that ultimately, every organization, from a sole proprietorship to a sprawling agency employing thousands, is an enterprise that doesn’t have profits / results, it only has costs.

Our social technology has ossified while our consumer technology overloads our daily lives with shadow work once performed by public and private organizations. Squeezed between corporate monopolies stripmining us with addictive technologies and crapified goods and services (planned obsolescence run amok) because there is no real competition left, and sclerotic institutions that respond to failure by expanding, we need a radical reversal of the Ratchet Effect. Nothing less will matter.

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