Insight 8

Companies aren’t guided by logic, but by organizational habits.

“Companies aren’t families. They’re battlefields in a civil war. Yet despite this capacity for internecine warfare, most companies roll along relatively peacefully, year after year, because they have routines – habits – that create truces that allow everyone to set aside their rivalries long enough to get a day’s work done.”

Routines that create truces are how work get done. While an external review may make it seem like companies are guided by logic, their decisions are in fact guided by a number of organizational habits. Habits are what allow companies with any number of clashing personalities to function. Work truces permit habits to sustain themselves and for companies to excel. Organizational habits make it so that companies don’t have to reinvent themselves at every step. Without these truces, members of the company would only be interested in their own advancement and throw their shipmates overboard.

These truces are only durable, however, when they are balanced. In one Rhode Island hospital, routines had created an “uneasy peace” between nurses and doctors. Yes, the organization functioned, but at the expense of the nurses, who were exclusively giving up power to maintain the truce. While the nurses made extra efforts – double-checking medications, writing clearly on charts, stoically enduring abuse from the overstressed doctors, as well as letting the staff know which doctors allowed operating-room suggestions – the doctors rarely even bothered to learn the nurses’ names. As one nurse explained, “The doctors were in charge, and we were underlings. We tucked in our tails and survived.”

When crucial moments arose, however, this one-sided truce failed the hospital. During one procedure, a nurse attempted to intervene before a surgeon made a hasty incision, but was ignored – resulting in the wrong side of an eighty-six-year-old man’s head being opened up.

“Organization habits offer a basic promise: If you follow the established patterns and abide by the truce, then rivalries won’t destroy the company, the profits will roll in, and eventually, everyone will get rich. A salesperson, for example, knows she can boost her bonus by giving favored customers hefty discounts in exchange for larger orders. But she also knows if every salesperson gives away hefty discounts, the firm will go bankrupt and there won’t be any bonuses to hand out. So a routine emerges: The salespersons all get together every January and agree to limit how many discounts they offer in order to protect the company’s profits, and at the end of year, everyone gets a raise.”


VIDEO 8: Watch Charles explain the similarities between organizational and individual habits.

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