I wrote before about precious instability, the idea that I design my life in an "unstable" fashion, then carefully control it, in order to make it more manoeuverable. For people who know me, some recent events might have put that into a bit more context.
But one thing I realized since then is that this concept is much more widely applicable than just me and my idiosyncratic ways. Modern high-tech business requires this kind of instability, but only when it's in the right places.
Put simply, there are two fundamental ways to manage any project: creatively (ie. a prototype) or using a well-defined process. Well-defined processes are efficient and scalable; creative solutions are resilient and flexible. (I wrote about efficiency vs. resilience before too.) An obvious way to balance the two is what I've been trying to do lately: do it (whatever "it" is, even if it's a business activity) the first time as a creative prototype, then try to generalize what you did into a repeatable process. As with software, making a mostly-right generalized design is usually possible, for a good designer, after you've done it about twice creatively.
But once your process is well-defined, then what? I've experimented with the "hand it off entirely to process-driven people" technique, but that often doesn't work very well, because if your process isn't perfect at the start, process-driven people aren't very good at fixing it. Meanwhile, trying to find some middle ground ("we'll follow the process, but bend the rules whenever necessary") is a disaster, because it's not a combined solution, it's a compromise, and it ends up being neither very efficient nor very creative. Gross.
I don't exactly have a tried-and-true solution to this, but here's what I'm thinking. Joel Spolsky has written about The Development Abstraction Layer, which is a partly-right variant of what I'm going to suggest. What he wants is a programmer's ideal world: the programmer just builds what he wants, which is assumed to be the right thing, and the rest of the company is an "abstraction layer" that gets all the annoying repetitive cruft out of the way. In terms of creativity vs. processes, that means the "developers" are creative, and the rest of the company delivers things based on defined processes (or at least inter-group communication follows defined processes).
The part where I disagree with Joel is the part where I've already specifically screwed up so I figure I can serve as a warning to everyone: developers shouldn't be the ones running the show. Not quite. Smart people who get stuff done (another Joelism) need to be running the show, but it's not about programming and designs and version control and operating systems and XML. It's about business and customer relations and good communication and... being smart, and getting stuff done. It just turns out that Joel's kind of programmer is exactly the right personality type... if they're deliberately caring about the right things, which is more than just the software.
So how about this. Classify your people into two categories: the creative solutions people and the process-driven people. Don't separate them physically or logistically; they have to work together. The creative solutions people design and update business processes. The process-driven people execute those processes - maybe only after the first prototype - and give rapid feedback on results. Don't worry, Joel, both groups should be smart and get stuff done. But they're two different kinds of people. Some very smart people really have a great time fixing bugs and optimizing failure rates and avoiding creativity at all costs. (Seriously, there are lots of people like this!) These aren't my favourite people to work with, but they're extremely useful because they like doing exactly the kind of stuff that I don't.
At the same time, process-driven people risk falling into dangerously stable ruts and getting blindsided when changes become necessary, because they enjoy their stability and will try to retain it at all costs.
So as a business designer, you need to set up the incentives of the creative and process people correctly. My suggestion? Don't let the process people define their own processes. Make them responsible for executing defined processes efficiently and make creative people responsible for changing the processes to make them efficient.
I call this "dynamic equilibrium," after the term from high school science class. It looks pretty stable, because the majority of people are sitting around executing repeatable processes. It's just that it's not really stable, because exceptions will come up, and when they do, weird stuff happens automatically to re-stabilize the system.
Disclaimer: I haven't tried out this advice yet, but it sounds like fun.
Crap, I really wanted to work in my example about airlines losing my baggage, but it didn't fit... so here it is anyway.
Airlines process absurd amounts of baggage every day very efficiently, and lose a vanishingly small percentage of it. That's an efficient business process.
But every now and then they lose a bag, and they don't know what to do, because if they knew what to do, it wouldn't be lost, sort of by definition.
You need business process people around to deal with the majority of cases, where the bags aren't lost. And you need creative people around to handle the exceptions, learn from them, and fix the processes so even fewer bags get lost.