Tag Archives: chaos

Hierarchy of Competence

Hierarchy, of anything, is based on a defined value. In a proper organization, hierarchy is based on competence.

Competence in relation to what? Competence in relation to the work.
Work, defined as decision making and problem solving. Competence begins with the potent combination of capability and skill. A competent person must possess the necessary cognitive capability and the skill to exercise that capability. Skill is a potent combination of technical knowledge and practiced performance. Practiced performance is the expression, the application of competence.

The first question in organizational structure is, who should be the manager? Hierarchy in an organization is based on a value of competence.

Natural Hierarchy

Order out of chaos. What we know and what we don’t know. There are people in the company now. As the mission was discussed, some left, some stayed, some enrolled. Those that are left have to work together, but in what way?

Organizational structure is simply the way we define the working relationships between people. Some of those relationships are vertical. Vertical working relationships are described as managerial and define two things. In that relationship, what is the accountability of each person? In that relationship, who has the authority. Accountability and authority. And, so, a manager is born.

But, who should be the manager? The instant the founder selects a manager, a hierarchy emerges. Some modern companies decry, that because they are modern, they have no managers and thus no hierarchy. Some modern companies believe that hierarchy is an evil social construct that should be banished for social good. But, if there is no manager, there is no hierarchy. If there is no hierarchy, there is no accountability and no authority. And chaos re-emerges.

Hierarchy is a natural sorting of value. Hierarchy is a product of nature, not a social construct. Value can be placed on many things. For mate selection, the value may be attractiveness, physical, chemical, economic. The Tinder swipe is based on a hierarchy of value.

For a company, the value is competence. The organizational structure is a hierarchy of competence. A person climbs the ladder of organizational hierarchy based on their ability (capability) and expression of competence.

In the Beginning

Order and chaos. What we know and what we don’t know. No material successful output is accomplished alone. The most spectacular achievements require a team, a company, an organization.

Prior to a team, prior to an organization, there is chaos. There is no order. Defining and planning an organization brings order. The design is an analysis of what we know, or what we think we know translated into thoughts. This is thinking and the most important part of every CEOs role.

Fielding the organization, hiring people, introduces more chaos, uncertainty, ambiguity, because real people do not follow the perfect design. This is the bane of every startup.

People must be adapted to the organizational design, but there is no motivation to do so. The founder first tries to be the parent, with impatient instruction, repetition and increasing volume. “If I told you once, I told you a thousand times.”

After some time, the founder realizes that motivation will only come by enrollment of the people into the purpose of the enterprise. Next to the perfect organization design emerges the perfect purpose in the form of mission. And the founder has to talk about it. Without people, the founder only had to think. Now, the founder has to communicate, but the thoughts are ill-formed and people have questions. A discussion ensues and, if successful, a company is born. This is the constant struggle of order out of chaos.

Role of the CEO

Order and chaos. That is the balance beam, one foot in order and one foot in chaos. Order is what we know. Chaos is what we do not know. We bring order to chaos by exploring its value in relation to what we know. Assigning value is the framework of hierarchy.

The role of the CEO is to bring order from chaos. The most significant chaos is the future. The future remains chaos because it remains unknown (in spite of economists and futurists who claim to know).

That solitary role at the top must make decisions today in the face of that chaos. Why do some (very few) people land in that role? It is not mathematical logic, only one CEO per company that explains why there are so few, relative to the population. It is the value stream of hierarchy. There are not that many people with stamina against the unknown. CEOs are accountable five to ten years into the future. Most people can hardly make plans to account for the uncertainty of next week. Some people can make effective plans for the uncertainty of next month, or next year. But five years is a very long time. Elements of what we know now and call by name are only concepts in the future of five to ten years.

The primary role of a CEO is to think. Think conceptually. Most people are not very good at it. Some people who land in the role of CEO may not be very good at it. Successful CEOs are those who stand in the face of uncertainty, make decisions today, solve problems today understanding the risks of chaos in five years.

Successful CEOs are those with the capability to bring order out of chaos.

Bringing Order From Chaos

Order and chaos. That is the balance beam, one foot in order and one foot in chaos. Order is what we know. Chaos is what we do not know. We bring order to chaos by exploring its value in relation to what we know. Assigning value is the framework of hierarchy.

Organizational hierarchy is the sorting of value according to some value assignment. Before I tip my hat to the value, let’s look at the role of CEO, stand back and just watch. What do we observe about that role? What are the decisions that must be made, what are the problems that must be solved, what are the risks that must be considered and assumed? At the top? In that solitary role, for which no one else is accountable?

The value hat tip is timespan. While other members of the organization work on different things, the CEO must make the longest timespan decisions and solve the longest timespan problems, considering the longest timespan risks.

The most important task of the CEO is thinking. Thinking about what might happen in five to ten years. That thinking is full of uncertainty and ambiguity, it is full of chaos. It is the role of the CEO to bring some sense of order to that chaos. Because, today we have to make a decision. Five years from now, we may know if that decision was good or if it was bad. Who is to say? We just have to wait. But the decision must be made today.

In Praise of Hierarchy

Order and chaos. That is the balance beam, one foot in order and one foot in chaos. Order is what we know. Chaos is what we do not know. We bring order to chaos by exploring its value in relation to what we know. That value sorts into a mental construct called hierarchy. Human beings (and other life forms) do this as a natural process to determine what we pay attention to.

We assign something a value based on what we know. That value will be different for each person, if each person stops to think about it. Some people do not stop to think about what is of value and simply adopt the value chain of other people (without thinking). In this value chain, some things are more valuable than others and in the sort, a hierarchy emerges.

Organizationally, some mistakenly believe that hierarchy creates a rigid “command and control” sequence for making decisions. We don’t understand hierarchy in relation to its value chain. Organizationally, hierarchy is a value chain or value stream where managers bring value to the decision making and problem solving of their teams. This is the central role of management.

When I ask a group of managers if they have “direct reports,” all hands go up. I announce they have already fallen for the mistaken understanding that they are managers so people can report to them. The truth is, everyone in the company reports to lots of different people. But each team member can only have one manager, and the purpose of that manager is to bring value to the problem solving and decision making of each team member.

Organizational structure is simply the way we define the working relationships between two people. That most important relationship is between a manager and a team member. That is the beginning of the value stream naturally embedded in hierarchy. Bringing order out of chaos.

Midst of Created Chaos

“How do you involve Edmund in the decision making about solving the problem?” I asked.

“As soon as we have the project specs,” Ruben explained, “when we know the outputs and the deadlines, we call a meeting. Edmund is the supervisor, so once we get into production, he is the one to call the shots. So, he is there, at the meeting. He sees all the elements we see, he just cannot connect them together.”


“We have developed a very thorough system that identifies the constraints and keeps them productive. The metrics are easy to follow and the system makes our throughput very predictable. But Edmund fights the system, ignores the system and almost weekly causes a production snafu that could have been prevented.”

“How does he explain the snafu?”

“Usually he manages to jump in and pull the project out of the fire, but not without some overtime and not without putting the project in jeopardy. It’s almost like he is proud of the chaos and being the hero.”

Works Well in Chaos

“What is different about being a Manager?” I asked.

Gerald was quiet. His new Manager had been a great Supervisor, but was having difficulty.

“You have a great employee, team player, always shows up, works well under pressure, your go-to guy in a pinch. What is so different about being a manager?”

Gerald began slowly, “The things he is failing on, are things that go more slowly. He works well in a bit of chaos, but as a Manager, I would expect him to prevent some of that chaos. It’s almost as if he allows the chaos to emerge, so he can show off his stuff. I want him to work on a system, so things are anticipated, projects get routed automatically, conflicts are resolved on paper before they happen.”

“And did he demonstrate any of that behavior before you promoted him?” I asked.

“Well, no, but we thought he would be able to figure that out.”

“Did you ever assign him tasks, management tasks, to test him on his capability to handle those assignments?”

Gerald narrowed his eyes, before his short answer, “No.”

“So, you promoted him to a Manager level, without evidence of Management capability, based on his success at a Supervisor level?”

Out of the Chaos

“Managing 20 projects is different than managing three projects,” Andrew repeated. “And, it’s not just that there are more things to do.”

“How so?” I wanted to know.

“When, you have 20 simultaneous projects, you have to look for patterns. In each of the 20 projects, what is the same and what is different? There is no sense solving the same problem 20 times, when you can solve it once.”

“What else?”

“Every project has a start-up phase, mobilization. Every project has a conclusion, substantial completion, punch out and close-out. And, every project has interior milestones. So, there are patterns to find.”


“And, if you recognize these patterns, you can build a system, a schematic, a flow chart that gives you a visual understanding how the components go together. In some cases, things become predictable, a natural sequence emerges. Some things can be done simultaneously, some things have to wait until something else is finished.”

“So, that’s the external stuff. What’s going on with you. What’s the inside story?”

Andrew stopped, looked down, then up. “Do I have what it takes. In the middle of the frenzy, will I get caught up in the weeds? Or will I have the fortitude to step back from the chaos and make mental sense of the noise?”