4000 UK sub postmasters had to repay funds that never went missing in the first place, 900 were convicted of theft, jail time for many and at least 4 suicides. The prosecution of these UK Post Office sub postmasters may have been a direct result of corporate greed, personal incompetence, legal error, rogue bureaucracy, etc. Maybe. But the answer could as well be far more simpler. People ended up in jail because of the fallacious inner logic of the Matrix Management system, chosen in the end 90s. It is these very choices that lulled an organisation, and its management, into the droning governance complacency of due processes. An organisation set up for failure, structurally unable to identify even basic operational liabilities.
If you are new to the UK post office scandal, you may wish to read my previous article first. The Post Office Scandal: Legacy Software, Legacy Management.
In this article I focus on the Why and How. How a business can blind itself into thinking that a systemic failure of that scale is actually nothing more than business as usual. And what was the impact of consultancy companies and management decisions.
For the human side, watch the excellent ITV dramatization Mr Bates vs The Post Office.
The origin story: the necessity of a radical transformation of a public service
In the last years of the 90s, everything changes for the Royal Mail/Post office. It would be unfair not to acknowledge the transformation that it had to undergo.
You want to optimise an enormous footprint of teams, real estate and vehicles, covering the entire territory by design. You want to shed the accreted weight of years of civil service, go back to the core mission, and run profitable operations.
And while you think about this, you get hit by a once in a civilisation technological revolution that basically wipes out one of your core historical functions: emails replace de facto letters in less than a decade. Only the legal ones, summons, registered mail will soon remain.
In these circumstances, your time is running short and you could be forgiven to try and shortcut it with external help. It means that you literally import ideas. They are not yours, or at least you do not present them as yours.
From the off, because they chose to rely on consultancies, the Post Office management sets itself as a messenger more than a leading team. As a manager, their role is to sell internally someone-else’s ideas.
Don’t inform, don’t inspire, don’t involve
That very logic is obvious in a farcical episode that happened at the very same time as the Horizon debacle. The write off of £700m for Horizon led ICL to change its name to Fujitsu to diffuse the failure. And the Post Office decided to change the name as well. Only to drop it just as fast.
Remember “Consignia”? A Top 10 worst name change ever, and a symptom of the Post Office mentality then.
It is understandable to send a signal that you mean business with that transformation. New century, new Britain, new Post Office, new name. Actually these were the years when Arthur Andersen changed to Enron, Philip Morris to Altria.
So, the Royal Mail sounds Tudor-esque, the Post Office too Postman Pat. Erase that, open the XXIth century with a new company name, Consignia. A “modern, meaningful and entirely appropriate” name as the Post Office said. A name that did not come out of a hat.
The creator of it, Dragon Brands consultancy, defined their process as branding ellipses. And to make it happen, the unavoidable acronyms: 3 I’s. The gold standard of to communicate the change: Inform, Inspire and Involve.
Saying it seems to have been enough for the Post Office management, as the name was just dropped a year later to everyone’s relief. Neither the public, the teams, the stakeholders had clearly been Informed, Inspired nor Involved.
An very public, ominous start to a transformation, but also a clear statement of management style.
Matrix management: deconstruct the old organisation into functions instead of mission
This is a symptom of the way the business would be run. It is critical, as the structure you chose will influence how you operate, of course.
There is a direct line between the operational transformation of the Post Office and the sub postmasters cases. In 1999, the government and the Business Secretary, kickstarted the transformation. That meant bringing in the specialists of modern management structures. This meant McKinsey to “Shape [the Post Office] for Competitive Success”.
What is the structure they chose to deploy? “Matrix management”. An organisational choice that has far from neutral impact on an operation.
The clue for the Post Office? The plan immediate references to “get rid of silo mentalities”.
What is silo thinking, why is it so bad, and why is it something that McKinsey obsesses over so much that you make it your PR headline initiative?
A silo is a vertical organisation dedicated to one mission. In this case, it may have been mail collection, mail sorting, counter sales, distribution, … These narrow execution departments optimise one mission. With no broader scope, they are an hinderance if you want to move your company to do something else. Or differently.
For example: selling. Given the size of your collection network, imagine you set the objective: everyone must sell insurances! The silos will not see it as their job, or only sideways. It is added workload. They will resist, and highlight material obstacles. You need something more flexible, more malleable. Further, these vertical department tend to be driven by execution experts, which is also an unwelcome internal resistance.
So, you remove the bottle necks, and dilute the silos into the individual functions they execute. You set this as the new “verticals”, new blocks of competence. Example: collecting the mail means driving, finding the box, stacking it and putting it into bags. So far, it all sounds logical, tactically useful for restructuring and intellectually attractive. It articulates differently the company core competences. In theory.
In practise, the function takes centre place, this is what people will optimise, not delivering the mission itself. Correct execution of the mission, if it exists at all, takes a structural backseat.
Functions are now the primary impulse over mission.
Matrix management confuses accountability
The theory runs that matrix management will naturally optimise resources allocation and performance as each will try and put his best effort. You align your resources to accomplish the mission.
In fact, you just slide into an organisation with a diluted sense of individual responsibility. And you very humanly align on mediocrity.
The basic idea of matrix management is to federate resources from as many function verticals as necessary. Individual loyalty is split between the functions you report to.
“Matrix management” was thought up to optimise temporary resource allocations in projects. So all of these effects were meant to be temporary as well. Using them as a sort of intellectual proxy for structural tasks makes that impact a constant.
In the case of the Post Office, this would mean that accountability is a virtual notion diluted among multiple allegiances. This is what we see in action.
In a word, no one was truly operationally in charge of the decision.
Managers and employees in a matrix are asked to seek constant “clarifications” for their responsibilities. McKinsey themselves is at pains to explain the risks. And so, 50 years on, there is a business book genre titled: How to build a matrix that works.
My answer would be: you do not.
The company energy goes into its corollary: individual plausible deniability.
By nature, matrixed company ends up looking inwards
Matrix management also widens the chasm between operation and management.
By intellectual construction, the mission is not anymore the primary function. The top company management is therefore the referee of “resource alignments”, an arbitrator of the daily operation.
As it goes, the recommendation is that good management “listens”, but does not act.
In the case of the Post Office, we can count the amount of times they listened but did not act. So, it is likely that they thought that they were doing the right thing. By design.
Below the top management, decisions by nature are taken in committee. Which, in case of issue, leads primarily to stalemate and stalling.
That is what you see at play in the Post Office: the mechanical material impact of the organisational choices.
There are experts for that
Who should you listen to?
How could the Horizon software be run without ever be doubted, despite numerous reports, court cases, alerts since the end 90s? Everyone in the loop felt and still feels that the software itself, the data it reported, the resulting prosecutions, was out of their scope, into an established, rock solid, process.
It was safely parked with the experts. No-one at the Post Office, or Fujitsu-Siemens actually felt it was their individual responsibility. Despite knowing that the basic financials they were given and reported back, were suspicious.
These attitudes are a direct, mechanical, but un-understandable consequence of the organisational choices made early on.
From Postman to Man of the Post
So, where you may have once thrived to be the best postman, the Post Office chose to restructure into “collaborative” groups, internal markets. You thrive now to be the best man/woman of the Post. A hive mind.
That explains the shocking tone of the Post Office internal emails and memos: the sub postmasters do not so much steal money than betray the narrative, the hive. They are “nasty” people, traitors.
While the intent was to create a fast, adaptable, modern organisation, the choices of matrix management and the processes set mechanically created an ever more tenuous individual responsibility and accountability from the top down.
The stock defence of the Post Office managers, “how could we have known” has a profoundly perverse inner logic. The real question should be: how could we NOT have known?
Setting the bad example
In matrix management, there is a mechanical logic to the organisation, but it also creates a personal logic.
How to be the vaunted leader if you ultimately have no real responsibility?
Leaders inspire, engage, communicate. They do not solve problems. This is the perversion that creeps in the seminal 2001 Harvard Business Review article.
In the case of the Post Office, they would all get medals, titles and kudos. They did.
It would only have taken one real leader to run double accountancies or maybe internal rolling audits. Maybe set an internal quality insurance sample of 100? Hold off the sign-off of the accounts until the results are in.
The recurring question asked was: is the software solid? My question would have been: are the accounts solid?
Our Mission? The Greater Good
Why does the Post Office case matter? Because, if not addressed properly, it will happen again. And, so far, we bark at the wrong tree.
Look at the interviews, listen to the voices, read the court summaries. It is not the proverbial mediocrity of Evil as defined by Bertolt Brecht, it is the sense that the actions were not only justified. But correct.
The decisions are actually aligned with the system.
Where better to see this dissonance than to read the current mission statement of the Post Office: “We’re here, in person, for the people who rely on us”.
Break it into individual components, and it is either breath-taking disingenuity or total self-absorption. Is it pure performative management or actually not being able to reflect on your actions.
Because, beside the human tragedy, not a single manager of the Post Office so far thought to re-evaluate their initial decisions. In my view, this is because the Post Office management sets itself up for failure and could do nothing else that simply deny the Horizon liability as they had “ticked all the boxes”.
Computer said so. So no.
Obviously, that cannot be the solution, and we should not have to wait 20 years to see justice served. So, we know now what to look out for, but what are the remedies we should think of?
That will be the third article in this trilogy covering the UK Post Office Scandal: Don’t let the Post Office Case happen to you – Fireproof Your Business.
You may wish to read part 1 as well: The Post Office Scandal: Legacy Software, Legacy Management
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