The Arbitrary Nature of Authority-A case study

Hi Allon,

I run a think-tank with 75 scientists. Most of the staff have PhD’s or MScs; about one third come from 8200 (Israeli crypto-spying unit).

Of course, as a manager, I allow our staff a great deal of freedom. We have 8  units with independent, almost unlimited  budgets. There are no timetables, and each unit  gets a very broad mandate to produce anything they want in such areas as “bridges and railway infrastructure protection”.

As a manager, I face one major problem. Everything is an argument. I get push back about our taxi-policy; our pension plans are ridiculed although they are very fair, the restaurants we order from are decimated by our staff on social media. No caterer wants to work with us anymore!

All of our rules and procedures are very flexible and when I get push back, I go to great lengths to explain the rationale after the unit managers throw up their hands in despair.  Last year, we  trained all unit managers in “managing creative people” but it was a colossal failure.

Things are out of hand;  no one wants to be a unit manager anymore. Three unit managers have resigned; I fear  a meltdown of all authority. All the shit floats up to my desk.

Can we meet and discuss this?

Prof Noa D.

My work with Professor Noa lasted 3 meetings.

In our first meeting, I recommended that Noa implement one rule which was arbitrary in nature, and provide no explanation yet very severe consequence for non-compliance.

The rule was expenses had be given in by 900 AM by the 27th of each month; if not, staff  would be reimbursed 80 days later, not immediately upon the next paycheck. Since the law calls for reimbursement within three months, this rule was kosher, albeit “out of the blue” and not all logical;  the IT system was equipped to reimburse expenses at anytime in real time. 

Prof Noa was instructed not to be provide any explanation whatsoever, except “that’s the way it is.”

In our second meeting, Noa reported that the rule was extremely unpopular but was strictly implemented. Two scientists had suggested that Noa see a shrink, and she had ignored their comments, and told them “do as you are told”.

In our final meeting six months later, Prof Noa told me that compliance with all regulations was far better than it ever was in the past. “And Allon, you were right; authority needs to be seen as somewhat arbitrary, otherwise one doesn’t stand a chance”.

Noa then invited me out to long lunch in the Yemenite Quarter of Tel Aviv. 












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Acquire an innovative company; then choke it to death

Israeli companies (often start ups) are often acquired by European, American and Chinese companies which are in need of innovation. The acquired Israeli companies often already have a value-add product for the purchaser, or even a suite of products, and the expectation is that the acquisition will result in an endless stream of innovation.

Indeed, this is the very essence of the Israeli high-tech scene. Israeli companies often lack the ability to scale properly after innovation due to poor discipline as well as distance from the market place , and the acquiring company has proximity both to market, an install base as well as resources to make it happen.

The success rate of integrating innovative companies is impressive but there are failures, huge failures, and I want to point out the most frequent reason for these failures.

1-Too much “process” is thrown at the Israelis: development, methodologies, business process, new IT systems, all of which divert the focus of the acquired company from continuing to innovate.

2-Senior  management on the acquiring side puts the Israeli site at the mercy of HQ -based middle managers and staff members who have no skills in managing innovation, and micromanage the Israelis to death.

3-Upon acquisition, top talent and key developers leave, fearing becoming part of a “big company”

4-Frequent clashes occur as the Israeli site strives to gain favour directly  with very top decision makers to ensure that the Israeli site maintains strategic positioning in the company roadmap. This often is very effective, but puts the Israeli site in conflict with everyone except the acquiring CEO.

5-The acquiring company wants the innovation, but lacks the stomach to deal with the results of “fast and dirty”, so characteristic of Israeli high tech, where speed is strategy.

6-Israeli developers tend to tell customers what they need, as opposed to giving customers what they want; this causes huge clashes with the acquiring company’s sales force, who want innovation, but don’t like how innovators interact with their customers.

7 The sales force of the acquiring company is reticent to sell innovative products to their clients, so they choke the products of the acquired company to death, in a slow squeeze, to the dismay of the acquiring CEO and the Israeli site. This is often a mean and brutal power play.





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On the inability of the EU to vaccinate its population-an annoying OD perspective

The media is full of stories as to why the European Union has failed to vaccinate its population against Covid 19. I am adding on one more.

My unique vantage point on the EU vaccine crisis stems from looking thru the lenses of an OD practitioner with (I hope) relevant experience in global organizations. As usual, I’ll keep it short and answer comments and queries that readers leave in the relevant section below.

Mergers take an awful long time to heal and as such, the European Union is still naturally experiencing severe post-merger integration issues. Post-merger organizations make decisions slowly because the centres of power are not developed enough to make coherent decisions. As a result, post-merger organizations suffer from decisional constipation, with key issues stuck in the system because no one is quite strong enough to push decisions thru even after these decisions have been made.

Post merger organizations are larger, but they cannot yet leverage their size. Their size becomes a major liability because it slows them down until they figure out how it all works, which can and does take  generations.

Procurement and deployment, when left in the hands of bureaucrats, becomes self-serving, because there is no one powerful client who has to be pleased and/or no dictator holding a gun to your head. Thus, negotiations go on for ever because the sense of urgency is lacking. Nothing, absolutely nothing, is more dangerous to a project than a self-serving bureaucracy immune to immense pressure from a powerful stakeholder.

Values prevalent in the major EU countries are liberal, with lots of slogans like about “no one is safe until we are all safe”. When these values impact a rigid bureaucracy and an organization with weak ultimate stakeholder pressure, another crushing blow is dealt to an effect coping strategy. So what’s wrong with these values, one may ask? To be honest, lots is wrong. Demand creates supply; central planning creates shortages. The Soviet Union taught that lesson very well. The strong help the weak because they are strong. You put on your child’s emergency mask on an airplane only after put on your own, otherwise you both die. Strong healthy nations can export vaccines only when they themselves no longer feel threatened. That’s common sense, except that neither common sense nor value consistency is common during post-merger integration.

When Mr. Yu asks his supplier, Mr. McGraw from whom he buys from millions of dollars, to hire his good-for-nothing-son, McGraw thinks Yu is corrupt. Yu thinks McGraw is thankless.

But Yu is right; favours do work, when they are mutually agreed to. As a matter of fact, favours work much faster than do negotiated contracts. If I were Italian, or Spanish, or Greek, I would prefer my procurer had pockets full of money to better leverage pressure (bribe) a vaccine supplier, rather than a book of procurement rules written by some clerk who wants to follow process and be “fair”, and immune from stakeholder pressure. 

Is this crisis a defining moment which will speed up the post merger integration of the EU? Well that’s another post, and it’s a crap shot at this point. Too early to call. It depends how many bodies will pile up and how ruinous the economy becomes within the nation states composing the EU. 






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