Effective Management: From a Linear Approach to Decentralization in Management

Dear readers, I'm glad to welcome you to my blog. The goal of this article is to introduce you to the new challenges in the field of project management and business operations, that have emerged in 2023-2024, as well as possible solutions. There is no hidden advertising here, just pure data and its interpretation based on my expertise. As always, the devil is in the details, and the answer next door.

Project management is an approach that answers the question of how we organize the work of a team to implement a particular project. We are all familiar with methodologies like Scrum, Agile, Waterfall, and Kanban, but we don’t always consider the underlying logic that shapes these approaches. The paradox is that almost all tools, aside from flexible methodologies, were created over the last century when the market was growing and evolving linearly and predictably. In other words, almost all modern project management, as a set of methodologies, is built on linear logic for project execution.

But what should we do now, when nearly all constants in the market are changing? If we imagine that we are solving an algebraic equation, previously, the equation had more known variables and just a few unknowns that we could calculate. Now, with almost everything changing, we have far more unknowns or constantly shifting variables, making the planning of long-term projects extremely complex, especially in areas related to physical materials, embedded systems, hardware, and large-scale development.

If we look at a practical example, let’s consider how much more complex the criteria have become for a person deciding to purchase a simple pack of chewing gum. Now it matters where it was made, by whom, what the reputation of the manufacturer and seller is, whether it is sugar-free or not, whether it was produced in country X or country Y, whether it is advertised by a man or a woman, and so on. And note that this has happened in the last 10 years.

Businesses as systems must significantly evolve and become more complex to remain effective and profitable. But how can this be done effectively under such conditions, when almost everything is changing, from geopolitics and customs duties on goods, to consumer behavior patterns?

For businesses, this situation creates two new needs:

• Either to build their own system of verification of critical data for business operations and project implementation;
• Or to have quick access to expertise that can verify the various data used in the project.

This situation raises several questions for businesses:

• What project margin is required to cover the potential risks during implementation?
• How will force force-majeure situations be resolved with partners and stakeholders during the project implementation?
• What qualities should the team possess to successfully execute the project?
• What conditions need to be created within the company, and which methodology should be used to manage the project team?

From the perspective of investment management, we have two additional critical parameters emerge when evaluating a business:

• Time to market;
• Requirements for the team responsible for implementation.

The systemic answer to most of the questions lies in using a systematic approach for organizing businesses and projects, and frameworks built on linear logic for simple linear processes. Due to the vast number of simultaneous changes, the market has shifted from linearity and predictability into the chaos of constant fluctuations. This is why no linear or sequential solutions and methodologies can be effective anymore. A vertically integrated organizational structure, where decision-making is the responsibility of executives, also stops working because there are far more unforeseen events than these leaders have time for, and the procedures in place are no longer sufficient to address them. Agile methodologies might save the situation for a while, but the number of exceptions where they will be ineffective is likely to increase.

All of this raises the question of adopting a decentralized management system for businesses, distributing responsibility across the entire team, and using still-effective agile methodologies for project management while implementing a systematic approach to management. It is also crucial to create the most comfortable conditions for the team to prevent emotional burnout and avoid wasting even more time. With such a colossal and often unconscious burden on the nervous system, the risks of nervous breakdowns or burnout among key employees increase significantly. Therefore, the 24/7 work approach is likely to be destructive and is better left to competitors. On the other hand, a carefully evaluated project, well-defined requirements, and a selected team working in a 4-day-a-week hybrid format could be much more productive and financially beneficial.

For those who may criticize this perspective, I suggest analyzing recent bankruptcy statistics and looking into transaction costs in project businesses, divided into external and internal losses.

On this optimistic note, I wish you good spirits and projects with high margins.

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Artem Deshytskyi