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David Toole: What are institutions for?

Institutions at their best are the definitive expression of what it means to be human, and their purpose is to generate creativity by organizing human efforts to a common end.

Photo by Alfred Palmer / Library of Congress
People can accomplish amazing feats when organized towards a common goal. During WWII, the U.S. produced more than 300,000 planes in five years. Here workers assemble B-25 bombers at North American Aviation, Kansas City, in 1942.

November 22, 2011

Wendell Berry once asked an incisive question: “What are people for?” Berry posed this question to make the point that the shifts from country to city that were redefining the demographics of America (and of the world) were not an obvious advance in the human condition.

It is only a small step from Berry’s question to this one: “What are institutions for?”

We live almost entirely within institutions of one sort or another. We are, as Robert Greenleaf once said, “institution-bound.” Moreover, we are in the habit of making grand claims about our institutions -- often about their failures, sometimes about their successes. But we rarely pause to ask ourselves about their purpose.

Peter Drucker once defined an institution as “an instrument for the organization of human efforts to a common end.” Drucker came to this definition when reflecting on his time working as a consultant for General Motors during World War II. GM was integral to the unprecedented organization of human efforts that allowed the United States to meet the needs of U.S. and Allied forces.

During the war, the fruits of these organizational efforts were simply astounding. For example, the United States produced more than 300,000 planes from January 1940 through August 1945. At the peak of production in March 1944, when Drucker was working with GM, U.S. workers were putting 290 new aircraft in service every day, a pace of 12 per hour -- 24/7.

In just eight days, they were producing more planes than had existed in the entire Army Air Corps in 1939. What was required to accomplish such a feat?

Drucker’s answer: “Most of us … fail to understand that modern production … is not based on raw materials or gadgets but on principles of organization -- organization not of machines but of human beings.”

The lesson is simple: human accomplishment depends upon the ways in which human beings organize themselves and their efforts toward a common end; conversely, human failure on any significant scale is often the result of poor or misdirected organization.

The startling successes of GM’s organization of human efforts in the 1940s were tied to the goal of defeating the aggressive ambitions of the Germans and Japanese. Sixty years later, GM was near collapse, not because it had failed to continue to build on the organizational lessons of wartime production, but because it had lost its way.

In this vein, failure is as instructive as success.

Consider Hurricane Katrina and the demise of New Orleans. The failure here was so immense that it is hard to grasp, until we realize that it was the failure of specific institutions: chief among them, the Federal Emergency Management Agency and the Department of Homeland Security.

FEMA was created in 1979, primarily to organize human efforts in response to natural disasters. The DHS predecessor, the Office of Homeland Security, came into being in 2001 to organize human efforts to protect the United States from terrorist attacks.

In 2003, FEMA became a part of the new Department of Homeland Security. It turns out that how you organize human efforts to respond to a natural disaster like Katrina is markedly different from the way you organize such efforts to prevent terrorism.

The many studies of our response to Katrina that now exist make it clear that the whole affair was a massive mis-organization of human efforts caused by deep institutional confusion about the ends being served.

Not apparent in Drucker’s definition is that institutions are defined not only by their ends but also by their beginnings, but this is evident in the term “institution” itself. The Latin root means “to set up, begin, arrange, order.”

As one online dictionary (if not the OED) has it, “institution” in this sense refers to “the act of starting something for the first time; introducing something new.” Indeed, this dictionary lists “innovation” as a synonym for “institution,” challenging our tendency to equate “institution” with those things already well-established.

Certainly, when we point to the Last Supper and speak of the words of institution, we are using the term in this sense of innovation. At that table in Jerusalem on the night that his ministry took its decisive turn toward the cross, Jesus was starting something new, and two decades later, so was Paul. Before the church was an institution, it was an innovation.

It is not enough, then, to say that institutions are for organizing human efforts to a common end. We must add that they are for the generative organization of human efforts, else we have done little more than define a bureaucracy.

Ants have colonies and bees have hives. Human beings have institutions.

Considered in this light, institutions at their best are the definitive expression of what it means to be human. Their purpose is not simply to organize our efforts or to aim us at an end but, through both, to generate our creativity -- and in so doing to allow us to attain our purpose as human beings who are created in the image of God and who exist, with our own creative potential, for the glory of God.

The movie studio Pixar illustrates the role generative organization plays in a vibrant institution.

Ed Catmull, co-founder and president, wrote in Harvard Business Review in 2008 that Pixar’s unprecedented success (by then, nine blockbuster films in 14 years) has not been the result of luck but of “adherence to a set of principles and practices for managing creative talent and risk.”

Catmull notes that Pixar executives have to resist the “natural tendency to avoid or minimize risks, which … is much easier said than done. In the movie business and plenty of others, this instinct leads executives to choose to copy successes rather than try to create something brand-new.” Management’s job is “not to prevent risk but to build the capability to recover when failures occur,” he says. Catmull goes on to note that the capacity for recovering from failure rests in talented people.

The challenge, Catmull says, “is getting talented people to work effectively with one another. That takes trust and respect, which we as managers can’t mandate; they must be earned over time. What we can do is construct an environment that nurtures trusting and respectful relationships and unleashes everyone’s creativity. If we get that right, the result is a vibrant community where talented people are loyal to one another and their collective work, everyone feels that they are part of something extraordinary, and their passion and accomplishments make the community a magnet for talented people coming out of schools or working at other places.”

Note that the goal of constructing a supportive environment is to unleash everyone’s creativity -- and that “construction” is more than a metaphor.

“Most buildings,” Catmull says, “are designed for some functional purpose, but ours is structured to maximize inadvertent encounters.” Particularly in creative endeavors, he says, “barriers [between disciplines] are impediments to producing great work, and therefore we must do everything we can to tear them down.”

Pixar removes such barriers not only through the arrangement of physical space but in two of its foundational operating principles: “Everyone must have the freedom to communicate with anyone”; and “it must be safe for everyone to offer ideas.” These principles are supported not only by the space itself but by Pixar’s embodiment of transformative leadership.

“In filmmaking and many other kinds of complex product development,” Catmull says, “creativity involves a large number of people from different disciplines working effectively together to solve a great many problems. … Every single member of the 200- to 250-person production group makes suggestions. … The leaders sort through a mass of ideas to find the ones that fit into a coherent whole -- that support the story -- which is a very difficult task. … The process is downright scary. Then again, if we aren’t always at least a little scared, we’re not doing our job.”

One of the benefits of always being a little scared is that it guards against complacency, which is the enemy of creativity.

Catmull credits Walt Disney with understanding this aspect of creativity. “He believed that when continual change, or reinvention, is the norm in an organization, … magical things happen.”

Catmull ends his account of Pixar by noting his 20-year pursuit of making the first computer-animated film. His efforts culminated in “Toy Story,” after which, Catmull confesses, “I was a bit lost. But then I realized the most exciting thing I had ever done was to help create the unique environment that allowed that film to be made. My new goal became … to build a studio that had the depth, robustness, and will to keep searching for the hard truths that preserve the confluence of forces necessary to create magic.”

Openness to fear, risk and failure; nurture of trusting and respectful relationships; pursuit of hard truths; the freedom of everyone to communicate and offer ideas; loyalty to one another and to collective work; recognition of the value of inadvertent encounters; commitment to breaking down barriers; reinvention as the norm; a vibrant community of passion and accomplishment that serves as a magnet for others, especially youth -- and all in the service of something extraordinary, even something magical.

It is interesting, isn’t it, that we find all that in Pixar?

Sometimes God and the gospel get out ahead of the church. Christian leaders should take that both as grounds for hope and as a reminder of what Christian institutions are for.