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The fourth law

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People get waste wrong a lot.

Start with the most basic process analysis technique there is: black box analysis.

As my consulting firm practices the trade – and honesty demands that I acknowledge the synonymity between “my consulting firm” and “me” – a black box is defined by four process parameters: (1) outputs, or what the process produces; (2) inputs, or what it converts into its outputs; (3) resources, the tools the process uses to convert inputs into outputs; and (4) constraints, which are forces, and conditions that must be taken into account when using resources to convert inputs into outputs.

What is waste, then? With black box analysis as our guide, waste is nothing more than process outputs the process stakeholders don’t want. Burn a log, for example, and you get heat to warm you up (a desired output) and CO2 (waste).

This is a bit different from how I often hear the word used. Often, it’s that waste is a process output that I don’t want. That’s selfish.

Or, it’s a constraint the process owner doesn’t like, and especially any process steps that wouldn’t be necessary without the constraint. At the risk of excessive nitpicking, constraint-driven process steps generate outputs. Audit reports are an example. They’re an output that might look like waste to the process owner, but are actually the inputs to some other process – regulatory reporting, for example.

Then there’s the consultant’s favorite: whole processes that can be dispensed with. Except that this is exactly the same as the black-box definition of waste, extended to processes that produce only outputs no one wants.

Which gets us to this week’s subject – effective governance, managed by governance councils, as opposed to governance committees. As we discussed last week, (or if you aren’t in the mood to click the link), a committee is a group whose members are there to look out for their area’s interests and negotiate deals that do so.

A council, in contrast, is composed of members all of whom consider themselves leaders of the whole company and collaborate to make decisions that help make the enterprise more competitive in its marketplace.

But … and there’s always a “but,” isn’t there, unless there’s a “however” to take its place … but, I say, councils are at constant risk of decaying into committees. All that’s needed is one member who violates the we’re-all-leaders-of-the-whole-company principle.

Because, as was also pointed out last week, when negotiating treaties about nuclear weapons, unilateral disarmament is a synonym for “surrender.”

How can an organization charter a council in a way that either encourages its members to continue to be whole-enterprise leaders, or, failing that, discourages its members from devolving into representatives?

This is very much the same challenge a company’s executive leadership faces when trying to eliminate organizational silos, only instead of managers running their departments as if they’re competing with the department down the hall, they’re negotiating with other council members using the same logic.

Same mindset, different scope of action.

The solution isn’t particularly complicated: Look at every manager’s incentives and make sure they encourage desirable attitudes and behavior.

Except that you’re unlikely to have the authority and sphere of action to do this.

Simple solution #2: Call the offending council member on it. It isn’t hard to spot someone who’s negotiating on their own behalf. Point it out – good naturedly, as there’s no point in getting someone like this on your wrong side – but point it out directly. “Now Pat,” you might say, “it’s clear how what you’re advocating would be helpful to HR, but not how it would be useful to any other department. If you ran manufacturing instead of human resources, would you still be advocating this?”

Or, there is a third approach. Form a small, temporary team – three members is a good size – and have them collaborate offline to resolve whatever decision the governance council is wresting with. Ask for volunteers and choose two you know you can trust to keep everyone else honest.

Bob’s last word: We might have just discovered a new law of thermodynamics. You might recall Ginsberg’s restatement of the (up until just now) three laws of thermodynamics: You can’t win, you can’t break even, and you can’t quit the game.

Our newly discovered fourth law? The more highly optimized a system is, the more unstable it is.

Bob’s sales pitch: If you’d like the KJR take on just about anything (I’ve written 1,700 or so of these missives, so good, bad, or indifferent you’re likely to find something that fits), you’re invited to search the archives as my guest. You might, for example, be interested in what else I’ve had to say about organizational siloes. Search for “silo” and you’ll find 40 mentions (this was my favorite).