All Posts in Organizational Design

|In: Industry Commentary|Last Updated:

In World War II the French lost to the German Army, not because they were “cheese-eating surrender monkeys” but because their generals were prepared for the last war, not the next one. The French soldiers were no less valiant than their German counterparts. Their generals, however, had perfectly positioned them for trench warfare, while the German generals had figured out how to take maximum advantage of the tank.

Taken as a whole, American business seems to be fighting its own version of the last war — “Japan Inc.’s” 1970s invasion, fought with goods that cost less and held up better than anything American manufacturers could produce. Whether it was Toyota or Datsun for cars, or Sony, Panasonic or Mitsubishi for consumer electronics, they cleaned our clocks.

The sad fact is, in this war we were the surrender monkeys (who, even more embarrassingly, considered Velveeta to be a real form of cheese). We shifted our economy from manufacturing to finance and services, sending some manufacturing sectors to offshore partners in their entirety while abandoning others altogether.

At the same time, on the theory that if you can’t beat ’em, join ’em, we obsessed about process through disciplines like Lean, Six Sigma, and Theory of Constraints — not only to organize the manufacturing that remained onshore, but to organize all of the other work as well.

Which is unfortunate, because a lot of the work performed in modern businesses doesn’t fit the process model and shouldn’t be organized as if it did.

A quick refresher: Every business function has six characteristics. Depending on the function their relative importance ranks differently. They are:

  • Fixed cost – the cost of turning the lights on before any work gets done.
  • Incremental cost – the cost of processing one more item.
  • Cycle time – how much time elapses processing one item from start to finish.
  • Throughput – how much work the function churns out in a unit of time … its capacity, in other words.
  • Quality – the absence of defects.
  • Excellence – flexibility, the ability to tailor to individual needs, and the presence of cool stuff.

“Process” is, by definition, a series of well-defined steps which, if followed correctly, yield repeatable, predictable results. It’s just the ticket for mass production.

Which is, for many businesses, either the last war or someone else’s war altogether. The same may be said of many business functions, only more so.

The process disciplines all assume that “better” always means lower incremental costs, higher throughput, and better quality. When you’re engaged in mass production, that’s usually a valid assumption to make for your factory, supply chain, and distribution (although assuming such things when you can consciously decide them instead is rarely a good idea).

Beyond that? Based on my exposure and experience, very little of the work that goes on in today’s companies fits the mass production model … incremental cost, capacity, and quality frequently matter less than keeping fixed costs low, being fast and responsive, and allowing exceptions, tailoring results, and including sales-worthy features and functionality.

These characteristics lie in the realm of business practices, not business processes … the realm where flexibility, quickness, and excellence hold sway. There’s no reason to expect methodologies designed to support mass production to deliver the right results, and lots of reasons to suspect they’ll fail at it.

My knowledge, though, comes from a non-random sample. Worse, I’m as prone to seeing what I want to see as anyone else.

We need data. You’re going to provide some (I hope … please?).

I’ve set up a simple survey form. It provides room for you to enter:

  • Company name: To be used to help prevent spurious entries; deleted after that.
  • Your email address: Same purpose, likewise confidential and deleted after tabulation.
  • Business size: Estimated number of employees, including outsourced labor.
  • Four most important business functions: These are divided into two pairs. The first consists of the two that most differentiate your company from its competitors and drive business success (such as sales, product development, and manufacturing). The second consists of the two most important supporting processes (which might include recruiting, app dev, or accounting).
  • Top three business function optimization parameters: For each business function, which three of the six … fixed cost, incremental cost, cycle time, throughput, quality, or excellence … are most important.

Fill out the survey form yourself (you’ll find it here) and spread the word, too. The more organizations that are represented, the more useful and valid the conclusions will be.

In the end, there’s just no substitute for actual evidence.

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|In: Leadership|Last Updated:

Imagine you lead an organization. Now imagine you want to improve how things get done.

It’s a redundancy, because if you lead an organization and haven’t identified something that can be done better than it’s being done right now, you’re coasting. As a business leader, your job isn’t to make sure things get done. It’s to build an organization that makes sure things get done; then to make sure the organization constantly gets better at what it does.

Here’s your challenge: Improving how something gets done is mostly beyond your control.

Say, for example, you decide ITIL (a popular version of what constitutes good IT practice) isn’t just in your organization’s future, it is your organization’s future.

Now what?

ITIL is a process framework. It provides an organized catalog of the processes IT has to master to be considered competent at what it does. To implement ITIL, you need to:

  • Select: Decide which processes are most critical to your organization’s success right now.
  • Assess your current level of competence in those processes.
  • Focus: Determine how the six process optimization parameters rank in importance (fixed cost, incremental cost, cycle time, throughput, quality, and excellence).
  • Target: Optionally, set specific quantitative criteria for what constitutes successful improvement.
  • Design the future state (ITIL doesn’t prescribe a single “best practice” for each process, understanding there is no such thing).
  • Plan: Figure out how you’re going to get from here to there.
  • Implement: Follow the plan until you’ve made if from here to there.
  • Iterate: As an alternative to designing, planning, and implementing, identify the weakest process link, fix it, and repeat until the process is in good shape.

Except that when I said “… you need to,” I meant the organization needs to. As its leader, at most you should be part of selecting, assessing, focusing and targeting. After that, your ability to influence is indirect.

Which leads to a skill all business leaders need to develop if they want to be effective at effecting change. To coin a phrase, call it Leadership Intervention Points analysis (LIP).

Leadership intervention points are, as the name suggests, the places a leader can intervene without micromanaging or otherwise violating the system of delegations that comprises the organizational chart.

Imagine IT’s capacity planning process is an improvement target. Now imagine that as CIO you decide to personally involve yourself in future state process design and implementation planning.

Now imagine your head of IT operations isn’t completely and utterly pathetic — something that had better be true, because otherwise IT’s biggest challenge is your ability to recruit, select, hire, retain, and promote talent.

Your personal involvement subverts the authority of the person you put in charge and disenfranchises the staff who should be responsible for making things work. You’re telling everyone what to do — delegating tasks instead of goals (if it isn’t clear why this is undesirable, you seriously need to read Chapter 3 of Leading IT: (Still) the Toughest Job in the World).

Worse yet, it prevents you from setting goals and targets, because once you tell everyone how they’re supposed to do their work you take away their autonomy … having prescribed the means, you now have to accept whatever ends they cause.

And worst of all, you’ve put yourself in the position of having to manage the process personally from this point forward. After all, you’ve made it clear that how everyone goes about planning capacity matters to you personally, so if you don’t supervise how they do it … not just the result … you’ll puzzle everyone.

Compare this situation to what happens if you give it some LIP. As it happens, in our consulting work we’ve identified the 150 or so factors that drive IT organizational effectiveness, including the thirty or so that comprise a CIO’s LIPs and their interconnections. Tracing through these interconnections it becomes clear that a CIO wanting to improve capacity planning, or any other operational process has just two LIPs to work with. They are: training, especially process management training; and culture, especially the establishment of a “culture of process.”

That’s it. CIOs can make sure their managers know what it means to manage a process instead of, or as a complement to managing the work. And they can do quite a lot to make operating through well-defined processes “how we do things around here.”

It might not seem like a lot. Luckily, though, it’s more than enough, because with those two factors in place, the processes will take care of themselves.

Or, more to the point, everyone in IT will make sure the processes are in place to take care of everything that needs taking care of.

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