All Posts in Organizational Design

|In: Leadership|Last Updated:

Squeeze a wet sponge and water will come out. Squeeze it again, harder, and you’ll get more water. Try to dry a sponge this way and you’ll get pretty frustrated. No matter how hard you squeeze, it will still end up damp. You can’t get all the water out, but you can damage the sponge.

Squeeze a flabby organization and cost will come out. Squeeze it again and you’ll find more efficiencies. No matter how hard and how often you squeeze, you’ll always see more waste. But like the sponge, when you squeeze an organization too hard you damage it.

That’s where the analogy breaks down: Damage a sponge and you can buy another for a quarter or so. Damage your organization and you’ll spend far more than you ever dreamed of saving to put it back in order.

So in your ongoing quest to “do more with less,” be careful. Organizations are easy to break, and very hard to fix.

Thus far, our quest to do more with less has looked at opportunities for improving alignment with the business. It’s the most painless place to look, but far from the only one. IT’s core processes, for example, often have tremendous potential for cost savings.

Take IT’s delivery management processes: Program management, initiative management, and project management. I’ve seen companies that could cut 20% of their total IT budget without any adverse effects because of bad delivery management. Here’s how: Development and integration projects account for 20% of their IT budgets, more or less, and they never successfully complete projects. If they eliminated the projects altogether, they’d save the money and deliver the same number of project deliverables as before — zero.

Not that this is the right answer. But take a hard look at your delivery management. Many CIOs have a high enough failure rate that by improving these processes they could cut their budgets a modest amount and still deliver more results than they do today. Here are some good places to look for improvement:

  • Do you recognize the difference between programs, initiatives and projects? Programs are indefinite in time and scope, and are chartered to achieve strategic change. They are composed of initiatives, each of which is also indefinite in time and scope, and are chartered to achieve a specific business result or outcome. Initiatives are broken down into a collection of projects, each of which has a clearly-defined schedule (which should rarely exceed six months and never exceed nine), scope and finite list of specific deliverables.

    Assemble all project deliverables within an initiative and you achieve the desired business outcome. Assemble the business outcomes from all initiatives and the program is complete, having delivered the planned strategic change.

    Organize large-scale change this way and it has a chance of success. Charter one big project and it’s guaranteed to fail, because at the time you charter the big project, you don’t even know how success should be defined.

  • Does every change effort have a business sponsor? A real business sponsor, that is — someone with the authority to provide budget and staff, and a personal stake in the results? Kill the ones that don’t. If a business sponsor leaves the company, kill everything he or she had been sponsoring, unless a new sponsor volunteers.If it isn’t clear: Without a sponsor, even projects that succeed will fail, creating deliverables nobody will ever use.
  • Does the culture in IT support good project management? Does the culture in the business support good project management? If not, you need to change the culture, because without a culture that’s receptive to good project management, even the best project managers must fail. They have no chance: Too much of what a project manager has to do involves leadership by persuasion rather than authority, and without a culture that encourages good project management, too few people can be persuaded.
  • Can successful project managers progress in a project management career? Or is the reward for successfully managing a project a promotion out of project management to line management? If you promote your successful project managers to other roles, you guarantee all projects will be led by unproven project managers. The result is predictable.
  • And finally … do you know how to launch projects, so everyone knows the effort has started and everyone knows what the project is supposed to achieve? Even more important, do you know how to finish a project — to declare victory and leave the field of battle?It’s astounding how often bad project completion rates stem from nobody being willing to announce, “We’re done now. Everything else will be delivered in subsequent projects or releases.”

Delivery management is more difficult than operational management for the simple reason that it’s harder to change something than it is to keep it the same.

Don’t make it harder than it has to be.

Comments

|In: Leadership|Last Updated:

Like the rest of the country, Minnesota is in the throes of the “tax revolt.” It’s premise is that we can cut taxes without pain because there’s plenty of waste in government. Somehow, though, when budget-trimming time rolls around, the waste pulls a vanishing act, and we’re told we have to make painful choices.

Sound familiar? It should. It’s the public sector equivalent of “eliminating non-value-adding activities,” a sham exercise American business executives buy from expensive executive-suite consultants for similar reasons: They want it to be valid, because if it is they can increase profits without having to make difficult choices.

Are there wasteful government programs? I’m sure there are, although most of the examples I hear are either rounding-error-size activities, programs whose value or lack thereof depends on the political philosophy of the observer, or employment programs that simply recycle tax dollars into the economy where they turn back into tax dollars. I’m equally sure the real waste in government hides where nobody is looking for it: Not in the list of programs but in their execution.

If anyone really wanted to find government waste they’d be asking line employees, front-line supervisors and middle managers where they spend money and effort stupidly, and why. But doing that would require painstaking effort to assemble a detailed understanding of how things are put together. More, it would require a form of taking responsibility that’s become increasingly unpopular: Those making the rules would have to acknowledge that the rules they’ve established are often the problem.

The same is true in business. While many businesses indulge in pet programs that don’t contribute much to the bottom line, they’re hard to distinguish from pilot projects that could pay huge dividends in the future. So the search for non-value-adding activities usually yields just a single item: The very expensive search for non-value-adding activities. After all, very few employees, or managers, or executives go to work every day saying to themselves, “I think today I’ll find a new way to squander the corporate budget on pointless efforts that distract us from building great products and attracting and retaining customers.”

What does happen is that somewhere in the rules, regulations, policies and procedures — often those created to prevent mistakes — lie opportunities to work more efficiently. As in government it’s the line employees, front-line supervisors and middle managers who know where to find them. The problem is also the same as in government: They have no place to take a good idea, nor does anyone actively seek the good ideas they have.

Here’s an example every manager in the federal government knows, but which hasn’t been fixed despite 25 years of tax reductions: Use-it-or-lose-it budgeting. Intended to reduce costs, it has the exact opposite effect. It requires every manager in government to engage in a year-end spending spree, not because they’re irresponsible but because, just like their private sector counterparts, they need to make sure they have enough funds in next year’s budget to get the job done.

Imagine the impact of a change in the rules. Instead of cutting next year’s budget if this year’s numbers look good, the opposite happens. Managers, supervisors and staff share 20% of the savings; another 20% is carried over to the following year, and the remaining 60% goes to cutting the cost of government. Is there any doubt what would happen?

That’s just one example. (It’s a freebie. If your local government would like to engage the services of my consulting company, we’ll be happy to find others.) It illustrates an important point that applies to your business and IT organization just as much as it applies to government spending: If there’s waste to be found, finding it will require two changes in attitude.

The first is that the waste will be easy to find and eliminate. It won’t. It will lie in the details of day-to-day work. While some opportunities will be easy to spot, most will require significant digging. Eliminating the waste will always be hard, calling for intelligent organizational redesign, strong leadership, and political courage. The most difficult part of all will be finding the benefits in accounting reports, which rarely reveal the connection between cause and effect.

The second change will be an even harder one for many business executives to accept than the first. It’s that the fault, to paraphrase Cassius, lies not in their employees but in the unintended consequences of their own decisions.

Comments