Tag Archives: organizational structure

But, We Have a Company to Run

“But, we have an airline to run,” Samuel continued to object. “As chairman of the board, it is my primary responsibility to make sure we have the right person at the helm. It is not my responsibility to micro-manage you, meddle in the way you run things. But, the way you run things makes me wonder if we have the right person at the helm.”

“Look, Sam,” Catherine replied, “we can squeeze the legroom, rearrange the seating on the planes. We can start charging for checked baggage. We can add a service fee if someone wants a soda. But that is not our problem.”

Catherine looked intently at Sam, sitting at the head of the boardroom. In the periphery, she could see the logos of the other companies in the portfolio. Outbound Air was the company in trouble and she had been selected to turn it profitable. She continued.

“Sam, we have close to a thousand employees now. They work 40 hours per week. Economically, they depend on us. Our compensation system and job opportunities directly impact how they live, now, next week and next year. Their self-esteem, what they achieve in life, in large part, depends on the role they play for us. How we set expectations, how we define their working relationships, how we evaluate their effectiveness, all, have direct impact on their contribution. They come home at night, frustrated or satisfied based on how things went that day. The way we design the environment of their work has way more impact on our bottom line than any fees we may charge for luggage.”

The saga of Outbound Air continues. Find out how Catherine got here.

Kiss Off

“Catherine, we hired you to run this company, and we want to give you free rein, but you must admit that some of your initiatives don’t translate into profit for this quarter.” Samuel Pierce was chairman of the board. He was not happy, but he was willing to listen.

“Sam, you didn’t hire me to focus on the next three months,” Catherine replied. “This company has some real problems that will take time to repair. In the short term, we will suffer. We will suffer some profit. I am not here to turn a single quarterly number. I am here to create a sustained profitability stream.”

“But, these employee initiatives are going to erode profitability. You want to change the wage structure. Your personnel plan adds in management overhead. These are long term things that will last beyond the next quarter. Are you sure you know what you are doing?”

Catherine took a moment. “On the surface, my role is to operate the business functions, define the metrics, create revenue and hold expenses. We can do that, and, in the short term, we can make a tidy profit. AND, my role is to create a sound and effective managerial system that will sustain those business functions. As CEO, right now, I have to focus on our people system, because it’s broken. As long as the people system is broken, you can kiss off all the rest.”

The saga of Outbound Air continues. Find out how Catherine got here.

Structure and Culture

Thinking out loud here.

During the past two days, I have laid out posts related to –

  • In spite of clear work instructions, does culture trump output?
  • In spite of personality inputs, does culture trump output?

If you learn anything about me, you know that I am a structure guy.

  • For those who think their organizational challenges revolve around personality, I tell you, it’s not a personality problem.
  • For those who think they have a communication problem, it’s not a communication problem, it’s a structure problem.

Structure is the defined accountability and authority in working relationships, both managerial relationships and cross-functional working relationships. Structure is the context, in which we work.

Culture is that set of beliefs that drive our required behaviors in the work that we do together. Culture is the context, in which we work.

So, I am beginning to wonder if organizational structure and culture are inextricably tied together. Does structure equal culture? Does culture equal structure? Do the warm and fuzzy concepts of culture have a science underneath defined by levels of work and structure?

I believe so.

The Enterprise as a Whole

From the Ask Tom mailbag –

“Different functions in a business do different things, and they each have their own set of cultures, rules and ways to be measured. We need to respect this, and stop imagining that how it works for us is how it should work for everyone else. Each function needs to be managed in the best way to suit its purpose, and the business needs all of its functions to work well and respect each other and their methods and measures if the enterprise as a whole is to be successful.” Comment posted to Responsibility, Accountability and Authority.

This comment began by railing against management as command and control, ended up with a brilliant description of what management IS. To understand management, as a subject to be studied and understood, we have to step back. We complain that how management works one way, does not work in another way. We get wrapped around the axle.

In the differences, there are universals. Here is what I pulled out of the comment posted above.

  • Business is a collection of different functions. Each function will have its own set of cultures, rules and measurement systems. And those systems will have different characteristics.
  • Each function must have a purpose. All the discussion about goals and objectives ultimately arrive back at purpose.
  • Each function must work together, must be optimized and integrated for total organizational throughput. Out of balance systems create internal feasts and famine, starving and bloating. Some optimized systems remain appropriately idle waiting for constrained functions to catch up.
  • Management is about the whole organization, separate functions coordinated together for the benefit of the whole system. This coordination depends on discretionary judgement, making decisions and solving problems, in roles we call management.

As the organization grows more complex, it needs more management.

Not a Time Management Issue

“Yes, you could call it stress,” Daniele replied. “And it’s building. I seem to get farther behind and I can see there are things that need to be done, there is no way I will get to them.”

“What do you think is happening?” I asked.

“I get to work early to get a few minutes of peace and quiet. It’s usually my most productive hour of the day. But then, there is an email, or a note on my desk about a struggling project and boom, I am in the weeds again. I am not complaining about the work, but I feel the stress. I am torn between these urgent projects and the work I know I really need to be doing. It even affects my work-life balance. I feel like I need to come in to work two hours early.”

“Do you think you have a work-life balance problem?”

“Yes. My husband thinks so,” Daniele nodded.

“You know I am a structure guy. I don’t think you have a work-life balance problem, I think you have a structure issue. Why do you think you get pulled into the weeds and cannot get to the work you need to be doing as a manager?”

“My team has questions that have to be answered, problems that have to be solved and decisions that have to be made,” she described. “If I don’t spend that time, they just get stuck and don’t know what to do.”

“Your stress is only the symptom. It looks like a time management issue, but it’s not. It’s a structure issue.”

Hot Spots

“So, I am the one to fix this problem with my silos,” Regina slowly realized. “And I can’t just leave my managers in the room to figure it out. Where do I start?”

“Putting your managers in the room is not a bad idea, but they will not be able to figure it out without you. Your role is the integrator,” I said.

“So, I get them in the room, then what?”

“Your managers are competent at work flow charting. Get them to step back and draw, not a system flow chart, but a functional flow chart.”

“Not sure I understand,” Regina quizzed.

“Your managers can flow chart the steps in a system. This exercise would be to flow chart all the systems in your business model sequence. Take this list, put a box around each element and flow them sideways on the white board.

  • Marketing
  • Business Development
  • Sales
  • Contracting
  • Engineering
  • Project Management
  • Operations
  • QA/QC
  • Warranty

In this exercise, we are not looking for the problems inside each function, we are looking for the problems that exist as one function hands off work to the next. We are looking for transition issues, capacity issues, clarity, timing, dead space, delay, undiscovered defects, inspection points.”

“How will we find those?” Regina asked.

“This is a hot spot exercise, just look for the pain. Your managers may not be able to fix the issues, but they know exactly where they are.”

The Problem is Normal

“Each department manager turned toward internal efficiency because you told them to,” I repeated.

Regina was stunned. She had difficulty seeing the root of the problem as her management directive.

“All crumbs lead to the top,” I said. “And, don’t think it’s because you are a bad manager. Every company has to become system focused at some point. It’s normal. But the solution to become efficient creates the next step of organizational friction. All these internally focused departments, these silos, have to work together.”

Regina’s look of surprise began to calm.

I continued. “If the problem comes from an internal focus by each department, where do you think we will find the solution?”

Regina turned her head. “With an external focus?” she floated.

I nodded, “Yes, and that’s where you come in. This is a higher level of work.”

You Told Them To

“It’s killing us,” Regina complained. “Our silos are killing us.”

“How so?” I asked.

“It’s like there is a little internal competition out there. It started with the blame game. Departmental managers in a meeting, pointing fingers at a problem. Not my fault, everyone said. Then it became CYA behavior. Departments began to build steps into each process to actually shift responsibility for problems to other functions.”

“Why do you think that happened?” I pressed.

“I don’t know,” Regina replied. “There was a time when I thought a little competition was appropriate. It seemed to help everyone perform at a higher level.”

“So what is happening, now that there is a little competition?”

“Our production department cranks up output, while our warehouse department tries to figure out what to do with all the finished goods. The sales department promises delivery with no visibility to purchasing, so we run out of raw materials. Production gets choked off and we run overtime while guys stand around with nothing to do. It’s a mess.”

“Why do you think it happened?” I repeated.

“I don’t know. It was like we just grew up into the problem.”

“You did. You just grew up into the problem. You told everyone to be efficient, no waste, no scrap. You wanted high utilization of precious resources. Each department went internal to re-sequence for that efficiency. It was a noble move and required at the time. Each department manager did it, because you told them to.”

Temper Tantrums Don’t Work

From the Ask Tom mailbag –

How do you overcome the obstacles of silos when the silos are the organizational culture and come from the top?

Whenever I look at organizational underperformance, total throughput, all crumbs lead to the top. The culture an organization has, is the culture the organization deserves. And, all crumbs still lead to the top.

But your question is “What to do?”

Temper tantrums don’t work. Parents know that. Most management consultants who think they have the answer are behaviorists who have no children.

Visually, we can draw pictures of it. Interruptions in workflow, rough hand-offs from one function to another, undiscovered defects blamed on another department. Some CEOs believe a little internal competition keeps everyone sharp, when the product of that strategy may be counter-productive.

But it works in sports? Yes, but sports are not organized to accomplish work. Sports are organized for entertainment.

Indeed, what to do? Comments?

The Symptom Goes Underground to Fester

WHY I wrote Outbound Air

Every company wants to go to the next level. Most have no clue what the next level is. This model provides guidance, anticipates predictable challenges and provides solutions to assist from one level to the next.

_______________Stable – challenge is sustaining the machine, relevance to the market
____________Prime – multiple systems/sub-systems integration
_________Adolescence – internal focus on system creation
______Go-Go – define and document methods and processes
___Infancy – focus on sales, production, find a (any) customer

This model guides us in the creation of structure. Organizational structure is the defined accountability and authority in the working relationships of the team. As the organization winds its way through these stages, its challenges assume false appearances, symptoms. Most think they have a communication problem or a personality conflict. They fall prey to resolving the symptom that only goes underground to fester.

It is only when the organization understands structure, that it can begin to define the accountability and authority necessary to get work done and that is WHY I wrote Outbound Air

A detailed version of this model (SI-SVII) is contained in the appendix of Outbound Air. This model is adapted from a comparative study of two models, Corporate Lifecycles, Ichak Adizes and Requisite Organization, Dr. Elliott Jaques.