Category Archives: Organization Structure

Necessary, But Not Sufficient

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WHY I wrote Outbound Air –

This subtle shift in the Prime stage is a precursor to the next level of organizational challenge. Everything we have examined over the past few days looks inside, the internal ticking. This subtle shift is a sea change of focus from internal to external. The organization has to maintain all the internal systems (functions) optimized and integrated, but that is no longer enough.

Sitting outside the organization is an external system that will now determine its fate. Sitting outside the organization is the market. Internally, the success of the company has built up a whole lot of overhead. This is no simple enterprise. Headcount blew past 100, perhaps 500 on its way to 1000. Simply sustaining the machine becomes its organizational challenge. But the internal efficiency and optimization is no longer sufficient.

If this organization is to survive, the strategic focus shifts to creating a clear and compelling vision that is relevant to the marketplace.

_______________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

The good news is, once the organization has nailed this down, it can relax, because markets never change. Just kidding. This begins a never-ending quest to remain relevant to a constantly changing market. Market responsive.
_____

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.

Tear Down the Silos? Really?

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WHY I wrote Outbound Air –

Everything about the organization has been internally focused, first on survival, then on efficiency. This internal focus creates the next organizational problem. Roles grew into departments, departments grew into silos. Some companies try to tear down the silos, but that’s not the point (nor the solution).

We still need the dedicated function inside the company. The solution is NOT to tear down silos, it is to integrate them together. It requires an integrator, someone in the organization who can see the internal workings AND the external necessity of integration. It requires someone with the capability to look outside each system and define the connection points.

We imagine managerial relationships in a vertical way, even if we put the customer on top and the org chart upside down, we see managerial relationships vertically. But that is not the way work goes through the organization. Work goes sideways –

Marketing => Sales => Contract => Ops => QA/QC => Warranty => R&D

It is in this prime stage that we see the emergence of cross-functional horizontal working relationships. If the organization can successfully integrate their systems together, acceleration occurs, to the next wall.

____________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 is adapted from a comparative study of two models, Corporate Lifecycles, Ichak Adizes and Requisite Organization, Dr. Elliott Jaques.

The Chaos of Go-Go Disappears

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WHY I wrote Outbound Air –

The organization re-sequences its methods and processes into coherent systems that bring efficiency, consistency and predictability into sharp focus. The chaos of Go-Go disappears and profitability emerges. The entrepreneur relaxes as cash flow improves. Sales volume increases as the market has higher confidence in the reliability of the product or service. The company offers a warranty program.

The roles defined in Go-Go grow up into departments where groups of people focused on the same function transform into teams. The system becomes more efficient as the focus turns inward, each step examined for time and motion, work hand-offs flow-charted for sequence, planning organizes resources, paring unnecessary elements. Every function goes through this transformation as the organization careens toward the next wall.

This internal focus builds the competence of internal teams, but the organization suffers the malady of the next level of friction. Those internally focused teams begin to compete for budget, resources and managerial attention. They stand next to each other and shout – “NO, look at me, pay attention to me.” One or two teams (departments) outperform, but the throughput of the organization grinds to a halt with the laggard teams setting the pace.

____________Prime – multiple systems/sub-systems create friction
_________Adolescence – internal focus on system creation
______Go-Go – define and document methods and processes
___Infancy – focus on sales, production, find a (any) customer

Many organizations get stuck and stay stuck. Some survive. Survival depends on a higher level of work.
______

This model is adapted from a comparative study of two models, Corporate Lifecycles, Ichak Adizes and Requisite Organization, Dr. Elliott Jaques.

Smile Training

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WHY I wrote Outbound Air –

As the organization grows, the chaos of Go-Go is killing the organization. The company has clearly defined its methods and processes, but the sequence is not necessarily efficient. Mom and Pop, who started the organization, long for the days when they could just do everything themselves. This motley crew of people (the team) is going through the motions, doing what they have now been trained to do.

For the most part, the product or service makes it to the customer, and for the most part, the customer is happy. But as sales volume grows, the chaos of Go-Go creates enough substandard output that people begin to notice. Deadlines are missed, defects become visible. The organization reacts by creating a customer service department, to apologize and smile.

But smile training doesn’t cut it. The company is now in pursuit of some sort of consistency, so that every product consistently meets its specification, so that every service meets the standard, every time. The strategic focus turns to a system focus.

____________Adolescence – system focus
________Go-Go – define and document methods and processes
____Infancy – focus on sales, production, find a (any) customer

The methods and processes are examined for sequence and priority to create a system that is efficient, predictable and most of all profitable. The bank wants that line of credit paid off.
______________
Homage to Ichak Adizes, Corporate Lifecycles, 1988.

The Organization Has to Become Profitable

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WHY I wrote Outbound Air –

Organizations moving to the next level, have solved the problems of the past, but solving those problems created the new problems of the future.

In the stage of infancy, everyone did a little bit of everything, but market demand required more volume, so headcount increased. With more headcount doing a little bit of everything, chaos increased and worked against the higher volume. It was great to have all hands on-deck, but the chaos wreaked havoc on efficiency. Sure, the product was delivered to the market, customers were satisfied, but in the wake, were body bags and organizational friction. These were the hallmarks of the Go-Go stage.

In the stage of infancy, efficiency was not an issue, because the point was “proof of concept.” Make the product or service, and (please) find a customer to buy. The sale did not have to be a profitable sale because the expense was pushed to a line of credit. But, at some point, the bank actually wants the line of credit paid off (primarily, so they can take it away, but that’s another story for another day).

At some point, the organization has to become profitable, it has to become efficient.

The Entrepreneur Becomes Prey to the Charlatan

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WHY I wrote Outbound Air –

As organizations struggle with (normal) growing pains, I watch entrepreneurs grasp at futile straws to make the pain go away. Often the solutions they seek aggravate the condition. Most often, the effort is to find a quick answer to a complex circumstance.

The entrepreneur becomes prey to the charlatan. There is a multi-billion dollar industry dedicated to fleecing CEOs looking for a quick fix. Outbound Air is a warning. The helpful stranger is not necessarily your friend.

Most issues that organizations face are structural. The symptoms look like breakdowns in communication or personality conflicts. They are NOT. Most challenges that organizations face are structural.

Structure is the defined accountability and authority embedded in the working relationships of the organization. Most companies do not define those accountabilities and that is where the trouble begins.

“Oh, we must have a communication problem.”

No, you don’t have a communication problem, you have an accountability and authority problem.

“Oh, we must have personality conflict.”

No, you have an accountability and authority conflict.

This is the beginning of WHY I wrote Outbound Air.

What Comes After Go-Go?

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WHY I wrote Outbound Air –

I watch organizations struggle. It is normal, uncomfortable, but normal. This organizational discomfort causes the founder to look for answers, in all the wrong places.

Go-Go is the most fun stage for any business. There is energy and enthusiasm. With a sustained momentum of sales, there arises a new feeling, invincibility. The entrepreneur says, “We faced the odds against us and we didn’t die. Our customers love us. We have a superb business model. Flawless execution of a brilliant business plan. We could take our business model and conquer any industry.”

This organization bounces inside its geography, opportunistic in its behavior. Its organizational challenge is focus. It cannot figure out if they are in the real estate business or the shoe business, because they believe they could make a fortune in both.

The momentum of sales has turned the negative cash flow of infancy into revenue streams of Go-Go. With a credit facility for expenses, this organization is on top of the world. The customer is happy and promises to buy more. But a subtle inspection in the wake of this organization produces body bags and friction. It is a wonder there is not more collateral damage. Efficiency is elusive. Profit is fleeting (in spite of the appearance of cash).

All of this is normal, but the entrepreneur is stumped, wondering why the organization does not run more smoothly and why it staggers in inefficiency. There are many who would provide answers, but most would be wrong.

This is the beginning of WHY I wrote Outbound Air. Tomorrow, the next stage.

Maybe It Should Have Stayed a Hobby

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Why I Wrote Outbound Air –

Before I tell you why, here is what I see. An organization bands together to accomplish something noble. In the beginning, everyone is organized around that noble idea. It is all about that noble product or service. Find a customer to buy it. Simple. So simple that most startups go out of business in the first five years.

Yet some survive. Those that did not die, make enough sales to prove market potential. I said market potential, not market success. In fact, those initial sales did not have to be profitable sales, because this startup put all its expenses on a line of credit or a credit card, whatever it took to emerge from this infant stage.

This noble product or service, this entrepreneurial idea was in some cases a hobby. In some cases, it should have stayed a hobby. But, the entrepreneur cannot help this feeling, this cause, to bring this idea to market. All odds are stacked, yet if enough early adopters buy enough product or service, create enough market demand, the organization just might survive to the next level.

If there is enough market demand to outstrip the organization’s capacity to produce (it is all about production), then the organization has the potential to grow. To grow requires change. To produce more volume requires more resources, more people. Headcount increases along with chaos. Ichak Adizes calls this Go-Go.

In the beginning, everyone did a little bit of everything, that was all that was required. With more headcount, that strategy, everyone doing everything, creates organizational noise and friction. To reduce the noise, individual roles are created with defined accountability and authority. This transition signals the first emergence of structure.

This is the beginning of WHY I wrote Outbound Air. Tomorrow I will write about what comes after Go-Go.

Outlast the Panic

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From Outbound Air –

“So, what did you think?” Jim asked.

Kevin DuPont stared into the corner of the room, not making eye contact with Jim. “I am not sure. That was a pretty awkward meeting. Before it started, I agreed with you. I mean, all we did was change the name of the meeting. But I can put two and two together. I didn’t like the reaction of the team.”

“What did you expect?” Jim asked.

“I don’t know. What did you expect?” Kevin replied.

“Exactly what we got. Panic. Except for Javier. He was the only calm head in the room. Of course, you cut the meeting short.”

“Well, yes. Couldn’t you feel the tension? Tough enough that morale is bad, now we have, what did you say, panic?”

Jim chuckled. “You young guys just don’t have the patience. Didn’t you know that all you had to do was outlast the panic?”

The Manager Lives and Dies by the Decision

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From Outbound Air –

“I have an issue where I could use your help,” Jim explained to the group. “And I think your understanding will have impact all the way to the top of this organization.

“As a manager, you each have a team,” he continued. “And you defined a manager as that person held accountable for the output of the team. So, if there is a decision to be made, related to the objective for that team, who is accountable for the consequences of that decision? Is it the manager, or the team?”

“Are you kidding me?” Johnny replied. “It’s the manager. If it turns out to be a wrong decision, we don’t fire the whole team, the manager is accountable.”

“Then, whose decision is it to make?” Jim floated the question, the same question that frustrated Kevin DuPont. “Whose decision is it?”

“It’s the manager’s decision,” Johnny responded. “The manager is accountable, the manager lives and dies by the decision.”

“But what if the manager doesn’t have all the facts to make an informed decision,” Jim protested, “and needs the team to participate. Needs the team to gather the facts, analyze the facts. Then, whose decision is it?”