Category Archives: Organization Structure

Knowing Information Does Not Assure Success

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It was a short break toward the end of the day. “I studied your books, attended your lecture,” Sam said. “I am excited to share this information with my team. But, I thought our organization would be farther along than it is?”

My face simultaneously winced and smiled.

“Organizational progress has little to do with information,” I replied. “In this age, the same information is available to everyone with curiosity. Knowing is only the first step. Next comes understanding and where that information applies to your organization. Then, you must do something, decision and execution.

  • Knowing information
  • Understanding and application
  • Decisions
  • Execution

“Along that continuum, your organization is exactly where it deserves to be.

“How many companies have access to the technology, but are unable to see where or how to adopt it. It is NOT the technology that makes the difference, it is how the organization is structured. In every company, there are four organizing documents, mission, vision, business model and structure.

“The business model and structure are intertwined and will determine the effectiveness in the market. Sometimes that effectiveness means market share and success, sometimes survival or death.

“When I talk about structure, it is the way we define the working relationships between roles in the organization. On a piece of paper, it looks like an org chart, but behind the piece of paper is a set of working conditions that govern our behavior in getting work done. The way we define those working relationships, I call culture.

“And, every company has the culture it deserves.”

People Model

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We continue to step our way through a short list of identified hallmarks of Agile through the lens of Levels of Work. Today, we move down the list to the people model.

  1. North star embodied across the organization.
  2. Network of empowered teams.
  3. Rapid decision making and learning cycles.
  4. Dynamic people model that ignites passion.
  5. Next generation enabling technology.

Dynamic people model
Levels of work identifies a robust framework where each role is defined by its level of decision making and problem solving. Effective decision making and problem solving at each level of work requires a concomitant level of cognitive capability.

In the transformation from analog to digital, there will be obsolete roles no longer needed and new roles created. As new roles are created, the organization has to identify the level of work in the new role and the corresponding cognitive capacity of the candidates for those roles. When people are challenged to work at or near their highest level of capability, in work they value, there is no need for motivational speakers to raise morale.

Most analog organizations define managerial roles as reporting relationships. In a digital organization, managerial roles shift from reporting relationships to a value stream, where managers are required to bring value to the problem solving and decision making of the team. This process brings alive the concept of “servant leadership.”

Rapid Decision Making

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In my last post, we made two steps down a short list of hallmarks of Agile through the lens of Levels of Work. Today, we move down the list to rapid decision making.

  1. North star embodied across the organization.
  2. Network of empowered teams.
  3. Rapid decision making and learning cycles.
  4. Dynamic people model that ignites passion.
  5. Next generation enabling technology.

Rapid decision making and learning cycles
Technology is transforming analog organizations to digital organizations. Many decisions (made with incomplete, unknown or unknowable data) become calculations (complete and known data) according to defined algorithms. A decision is made in the context of incomplete information. A calculated adjustment is made in the context of complete data.

In the digital world, this data is captured in real time and is more transparent to more people in multiple functions. There will be no more waiting for a report from accounting. That data will be available in real time. And, with that accurate data available in real time, there is no need for a role that captures, collates and compiles the data, no need for a role to review the data. Analog roles slow things down.

Levels of Work acknowledges that some roles will be gone and new ones appear. The level of work is likely to be higher. It is no longer a matter of gathering and compiling data, it is a matter of which data to stream, to whom. Which data is relevant, which data irrelevant? What sensors gather the data to stream? What new sensors are available to gather new data? What sensors are obsolete?

In what technology do we invest our limited resources? Our decision making and learning cycles have to come faster.

Networks and Level of Work

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In my last post, we started to look at the hallmarks of Agile through the lens of Levels of Work. We looked at North Star through three organizing documents, vision, mission and business model. Today, we move down the list.

  1. North star embodied across the organization.
  2. Network of empowered teams.
  3. Rapid decision making and learning cycles.
  4. Dynamic people model that ignites passion.
  5. Next generation enabling technology.

Network of empowered teams
In a short post by Seth Godin, he chronicled the history of networks from crude computers, each requiring its own building, to those as big as refrigerators, then small enough to sit on a table, now carried in your pocket. Something else happened.

Godin says the first computers were good at two things, arithmetic and storing data. Then, computers got connected so they could share arithmetic and data. Godin described this as the computer meets the telephone, meets the fax machine, and the more people with fax machines, the more valuable the network. The third iteration included the disintermediation of both space and time. This was the death of geography. The current iteration, Godin calls the hive mind, the intersection of technology and agile networks (some of which may contain people).

The transparency afforded in current state technology distributes data and analysis to everyone who can understand it. Distance is dead. Real-time erases delay.

What impact does this have on decision making and problem solving? What decisions are now calculations (no longer a decision)? Who, in the organization, works on those problems and the new decisions we could not see before? How do we measure the size of those decisions? In the end, who is accountable for the output of those decisions?

Godin’s insight on the state of technology provides some clarity on our understanding of the state of the organization. Four issues, problem-solving, decision-making, accountability, authority. It depends on the Level of Work.

McKinsey and Agile

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From the Ask Tom mailbag –

Question:
You seem dig your heels in around hierarchy. Here is an article from McKinsey on agile organizations. McKinsey is a big company. I think they know what they are doing.

Response:
McKinsey is a big company and they know what they are doing, but with the absence of an understanding of levels of work. Here are their five trademarks. Today, we will work on the first.

  1. North star embodied across the organization.
  2. Network of empowered teams.
  3. Rapid decision making and learning cycles.
  4. Dynamic people model that ignites passion.
  5. Next generation enabling technology.

North star embodied across the organization.
This is the strategy that the organization serves. The most important function of management is context setting. This is important at every level of work, to establish the cascading contexts aligned with the overall strategic objective. There are three primary organizing documents –

  • Vision statement
  • Mission statement
  • Business model

Vision Statements and Mission Statements
These two organizing documents set the initial context, but most are nonsense about “being the premiere provider” of something and “exceeding customer expectations.” These kinds of statements do NOT set context. They are vague and contribute to the ambiguity already present in the world.

The reason most Vision/Mission statements are vague is their attempt to position the company at some point in the future, five to ten years out (rightly so). At the five year mark, all of our tangible, concrete plans go out the window. The discussion shifts from known things to conceptual things. The problem is that most people do not think conceptually and those that do, don’t practice very often. Most feeble attempts all sound the same.

So McKinsey is correct. North Star is important. But, McKinsey and Agile do not have a corner on this market. Every company I know makes this attempt, they just don’t do it very well.

For another discussion on North Star, you might also check out Accelerate, by Suzanne Frindt. Of course, she calls it Yonder Star, instead of North Star. Same idea.

The Business Model
The business model is the first step in defining the organizational structure. The business model flows from identification of market segments, value proposition in each segment, resources required including people. Often, defining the business model provides guidance on the creation of the conceptual vision and mission statements. The most helpful resource I know is Business Model Generation. It is a very easy and explanatory method of creating your North Star documents.

Sustained Achievement

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What is the function of management? I often ask.

In organizations, we design roles for people to play. So, what is the role of management?

Every employee is entitled to have a competent manager, with the time span capability to bring value to their problem solving and decision making.

I once asked the definition of an entrepreneur. I was sternly instructed that an entrepreneur is that person who creates an organization that leverages the skills and talents of other people to create something that no one individual could produce on their own.

And, so it is with a manager. That person who leverages the skills and talents of other people to create something that no one individual could produce on their own.

Individual achievement is a myth. The truly great works of mankind are nestled in the collective works of people transformed from a group to a team. Sustained achievement is the collective work of people, transformed from a team to an organization, that continues to create beyond the original ideas of the founder.

By Design, or By Chance?

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I was just about to leave when Lawrence stuck his hand in the air. “What about the people?” he asked.

“The role of the Manager,” I started, “is to create the system and make the system better. The most important system is the people system. How people work in your organization is top priority for the Manager. Look, here is the bad news. Right now, your people system is working exactly as it was designed to work.”

“How can that be?” Lawrence replied. “Our people system sucks.”

“You designed it that way, or by choice, you decided to leave it to chance. Either way, you designed it to suck.”

“But, it’s not my fault. I have only been a manager here for two months.” Lawrence was backpedaling big time.

“And so, for the past two months, you have supported a system by doing nothing about it,” I replied. Lawrence was looking for a better excuse, but I stopped him. “Look, in the short time you have been a manager, have you drawn a brief diagram about how people work around here, how they relate to each other, how they depend on each other? Have you written job profiles to document the specific accountabilities of each person on the floor?

“Lawrence, you are in charge of the most important system in your company, the design of how people work together as a team.”

The Source of Organizational Pain

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Sometimes people on your team don’t fit. Culture is that unwritten set of rules that governs our required behavior in the work that we do together. Some people don’t fit. It doesn’t make them a bad person, they just don’t fit.

Some companies hire for culture, assuming the company can train the technical stuff. Some companies require the technical stuff assuming the candidate can adapt to the culture.

Organizational structure is the way we define the working relationships between each other. Organizational structure is culture.

Based on your product or service, your business model, what is the relationship your customer wants with your organization? The Discipline of Market Leaders documents three types of relationships (why customers buy from us).

  • Product Superiority (Quality)
  • Low Cost
  • Customer Intimacy

This narrative set the stage in 1995, and, now, there are more ways to define the customer relationship. (I would like to hear how you describe yours.)

Your customer relationship platform drives everything else, specifically your structure. It is the basis of your business model. As a small business owner, being able to accept credit card payments is one of the most important small business tools that should be at the top of your list. By accepting credit cards, you’re making it easier for customers to do business with you. When choosing a credit card processing provider, it’s best to compare the credit card processing fees they charge so you can get the best possible deal.

What Changes About the Work?

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What will be the nature of work?

As we adopt technology into the enterprise, what will change about the work? Those who sit in my workshops know that I define work as – decision making and problem solving? What will be the nature of decision making and problem solving as we embed technology into our internal production systems?

Production Work (S-I)
Physical robotics are already creeping in to production work (S-I). Robots are most often adopted into physical work that is repetitive, requiring precision cuts, punctures, bends, dipping, pouring, lifting. Robots are also useful in production environments where human involvement is uncomfortable (cold, heat) or dangerous (hazardous exposure). As companies adopt robotics and other technology, what changes about production work? What decisions are left for humans?

Supervisory Work (S-II)
And, what of supervisory work (S-II)? Typical (S-II) tools are schedules and checklists, the role is accountable for making sure production gets done, on pace and at standard spec. If we can sense most critical items in a production environment, with precision, in real time, what decisions are left for humans? As companies adopt technology, what changes about supervisory and coordinating work?

Managerial Work (S-III)
And, what of managerial work (S-III)? Typical (S-III) tools are work flow charts, time and motion, sequence and planning. The role is to create the system that houses the production environment. Most sub-enterprise software (as opposed to full enterprise software) is simply a transaction system that records transaction activity through a series of defined steps. Most computer software contains embedded rules that enforce a specific sequence of task activity. If most systems are designed around software systems, what decisions are left for humans? What changes about system work?

Executive Management Work (S-IV)
With a concentration in Ops (COO), Finance (CFO), Technology (CTO), the essence of executive management is functional integration. Most enterprise (full enterprise) software is designed to integrate end to end functionality across the organization. It contains hooks that communicate from one function to the next, with a plethora of configurations possible depending on the desired integration. If functional integration is controlled by enterprise software, what decisions are left for humans? What changes about functional integration work?

These are not idle questions.

It’s All About the Work

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“Yes, but we can’t afford to fire this person, right now. If we did, we would lose everything they know about our system. I know their performance is unacceptable, but we would be lost without the things they know about our processes, our machines, the tolerances, the setups.”

“So, where does that leave you,” I asked.

“Between a rock and a hard place. We can’t even let this person find out that we are recruiting for his replacement. He might quit.”

In the beginning, most companies organize the work around people and their abilities. As the company grows, an inevitable transition must take place. At some point, we have to organize the people around the work.

This looks like a people problem. This is a structural problem.

If you think your organization is people dependent, where work is organized around the people we have, what steps would it take to transform into a system dependent organization? It starts with the simple documentation of processes and roles. That’s the first step to prevent becoming hostage to an underperformer.