Tag Archives: level IV

Multi-system Integration

From the Ask Tom mailbag –

When you talk about the COO role, you use the words multi-system integration to describe its purpose. I understand silos, and you said we put the silos there for a reason. You said not to get rid of your silos, but to integrate them together. What does that mean?

Yes, as companies move from Adolescence to Prime, the silos will kill them without system integration. The COO role will necessarily focus on operations confronting two main system integration issues.

  1. What is the performance standard of the work output from each function (department, system, silo) as work moves to the next function? Each function has marching orders (from us) to be efficient, internally profitable. This necessitates an internal focus to the function. Many critical handoffs occur as work moves from sales through project management into operations. When there is a defect in the handoff, we may not discover the problem until we have poured concrete around steel. It is much easier to unwind in the handoff stage than the jackhammer stage.
  2. The other system issue relates to each function’s capacity for output. Without someone paying attention, easy for one system to outstrip the capacity of its neighboring system. This may manifest as a breakdown in communication, when the underlying cause is two internally focused systems, heads down not paying attention to the other functions around. Discussions of single system capacity rarely emerge below S-IV, much less the impact of one system onto another system.

One of the critical functions for the COO is to calculate the company’s operational (ops) capacity as operations is most likely to be the constraint in the midst of the other systems.

Is the COO Irrelevant?

From the Ask Tom mailbag –

I read your book, Outbound Air, again.

And I was thinking there might be a conflict with trendier/newer business models. A lot of companies seem to be pushing flatter structures and mixed function work-groups. So there isn’t really a role for COOs as say, the CEO’s internal quarterback

My understanding is that COOs exist to corral the various functions i.e. highest timespan
while the CEO is dealing with strategy, major threats etc.

So does the timespan model change for these flatter-structured businesses where the COO is supposedly irrelevant?

Elliott’s response to a similar question goes like this –
“I hear these things, and I just have to ask, who is kidding whom?” It is not that the role of the COO disappears, but it is certainly different.

Small Organizations
First, many organizations (small ones) are not level (V) organizations in the first place. Indeed, many companies are level (III) organizations, so they have production, supervision and a CEO, who really plays the role of a level (III) manager. Nothing wrong with this small company, the CEO can make a wealthy living out of it.

Growing Organizations
As the company grows, the level of work will necessarily increase to level (IV). There are multiple functions (systems) inside the company that must be integrated together. Again, the CEO in a level (IV) company will play the role of the integrator. In a larger, more mature company, this would be the role of the COO.

Maturing Organizations
In a level (V) company, the CEO must leave the integration role and truly focus on strategy. Without an effective COO at level (IV), the CEO will necessarily be dragged down into the weeds (back into integration activity). And, as long as the CEO is doing work at level (IV), the company will not grow, likely grow and contract in fits and starts, never effectively integrating their multiple systems. Yes, it is possible to have a dysfunctional level (IV) organization.

Digital Technology
Over the past two or three decades, technology arrived. Indeed, computer systems (note the word system) supplant many level (III) functions. MRP and ERP software systems, in their algorithms, require very specific steps in specific sequences, level (IV). The algorithms were created by some very smart teams who created systems and system integration in a variety of disciplines.

However, with effective technology implementation, the managerial work changed. So, let me pose this question. If we have a technology platform that serves to move data between multiple functions in the company, integrating those functions together, a level (IV) role, then what is the work of the COO?

Here is a hint. Work is decision making and problem solving. In the presence of an effective ERP system, what decisions are left to be made and what problems are left to be solved by the COO? There is an answer to that question.

Your thoughts? -Tom