How does an organization think? How does it manage
its planning and resources in order to achieve it's purpose? We
all have mental processes that structure the world around us,
that assess ourselves and the complex interdependencies with our
environment. We have mental processes that plan our actions in
order to achieve goals, processes that allocate scarce resource,
and processes that assess our progress. This ability to structure
and self assess allows us to plan and act towards the achievement
of goals (purpose). Our ability to structure and self assess
enables us to dynamically (and quickly) adapt to the larger environment.
Rigid structures and long feedback loops are OK in a stable environment
but fatal in a dynamically changing world.
The enterprise has all these same mental processes.
The difficulty is that they are many times hidden and fragmented.
The enterprise does not think and act as a single person (think
how powerful that would be if it could). It thinks and acts as
a culmination of each employees thinking and acting. This can
be at best clumsy and worst self-destructive.
Remember, my trade is a process designer. Process
design work has a profound interdependence on the way an enterprise
thinks (structures it's work, resources and assesses progress).
To be successful as a process designer I have to understand and
influence organization structure, resource allocation, and self
assessment mechanisms.
To do this work I focus on three distinct areas 1)
organizational structure 2) organizational measures 3) change
strategies. In fact I have found that if these three areas can
be aligned to the enterprise purpose and authentic principles,
good process happens! Unfortunately there is usually a high level
of resistance, these three areas are most difficult to change,
these are the trees that we hug. In fact I don't believe that
you can change them directly. They are changed through giving
visibility to the gap between existing structure, measures, and
strategies and the enterprises purpose and principles. Nobody
seems to like discontinuity.
I have always seen organization charts as 'ownership'
charts. They are a way of partitioning responsibility and in many
cases resources. The problem with this structuring is that it
is rigid and tends to fragment. The components of the structure
(functions, business units, geography) take on a life of their
own. They define their purpose in the context of the enterprise
structure rather than in the context of enterprise purpose.
It is not uncommon to discover functions that are
very interdependent from a process point of view yet very distant
from a functional organizational viewpoint. This in itself will
generate significant dysfunction. In effect to many cooks, three
vice presidents competing for the same business. Or the case of
a trouble desk function, engineering, and shop floor functions
all owned by different VPs. Each blaming the other for low product
yields. The one who survives gets promoted!
The goal of these exercises is to provided visibility
to process, structure, purpose disconnects. And methods in which
principles across the enterprise can collaboratively develop new
more appropriate processes and structures to achieving the enterprises
purpose.
Enterprise purpose can only be achieved by the collaboration
of cross organization behavior (process) not by partitioning responsibility.
The only need for partitioning is to manage complexity, this is
the catch 22 of complex design. How do I partition and not loose
sight of the higher purpose? How do I do this in a world where
adapting to a dynamically changing environment is necessary for
very survival? The only way is aligning responsibility to the
enterprise purpose at every level (from the individual to the
Board of Directors) and to allow (trust) individual initiative.
It is individual actions that define the enterprise, that creates
value, that satisfies the needs of it's trading partners, that
realizes vision and achieves purpose. Responsibility must be
aligned to those actions (core processes) that justify the enterprise,
any other alignment of responsibility will eventually become dysfunctional.
As a process designer I must help people transition
their thinking from an organizational focus (rigid) to a cross-enterprise
process focus (dynamic). This is not easy. People like rigid structures,
they give the impression of being stable and predictable. By partitioning
responsibility they can focus on 'their' work and let someone
else worry about how it fits together. It's very uncomfortable
to have their success dependent on people that they can't control.
Show me two organizational functions (boundaries) that are highly
dependent on each other and I'll show you process breakdowns and
conflict (sales/manufacturing, order mgt./invoicing, new product
development/manufacturing).
I believe this transition of thinking from organization
structure to cross-organization process needs to be done quickly,
and should begin at the top of the enterprise.
I have three basic techniques that I use to accomplish
this, Identify Core Processes, Organizational Mapping and developing
an Organization Matrix. Begin with the identification of the enterprises
core processes, and then map those processes across organization
structures.
The purpose of these techniques is to enable team
members to discover process/organizational relationships, build
shared knowledge, collect process weaknesses and strengths for
later analysis, and communicate these learning's throughout the
enterprise. Building these models (charts) also provides a healthy
and safe arena to address and resolve conflicts in purpose and
principles.
The two most important steps in creating a healthy
enterprise is 1) clear definition of purpose and 2) identification
of core processes necessary to realize that purpose.
Identification of core processes is the first step
in understanding the enterprise as a process rather than a structure.
Structure is there to support the process yet most people have
been taught (indirectly) that process supports the structure.
My technique to identify core processes builds on
the purpose and principles exercise. Using the diagram of the
enterprise and trading partners, identify all the triggers (what
causes the enterprise to act) and products (outputs that have
no further interaction). List the triggers on the left and products
on the right. Line up triggers and products that are related (cause/effect
relationships). Name those relationships and prioritize in order
of importance. Importance is measured relative to contribution
to achieving enterprise purpose. This is not a precise science,
their is no ideal answer. The value is the focus developed through
the discussion. The consensus on processes that begin with customers
needs and result in the satisfaction of the needs. Don't worry
about these being 'the' core processes. They are a starting point
to begin mapping process to organizational partitioning. Once
the transition to process thinking is made, the identification
of core processes will be refined.
Organizational Mapping maps a single process across
the organization and builds a visual organization and process
hierarchy. This allows participants to relate cores processes
to the more familiar organization chart. This mental bridging
can be eye opening. And participants can assess whether there
is a good fit between the core process and the organizational
structure. One question might be "Is ownership split among
vice presidents with conflicting measures?".
This exercise helps organization members create a
road map of a selected core process across the enterprise's organizational
structure.
Using a blank wall, 3X5 colored cards, and 1X5 strips
of black paper. Walk through the core process from trigger to
product. For each step in the process place a 3X5 card on the
wall to represent the organizational owner (by name and title).
For each organizational owner build the organizational hierarchy
from that person/function to the CEO. As you map the process a
traditional organization chart will evolve on the wall. An organization
chart that maps process ownership.
This exercise has two major benefits. First is the
discussion and shared knowledge that develops as the map develops.
During this discussion you will hear critical interdependencies,
problems and strengths. These can be captured on flip charts for
later use. The second major benefit is the use of this map as
a tool to share the process learning with other members of the
organization (up and down). It becomes an artifact of the process
design journey. It is kept on the wall and updated, as cross functional
processes become more visible and improved.
Organizational Matrix reviews each function in the
organizational chart and maps process interdependencies for all
processes and functions. This is not so much a road map as it
is a visible contract of functional interdependencies. Each function
is saying "to do my job I need these things from other functions,
and when I'm done my product/service is used by these functions".
Creating a simple chart that captures and communicates complex
interdependencies.
This exercise helps organization members to create
an inclusive matrix of major organizational functions and their
process interdependence.
Using a blank wall, 3X5 colored cards, and 1X5 strips
of colored paper. Label each card with organizational functions,
place each card on a diagonal (bottom right to top left of adjacent
card). Treating each function as a business/service unit identify
all inputs and outputs. Using the 1X5 strips, create/label one
for each input and output. Place these strips on the matrix so
that outputs are on a horizontal axis to the producing function
and on the vertical axis to the consuming function. Add functions
and external organizations on 3X5 cards to the matrix as needed.
The resulting chart can surface interesting patterns
of interaction. Some patterns that I look for are functions that
have interaction with many other functions, and other functions
that have little or sometimes no interactions with other functions.
I also look for patterns of problems and issues, how they are
clustered or spread across the enterprise. Again the value is
in the discussion, discovery, and shift in thinking from organization
ownership to process contribution. Organization functions don't
exist for themselves, but exist for their contribution to a higher
enterprise purpose.
How do I know if the enterprises core processes
are achieving the enterprises purpose? How can I monitor and tune
performance in a way that dynamically adjusts to external and
internal factors. How can I align the enterprises purpose with
the work of each individual. Measures are the vital signs!
It is useless to measures pieces of the enterprise (functions)
unless the measure can be directly related to the enterprise purpose
(core end to end processes).
Measures are feedback mechanisms that allow the enterprise
to improve, and adapt to an ever changing dynamic environment
(in which it must maintain meaning to thrive). Measures are not
numbers! Measures are relationships, of cause and effect, they
are sensing mechanisms for interdependencies that are too complex
to understand or control directly. To be effective measures
must be simple, easily related to the viability of the enterprise
purpose, and mappable to individual action.
Measures have a powerful influence on the health
of an enterprise. This power can be destructive as well as constructive.
This is why they must be understood and cohesively integrated
into the enterprise purpose and core processes. If not, measures
will erode and destroy the enterprise. Measures are a way for
each individual to relate their work with the higher purpose.
In every enterprise there are visible (explicit)
measures and invisible (implicit) measures. If these two measures
are different the enterprise is, or will become, dysfunctional.
Always remember that measures are indicators, not root causes.
Inconsistencies in measures are driven by inconsistencies in purpose,
or fragmented purpose.
I have some basic techniques for helping people in the enterprise evaluate and develop a set of useful purpose driven measures. These techniques can be grouped into three basic areas; metrics structure, evaluation of current measures, and development of additional measures.
Since measures are the vital signs of enterprise health, it is important that they be complete. Having a framework, or structure to understand the major areas that measures are needed is useful for this. I have found the concepts of 'viewpoints' and measurement 'dimensions' as a good structure to discover the completeness of current measures and identify what areas may need strengthening.
Measures provide feedback on the ability of the enterprise
to achieve it's purpose, remembering that purpose is multi-dimensional.
In addition to satisfying customer needs, enterprise processes
must satisfy the needs of equity owners, and the needs of management,
employees, community and economy. I refer to these different needs
as 'viewpoints'. The three major viewpoints are the Customer,
the Equity Owner, and Management. An imbalance in meeting these
different needs will lead to dysfunction. I can satisfy customer
needs yet still not make money, or make money (in the short term)
and not meet customer needs. Additionally I can have very efficient
internal processes yet not meet customers needs or create return
on equity. Each of the three major viewpoints must be viable (healthy)
for the overall enterprise to succeed. Each viewpoint should have
it's own set of measures developed by stakeholders of that viewpoint.
Measures are the vital signs! Just as the health
of a body is measured in several dimensions such as temperature
(98.9), pressure (120/40), chemical make up of the blood. There
are also dimensions that most business processes can and should
be measured. The three major dimensions for measuring enterprise
processes are cost, quality, and time. The enterprise should have
at least one major measure in each dimension for each viewpoint.
Again, measures need to be developed by viewpoint stakeholders.
The value of this evaluation is the structured discussion of existing measures, strengths and side effects (good and damaging), and the linking of measures to higher level enterprise purposes. With a group of viewpoint stakeholders I list all major measures. For each measure I then ask the group to list the purpose for the measure, intended effect and unintended side effects of the measure. The measure is then place in the viewpoints/dimensions structure (3x3). The purpose of this is to identify any imbalances in the measures structure, such as many measures of process efficiency (management viewpoint) but few measures of equity performance (equity owners viewpoint).
Building on the knowledge developed in the structure
and evaluation of current measures, modify and develop measures
representing all viewpoints and dimensions.
Why do good designs not get implemented? Why is change
so difficult across organizational boundaries? The answer lies
in fragmentation and conflict of purpose. People are generally
purpose driven. If they understand and agree to the need for change
they become adaptive and even innovative in implementing the change.
If they disagree with the purpose of change they can become resistant
and even subversive to change. This is why authenticity of purpose
is so critical to enterprise health. If there are gaps or inconsistencies
from the stated purpose and explicit actions (such as measures
and allocation of resources) there will be a breakdown in the
change process. This is so simple, but for all the reasons that
get the blame of failure (politics, technology, bad luck) I would
argue that the real failure was inconsistency in purpose. All
other barriers can be overcome.
The following outlines my approach to healthy change processes that can overcome some of the natural resistance to enterprise change. It follows the steps of developing a case for change, understand how change is initiated and how collaboration is built, what are the mechanics of going from point A to point B.
A compelling case for change needs to be authentic,
explicit, and easily communicated to all viewpoints. One aspect
for doing this is the development of a 'business case for change'.
The business case for change is a business plan that supports
the investment in change. It looks at the need, costs (qualitative
as well as quantitative), and benefits of the change over a reasonable
life of the benefits. The purpose of this business plan is not
return on investment projections (as important as that is), but
the surfacing of underlying assumptions driving the change initiative.
Those assumptions will provide key indications of consistency
of purpose, feasibility, and underlying principles.
The second most important aspect is to have story to go with the business plan. I have seen senior management be very effective in 'telling the story' of change. Anecdotal events that galvanize our mental images. The story of the order that got lost, losing the customer but for the heroic efforts of individuals. Or the story of new market needs and the vision of how those needs can be met with new ways of doing business.
Where does change come from? Top down, middle out,
bottom up, outside in? In my 20 years I have seen all of these.
Some succeeding some, painfully failing. My observation is that
all successful organizational changes are the result of all four
working intertwined. In fact if all four are not in play the change
will fail! The catalyst for change can come from any of the four
sources. No matter the source, the catalyst for change must cascade
into each of the other three groups to successfully shift the
course of the enterprise. Each of the four areas has their own
unique viewpoint that must be authenticated by the change. The
Business Case for Change should support each of the four viewpoints.
I have a firm believe that successful change is based on conspiracy,
and conspiracy is based on shared vision/purpose.
An external consultant can play a pivotal part as a catalyst agent. The consultant can be more direct and more easily cross political boundaries more. In fact in the case of middle out change, the consultant may have been brought in because of this. I've never seen this stated in the consulting contract but am convince that this is the underlying motivation for many consulting engagements. To do this right means that the consultant must personally believe in the change and has to put their job on the line almost every day of the engagement!
There are tremendous barriers to change. Legacy processes,
systems, and foremost human nature. Having a clear cohesive framework
for change is key. This framework must be built on the four legs
of shared purpose, shared understanding of current state,
shared understanding of the goal state, and shared understanding
of the steps (road map) necessary for moving from one to
the other. All points of knowledge developed by those that need
to do, and live with, the work. Given convergence of these four
points of shared knowledge change will happen. Also note that
each point of shared knowledge is a dynamic learning process,
constantly changing and adapting, guided by purpose and principles.
If any of these four points of knowledge is weak the overall effort
will be weakened.
Shared knowledge is the most powerful factor in successful change. I have found that shared knowledge must be developed in two dimensions. The first is along the four points of purpose, current state, goal state, and transition road map. The second takes these four points of knowledge and ensures that they are consistent in three major organizational axis's, chain of command (down to the individual worker), cross functional/geographic (including customers and vendors), and information systems/technology.
The primary technique for creating, maintaining,
and sharing these four points of knowledge is the development
of models. Models are abstractions that allow the designing, testing
(learning), and communication of complex mechanisms. The risk
of using abstraction (models) to capture and share knowledge lies
in interpretation and hidden ambiguity. Conventional process modeling
and simulation modeling tools have some limitations in meeting
the requirements of shared knowledge. I detail how I use models
in section 3.4 Achieving Physical Health (Core Processes).