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The Design of Business

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Imagine your dismay when this hypothetical product has all manner of dysfunctions that require endless workarounds to compensate for its bad design. Would you settle for that? Not likely. Odds are excellent that in short order you'd be on your way back to the store and standing at the returns desk.

If we won't tolerate badly designed products in our lives (MS Windows notwithstanding), why do we tolerate badly designed businesses? When you consider the relative importance in our lives of that from which we derive our livelihood, we should have far less tolerance for dysfunction at work than we do at home.

The problem is that dysfunctional organizational environments is mostly all we've ever known.

The great anthropologist Edward T. Hall in his classic book The Silent Language said that "culture is largely invisible to its participants." In our lifetimes there has been much research and education and popular awareness of corporate cultures. However, what has remained invisible is the culture of business.

For those who are not conversant with the concept, culture can be thought of as that set of beliefs and assumptions about reality that order all personal and social activities. In the culture of business, there are many assumptions which are never seriously questioned. An example would be how many direct reports a manager should have. The rule of thumb is six to eight. No one questions job costing as a legitimate accounting technique.

As a reality check, i personally know a CEO of a $600M company who has 500 direct reports and the people who invented job costing were very aware that it introduces very serious distortions into understanding how companies make money.

One of the great failings of Western culture is that we tend to fixate on symptoms when systems are dysfunctional (like our health) rather than striving to understand what the underlying causes are that are giving rise to the observable symptoms. Nowhere is this more true than in organizational life.

We have created a massive infrastructure of consultants, writers and thinkers who exhort us to have emotional intelligence, have fierce conversations, understand the five dysfunctions of a team, be one minute managers and remain calm when someone moves our cheese. This infrastructure virtually without exception if focused on treating symptoms and never really asks the hard question, "What is it about the way in which we have designed businesses, leadership and management that is giving rise the the many dysfunctions of which anyone who has spent any time in any kind of organization is intimately aware?"

Asking this question, brings to visibility, the heretofore invisible layer of business culture. It puts us in the uncomfortable position of having to question our most sacred assumptions, to bump off our sacred cows, to throw ourselves into the non-linear space of not knowing.

Most people do not find this a happy experience.

Sadly most of us are willing to accept the corrosive effects of chronic pain of living with dysfunction for the short spike of acute pain of working through the unknown and arriving at a new way of being and doing in which the dysfunctions have disappeared.

We know that organizations cannot remain static. The world is changing rapidly and organizations that fail to adapt and evolve become obsolete and incapable of delivering adequate value to their constituents to survive. The Quality disciplines (TQM, Six Sigma, Lean) are powerful tools and have had a huge impact on our ability to do more with less.

In recent years, the body of work that perhaps has come closest to challenging the norms of business culture has been Goldratt's Theory of Constraints. If you haven't read The Goal, It's Not Luck, and Critical Chain, you need to do so.

But the issue remains that from a design standpoint, if organizations were better designed, we would not have to deal with the incredible dysfunctions that organizations manifest and I would make the case that we cannot remotely afford the cost of these dysfunctions in what is rapidly becoming a just-in-time world.

How do we attack this problem? The starting point is to realize the assumptions that went into the design of what i call traditional management practice.

The inventors of management as we know it were 19th century intellectuals whose worldview was Newtonian, that is they understood the universe to be a cosmic machine. At some levels this understanding was accurate, but a long way from complete.

We now know the universe is self-organizing and that below it's more superficial machine-like qualities, creation is much more complex and unpredictable. The fact that Complexity Theory has shown us that all systems have a natural propensity to self-organize should help us begin to see how we need to attack the redesign of organizations, leadership and management.

The key elements are how we structure organizational relationships, how we compensate, how we provide feedback, how we educate, train and orient our employees.

If you look at traditional management practice from the point of view of Complexity Theory, it becomes apparent that much of traditional management is designed to prevent self-organization. Surely it makes more sense to design organizations which swim with the currents of how the universe appears to actually work rather than against them.

The Five Most Dangerous Words in Business

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The great anthropologist Edward T Hall said in his classic book The Silent Language, culture is largely invisible to its participants.  Culture, of course can be defined as those assumptions and beliefs about the nature of reality that never get questioned.  There has been much said and written about corporate cultures over the years and a quick search on amazon for "the culture of business" brings up many books on doing business in other countries.  But what assumptions do we make in how we organize, compensate, provide feedback, educate and orient our employees?  There are many assumptions and beliefs that never get scrutinized.  

And they cause big trouble.

Let's be honest, American businesses (and probably all businesses) are filled with all kinds of dysfunctions that create stress, inefficiencies, loss of productivity, waste, and stunt the development of the talent for which we pay so dearly.  The assumption that is the most deadly to business today can be summarized in the five most dangerous words in business:

That's just how it is.

It's almost if instead of the ten commandments, Moses came down the mountain with the blueprint for the modern organization.  An act of God determines how we do things and the dysfunctions we deal with, well, that's just how it is.

Except it isn't.

Organization design, management practices and processes are human artifacts, not holy relics.  They are the product of human design processes.  And anything humans design, humans can redesign.

How is it that we have fallen into the trap of assuming that when things go wrong that someone must be responsible?  Why is it that when there is a lack of trust among employees (or worse, leaders) that the people are the problem?  The facts are:

1) The people are uncaring, negligent, incompetent, and indifferent or
2) The people are caring, attentive, competent and committed, but are responding to the pressures and rewards of the ecosystem in which they work and to which they pay very close attention, and the dysfunctional behavior is symptomatic of the system in which they work.

What other options are there?

If you believe your people are caring and committed, then the only place to look is the system.

As Sherlock Holmes once said, "When all other alternatives are eliminated, whatever is left, no matter how improbable, must be the truth."

We do not have the luxury of putting up with the wasted efforts of people working at cross purposes in our companies.  We have to reinvent business around a different model.  We need to study the culture of business and realize the trap we've fallen into is that we have gotten so used to our organizational dysfunctions we assume that, "That's just how it is."

The good news is that nature is showing us the way.  More on this over the next few weeks.  

Meanwhile, the next time you let out a sign of exasperation about the dysfunctions in your organization and hear those five most dangerous words wander through your mind, I hope all your alarms go off.  The right response is, "We created this mess, and by God we can fix it." 

The Workload Paradox

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Productivity is at the heart of business.  We measure it at a macroeconomic level. Managers worry about it.  Employees are often measured on it.  Most people work at or near the practical maximum production capacity (Figure One).  This is not to say that their activities are necessarily effective, but people tend to stay busy.  productivity1.jpg

Most people would agree, their lives (work and personal) tend to hover around their maximum capacity, sometimes in overload, sometimes a bit less than their maximum.

On the surface, this looks like the optimum scenario, the content of what we are doing notwithstanding which I'll touch on in a bit.

It appears we are making the most efficient use of our time and talents. But, as usual, there is a fly in the ointment.

Figure Two shows us the fly.

productivity2.jpg
As soon as we are confronted with any change, any surge in workload we immediately go into overload.  I think everyone would agree that overload is not our best gig.  Tempers get short, stress increases, work hours cut into family time, sleep deprivation starts to impact our effectiveness.

Granted, there are those who would say they do their best work under pressure.  I'm one of them actually and there is some basis of truth to this.  However, over the long haul, the cost in physical, emotional, relational well being, clarity of thought and action belies the notion that this is a desirable scenario in any way.  

The quality disciplines for example demonstrate conclusively that it is the consistency of throughput that yields the highest quality work and that spikes and slack times undercut quality.
productivity3.jpg

This brings us to the workload paradox. 

What if we throttled our activities back to something that looked like Figure Three?

Well, the first complaint is that we're not being as efficient as possible.  At one level, clearly this is true.  But let's look at it from another point of view.  What production manager ever born does his/her production planning based on the assumption of 100% uptime of production machinery?  

None.

Murphy lurks on every factory floor.  Machines break, machines require preventative maintenance.  Smart 
productivity4.jpg
production people conduct predictive maintenance.  All this downtime has to be factored into any and all production expectations.  

Why do we consider this principles not applicable to human beings (ourselves as well as our employees)?  Imagine the overload scenario in Figure Two taking place in the context of the workload of Figure Three.  The result is shown in Figure Four.  

In this scenario, we have surge capacity.  We can assimilate changes in our world.  We can deal calmly and effectively with crises.  

Here's the real kicker.  

"I really should train Bob/Sue to take this responsibility off my plate but I'm just too busy to take the time.  It's quicker to just do it myself."

Anyone out there in blog land ever had that conversation with themselves?  It's OK.  We've all done it.  This is called being trapped and it is a byproduct of working at your maximum practical capacity.  If you don't have time to leverage yourself, you're trapped.  If you don't have time to work yourself out of a job, you're trapped.  Whether you're an employee or the CEO it doesn't matter, you're still trapped.  Ironically, trapped in a prison of your own making.

As a leader of a company, division, or workgroup or even just yourself, getting out of this trap requires voluntarily driving yourself into overload for some period of time.  You have to do more before you can do less.  What are the steps?

1) Identify the least strategic, important, or skilled activities you spend your time doing.
2) Identify who you can offload them to.  If you don't have anyone to offload them to, ask yourself the question, "What would happen if I just didn't do them?"  You'll be surprised at how often nothing of importance would happen if you just quit doing some of the activities you do routinely.  
3) Be prepared to defend your lower level of activity.  You will be bucking the trend of the people around you (and above you).  
4) Demonstrate the value of your new level of productivity by taking on new, more important activities or assignments, being sure to push an equivalent amount of your least important work down to others.

The results will be that you will do less and accomplish more.  You will be clearer minded.  You will be better rested.  Your family will be happier.  Your employees will grow and progress faster which will attract the best talent in your organization.  You will be doing increasingly more strategic and important work which will be rewarding to your career, be you entrepreneur or employee.  You will be having more fun and be happier.  Others will enjoy your company more.  In other words, you will have created a self-reinforcing updraft.

Will you be less efficient?  Yes.  Will you be more effective?  Also yes.  

In one of his early books, Peter Drucker, the great management thinking and writer once said (and I'm paraphrasing), efficiency isn't necessary to create success, it's necessary to sustain it.  To create success we have to be effective.  He characterized the difference between the two by saying efficiency is doing things right.  Effectiveness is doing the right things.

Doing the right things is the key to resetting your workload to a lower but more effective level.    

Don't Bring Me Problems, Bring Me Solutions

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How many times have we heard this fundamental axiom of management?

Here's an alternative approach:

1. Give me a heads up about the problem so i can be thinking about it.
2. Bring some possible suggestions for solutions.  You probably won't have all the data so don't get too attached to any one solution.
3. I'll come up with some ideas, but I probably won't have all the data either so
4. Let's meet and share our ideas and craft a solution together which is much more likely to be more powerful and effective than anything either of us could have come up with alone.

There are two principles at work in this suggestion.

1. One of the fundamental principles of the quality disciplines is that all employees work in a system that they don't own and don't control.  The employees are intimately familiar with the limitations of that system but they are largely powerless to effect any changes.  Managers, who have the authority to change the system, don't work in it and therefore have little visibility into the problems or any visceral sense of the cost or impact of the problems.  It is only through the collaboration of managers and employees that process improvement can take place.  Managers must acknowledge that employees have the information and then work with employees to make the process and systemic changes that produce real improvement.

2. In their excellent and classic little book Getting To Yes Roger Fisher and William Ury show elegantly how two minds together are far more likely to create a more creative outcome than either mind alone, no matter how talented.  By coming together with ideas rather than solutions, a collaborative dynamic is created which will be much more likely to lead to a mutually satisfying outcome.  As soon as one party brings a "solution", a very different dynamic is created in which the manager is much more likely to take a black and white position in response, which often is "That won't work."  End of conversation.  Employee is demotivated, problem is likely to persist.  

Discuss this shift in approach at your next staff meeting.  See what happens.


Performance Review Madness

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Most people look forward to performance reviews about as much as they look forward to a root canal.

As leaders/managers that should make all our alarms go off.

There are so many things wrong with how traditional performance reviews get done that it's difficult to know where to start, but let me drop one idea in the bucket.  We'll revisit this subject many times I expect.

Here's the key question: Each employee engages in many transactions daily with other employees.  What percentage of those transactions are between the employee and his/her boss?

A relatively small percentage.  In many cases, less than 10%.transactions.jpg
This should raise the obvious next question:  If the boss has among the fewest interactions with the employee, why is the boss doing the performance review?  He/she probably knows less about the employee's performance than almost anyone in the company.

This may appear to be an overstatement, but if we look at the the internal relationships in the company as internal customers and vendors, then it becomes apparent that while the boss is certainly a customer of the employee, he/she is only one of many customers the employee serves.  This raises a third obvious question: since the quality disciplines tell us that customers get to define quality, why are the internal customers not conducting the employee's performance review?

For more thoughts on this subject, you'll find some interesting articles on one of my websites, www.fiveminutemba.com.
Lanny Goodman, CEO
Management
Technologies Inc.

414 1/2 Central Ave SE
Suite 4
Albuquerque NM 87102
(505) 884-7300

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