Organizations are full of smart people. We meet them every day. So why aren’t all organizations exceptional?
When we receive great customer service it feels like the exception and not the norm. We read about exceptional innovative organizations but they are not the majority? In fact, why does it seem that the number of exceptional organizations in the world is less than 5% rather than 50% or more? And when we read about this small minority, such as Jim Collin’s 11 great companies out of a starting pool of 1,435, why do many of them go on to stumble and fail?
Why?
Organizations are complex. They have many moving parts, variables upon variables and interact with a world that is even more complex. The amount of variety that occurs in not just a day or an hour but in every minute across an organization is immense. Stafford Beer points out that one method of dealing with this amount of complexity is to ignore it, he goes on to say that this is not a viable option to survive. But this is exactly how the majority of organisations are managed today. We try to simplify everything down to a few manageable variables to be controlled by management, while ignoring the majority of the complexity that makes up an organization. Konosuke Matsushita, the Japanese founder of the National and Panasonic brands, explains the danger of thinking this way;
“We are going to win and the industrial west is going to lose out; there’s not much you can do about it because the reasons for failure are within yourselves. Your firms are built on the Taylor model. Even worse, so are your heads. With your bosses doing the thinking while workers wield the screwdrivers, you’re convinced deep down that it is the right way to run a business.
For the essence of management is getting ideas out of the heads of the bosses and into the heads of labor. We are beyond your mindset. Business, we know, is now so complex and difficult, the survival of firms so hazardous in an environment increasingly unpredictable, competitive and fraught with danger, that their continued existence depends on the day-to-day mobilization of every ounce of intelligence.”
The organizational influence diagram below begins to highlight some of this complexity. Although it is a simple diagram when we think through the, relationships, interactions and inter-connectedness between all the elements it becomes very complex, very quickly. Given this, we can understand Matsushita’s advice that our “continued existence depends on the day-to-day mobilization of every ounce of intelligence”. This means all the elements are working effectively together; mission, objectives, metrics, people, processes, structure, culture, behaviour, decisions and workflow. And because this doesn’t happen, the exception is the exception and not the norm.
To do so requires complex thinking. It requires enabling “every ounce of intelligence” to manage every variable and to have them all pulling in the direction of achieving the mission’s outcomes. Because this is very difficult if we don't have people with the necessary level of capability at the different layers of the organization we manage by dumbing down the complexity. We, consciously, or sub-consciously, choose to ignore the things that make an organization effective. We fall into Beer’s ignorance trap.
The organizational influence diagram below shows us the factors that stop organisations being exceptional. These steps happen in parallel, but we can walk through them one by one.
- Many CEOs don’t have the level of cognitive capability that allows them to understand the immense complexity in an organization or how to lead such an organization.
- These CEO’s hire people like themselves and operate with a command and control mindset. They assume that everyone in the organizations has the same values and drivers as themselves.
- The executive team creates mission statements that have a short term focus, usually based on “making money”. We see this written as “increasing shareholder’s value”.
- The organizational structure is based on “command and control” thinking, leading to vertical functional silos. Value adding workflow now has to cross multiple department boundaries to be achieved.
- The objectives, targets and metrics become aligned to the vertical silo structure reflecting the internal world of the organization and not the external, customer facing world.
- The decisions, workflow, processes are based on the functional departments’ objectives, targets and metrics. Which are not customer facing.
- The culture and behaviour is now internal facing, risk avoidance and self preservation.
This organizational setup cannot cope with the vast variety in the world. The result is the simplification to a “one size fits all” approach. The organization serves the average; customer, decision, situation, problem. Unfortunately, the "average" doesn’t exist, the variety in the world ensures that everything and everyone is a bit different to the average, one size never fits all.
To be exceptional is not easy which is why it isn’t the norm. The organizational influence diagram shows us the many different aspects that need to be in place in order to deliver sustained exceptional service. The gaps are what lead to the frequently asked questions for organizations. By the way, as Jim Collins found in Good to Great, it does all start with the CEO!
Many of the manifestations of being the norm are found in these frequently asked questions.