Join Derek Hudson as he explores Essential Dynamics, a framework for approaching the challenges facing people and organizations. Consider your Quest!
Welcome to Essential Dynamics. I'm your host, Derek Hudson. Today, I'm happy to be with my colleagues, Ann MacTaggart and Glen Vanstone. We're all part of Unconstrained, the organization that brings you the the Essential Dynamics podcast. Essential Dynamics podcast is a way that we explore the ideas of essential dynamics, which I've been working on to help us, think through, complex, problems and opportunities.
Derek:The podcast explores these things through deep conversations with interesting people. I have interesting people. Last time we had a deep conversation about silos in organizations, organizations that are set up enough, some kind of functional or business unit matter where the pieces don't work together. We took that we took that down a bit and tried to understand why that happened, and now we wanna build it back up and talk about how we can have more effective organizations that aren't bogged down by internal divisions, communication problems, and what we call silos. So, Anne and Glenn, thanks for your, comments in the last one.
Derek:I think we wanna pick this up with something that, I mean, Glenn really finished on. It's just we have to figure out what the organization is there for, what it's supposed to do. You wanna elaborate on that, Glenn, please?
Glen:Yeah. Thanks, Derek. Hey, Ann.
Ann:Hey. Good Good morning.
Glen:Let's see. Organizations, in a classical model, I think I was commenting, a classical model, which is the side of there's the head and then there's all the functions within that group, etcetera. That's about control and operational excellence, right? The focus on everybody in there is to produce what that functional group is really good at, the value they create out of that. But it's really about control, right?
Glen:Because you have the person who is there, that's their team, and they set the tone, the pace, the direction, etcetera. So that's when an organization is built to do that. They make widgets, they make those widgets really, really well, and they are awesome at widget making. A different way of looking at an organization is, well, the matrix kind of model says, well, there's a group of people that have the same sort of function, but then you have kind of more customer facing leaders. And in that, environment, that leader who is who is directed at the customer is able to pick and pull, people across these silos to address that customer related issue, right?
Glen:And in that kind of an organizational matrix, you have more collaboration, you have more what they call, you know, the customer intimacy, form of a matrix. The same sort of piece is when you have a product, facing leader. And so that matrix model then says, you still have people that report within a functional efficiency piece, But if you have product leadership, it's really about the competence angle. Right? You're you're emphasizing, that you can adapt a product to meet customer and or product requirement.
Glen:Right? So it's it's about competency, not control. One is about collaboration, not about competency or control. So these are different types of of organizational structures. But if your organization is actually about kind of disrupting everything, well, we've seen that before.
Glen:We've seen that in the form of the famous Lockheed Skunk Works. Right? That's when you take people right out of those silos, right out of those functional things, and you say, go over to that box, that building over there, and you're free to do whatever that you need to actually create something that isn't going to be dragged down by the rest of the organization. Right? So that whole Skunk Works or Tiger Team model really just says, we can't optimize the system or the silos or the tribes, we'd actually need to take that out of our own organizational structure in order to be able to let these people create their best value.
Glen:And so it depends on what your organization really is trying to do in terms of what organ your management model needs to look like.
Derek:I gotta push back against that in one sense, which is, we can come back to the matrix and stuff like that, but I don't think you ever get there if you're trying to do it based on drawing org charts. Right? No.
Glen:It's how you're managing.
Derek:Yeah. It's the org chart is easy thing for consultants to, like, put on a Power point and for a CEO to present to the board, and mostly it means nothing, if unless it supports a way of doing business that really makes sense. So, Anne, you had made some comments last time about it being very hard for people to support, doing really well in organization and not being a silo because they they sit inside the silo and they see a small part of the organization. And you talked about stepping back. What are we what are we trying to get people to step back and see?
Ann:The I think the short answer to that is I the purpose of the organization and achieving it. I think the the we reinforce by the org chart, the incentives systems, and the we reinforce people to stay in their lane because it's deemed to be operationally efficient, and we're a great organization. We celebrate being great organizations, but yet the great organization is under the cover a bunch of, as Glenn calls them, tribes or individual departments. We design incentive plans. We all worked in an organization where there's KPIs.
Ann:And if you hit your KPIs, you're gonna get a bigger bonus or get some recognition or something that's of value to you. You get the ring. But those KPIs even are designed to have what is it that I can control so I get more of my bonus based on what I can control in my little silo, in my role in that little silo. And then less and less control as you go up the org org chart, towards the company's results. You could almost actually, now that I'm talking about this, you could almost reverse the incentive program so that it's all based on or more of it is based on the overall company or customer satisfaction and progress, and that might help to break down those silos.
Ann:But I don't I don't I don't know how well people would buy into that.
Derek:Well, I've, I've been there a bunch of different ways. So let's let me re recap some of the stuff here. So, first thing is, if you don't understand the purpose of the organization, then you're kinda limited as an employee. Let's say I, might call them knowledge workers anyway. Something other than somebody that could be replaced by a robot tomorrow.
Derek:Anyone who's gotta think and process and make judgments for their job or interrelate with other people for their job. You you have if you understand the purpose of the organization, then you can see upstream and downstream from the work that you do and and try to make it better. And you can have interactions with customers, suppliers, and trying to make those relationships better. But if you don't understand that stuff, you're really stuck with the job description that you have, the tools at your desk and this kind of stuff that goes in your inbox. But the problem is in, our complex world, the system that we used yesterday might not be the one that we need today, and we need everybody on it trying to figure it out.
Derek:So help people understand the purpose of the organization, the parameters of the organization. Sometimes sometimes those are values about this is what we need to accomplish, but we can't do it that way. And then people have people really bought into the purpose. And then the other thing I think we're we're talking about is then you have to be able to step back and see the system that creates the value, which is not an org chart. The system which creates the value is the flow of taking inputs and adding value to them every step of the way, and then putting in the hands of a customer who says, yes.
Derek:That's what I wanted. I can't get this anywhere else. Thank you very much, and here's some feedback for next time. So you you have to be able to see that system. If whenever you get pushed, you drop back to the org chart, then you give people the easy out to drop back into their tribe and to say, well, we did our part, and we don't care about the rest.
Derek:But here's the thing, an organization, let's say, you know, mostly that would be like a single corporation, That's where the bank account is. That's where the shareholder expectations are. That's the entity that contracts with other organizations that has actual relationships with suppliers and customers. There isn't anything else. Everything below that is something that we make up to try and get a whole bunch of people, you know, working together to produce this value.
Derek:To the extent that we don't talk about the purpose and the system that we use to create the purpose, then we default to, you know, what's the stuff that's coming across my desk. And then to make it worse, then you put in an individual incentive plan or a group incentive plan, and, then you have to design an incentive plan so precisely that it doesn't screw up the work processes that actually create value in the organization. And there's no end of ways in which you can mess it up and very, very hard to design something that's gonna be resilient enough to flex with the business and not put perverse incentives every which way. So is that are is that, part of the prescription then?
Glen:Yeah. Absolutely. I think, anything we can do to, allow people to understand the value they create and how better to apply it. I've always maintained that people in in organizations, have a perspective of value creation that doesn't get tapped in as much by, the structures, if I can use it in in that term. People see things, you know, from a different perspective, and they absolutely want to create value every single day, and try different ways of making that
Derek:better. So if you understand the purpose really clearly and you have an idea, you can you can test it first against the purpose and say, this customer didn't seem to be happy last time. I have an idea. Our purpose is to solve this problem for the customer. I should put my hand up and see if we can make that change.
Derek:If you're not clear on the purpose or if or if that kind of thing isn't welcome, you drop back into your tribe.
Glen:And sometimes the tribe itself doesn't, doesn't understand that perspective or doesn't understand how that perspective, contributes to the silo. Right? So sometimes people will say, this is what we're about, my understanding of the purpose. Here's some an idea of how I think we we we can improve value because I do this every day, and I see those threads and the connections. And then the organization as the entity, the way it's structured says, yeah.
Glen:But that doesn't fit in the in in the silos. It doesn't fit in the the the tribal. It's not as easy. And so you have conflict sometimes with the actual way the organization is managed against how people view their ability to contribute value to the purpose.
Derek:So what are ways that you've seen where people have really bought into either the purpose or the system? Or, you know, maybe both.
Glen:Well, been in a couple of organizations. One very large that was structured and very regimented, very process driven, and the reason why those processes were in place because of of of safety and and, etcetera. So there was a highly process type organization that needed all of those parts to work in lockstep with each other in order to produce the outcome. Everybody understood what the outcome was, and they had that hyperdependency on one functional group to be able to to meet the moment and do that on a consistent basis. And one of the things that we did was in that was we had a lot of clarity around the metrics of what the outcome was to be.
Glen:So for example, and I'll use use it, working for an airline, on time departure, the flight had to leave at exactly that moment at that point in time on that date. There were 300, identified steps and decisions that were all codependent for every single departure for every single flight for every single day. And so the system was highly regimented and highly structured. So people knew what they had to do, but they also understood how it related to all of the other parts. So there was that commonality of a a metric.
Glen:We had an outcome. We everybody knew their interdependencies. And so that was very clear and it and it made people understand what their little bit of value creation was, and how it contributed to that outcome. So, you know, that's one where you have that that one goal that is very clear regardless of the quality and and efficiency and effectiveness by which you carried out your one function. That wasn't the important metric.
Ann:I wanna add to that, Glenn, in that what you've just described. It also they had a really short feedback loop because as soon as it ticked past the planned time departure, they knew that something needed to change or they needed to do better or they needed to change that process to get back to achieving that outcome. I think in other organizations that are not nearly that I do this, this is the impact, they they just you don't get that reinforcement of the right behavior or the the the best outcome of what you do and how you did contribute that value. Correct.
Derek:Yeah. And the the other thing about your example, Glenn, is when you don't make on time delivery or on time departure, then the pieces start to fall apart and it cascades like crazy. Right?
Glen:Yeah. So so it's called the rate it called the regular operations and everybody, you know, rubbed their temples when they're in regular operations. And that's when customers, customers gave you that instant feedback, by the way. There was, there was real feedback.
Derek:Right? Real feedback. And, and so Anne, you're right that many of our organizations don't have it, that obvious. And so let's, let's give some advice here. The first thing is have a very clear purpose of what success is both for the organization and for the customer.
Derek:And if you're a not for profit, you're gonna have a user and a funder that can consider them both customers in different ways. You have to be very clear on that, and it's hard. It's really hard to do, but you have to be very clear. Then you have to then you have to understand the system that you use to create it. And we talked about our tendency is to break the system up into pieces, because the whole thing is too much.
Derek:And what we've learned from, from doctor Goldratt and his theory of constraints is in a complex system, usually, there's one factor, one limiting factor that can't keep pace with all the others that affects the output of the system. And if you understand that, then you can understand what the system's capable of. And so what you wanna do, first thing first thing we talk about is, oh, constraints are bad, let's get rid of them. No. That's actually not true.
Derek:You wanna choose the right constraint, which typically is the highest cost, the highest value, the most intricate step, and you want to use that as a control point and then arrange your whole organization around supporting that. So when you talk about on time departure, all kinds of things that no one ever cares about if they're done in time so that the plane can depart on time. Mhmm. But there's a window into in which you get into the yellow zone or the red zone and you risk on time departure. But if you can stay away from that, then you're contributing in that.
Derek:And so if you talk about think about those functions even, in an organization that doesn't have, you know, those as obviously tangible, steps, you need to keep things away from becoming the constraint if they're not the designated constraint. Yeah. So you you have things like like buffers and excess capacity so that the constraint can be managed. You don't then need to focus too much about operations versus sales versus engineering. You understand if, if we're an organization that's gonna have a backlog, we're gonna take more orders than we can deliver, then we just need to keep putting more sales in the system, so we have a bit of a backlog.
Derek:And then we'll manage, our production on the inside. And then we and then our simpler system simplifies. And then you have to help people understand that when they contribute to lack of variation in the system, when they contribute to, having on time or available capacity always, that they're supporting the system. So there's a there's some process oriented stuff to that, but there's also this question of purpose. And if people can identify it with that, and they can see that them doing their job and supporting other people doing their jobs, supports the purpose, then I think they less they need less supervision, and what we, you know, we're referring to as accountability, which is being set up to being blamed for something if you have context for the purpose.
Derek:So I, I do I have shared this story before, at, Edmonton Economic Development. The the purpose of the organization was to make the community's economy better so that individuals and families could have better lives. And, sometimes when we interviewed people for positions, we'd say, why do you wanna work here? And they say, well, I love this city, and I really wanna contribute. Hey.
Derek:The cool thing was that was for receptionist or accounts payable clerk. And and it wasn't the people who were attracting the major sporting events or, or or landing the, the big, new facilities. They were gonna have lots of jobs. These are people inside the organization, but they identified with the purpose of the organization, and that was good enough for them. If they're moving stuff along that they they felt aligned to that purpose.
Derek:So the purpose thing is really important, and then understanding the system isn't as hard as we think. And we often talk about value creation system, which I think is at kind of the highest level of this is how our organization makes the world a better place. We take these inputs which have less value, and we translate them and and convert them and add value until they're this solution for the customer. And it's not very many steps. And then from that, you look at what limits our flow, what could enhance our flow, how can we do more of it.
Derek:I think that not I mean, a measure of success of this initiative that we're talking about now, would be if we went and sat down to a a new client that we're working with in the future and said, tell us about your business. And they started with a purpose and moved to how we create value, and we never saw an organization chart. What do you think? Is that what we're after here?
Ann:Absolutely.
Glen:Well, ideally, you know, it's the most, opportunistic, point of view or perspective. Right? Because when you when you do purpose and you talk about how we create value, the markets are so dynamic now. The markets are so unstable, and they're so flexible that organizations have to get away from any sense of rigidity. Right?
Glen:The market is changing. The opportunities are changing so quickly that they have to be able to take this as our purpose. But how we create value can be the, you know, the malleable parts. And if they are able to move and shift and reshape their functions and their or their services or their product to be able to meet to those change of market demands, then they are prosperous. They will be, resilient.
Glen:They will be more effective than anybody who is trying to jam a structure, the square peg into the round hole, and that suddenly becomes a triangle hole. So it's back to that deal that says, What do you want? You want an economy that is full of organizations that have a lot of clarity in terms of why they exist, and they have a tremendous amount of of dynamic flexibility in their teams' ability to reshape themselves to create different kinds of value for different types of outcomes.
Derek:So we talked Yeah. Yeah. We talked, last time about the the the fact that, we're we might come down hard on some ideas, but ideas don't have feelings. But it's also hard to break from, from patterns of thinking. And so one of the things that we find is when we talk to our clients, we can talk them through to the point where they can describe a purpose and a system for creating value, which was there all along, but they they didn't have the words because they, they weren't thinking that way, and it's hard to see it until you get pulled out.
Derek:So we're happy to do that for anyone that, that can help. Anne, any final thoughts?
Ann:Actually, I'm I'm still processing, so no. Well
Derek:We we do learn as we as we converse, and, we're we're just excited to be part of, this kind of a conversation. And so today, Anne and Glenn, thanks for for coming back and and knocking this one down. I feel I feel better for having the conversation and expect to have many more with with people alive, but, appreciate the those who are listening to the podcast, please share it with those that you think, could benefit from this. And that might be your boss. Who knows?
Derek:So Glenn and Anne, thanks very much. Brynn, thanks for, making us making us sound so good. And until next time, please consider your quest.