By Geary Rummler and Alan Brache
The pharmaceutical industry has developed a host of effective medicines. Penicillin, for example, is a drug of demonstrated effectiveness. However, it probably won’t help a cataract. There’s no evidence that cortisone will do anything for a fever. Aspirin has been called a wonder drug, but it is harmful to someone suffering from an ulcer. Unfortunately, every effective medicine addresses only a limited number of ailments. Professional diagnosticians, doctors, are paid to match medications with patients’ illnesses.
Similarly, there are lots of approved performance improvement “medicines” out there. Training is one form of medication. Reorganization is another. A new information system is another. An incentive compensation plan is yet another. The question is, who are the “doctors” being paid to match these and other medications with our organizations’ illnesses?
Successful companies are not necessarily effective or efficient at implementing change. Even companies that are good at making operational changes may not be good at implementing systemic performance improvements.
The use of the planning/project management tools that serve them well in product introduction or facility construction are useful but insufficient for this type of implementation. An intelligent solution, effective planning, and rigorous project management do not, by themselves, prepare an organization for change.
When an improvement effort fails, it is only occasionally because the idea or model is flawed. Sometimes it falls short due to the quality of the analysis or design. Most frequently, improvements fail during implementation. Here are some of the most common causes for lack of implementation success and strategies that can be utilized to avoid them:
The Process Owner
To ensure that someone with clout is looking at and taking action to improve the performance of an entire cross-functional process, many organizations are appointing an individual as the Process Owner of each core process. A Process Owner plays several or all of these roles:
The Right Way To Design An Organizational Structure
By Geary Rummler and Alan Brache
Designing an organization structure is more than naming, arranging, and filling the boxes on the organization chart. While clear reporting relationships are administratively essential, getting products and services to customers requires an organization structure that focuses on the nature and flow of work.
Toward this end, first determine what work needs to be done and how it currently gets accomplished. Next, design the way it should be carried out. Only then can a useful organization chart be created. Form (structure) should follow function (processes).
How to Develop Sound Measures
Performance—that is, output—should be measured at all three levels (Organization, Process, Job/Performer).
Follow this sequence when developing your metrics at the different levels:
The True Picture of an Organization
Most change efforts produce disappointing results and unintended consequences because they stem from a fundamentally flawed view of the organization. Traditional thinking is reflected in the typical organization chart, which graphically describes the functions of the business and the vertical reporting relationships.
What’s wrong with that picture? It doesn’t show the customers how the products are developed, produced, or delivered. It doesn’t provide any sense of the work flow and tells nothing of what the business does, who it does it for, or how it is done ...
Making Only Piecemeal Changes Can Be Dangerous
All too often, companies respond to external pressure with spasmodic campaigns such as:
If management’s objective is to symbolize to employees, customers, shareholders, and the business press that it recognizes the challenge and is doing something about it, then any of these actions will do the job. If, however, managers wish to address needs comprehensively and on a sustained basis, they cannot pursue the quick fixes and superficial responses that have become the trademark of improvement efforts.
Noble intentions drive each of the actions listed here, and each of them can address a piece of the problem or opportunity. Therein, however, lies our concern. Managing to meet the challenge of change—demanding, unforgiving customers, and ubiquitous, unmerciful competitors—is a complex and complicated task. Piecemeal approaches, that are assumed to be the answer are as dangerous as no response at all. These efforts can absorb vast resources as they lull an organization into thinking ...
Six Fundamental Laws of Organizational Systems
By Geary Rummler and Alan Brache
The Strategic HR Department
We believe that an organization gets the HR function it deserves and an HR function gets the status it deserves. If HR is perceived as a “necessary evil,” it has earned that label through its failure to play a strategic role in the organization. The best route to a mainstream role is through a series of steps which HR initiates. The HR function that is waiting to be assigned strategic responsibilities should find comfortable chairs and some good magazines.
THE HUMAN RESOURCES FUNCTION AS A CORNERSTONE OF STRATEGY IMPLEMENTATION
We have found that HR can establish a strategic role if its staff members:
Learn the business. HR employees should devote time to understanding their organization’s strategy, the actions being taken to implement the strategy, and the work processes which drive the business.Link HR activities to the organization strategy and business plan. Every HR responsibility can and should be a critical component in strategy implementation...
The Powerful Alternative to the Way Organizations are Typically Managed
Managers have found out that creating high-performance teams doesn’t necessarily produce a growth spurt. They’ve discovered that the hot pursuit of Six Sigma or Lean doesn’t inevitably result in excellent processes. They’ve seen that redesigned processes don’t make much difference when they aren’t hardwired to strategy and implemented through redesigned jobs.
In spite of the money, commitment, and effort that have gone into growth initiatives, the results have been generally disappointing. As sweeping as these growth strategies appear to be, they aren’t broad or deep enough...
Shift Perspective 90o
Managing in a process-centered organization calls for a new mindset. We’re dealing with work from a different slant. It’s no longer simply a vertical, top-down, task specific exercise. Management now involves broad spectrum responsibility for facilitating the flow of work from left to right. The old north to south style of management is too one-dimensional. Too localized. A process focus means our perspective must swing around such that we’re mainly thinking west to east...all the way across the company.
Now you’re managing sideways. And it’s a very different drill.
Just as a 90o shift in wind direction announces the arrival of a new weather pattern, this quarter-circle turn on the management dial tells us we’re changing the way we deal with work. Fundamentally. When we make the simple shift in focus from tasks to processes, it profoundly affects our perspective on how we do business. The different departments or functions stop operating as silos. We quit thinking of individual tasks in a singular and disconnected manner. Instead, we consider the overall collection of tasks-that is, the process-that’s involved in producing an end result...
What's Next After Redesigning Processes?
Let’s say you’ve done some good architectural work on the process. You’ve got it designed to create value for the customer. And let’s assume that people’s jobs are well aligned with the process. Their performance goals position them to make meaningful process contributions.
Now’s the time to make sure you’re managing sideways. West to east, mainly, rather than north to south. Instead of supervising people, manage the white space. Keep your focus on the handoff zones. On results. Don’t get caught up in issuing instructions, policing people’s individual performance, or being too handy with helpful advice. That’s the old-fashioned vertical approach. Here we’re looking for horizontal management, and that means you don’t want people raising issues up through ...
Managing People is More than Managing People
Successful managers tend to be guided by a set of fundamental truths about human performance:
The Organization Level of Performance
A wealthy owner of a baseball franchise will often recruit the most highly skilled (and highly priced) talent and wonder why his or her team doesn’t win the World Series. A championship team often pales in position-to-position matchups; it wins because somehow the whole is greater than the sum of its parts. The distinction is usually that the winning team as a whole, not just each individual player and function (hitting, pitching, defense), is being managed.
Similarly, an organization can be greater than the sum of its parts only if the whole organization is managed. An organization may have people with outstanding experiential and academic credentials. Its functions, such as marketing, production, and research, may look good when benchmarked against those departments in other organizations. However, its results may be less than stellar because its executives manage functions and people without placing them in a larger organizational context. This practice is a prescription for suboptimization, a situation in which the whole equals less than the sum of its parts. Our first step in managing organization performance ...
To be Customer-Focused, We Have to be Process-Focused
Since the people we serve and sell to are truly the ones in charge, a customer orientation should drive all of the organization’s activities. We need to start with the customers’ wishes, with what they want from us, with what they consider value.
It’s not our opinion that counts. As the supplier, our perspective on what represents value, quality, or worthwhile work may be quite different from the customers’ thinking. But if we’re smart, and if we take a process-centered approach, we’ll start by determining what customers really want from us. Then we’ll work backward from there.
A process is a series of related steps or tasks that together create value for the customer. The most important word here is “customer.” A process perspective on a business is the customer’s perspective. That’s because processes are the means by which an organization produces its products and services. And the only things that customers really care about are these outputs. Our results. Customers are totally uninterested in our organization chart, strategic plan, personnel policies, or such. The important thing to them is the value we deliver. So if we’re going to be customer-focused, we have to be process-focused ...
Your Organization's Future Lies In Its Processes
Tomorrow’s results will be determined largely by today’s approach. By the way we tackle our work.
Sure, our strategy must be solid. Our people must be capable of performing. But that won’t make us competitive if our processes are clumsy. To succeed in this demanding and chaotically changing marketplace, we have to accelerate our output. Slash costs. Bring higher quality and better value to our customers. But how do we achieve this competitive triple play of “faster-better-cheaper”?
The most promise will be found in process improvement.
If we scan the competitive landscape, we’ll see old competitors who relentlessly keep improving. We’ll be shocked at the new competition springing up from innovative outsiders who come from other fields. And we’ll note that customers keep upping the ante by always expecting more.
So let’s take a hard look at how we do things around here. Shall we stick with the same old habits and techniques? Or do we decide it’s time to start doing things differently?
The Process Level of Performance
We have found the Process Level to be the least understood and least managed level of performance. Processes are rolling along (or, frequently, stumbling along) in organizations, whether we attend to them or not. We have two choices—we can ignore processes and hope that they do what we wish, or we can understand and manage them. We have proposed that the only way to truly understand the way work gets done is to view an organization horizontally (as a system) rather than vertically (as a hierarchy of functions). When you view an organization horizontally, you see business processes.
While the Organization Level provides a perspective, sets a direction, and points to areas of threat and opportunity, our experience strongly suggests that the Process Level is where the most substantive change usually needs to take place. A clear strategy and logical reporting relationships (Organization Level) and skilled, reinforced people (Job/Performer Level) cannot compensate for flawed business and management processes. An organization is only as effective as its processes ...
How Jobs are Different in Process-Focused Organizations
Processes work best when they’re simple. You want to keep them lean, elegant, and efficient. How do you go about this streamlining? You get the complexity out of the process and move it into people’s jobs.
This means the scope of people’s work has to change.They need to assume responsibility for a broader range of activities. Instead of being focused on one or two single tasks, their jobs should be designed around outcomes. Toward overall end results. They must migrate from specialized labor to more general, wide-spectrum duties. This requires an expanded set of competencies. It calls for know-how in multiple disciplines. It may be that the individual needs to understand and be able to perform all the steps in a given process.
As their jobs become bigger and more complex, people need a fuller understanding of their own process and of the organization at large. They need to be able to see the big picture . . . how the system works . . . how all the activities in their process fit together and interconnect with other processes to ultimately serve the customer...
Balance The Three Process Components: Plan, Perform, and Measure & Manage
A process requires three separate but interdependent efforts. First, there’s the need for planning. Next comes performance, or execution. The third effort involves measurement and management support. The power of the overall process depends on a healthy balance between all three.
Historically, most of the effort invested in process improvement has been spent on component #2: Perform. Organizations polish their process execution to a high sheen. They eliminate unnecessary steps. They reduce the number of handoffs. They minimize the amount of time wasted on low-valueadding work. Eventually, the process itself becomes a work of art. Problem is, this bright and shiny process that’s receiving so much attention is more or less an orphan. Both the front-end effort (planning) and the back-end work (measurement and management support) are missing to a large degree. As a result, the process is misdirected . . . disconnected from the company strategy . . . or impotent due to a lack of follow through.
This tendency to over-focus on process execution is unfortunate. Organizations spend roughly 80 to 90 percent of their time there. But our experience suggests that the greatest opportunities for gain exist in the other two areas....
The One Thing You Must Do Well to Maintain Powerful Processes
The right measures can trigger dramatic improvement in the performance of cross-functional work flows.
In fact, if you want to single out the one management act that can make the greatest contribution to successful and enduring process management, it would be developing and installing a process-based measurement system. Unless you do that-and do it well-you don’t have a prayer of maintaining powerful processes.
Good measurement is crucial for a variety of reasons. Let’s start with the fact that it signals what’s important. That positions people to get their priorities straight. It focuses everybody’s efforts on what counts the most. It makes it possible for them to evaluate their performance ... to make improvements ... to allocate their time and effort to produce maximum payoff ...
The Questions that Need to be Answered
Before performance at any level can be managed, the expectations for that performance need to be clearly established and communicated. This need is particularly strong at the Organization Level. If we have not clearly defined the business we are in, we certainly cannot effectively design and manage the Organization Level of Performance or establish goals, structure, and management practices at the Process and Job/Performer Levels. Without the guiding hand of a clear strategy, we cannot be sure that we are allocating our resources appropriately, managing our critical business processes, and rewarding the right job performance.
To slightly alter the old Chinese proverb, “If we don’t know where we are going, any processes and jobs will get us there.” We will not add to the vast number of models, theories, and methodologies for strategic planning. Our objective is to identify those questions that need to be answered if an organization’s strategy is going to effectively guide the Three Levels of Performance ...
Going Beyond Process Improvement
Overview of the Three Levels of Performance
Nineteenth-century environmentalist John Muir found that each component of the ecosystem is in some way connected to all other components. The brouhaha over the snail darter, which ultimately halted construction on the Clinch River breeder reactor, was not just about a tiny fish that affects very few of us; it was about tampering with a small tile in the environmental mosaic. Each tile that is removed or changed alters, if only in a minute way, the balance of the picture.
Similarly, we have found that everything in an organization’s internal and external “ecosystem” (customers, products and services, reward systems, technology, organization structure, and so on) is connected. To improve organization and individual performance, we need to understand these connections. The current mosaic may not present a very pretty picture, but it is a picture. The picture can be changed or enhanced only through a holistic approach that recognizes the interdependence of the Nine Performance Variables ...
Organizing Around Process Is Not Practical
A process organization structure merely creates a different kind of white space . . . between processes. Furthermore, it may require additional people, obstruct sharing of learning and resources, and erect career path barriers. In most process-based organizations, functions remain as “centers of excellence.”
How does an organization establish effective vertical and horizontal structures? In our experience, the key is measurement. Establishing customer-focused, process-driven measures is the first step. In a process-driven environment, each functional manager is still responsible for achieving results, allocating resources, and developing policies and procedures.
Line managers have as much authority as in any traditional organization. There is no tug-of-war between two bosses, as in many matrix-managed organizations.
How Does Strategy Relate to Process Redesign?
There are a wide variety of models for strategy formulation, strategy execution, and process redesign. How do all three areas link together?
The Evolution of Process Redesign
When the Rummler-Brache Group began first focusing on process improvement, our thrust was on the development and deployment of tools for analyzing and designing cross-functional processes such as order fulfillment, product development, pricing, and budgeting. It didn’t take us long to discover that our interventions in this area were less likely to be effective and almost certainly to be inefficient if they weren’t preceded by some strong up-front planning. We concluded that any process design/redesign should begin with ...
"Fix" The System Rather Than The People
Let’s talk about management ROI—the return on investment you can expect from your management efforts.
What offers the best payoff? Experience proves that you’ll enjoy the biggest benefits when you focus on system changes, rather than trying to improve the various people who work for you.
Nobody’s arguing here against training. People definitely need coaching and development to make sure their skills measure up. The point we’re making is about leverage. About playing the odds. About investing management time and energy for maximum return ...
Overcoming the Seven Deadly Sins of Process Improvement
As with other performance improvement efforts (TQM, self-directed teams, Six Sigma, Lean, Just-In-Time inventory, etc.), most organizations can point to the results of their efforts: cost savings, quality improvements, and cycle time reductions. However, there has been more sizzle than steak, more activity than results. In our experience, most failures to realize the potential return on an investment in process improvement arise from committing one or more of the seven deadly sins.
Sin 1: Process improvement is not tied to strategic issues. One company in the food business was proud of its seventy cross-functional process improvement teams. When asked about results, executives mumble vague homilies about “culture change” and “empowerment.” Noble pursuits, no doubt, but what’s the increase in shareholder value? Almost every one of an engineering conglomerate’s dozens of business units has documented its processes. When asked how they’ve used these “maps,” they admit that they haven’t. Too many process improvement teams are convened to address self-selected “backyard” issues that are not ...
New Processes Require New Information Routes
A process approach must be supported by different arteries that facilitate cross boundary communication. Information has to cut horizontally across the system, instead of following the traditional pathways up and down the organization hierarchy.
Processes just don’t work well when the various functions are walled off from one another. If information has to struggle up through the chain of command in one department, make it over to another area, then dribble back down that silo to the people actually doing the work, the process is far too sluggish. So the vertical communication patterns must yield to more sideways give and take.
Word can get around a lot better moving laterally.
This means the slow-moving routes must be bypassed. Just as an interstate freeway cuts around or over a city’s clogged traffic patterns to speed travel, you have to help construct new arteries that accelerate and enrich information flow. Fast and accurate communication across the entire process, and between processes ...
The Job/Performer Level of Performance
The Job/Performer Level is so named because it looks at jobs at all levels and at the people who serve in those jobs. At this level, we take the same systems view that we take at the Organization and Process Levels. We believe that performance can be improved only if jobs and people are examined in an overall performance context. The need for a systems perspective is best illustrated by an analysis of managers’ typical responses to people problems. Aside from the frequent response of ignoring the problem, the actions we see most often are: train, transfer, threaten, discipline, or replace them. The common theme through all of these responses is them. Each action assumes that “them” is what’s broken, and therefore “them” is what needs to be fixed.
Assuming that defective people are at the root of all performance problems is as illogical as assuming that a bad battery is at the root of all automobile malfunctions. While the battery may be at fault, a good mechanic realizes that it is part of an engine system. Even if the battery is performing inadequately, it may be because of another component; the root cause may lie elsewhere ...
How Would You Grade These Performance Improvement Programs?
To optimize performance, companies need to improve all Three Levels of Performance:
1. The Organizational Level (where strategy is established)
Typical improvement campaigns (i.e. customer focus, process redesign, TQM, cost reduction, cycle-time reduction, Lean, Six-Sigma) focus on only one level. As a result, these efforts do not optimize overall results. In fact, they can do more harm than good if the “fixes” in one area create unintended, negative side effects elsewhere.
Breakthroughs occur when leaders address all Three Levels of Performance and manage the whole system, not just tinker with a few of its parts.
With that in mind, how would you grade the following four performance improvement programs? (The names of the actual companies have been changed) ...
Don't Expect Employees To Love A New Process Just Because It Is Better Than The Old One
Process re-designers often bank on the idea that everybody will buy into proposed changes just because they make good economic sense. But that rarely happens. People don’t automatically fall in love with a nice process, even if it’s brilliantly designed.
That’s understandable. Just consider what all we’re asking people to do here. Comfortable and familiar ways of doing business must be ditched. Working relationships will get reshaped. The boundaries between departments need to come down. Power and authority among different functions and across levels will be redistributed. People face new performance requirements that call for new skills, different work habits, and a shift in mindset ...
5 Key Steps in a Process Improvement Project
1. Determine the Critical Business Issue
You shouldn’t pursue Process Improvement because it’s conceptually logical or a noble objective; you should do it to solve a high-impact problem. The driving force of a Process Improvement project is a Critical Business Issue (CBI) that may be centered on revenue, quality improvement, cost reduction, and/or cycle time reduction. (Since most of these variables are in the mix, you need to agree on which one or two are the primary motivations for the project.)
Once you reach consensus on the CBI, the individual championing the effort should lead the Process Improvement project definition, which results in: