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Chapter 12 Question All the Answers Assignments, not jobs Term limits for managers Eliminate internal monopolies Try before you buy
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Chapter 12 Question All the Answers
Excerpt from Rethinking the Corporation By Robert M. Tomasko
Amsterdam's ING Bank building is a physical embodiment of the idea of an "architecture of change." This headquarters building has been well sized. It provides work space for more than 2,000 employees in a structure that does not overwhelm the residential and shopping district in which it is located. Its shape, like Fallingwater's, is predominantly horizontal, allowing for easy movement from office to office and department to department. As with some of the most innovative houses of Frank Lloyd Wright, the Dutch architect of the ING Bank minimized the occurrence of right angles throughout the structure, another way to speed movement and encourage pedestrian circulation both within the building and outside it. The ING building also symbolizes well the rethinking process. Its infrastructure is as innovative as is its superstructure. An interior walkway, with floors of Italian stone and walls lined with art and plants, links the ten mini towers of the building. More than just an office building corridor, clusters of comfortable chairs and tables are included throughout to encourage impromptu networking. For more lengthy informal conferences, a snack bar, four restaurants, and several gardens tucked into the building's external folds are available. This is a building that seems to question all the traditional answers about building design. In addition to multifunctional passageways, the role of stairways, wall color, and even wall shape have been rethought. Staircases are wide, covered with glass domes to fill them with daylight, and are placed in ways that encourage their regular use, not just their serving as a hidden backup for use when the elevators break down. Careful thought has been given to the color of the interior walls. Those on the cold north side of the building are painted in warm earth tones. The structure's sunnier south side features cooler grays and blues. Few of the building's external walls are vertical. This makes it appear less massive and also reduces neighborhood noise pollution by reflecting sound upward. And, since the walls are angled to the sun, they help the building absorb additional rays, reducing heating costs. Perhaps the kind of rethinking process that guided the design of ING Bank's headquarters can also be applied in the realm of organizational architecture. The experience a company gains in rethinking career structures and the role of hierarchy can launch a reexamination of other management practices that have been taken for granted for too long. Opportunities for doing this abound. Areas Ripe for Rethinking First, let's reexamine the idea that a company is a collection of individual jobs or positions. This proposition is usually accepted without any second thought. It is also a lot of nonsense. Replace Jobs With Assignments Lest the wrong idea be conveyed, please note the target here is jobs and positions, not employees and employment. Employees who are loyal to the business because the business is loyal to them are absolutely vital. Providing employment, compensation keyed to contribution, and some assurance that both will continue or help will be provided if one or both are eliminated are key elements of the mutual loyalty pact. In exchange, however, many employers may find it necessary to rethink how work gets done and to look for ways beyond traditionally structured positions to both maximize flexibility and ensure the company is making use of the full range of employees' skills. In most companies, work is packaged into eight-hour-a-day,
forty- Change is hard, partly because positions do tend to take on a life of their own, sometimes independent of their intended contribution to the business. They become animate objects, possessions that are "owned" by their incumbents and bargained or fought over. (This is one reason why head count change becomes the most measured objective of many restructurings.) Their implied permanence leads them to be defined more by their boundaries than their results, creating another wall between employees and what needs to get done. What alternatives are available? Chapter 6 described one-surrendering one's individual job for membership in a "composite team." It is, when fully developed, a very useful idea-but not for everyone, or for every type of work. It is a form of job sharing, appropriate when the work to be done is "bigger" than any one individual can handle. A lot of work, though, comes most naturally in chunks smaller than the capacity of an employee. Let's call these chunks assignments. Whereas a job is a laundry list of activities, an assignment is more focused. It has a clear result. The result can be measured, so it is apparent when the assignment is over. A job-barring a serious downsizing or an act of God-goes on forever. Some are even inherited. An assignment is always time-bounded. It has a beginning, a middle, and an end; it follows a life cycle. Assignments are like many consumer products. They have shelf lives (or half lives), beyond which they start to go stale. A company that wanted to eliminate all jobs could move the
employees into teams, possibly along the lines of the innovative
Japanese ceramics maker Kyocera. This Kyoto-headquartered high-tech
company sorts everyone into groups comprising from two or three
employees to several hundred. Each group has a clear objective,
allowing its contribution to Kyocera's profitability to be measured
(and the company's accounting system has been structured around
the necessity to do this). In surveys in which Japanese executives were asked to name the company they admired most for entrepreneurship and technology leadership, Kyocera ranked ahead of better-known companies such as Honda or Sony. This reputation is due in part to these unconventional management practices, ones that make it a maverick among Japanese companies.
Problems can emerge with systems like this if top management attempts to micro manage the work of its subordinates or misses changes in the forest because of a preoccupation with the trees. Still, these systems can provide a useful control infrastructure for an assignment driven business. This is not only a high-technology computer parts maker's practice. Look over the shoulder of what appears to be one of the night-shift guards at Chaparral Steel. You may well find the person, in addition to watching the automated security monitors, entering the previous day's orders and quality results into the plant computer system. The guard may take an exercise break to fill the fire extinguishers, and he is also trained to perform checks on the machinery that is idled for the night. Is this one job, or is it a start at creating a series of assignments for what would otherwise be a sleepy, dead-end position? In companies built around assignments, each employee has a portfolio of projects, not a job description. The size and content of the portfolio varies considerably among employees, depending on factors such as past performance on similar tasks, assessments of potential, education and related experience, personal interest, and availability. Managers need to look more closely at the characteristics of the work and the way they package it. Some companies give considerable attention to assessing and categorizing their employees, with tools such as Myers-Brigs indicators and managerial grids. Getting all a company's work done through assignments requires careful analysis of the characteristics of the work as well as of the workers. Managers and employees operating in this environment need to become master schedule jugglers. Each employee's portfolio is dynamic, not static. At any one point in time an individual's portfolio may have an assignment just starting, one or two half-completed, and another winding down. The trick in scheduling is to avoid having all of any one person's tasks in the same stage of completion-something much easier to hope for than achieve. Applying this philosophy works best on an all-or-nothing basis. Its full value as an organizing tool cannot be realized if it is just a special projects overlay on traditional position description-driven jobs. This means adopting a new mind-set about ongoing, taken for granted tasks: they do not exist anymore. Companies that have adopted the continuous improvement doctrine in their quality programs should find this easy. Every task is associated with a time frame. In addition to completing the task, or several iterations of it, during the time period, the employee is also expected to have made some measurable improvement in the quality or productivity associated with the task. The important thing here is the specification of a time boundary for everything. It gets done, gets better, or both. This can have an amazing impact on focusing attention and improving performance-if it is real and well-managed. Similar to the crystallizing effect of an appointment with the hangman, thoughtful deadlines can be powerful tools for converting mundane routine into meaningful accomplishment. Both General Motors and Northern Telecom have been surprised by this phenomenon when they conducted "nontraditional" plant closings-nontraditional in that they gave many more months' notice that the plants would be shut down than is commonly provided or legally required. Both companies found that during the period from when the notice was provided to the actual closing, the plants' productivity soared! Absenteeism and scrap rate dropped, and product quality and morale were frequently the best ever. Why these counter intuitive results? For the first time in these plants' histories, time was really being managed the way it should be. Knowing when "the assignment" had to end provided a strong focus for everybody's attention and efforts. Knowing the length of the game seemed to motivate the players to give it their best. This aspect of worker psychology is so useful that it is well worth applying to other situations. Replacing jobs with time-bounded assignments can be a good way to do so. Thinking about a person's employment along these lines can offer a number of benefits to the employee. Once the forty-hour workweek mold is broken, it is much easier to provide employment in smaller chunks of time. For many employees, especially those with young children and members of two-wage-earner families, part-time work has great potential attractiveness-as long as it does not imply accepting a sentence to career Siberia. Managing employees through assignment completion rather than job occupancy redefines what constitutes acceptable performance, reducing the need to distinguish between full- and part-time employees. For the same reason, it also can facilitate telecommuting and greater flexibility in work hours, both popular alternatives for many employees. This conversion provides a number of advantages to employers willing to make the required upgrade of their management practices. Cost savings are certainly possible through increased use of part-time employees, even when they receive the pro-rated benefits vital to keep from creating a second class of employees. Increased flexibility in coping with workload changes and differing skill requirements also offers the possibility of achieving the same work with lower payroll costs. Organizing this way is good preparation for choosing tasks to assign to temporary or contingent workers (sometimes the best of whom are recent retirees). This approach is a change that supports (and also depends on) contemporary innovations in compensation, such as those that move toward providing fewer but broader "bands" of pay levels and establishing base salaries that are determined more by skills and know-how than by job title. Institute Term Appointments
for Every Manager When the mission is completed, it is hoped dose to schedule, it is time to move on-perhaps to another management job at the same level in need of that individual's special talents, perhaps to a senior individual contributor's slot, or possibly to an understudy post in preparation for advancement up the management hierarchy. One of the greatest errors companies make is keeping managers in place long after the reason they were selected becomes irrelevant. Not having a preset, multi year "term appointment" sends the implicit message the job is available for life-or at least until some dreadful mistake is made. This is not the disciplined, performance-driven orientation most companies want to cultivate. Yet it is almost inevitable unless at the outset of a manager's appointment some sense of duration is provided as the context in which the manager's multi year mission is laid out and committed to. Of course, in some situations the manager may move on sooner or she may be asked to stay for another round, but at least an explicit framework is available in which to make such decisions. The rapid growth of the temporary, or interim, management industry is an indication of the increasing acceptance of assignments as replacements for jobs as ways to get things done. It is now possible to "rent" a chief financial officer or a seasoned division head who already has accomplished an important mission similar to the one facing the renting company. The industry is built on the kind of rethinking that says: "We need a market plan, not necessarily a market planner; a turnaround, not a turnaround artist; or a brochure, not a brochure writer." Reorganizing around time-bounded assignments can pave the way for an important, related area of rethinking: questioning the necessity for doing everything in-house. Replace Monopolies With Free
Markets Outsourcing can be useful when the need is temporary or cyclical- or when the need is ongoing but is not one of the five or six key business processes most worth organizing around. It is indicated when work is not highly critical to competitive success-and also when it is so critical that the only way to get something done is to go outside the company. The computer this book was written on, a Macintosh PowerBook 100, is part of the Apple family of notebooks. But its design and manufacture were subcontracted to Sony, a strategy used by Apple to speed its entry into a critical market segment. Outsourcing can make sense when a skill is so common that it diverts attention from other, more vital skills on whose development the business needs to focus. Conversely, a skill may be so rare or impossible to retain internally that outsourcing is the only way to obtain it. Despite these complexities, the kind of company that can be created through intelligent and selective outsourcing is one well worth having. It is one that has eliminated its internal monopolies. It is ironic that so many otherwise free enterprise-oriented executives tolerate vast, closed marketplaces within their companies. These are their internal service-providing units. They all have customers; the customers just happen to be employees of the business. Unfortunately, because of the monopolistic quality, many companies have to put up with second-class service-and tolerate higher-than-necessary overhead. In the United States, improvement in white-collar productivity is almost nil, one reason overhead takes a bigger bite out of American manufacturers' revenues than it does from their European or Japanese competitors. Internal monopolies are expensive luxuries. The watchdog arm
of This is not just a government problem. It is difficult to find a corporation without its own array of GPO-like functions. The real trick, though, is to keep the cure from being worse than the disease. The too common remedy has been near-mindless overhead reductions-programs that seldom face up to the real issue of just what businesses (serving internal as well as external customers) the company should be in. A better idea is to eliminate organizational backwaters, to make your low-priority activity someone else's high priority. This is the essence of what contractors like ServiceMaster try to provide. For some of their customers, they serve as a managerial intermediary, providing supervision, labor-saving tools, and training for a hospital's janitorial work force. While it may be pointless for a hospital to make capital or knowledge investments in janitorial jobs, for companies like ServiceMaster it is the source of their future competitiveness. Sometimes a company like Xerox takes over responsibility for the internal service functions of another company, as it has done at Bankers Trust. There Xerox operates a diverse but information-related group of activities (mailroom, printshop, payroll, employee record keeping, central phone switchboard), employing the ex-Bankers Trust employees who formerly provided these services. The pattern is increasingly common: Bankers Trust, in turn, manages, on a contract basis, the employee savings and retirement programs of many Fortune 500 companies, work once done by these company's employees. It is as if many companies are "getting in each other's pockets" in order to allow each company to focus its own employees primarily in ways that add the greatest value to its outside customers. Pitney Bowes employees deliver the mail at IBM offices, while IBM employees staff the Kodak data processing center. Recently the glass manufacturer LibbyOwens-Ford literally sold its information systems department and its mainframe computer to the former head of this function at the company. He formed an outsourcing company to sell data processing services back to his former employer, as well as to other companies. His outsourcing company is in the business of writing computer programs and providing reports that its clients need, not running computers. So it, in turn, got rid of the mainframe it purchased and is outsourcing the computer operations portion of its business to a more focused provider of that particular service. In contrast to the make it someone else's problem approach, some companies are following a take in each other's laundry strategy. Global electrical equipment maker ABB reduced what was a 6,000-employee headquarters function to require fewer than 200 positions. This was accomplished, in part, by creating service-oriented businesses to do what was once handled by overhead-funded staff. ABB Marketing Services is one of these new businesses. It is run like an enterprise unit. It creates and manages advertising campaigns for ABB's other businesses, it also works for outside clients-and it is also expected to make money. Italian tire maker Pirelli followed the same path when it told its strategic planners they were no longer to sit at headquarters and pass judgment on the plans submitted by Pirelli's divisions. Instead, they were to sell their planning services, on the same fee basis as is used by outside consultants, to the divisions. The divisions were free to use the outsiders, if they preferred, or to do all the work themselves. To help establish its bona fides as recognized experts to the divisions, the former headquarters planning group also sells its services to businesses outside the Pirelli group. Probably the world's two largest debureaucraticization efforts are proceeding on similar lines. As massive government-owned conglomerates in what was East Germany are dismantled, many workers are encouraged to form independent service and technical support companies. About 2,000 of the optics company Carl Zeiss Jena's 60,000 employees accepted such encouragement, which comes with low-cost loans and equipment and facility leases to help ease the transition. IBM's massive restructuring includes setting up subsidiaries around the world to sell, on an arm's-length basis, services that were once provided internally. Its new Workforce Solutions unit includes 1,400 former IBM human resources specialists who provide pay and benefits administration and management training to the IBM units in which they were formerly based. Monopoly busting is not limited to situations involving thousands of workers. It is often a good idea to apply one employee at a time. Toro, a Minnesota maker of lawn mowers, fosters innovation by supplementing its inside product development teams with an independent inventor kept on retainer. Bob Coiner, who has been on contract for twenty-three years, prefers to work this way. It keeps him focused on his task, not on the office's politics. It also puts a safe distance between him and disapproving executives who might kill a fledgling idea before it is fully developed. As with all good ideas, internal privatization has its limits. It is no quick fix, and it is dangerous to approach it as such. Its success requires continual oversight and an industry of service providers, not just the exchange of one form of monopoly for another. Most important, it requires careful choices about what is appropriate to do outside the business and what needs to be done internally. Using the topology presented in Chapter 3, many complementary capabilities are good possibilities for outsourcing, whereas critical capabilities almost never are. Core and cutting-edge competences need to be considered individually. Typically, when Japanese companies are on the receiving end of an outsourcing arrangement they see it as a learning opportunity, not as someone else's drudge work. Your company may usefully follow the strategy of outsourcing an activity to a superior provider for a period of time, learning from them how to upgrade your approach, and then decide to bring some or all of the work back inside. Harvard Business School's Michael Porter's research warns that innovating to offset local disadvantages almost always pays off better than outsourcing. Approaching this issue creatively requires first determining where overhead and support activities occur within your business. If you like to think of them as fat, as many do, remember that despite its harmful effects when eaten in large quantities, some amount of fat intake is useful for good health. And that fat does not just occur around the edges of a piece of meat, as reengineering advocates are quick to point out; it is often interspersed throughout. Locating all this marbling is the first step. Then keep in mind that free markets work only when they include more than one strong player. Looking outside the company is one way to locate the players; so is "insourcing" -converting units formerly on the overhead dole to quasi-free market operators. Dramatic changes may be possible; look at what happened when the city of Phoenix started a bidding process to contract out the garbage collection services that the city had always provided. Initially, private waste haulers won contracts for many of the routes put out to bid. But the enterprising director of the Public Works Department did not roll over and play dead. He carefully observed the management practices used by the private operators and went them one better by sending study teams to other cities with especially efficient operations. As the private contracts came up for renewal, armed with these insights, he prepared plans that allowed his municipal operation to outbid the competition. Over ten years, his operation won back every contract it had lost and was the only service-providing part of the Phoenix government to have lowered its unit costs each year. Try Before You Buy Minimizing mishaps like these is a prime concern of architects. Before a building's plans are finalized, careful testing will have been done of the soil conditions, seasonal weather variations will have been taken into account, and possibly building models will have been constructed to allow for wind-tunnel testing. These efforts will be doubled if new building materials are to be used or if the terrain is especially difficult. These early models, and their accompanying sketches, have another purpose. They are selling tools; they are usually necessary to convince the owner-to-be to hire the architect or to construct the building a certain way. Often competitions are held to choose from among several architects' plans. Some high-visibility projects may even impanel a jury of leading citizens or of future users of the building to select among the prototypes advanced. Unfortunately, seldom is equivalent care given to testing and evaluating new approaches to corporate organization before they are installed. At times, great efforts are made to solicit ideas for improvements from the occupants of the current organization, but then the redesign process is clouded in secrecy while the planners and the decision makers hurriedly huddle to balance political practicalities with strategic needs. Then the new structure is unveiled, criticism usually muted lest it be taken as a sign of disloyalty, and a resigned spirit of "let's at least give it our best shot" guides the implementation. Imagine what buildings would look like if their design proceeded along those lines. Perhaps this process explains why so many reorganizations fail to meet expectations or why restructuring seems to be a near annual event in many companies. What makes this situation especially troubling is that, in other aspects of corporate operations, a great deal of skill and experience is applied to introducing change. Consider what happens when a new product is launched. Many mock-ups and prototypes are built and rigorously tested. If the product has a connection to an outside regulatory group, its certification will be sought. It is the subject of extensive market research (while still in the idea stage), focus group input, and eventually trial exposure in handpicked test markets. Then what is learned is carefully evaluated and necessary readjustments made before the product is rolled out to the marketplace. Extensive advertising and other communication efforts accompany the launch, and special promotions are developed to help win customer acceptance. Multiyear market share targets are set, and a schedule is set for periodic product improvement and redesign. Ironically, even in companies that have mastered processes as complex as these, there are few counterparts to any of these steps when a reorganization is launched . What is especially missing is any well-managed prototype development and testing. Too often, only limited benchmarking is substituted ("This organization structure seemed to work wonders for IBM. Let's give it a shot"). Often, the closest thing to a prototype produced before a reorganization is a draft organization chart. These charts, while common enough, are poor representations of most organization structures. They attempt to show in two dimensions (subdivisions and hierarchy) something that must function well in at least three (subdivisions, hierarchy, and work flows) and usually four (these three plus time). The problem is similar to that faced by architects. They seldom have trouble visualizing three-dimensional buildings and how the structures will function just by looking at floor plans and side views. But their clients frequently do. Many creative ideas never leave the blueprint stage because they cannot be adequately communicated to the people paying for their implementation. These difficulties are compounded in the corporate world, where the difficult-enough-to-understand organization chart is invariably marked "Top Secret" and its distribution kept limited, possibly because it is such a poor communication tool that its only significance is as a political document. Getting around these limitations requires some of the tools of the architect or the new-product developer. Models must be built, reactions sought far and wide, and then the prototypes debugged. Here, the architects have it easier than some corporate planners. They can usually accomplish all this with cleverly drawn sketches and small, three-dimensional models made of paper and wood. What would be the equivalent of the architect's scale model? Since the organization is essentially a container of human behavior and interactions, perhaps the careful creation of a drama depicting the functioning of the new corporation would best fit the bill. Ideally, it should be written in at least three acts to bring in the time dimension. Several carefully monitored performances should be provided to audiences around the company, and possibly to a few trusted outside critics. After all, shows are not real life; they elicit only temporary involvement and are relatively easy to critique. While this idea has possibilities, keep in mind we already require the organization planner to be part psychologist, part business planner, part social worker (and now, part architect). Asking also for the skills of a playwright might be excessive. A middle ground is available, though. Most corporations maintain a group of management training or development experts. At times they are brought in after a reorganization is announced to help guide its implementation. Good idea, but bad timing. The best of these specialists are well acquainted with techniques such as computer simulations, multiple-day management "games," and the case method of teaching. At the minimum, a business school-style case could be written of the reorganization under consideration, describing it as if it already were in place. The case could be "taught" widely around the company, with "student" solutions to it factored into creation of the next prototype. After several rounds of this have occurred, an investment may be justified in a "game" that simulates, with a speeded-up clock, the decisions to be made and the relationships that must work right for the new organization to be successful. Played with many cross-sectional groupings of employees from all levels and segments of the business, it can also prove to be an invaluable debugging device, as well as a way to use the force of anticipation to pave the path for eventual rapid implementation. The hottest preview tool becoming available for the architect is something called virtual reality. A form of computer-assisted simulation, it allows the viewer to grasp reality through microchip-generated simulation. It will eventually allow a prospective building owner to feel as if he or she is walking through the building, complete with all attendant sights, sounds, and feelings ordinarily obtained from touching the proposed wall surfaces or floor coverings. All these variables can be manipulated by changes in the computer software, allowing for many prototype buildings to be "experienced" without a shovel ever coming near the building site. This is the ultimate "try before you buy." It is
another idea too good for organization planners to allow architects
to keep to themselves. The new kinds of organization that can
be invented with interactive simulation tools such as these will
easily out implement and outperform any management guru's latest
solo vision. The shaping process is ultimately more important
than any particular shape it produces.
© Robert M. Tomasko 2002 |
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