Thinking Faster

What were once capabilities are now stovepipes

Did you ever hear the album What were once vices are now habits by the Doobie Brothers?  Well, except for a couple of songs, you didn't miss much.  I always thought the title was rather clever though.  Their point was that over time people's perceptions changed to see things in a different light.

Today's riff will center on the fact that we've allowed what were once capabilities to become stovepipes in our business.  Yes, it's time to take on the traditional corporate structure, in which capabilities like sales, finance and marketing have become rigid stovepipes and barriers to work across the enterprise. 

Once, a long time ago, probably just before the age of the railroads, business were mostly small craftsmen and merchants.  Many times the person who procured raw materials, made an item and sold it were the same person.  I gave the breakpoint as before railroad (BR) and after railroad (AR) since the advent and growth of the railroad forced people into specializations - the railroads even forced the US to accept a more consistent national time keeping.

Railroads were one of the businesses which introduced the concept of a stovepiped organization and a command and control business operation.  This was fine, since the railroad and telegraph were the two technologies which moved information along and information did not move any faster than these two technologies.

Command and control and functional silos were important as organizations grew larger, and a few knowledgeable managers were responsible for directing large numbers of blue collar and uneducated workers.  This model grew and evolved through the 1950s and into the 1970s when a change occurred.  By that time, the average employee had much more education than before, was able to manage information much more effectively and had a much more vital stream of information at his or her fingertips.

The Japanese, without such a long history wedded to the command and control organization, were the first to experiment.  They formed work teams, quality circles and many other self-organized and self-managed teams.  Gradually, the rest of the world took notice and began to push down decision making and team building to the individual worker.

Then, of course, we could do away with the middle manager! Not so fast.  The middle manager was the "glue" that kept upper management and the actual workers together, translating corporate vision into actual direction.  There are still two problems in this model: 1) the vision of the company that the senior managers hold - which is still wedded to the command and control structure - and the actual capability of the individual worker - who has much more initiative and capability than the senior managers are willing to unleash.

So, where are we heading?  What were once capabilities - sales, manufacturing, customer service - are now rigid stovepipes, but don't add a lot of value to the customer or the product on a regular basis.  Workers are more educated and more capable of making decisions, and have more information and the tools to decipher that information.  We can restructure lines of reporting and business processes much more easily than ever before.

We have the ability to unleash teams and organize them in any way we can imagine - along a business process for example, or to optimize customer relationships.  We have the right people, the right technologies and most importantly, the right information to organize in any way we see fit.  What we don't have yet is the cultural awareness and commitment to change the business structure to fit the needs of our customers, business partners and employees.

What's the right model for your business?  Top down command and control?  Functional stovepipes?  Organized around a business process?  Emphasizing a specific capability or function? Geographic concentration?  Organized specifically for a specific customer or group of customers?

There's no mystique to the command and control top-down stovepiped organization.  Organizational models have mutated and changed based on the needs of the firm and the capabilities of its workers and its data management.  The next evolution in organizational structure is just around the corner.  What are now interesting experiments will soon be the established corporate structure.

There's no IT in Team

I've taken as a given in this blog that work in the future increasingly becomes knowledge work.  By knowledge work I mean the creation of innovation and ideas and moving information and ideas as effectively as possible.  There's less focus in the US on traditional manufacturing.  Also, I've stipulated previously that most knowledge work is performed in cross-functional teams.  Increasingly, we are called on to work across functional and corporate boundaries to accomplish our goals.

However, our business processes, data and systems aren't configured to support these new working teams.  Information Technology has focused on implementing enterprise transactional systems.  These systems are great for capturing the everyday transactions that occur between businesses (purchase orders, customer orders, etc) and create vast amounts of new data.  However, they are fairly monolithic and do not support rapid redesign and implementation to provide data and systems for cross-functional teams.  In fact, its seems while most work is now done in teams and on a project basis, most computer systems are not configured to support these needs.  Few "teamware" products exist to support cross-functional teams who are sharing ideas and information and creating documents or recommendations.

Here's a good example of the dilemnas teams face.  Recently, a firm I was consulting with in the business intelligence space was approached by a very large consumer goods firm in the US.  This firm was in the process of improving its business processes using the Six Sigma concepts pioneered by GE and Motorola.  The "Black Belts" - internal consultants who would improve the processes - needed a system to capture data and improve communication in the team.  Their IT department informed them that the existing IT systems would require 10 to 12 months before the systems could be configured to support these processes.  The Six SIgma project was scheduled to complete in six months.  So the Black Belts used Excel and Word and transferred data in flat files from the corporate databases.

Our working teams need simple, integrated tools to improve their effectiveness and productivity.  These tools should include a team "workspace" to share information, simple knowledge management tools to catelogue what the team "knows" and some basic document management capabililites to help manage the data and documents the team generates.  There's probably not as much money in these systems for the large software developers, but this is definitely an area of need for knowledge businesses.  Who will put the IT in Team?

Beyond these walls

One of the most interesting developments in modern work is the increasing reliance on third parties. During the last year "outsourcing" has become an increasingly negative connotation, but in many instances others can perform certain tasks more effectively or less expensively than we can, so why not leverage the best solution possible?

What holds up many of the potential outsourcing relationships is that our mentality, business processes and systems are geared to work within the four walls of our business. Traditionally, sharing data with third parties has been frowned on, and we kept suppliers and distributors at an arm's length. To increase our competitive capability and make the best products and services available, we need to decide what we'll do well (and keep doing internally) and what others can do for us (and outsource that work). Then, we need to ensure our systems, processes and procedures fully support the third parties we are working with to share information.

The initial steps in this direction reflected the conflict inherent in thinking about working with third parties. Many early trading systems required vast amounts of computing skill and put information outside the firewall but did not guarantee a free exchange of ideas and information. Rather they deposited some information in a mailbox and waited for the partner to deliver new "mail". Later, Enterprise Application Integration (EAI) and other middleware systems created business rules and automated data management to speed the data on its way in standardized platforms. In many cases, these applications are overkill for the requirements and don't consider the communication needs of the teams involved.

I think we need to step back and develop tightly integrated, point to point systems with our key business partners. These need to be simple systems that are built from the top down, based on our business processes and the information we need to share with that partner. Too often, the information we need to share and the business processes we need to support take a back seat to consolidation and standardization of information technology resources.

Here's the point - build a simple website or extranet to share information and business processes with your third party vendors, suppliers and business partners. Do something small, learn from your omissions and mistakes, and continually revise the systems, data and processes to improve your productivity. Don't start off with a large enterprise package or one that guarantees full business rule management and enterprise integration. They don't work that well and really aren't that flexible, especially since the business processes and your needs will change frequently. Do decide and implement business policies and procedures that reinforce the information that should be shared and encourage your internal teams to work as closely as possible with your vendors. If you can't or won't work closely with the firms who are taking over parts of your production process, stop what you are doing and bring it all back in house. It's hard enough to share data and work effectively within the four walls - what will business be like if you cannot agree on how to share information with a business partner?