19Aug/15

Modern Organization Needs Organization Designers

Practical Organization Design

Think of when you drive to job every morning. How can this activity be done in a better way? Your possibilities to improve is heavily limited. A faster car will not help. GPS navigation equipment will not help. Neither will a course in safe driving substantially improve results. To drive your car in the rush hours is a complex activity with lot of stakeholders, prerequisites and constrains. Substantial improvements in complex systems can only be made with a system approach, relevant knowledge and with the authority to make system changes.

 

We can easily transform the example above to how it works in most of today’s organizations. Many companies or non-profit organizations are stuck in old time ways of working. Individuals in the organization may do changes in small areas they can impact, but these changes are often too limited to make a difference to overall performance. Top management have most often understood and accepted the need to improve performance. But they may be limited by late notice, i.e. there is a need for fast change. This makes it hard to do a structured analysis and thought through design of the organization. The result is that managers will continue to use the old time method; “Improve by changing Organization Chart”.

Any modern organization, small or large, needs Organization Designers. People with the knowledge, tools and experience to do a design of the complex system that any organization is. Understand what efficiency and effectivity means for the organization. Identify how to measure performance, improve value creation chains, define roles and responsibilities for operations and establish controls. Finally will Organization Designers do evaluations with the purpose to suggest further improvements to management.

11Aug/15

New book about Organization Design

Banner - Book ad

I am happy to announce that my book project for the spring of 2015 is ready. A book has been published and is globally available. It describes theories and guides the reader through practices in how to design effective organizations via a structured Management System.

For more information please read more about the book Practical Organization Design.

I hope that you will be inspired. I hope you learn something more about organization design and that you get practical guidance to improve your organization. This is why I think you shall read this book.

29May/15

Is your Process ready for execution?

400dpi-Process ready

Many Organizations may have developed Processes for years, but are the Processes fully ready for execution? To be ready means not only that the process is described, and that it is deployed and used. We know that Business Environment are changing, the Organization find new possibilities on the market, new ways to do things and we know that we can constantly improve ways of working. This means that a Process has to be maintained, improved and developed further to meet future possibilities. To be ready with a Process means to be ready, not only with Process design and deployment, but as well with the structures to ensure continuous improvements. This includes ownership, governance and performance measurements.

The below criteria has been successfully used as a checklist to ensure that whatever Process is developed, the prerequisites to manage it will be available before the Process is considered ready.

  • Process is described
    • Logical process flow reasonable correct
    • Activities with inputs and outputs are identified
    • Criteria in checkpoints are defined
    • All included roles are identified and described
    • Process execution decision bodies identified and described
    • Process documentation is archived an linked from web
  • Process is reviewed
    • Logical flow, checkpoint criteria and roles are reviewed by main stakeholders of process execution
    • Process external interfaces handshake and consistent with interfacing processes.
  • Process prerequisites ready
    • All managers for executing organization entities have accepted their scope and responsibilities
    • All roles, tools, templates, etc. is available for use
    • All involved in execution has got relevant information
  • Process Management is established
    • Process Owner is assigned
    • Process Leader is assigned
    • Decision body for process governance is defined
    • Process key performance indicators are specified

 

 

19May/15

The book is written. Now I will delete 80 pages.

Page deleter

I have now written the full text for all parts and every chapters in the book “Build a Company”. It has been a hard work, but I am far from ready. My next challenge will be to delete text and lighten up the layout. My ambition is to come down to about 200 pages of text. I need to take the time to make it shorter, more focused and easier to grasp for the readers.

If you have any ideas on what I can do, please let me know.

Part V “Make Strategy happen” is mainly what I have added to this version. I discusses how choices about wanted position from the strategy should impact the design of your Management System. How you in the design work have to balance the parameters lead time, variation and resource utilization. How key expectations from customers impacts your performance monitoring, how you align internal processes to customer behavior, etc.

I have also finalized the Introduction, where I describes my fundamental thinking about design of Organizations. Altogether, I can now share the first complete draft of my book “Build a Company”.

  • Part I     Introduction – What this book is all about
  • Part II    Design concept of the Management System.
    Describes the theoretical platform and explains the Management System Reference Model.
  • Part III  How to establish a Management System.
    Describes how to establish a tangible Management System.
  • Part IV  Improve Internal Performance.
    Describes practical and stepwise techniques to sustainable improve performance via changes of key building blocks of the Management System.
  • Part V   Make Strategy happen
    Describes how to transform Business Strategy to Management System Design
  • Part VI  Terminology and References
  • Part VII About – The author and readers

Follow the top bar navigation “the Book” on this web and you will be able to read more. If you want your own full PDF copy, please let me know.

05May/15

The fundamental law behind Organization Design

Three fundamentals

Every organization is a complex system of activities. An efficient organization has the ability to create values for customers, and at the same time satisfy the owners. Successful and sustainable organizations have the ability to maintain a positive level of satisfaction among all stakeholders. Not all organizations are in such a positive situation and there are a number of different methods and scientific studies available to help managers improve efficiency and effectiveness. From the early years of the 20th century when Taylor wrote about Scientific Management, over Juran’s Quality Control and later Total Quality Management, Business Process Re-engineering, Lean and lately the popular Agile approaches.

Behind all of these methods and approaches there exist a fundamental law on how to design effective and efficient organizations. An Organization is a complex system of infinite number of queue systems. Work is ongoing, work is waiting and variations in the work pile up delays. This is true for each individual as well as for the full organization. This understanding helps us to formulate the following fundamental law:

The optimal design of an Organization has to balance Lead Time, Resource Utilization and Variations to achieve wanted performance.

It is impossible to maximize all three of above at the same time. Assume you are able to use all available resources 100% at the same time as all customers are served as soon as they enter into the organization. The customers are happy, and the flow of customers increases. The system will then become overloaded and Lead Time will increase dramatically. Customers will become very dissatisfied.

How has different organization design approaches tried to manage this fundamental law? Scientific Management argued that all activities shall be identified and standardized. This approach tries to minimize process variation and by that achieve efficiency. Business Process Re-engineering focus lead time by identifying unnecessary activities and simplify process flow. Agile work methods tries to balance according to the law. Agile manage utilization of resources by the use of backlog planning, it standardizes work tasks in sprints and minimize lead time by waiting to start sprints until there is a customer order.

How can we use the knowledge of this fundamental law? When you design the business model of a company and designs the Management System Architecture you have to identify key performance requirements and optimize the high level design based on this. If cost is critical, resource utilization should be maximized and long lead times can be the result. If flexibility is important you may have to have some amount of resources available for work. If lead time has to be short, 100% resource utilization will not support success unless you have full control of customers input and process variations.

21Apr/15

Part III available – How to improve Internal Performance via the Management System.

Improvement drive

I’m ready with the draft version of Part III of my book “Build a Company”. So far I have written 257 pages, drawn 84 figures, created 11 document outlines and describe 6 fundamental design rules. Is this a good result? Often measures available does not tell you anything about real performance. In this case I cannot tell if the book is good by measuring number of pages. The result so far depend very much on what you think about what is written. Check out the content and let me know.

In Part III I describe how to improve Internal Performance. I think of the Management System as a car moving up a hill of competition, pulling the company forward to higher performance. The car has an engine, measuring equipment, wheels and one steering wheel. Change Programs need to focus these parts to succeed with major improvements. For a company or non-profit organization this means we have to change process structure, change way of measuring, structure of responsibilities or decision making.

  • Part III – Improve Internal Performance.
    Describes practical and stepwise techniques to sustainable improve performance via changes of key building blocks of the Management System.
  • Part II – How to establish a Management System.
    Describes how to establish a tangible Management System.
  • Part I – Design concept of the Management System.
    Describes the theoretical platform and explains the Management System Reference Model.

I share the text with those who want to read it, and it is free of charge. Select “the Book” in top navigation bar if you want to read more.

14Apr/15

Seven steps to build your Organization Structure

Build Organization

It does not exist a “mathematical way” to build the most efficient organization structure for a company. A general truth is to do it as simple as possible, as long as the organization can do what is required. I describes an approach in seven steps to do the design in a structured way, with a start in what the company need to do.

 

Step 1; Define responsibilities

Create a logical structure of tasks which describes work that needs to be done. Assign the responsibilities to perform each task to a first set of Organizational Entities

 

Step 2; Assign resources

Identify the resource need per Organizational Entity. Resources can be a production line, people and competence, tools, etc. The initial number of Organizational Entities may have to change to ensure an efficient use of resources.

 

Step 3; Optimize interfaces

Identify the interfaces for each Organizational Entity. Minimize the number of interfaces per Organizational Entity because this will have direct impact on speed and performance. The number of Organizational Entities may have to change in order to simplify structure of interfaces or it has to increase to decrease internal span of control.

 

Step 4; Assign authorities

Assign decision authorities to the Organizational Entities which will have best overview of the business logic. Dependent on where we create these power centers in the Organization Structure, different operational behavior will be amplified.

 

Step 5; Add common functions

Identify need for functions to support Top Management and possibilities to centralize common functions. These may be IT support, Business Control, Organization Design, Human Resources, etc. Define a set of Common Function Organizational Entities to efficiently manage included resources.

 

Step 6; Adjust to fit external requirements and constraints

If we follow the five steps described above we can fairly easy and straight forward create an Organization Structure. But we need to do some adjustment to fit strategic situation and to meet external requirements put on the company. This may be to minimize cost of operations, increase speed in execution, adapt to geographical location, create economy of scale, locate operations where competence is available, etc. The number of Organizational Entities may have to change.

 

Step 7; Document the design of the Organization Structure

The agreed Organization have to be communicated and made available via the Management System. Use the Organization Chart and the Organization Scope documents. Document outlines can be found in the preliminary PDF versions of the book I am working on. Send me a mail if you want a copy (jan.olsson “at” management system.se).

24Mar/15

Why run fast if decisions moves slowly?

Slow Decision Process

What if we run like h… very fast, and every time there is need for a decision, things stops. We have to line up in the queue to get decisions, wait, and when the stars are in the right position, management will approve next step. No matter if we have applied business re-engineering and have eliminated every unnecessary step in execution, if we have created fast procedures, developed supportive tools and have trained the staff to be as fast and accurate as ever possible. The result of all these efforts will have little impact on total speed, if the decision process is left unchanged and slow.

This is what you should do about it.

  1. Identify key type of decisions.
    Decisions at a macro level are; what are the key decisions required to achieve business mission and to be efficient? It can be budget decisions, investment decisions, decisions about new products, decisions on new markets, etc. Decisions at a micro level are related to detail level process or procedures. Examples of such decision might be; are we ready to send the product to the customer, shall we add more service for same price to this customer, do we buy a coffee machine, etc.?
  2. Minimize number of formal decisions.
    Which of the identified key decisions do you need to make as formal decisions (following a pre-defined procedure in approval systems or in put them on the agenda in decision meetings)? Ask you self, what happens if….? What is the risk of negative consequences? Is there a risk to break any laws? Can errors be corrected without damage? What happens if we delegate decision power to the ones executing the work?
  3. Re-engineer the decision process.
    Ensure the needed formal decision procedures are designed to be as efficient as possible. Make sure to design efficient decision meetings. Decisions has to be taken as fast as possible, measured as lead time. This does not necessary mean to speed up decision meetings as such. Secure that efficient preparation of meeting is done, minimize number of participants in decision meetings, create a schedule for decision meetings to support execution, etc. Ensure that the organization will have approval systems that support high speed in decision process, minimize number of approval layers in approval system, secure that request for approval does not end up in a mailbox that is not checked regularly.
  4. Review and change you organization structure.
    If more speed in decision process is needed, further changes to the organization structure may be needed. The more complex organization you have, the more complex decision process you will get. Gather the power to execute activities in one organization entity, minimize the need to coordinate, co-locate people working in same activities, and simplify the mission for different organization entities.
  5. Trust that employees will make correct decisions.
    If we critically reviews decision processes, I believe many organizations have added to unnecessary controls and too many formal approvals. People in general want to make the best decisions, and will do so if they have the knowledge and the correct information needed.
10Mar/15

Get your free copy of the book “Build a Company”

Get part II

The title of part II is “How to establish a Management System” In this part I share a practical and stepwise approach on how to establish a tangible Management System. I describe how to create the right prerequisites by a Framework for the Management System, how to set-up responsibilities for the work, how to build the content, how to deploy the usage to employees and how to monitor implementation.

Part I “Design concept of the Management System” of this book gave the theoretical platform. Part II transforms these theories in to practical steps, down to detailed outlines of the documents for the Management System.

I share the text with those who want to read it, and it is free.

Via the top navigation bar you can find text parts under “the Book”. This website contain summaries of different chapters, published when they are ready. Please observe that the published text is only summaries of full content. If you want to read the full text, please send me a mail (address in the above picture) and I will send you a PDF copy.

I only ask one thing from you in return: Please, do not send the pdf document to others. If you have friends or colleagues who want their own copy, tell them to send me a mail and I will send it to them.

Why am I doing this? Simply because I want to share my knowledge, and I hope all who find the text useful will share my website with friends and colleagues.

I also like to get feedback. Please let me know what you think. I want to understand if there is a general interest in the topics described by my book. I want to understand if you share my thoughts, if there are aspects missing or if you think I am wrong in some areas.

More info.

24Feb/15

Successful ways for Top Management to fail

We all know the importance of top management drive when changes are to be done in an organization. Often good initiatives dies as the attention from top management was zero to nothing. With this knowledge a lot of internal entrepreneurs, who sees possibilities to make a change, address top management to seek their support for changes. Some does this because they have really good solutions to a problem or fantastic ideas to grab possibilities not yet explored. At the same time some change apostles may do this only based on their need to support their career getting good air time with top management.

Unsuccessful Manager 2

Being a top manager you have to be strong and show leadership. Threats to the business or opportunities for major improvements has to be taken serious. With you power and authorities you are the one who can make great improvements. Unfortunately your position also enable you to make great failures and leave you with your pants down.

I have over the years’ experienced great successes and fantastic failures from top managers. Some of the failures could have been prevented. In some cases a short stop and reflection in an early phase of the change project would have hindered bad things to come.

Before you continue with your change initiative, make sure you are not doing any of the below mistakes.

Start change project based on proposed solution.
Often employees have lot of good ideas and most often good changes comes from people doing the actual work. But if a create a list purely based on general proposals and rank those based on number of similar suggestions, power of the proposer, political correctness, etc. there will be a long list of proposals. Most would probably not related to real problems or possibilities. The majority of the proposals will rather related to personal ambitions and vague ideas about change needs.

What you should do: Start with a problem formulation before you define the solution.

Set up a structured program to drive change projects, without strategic aims.
It is very good to create a structure around change projects, to gather them into a change program and create plans, reports and decision forums. But if there is no strategic aim with the change programs, if they are loosely connected and have vague objectives, no project structure can make them successful. Unfortunately there is a tendency to compensate vague strategies with additional reporting and project documentations. You can be sure that this is the case if progress is purely related to plans written, meetings held, changed objectives, delays in deliverables and in the end no tangible effects on business.

What you should do: As a top manager, you should be interested in plans that shows tangible deliverables and support achievements of effects. Program structure shall support projects, decision making and top management need for information. Do not try to solve a bad program with more reporting requests.

Use management authority to force latest management trend into the organization.
It is too often seen that managers force bad changes to organizations. Sometimes managers are convinced that a change done in another organization will as well improve this organization if it gets implemented the same way. Sometimes forced changes are based on strong push for change from a group of experts or leaders. Doing what they propose can be the simple way forward for the manager, showing power. The most treacherous thing with any change is that it often creates short term positive results just because it is viewed as positive (this is called the Hawthorne effect). It can then be understood as the change has been successful, but after some months the problem is back. Top manager may then believe that the change was correct, but people need to be pushed.

What you should do: Put top management pressure to secure the following; Agree on the problem, analyze possible solutions, agree on the solution to implement, add measures to monitor progress and agree how to judge when the problem is fixed.

Delegate ownership of strategic change projects.
Strategic change project often impacts several parts of the organization. There is a constant need to keep focus and align the organization on the changes needed. If top management delegates ownership to someone else, and stop showing interest in the change project it will immediate open for politics, conflicting activities, obstructive behavior, etc.

What you should do: If the change project is strategic and impacts more than one organization entity, today or in the future, stay as owner of the project. If you have too much to do to make this commitment, you have to value the importance of the change towards other tasks you have. Either stop the change project or stop another of your tasks.

Make clear that negative status report is a sign of failure.
Change projects are seldom simple. Plans, progress and results are most often hard to predict. Changes has to be done during execution. If changes shows up to become negative for the organization, stop the project or make drastically changes as soon as possible. Change projects are as well learning opportunities, for top management, for change project members and for the organization. Learnings comes from both successes and failures. If top management does not understand above and believe push for results is the only thing that enables success, they may introduce a culture of hiding bad information. Sometimes managers as well punish leaders that presents status and results in change projects that are not as originally planned. These managers may create a culture of denial. This is devastating for changes and learning in any organization.

What you should do: Foster a culture where changes to plans, that cannot be corrected by project team within given authorities, immediately is reported to project owner for support. Active control and steering towards end result is supported, failure may happen. Push for learning and sharing of experience, good or bad.