go back

12/30/2008
Fit for the Future – Part 1

 Step 1: Be prepared to change the way you think

Most managers receive this challenge as an affront. It is the same as saying there is something wrong with the way you currently think. Let me persuade you to stay with me by saying your problem – assuming you do need to change your thinking! – is not your fault. Through our organizations, government and educational institutions we have educated managers to think in ways that are sub-optimal. There is a better way.

To begin, I expect you recognize this:

·        The organization is a top-down hierarchy.

·        Work designed in functional areas.

·        Decision-making is separated from work – decision-making being management’s job.

·        In making decisions, managers use measures of budget, activity, productivity, standards and the like.

·        Managers believe their job is to manage budgets and manage people.

·        Most organizations are designed and managed this way.

The news (if it is news for you) is this doesn’t work very well.

Why do we teach this thinking?
Because it worked originally – it is the thinking that was epitomized by mass production and at the turn of the century it led to a quantum leap in performance. Our problem is we

·        have not continued to question our thinking;

·        invented a system of management and, over time,

·        have assumed it to be unsurpassable. Yet it has been surpassed.

In case you doubt me consider this: The number of man hours it takes to build a Lexus (Toyota subsidiary) is LESS than the number of man hours used to RE-WORK a top-of-the-line luxury German car at the end of the line after it has been made. Just stop and think about that. . .

Are the Toyota managers smarter, more committed, more enthusiastic or is it perhaps because they are Japanese that they can achieve this?
None of this is true. Toyota achieved this extraordinary leap in performance by using better methods. These methods weren’t dreamt up in a boardroom, they emerged from solving practical problems while working against seemingly insurmountable odds (Post WWII and a country with few natural resources).

Is this better thinking unique to Toyota?
No, many organizations are learning to work this way. My consulting company has been dedicated to introducing these ideas (better methods) to service organizations; we know they result in outstanding improvements to performance and morale.

So why aren’t more people thinking and working in this better way?
Because this thinking represents a fundamental challenge to current managerial beliefs and, consequentially, it is hard to understand if you think the ‘other’ way – you are naturally inclined to interpret what you hear from your current point of view.

You might be wondering why, therefore, I am foolish enough to attempt to help you change your thinking with a series of short articles. I fully recognize the limitation of the written word, but in each of the next five steps I’m going to give you something practical to do. I am sure that if you do these exercises with an open mind, you will learn.

The better way starts from a different point of view

While we have learned to think of our organizations as top-down hierarchies, they don’t look like that to our customers. If you assume (as I do)  

1) that the purpose of any organization is to get and keep customers,  

2) to take the customers’ view of an organization leads to a different and more productive set of problems to address.

Then when you look ‘outside-in’, you always find out how unproductive your organization is.

What accounts for this (sometimes alarming) damage to productivity?
It is the way the organization is designed and managed. Because, for example, measures are related to functions and managers of those functions need to meet targets. The parts achieve their goals at the expense of the whole.

Managers know this. They often give graphic accounts of the ingenuity they use to ‘win’ while others ‘lose’. Even this obvious madness does not encourage managers to question whether there is a better way in part because to question the status quo is itself a dangerous thing to do. But if we are to gain a quantum leap in performance in US organizations, we must learn about the better way.

While we might think of work as being managed and controlled through functional hierarchies and their associated measures, in practice work ‘flows’ through an organization. If functional design and measurement can impede flow – which it always does – learning to manage flow will improve performance. The first step to managing flow is to think of your organization as responding to customer demands.

Think of it this way: if your organization responds to a customer demand by doing what the customer wants and no more, your service will improve and your costs will fall. If Toyota’s Lexus line can respond to a customer demand by making a car in a week it is not beyond the realms of possibility for any organization to do likewise. If your organization produces goods that are less complex than a car and, bear in mind, many service organizations ‘make’ nothing at all, the gains from this way of thinking can be achieved in a very short time.

If you are going to manage flow, you need measures that tell you about how well your flows work. These are capability measures. They should always be derived from what matters to your customers and they will tell you what you are predictably achieving for better or worse. This is to change management’s attention away from ‘costs’ and instead to focus on the causes of costs. And as managers learn to eradicate the causes of costs what do you suppose happens to costs? It is self-evident.

How many managers proclaim their people to be their most important asset, yet design and manage the work their people do in ways that cause demoralization?
The answer is most. In traditionally designed organizations the managers see their role as managing people. The managers fail to recognize that their ‘people problems’ are, in fact caused by the way the work is designed and managed.

When an organization’s workers are judged by their managers on achievement of standards or targets, and, as is always the case in traditional thinking, their performance is governed more by their system than anything they can do, the workers become demoralized. By contrast, when workers have measures in THEIR hands that relate to purpose, and they have the freedom to experiment with method, they become tuned in and turned on. In short, changing the design and management of the work mobilizes the people – it removes the causes of workers being disenfranchised.

Managers foolishly pursue the ‘engagement’ of their workers by employing ‘employee participation’ programs. The better way to engage employees is to change the role of management. When managers learn to manage by acting on the system, they naturally engage their workers – who know what is going on – in improving the system. And this is the heart of the better way. The better way of thinking is to:

·        understand and manage your organization as a system.

·        how the parts work together to achieve the aim.

The next steps will take you through some simple exercises to do just that; but be warned. If yours is a traditional, functional, hierarchical organization with all the attendant features, be prepared for some shocks. You will discover for yourself that what you currently do doesn’t work very well. It could give you the impetus you need to make a substantial change. I hope it does, for the future belongs to leaders of change.

Articles were written by John Seddon (Managing Director) and Vanguard Consulting Ltd.  He is an occupational psychologist, author and consultant.  John describes his work as a combination of systems thinking – how the work works, with intervention theory – how to change it.  This article has been edited by the people of Bryce Harrison Inc. (USA).  The Bryce Harrison website is www.newsystemsthinking.com.