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Psst, there’s potential for disruption in organization design

Reviewed: Organisation Design: Re-defining Complex Systems

orgdesigncoverWhile Nicolay Worren explains that his new book is intended for MBA students and executives, one can’t escape the thought that much of the learning it offers could be useful to a much larger audience. In fact, it might even be inspiring to those confronted by the complex dynamics and ambiguity in modern business design, and hoping for tools to manage that growing complexity. After all, the book’s stated purpose is to promote approaches to organization design that are focused, current, rigorous and pragmatic. In other words, its aim is to bring science to a business where it has been lacking. Organisation Design: Re-defining Complex Systems achieves that, especially with its bold introduction of Axiomatic Design.

The thing about an open scientific approach, however, is that it potentially puts organization design thinking into the minds of any employee at the very time when the structure of agile companies are flattening and employees are having more say in the design of their own work.  As the author points out, research shows “successful firms pushed decision making down the organization, achieved fast, easy and abundant sharing of information, and encouraged creativity and learning among employees.” With this book, organization design is no longer a dark art where corporate witch doctors follow arcane recipes to satisfy only a few privileged stakeholders at the top. Today, organizations are increasingly collaborative systems and, to work most effectively, employees need to understand their role in the system holistically and to act accordingly.

The book is a model of a clear-headed, systems approach in its very layout. Each chapter begins with a bullet-point overview to establish the need for what is about to be discussed. This orientation to salient needs reflects the one thing of primary importance in designing every role and activity in an organization: its purpose. If you’re unclear, for instance, how a role’s purpose supports corporate strategy (i.e. you’re not asking the right questions), you’ll never get the right solution.

While this disciplined orientation to satisfying functional requirements is not exactly new, what is new is the methodology for achieving it. Axiomatic Design, invented by Professor Nam P. Suh (MIT and KAIST universities), is emerging as a formidable tool for managing complexity. A.D. has been applied very successfully in the world of engineering and product design but this seems to be the first book advocating its application to organization design.

Axiomatic Design comprises four design stages: strategic needs, functional requirements, design parameters, and process variables. The magic of Axiomatic Design is in the way design processes zig zag back and forth to ensure coherence between each stage. In fact, as Worren points out, this coherence-checking between design and the strategy it is intended to serve, can have the effect of requiring changes in strategy—it’s a two way street.

According to Axiomatic Design, complexity is a function of coupling or interdependency. In fact, Axiom Number One is called the Independence Axiom which states “Maintain the independence of functional requirements.” For example, an employee will be more prone to make errors when there is ambiguity about who he or she reports to. While there may, in fact, be justifiable reasons for structural ambiguity, those reasons need to be assessed methodically. Here, Worren makes a distinction between necessary complexity and unnecessary complexity.

Normally, it is best to remove all complexity i.e. coupling of ambiguous or conflicting functions. Sometimes, though, complexity can be beneficial, for example, when it enables solutions impossible by any other means or when the ability to deal with complexity is a competitive advantage. With that in mind, the design exercise becomes, first, to root out unnecessary complexity and then to manage or mitigate the risks of the necessary complexity.

To assess where coupling occurs in organization design, a Design Structure Matrix is used to graph the overlaps. At the highest, most superficial level, these matrices can be very easy to understand and work with. Although Worren doesn’t go much deeper than that, the experience of Axiomatic Design as it’s applied to product design promises much more. When design analysis drills down into finer detail and greater scope, the matrix maps can become extremely dense. But that is also where patterns begin to emerge that can point to major systemic changes being required.

To date, most organization design has been based on simple economics models. That is, you pay for someone to perform whatever function you demand and that’s it. In competitive businesses today, that won’t work anymore; employee relationships are becoming as complex as the jobs they are performing. High quality employees demand autonomy and empowerment so that they have a say in the design and performance of their roles. They demand the resources they need to master their roles. And they want clearly defined roles.

The costs of not moving to complexity management in organization design are huge. First, as an organization grows, the number of interactions within the organization grows. For the most part, this is unnecessary complexity that comes with increasingly onerous coordination costs. Every relationship or process handoff is a potential problem that needs to be escalated to management.

In addition to lower performance, the other problem with ambiguity in the workplace is unethical behavior. As the author describes in cases such as Enron, Arthur Anderson and other business disasters, the source of trouble was in ambiguous policies and roles. The reason or excuse for these painful failures was the fog of complexity.

With transparent sharing of knowledge and social learning in well-designed organizations today, it’s hard to imagine empowered employees allowing such situations to develop. Where it will happen, however, is in an organization structure where there isn’t that sense of clarity and transparency, where employees feel inclined to say “it’s not my job, it’s not my problem.”

The greatest hope that shines through in Organization Design: Re-defining Complex Systems is in the promise of greater agility. Using these tools for complexity management and designing employee roles that are more entrepreneurial, organization design becomes dynamic and ongoing. Instead of being forced into a panicky reinvention whenever it’s confronted by market changes, an organization designed top to bottom for managing complexity has the resilience to adapt more readily. That’s a clear-cut edge over competitors burdened with traditional organization structures. In fact, if done right, it could be disruptive.

Occupy Business Innovation in Canada

November 28, 2011 Leave a comment

It’s time to Occupy business innovation and research commercialization in Canada.

In response to reports that Canada has slipped badly in global rankings of innovation and research commercialization, the federal government asked industry for ideas on how Canada might fix the problem. The result is the Jenkins Report, which is stirring up some debate in business circles (see Globe & Mail column and comments).

The report offers a number of solutions to the problem of lagging innovation but the main thrust seems to be better targeting and distribution of the billions of dollars we already dole out to businesses every year. Strangely, since I’m more left than right, this has me feeling a little Kevin O’Leary about it all. It smells like tweaking a perpetual government bail out of business.

My point is the report and the debate completely disregard the concerns of the Occupy movement, which is pointing to the same broken business finance system. This disconnect is strange because so many of the business people arguing about improving Canada’s innovation financing are also sympathetic to Occupy, especially the younger startup crowd. But they seem unable to recognize their own power and this unique opportunity to influence both issues at once.

The Occupy movement says big money and corporate power can’t be trusted to run the world anymore. Capitalism, if it ever was a noble beast, has devolved to a rigged game of elite cronyism, manipulation and greed. We’re seeing examples of that in the way so many companies and consultants are gaming government innovation funding now.

Occupy supporters say the metrics used by the financial elite to pick winners and losers ignore everything but money. Aren’t those the same metrics used in the innovation funding game?

And Occupy says if corporations are indeed people, as recognized by the courts, then too many of them are psychopaths. Well, how many fat cats just take government money to pad their bottom line and run without a second thought?

While many old-school business people may sympathize with these Occupy issues, they are fearful that speaking out could cast them as socialists or threaten their jobs. Or jeopardize funding for their startups.

Others, though, are not so fearful of speaking truth to power. Their businesses are being built on ecosystems of social networking. They are broadly supported and connected – constantly sharing not only the cold information of transactions but also their feelings about how the world could become a better place. Being in touch with so many kindred spirits, they are not so easily divided and conquered.

So, here’s the thing: Plans for the future of innovation funding in Canada are being made now. These plans call for more or less of the same old same old. No one discussing these plans is connecting the dots to issues raised by Occupy. If you are a socially-networked business person and you sympathize even a little with the Occupy movement, then you have the power and the opportunity right now to influence Canada’s approach to business innovation.

Social BPM and Social Learning

September 1, 2011 Leave a comment
A number of companies, ranging from IBM to IbisSoft are working to integrate Business Process Modelling with Social Media. More specifically they are making their BPM tools collaborative, allowing multiple remote users to work on one model at the same time. Max Pucher wrote about these tools in his insightful blog post, Social BPM Methodology: The Triple Oxymoron. My post is a response to his expressed concern over the viability of social media in the context of formalized methodology.

Talking about social BPM is tough because shared meaning about such new topics has not settled yet. Social media, for instance, is still struggling to define itself. While many of us hope for something meaningful, others seem intent on subverting its value by whoring after large numbers of friends and followers at the expense of creating and capturing genuine value in real connections. Real value in social media comes from shared passion in facing a shared challenge.

Changing the Weather

If the M2M B2B industry continues to muddle along with business as usual then someone might someday get lucky enough to have an impact that is “in some ways disruptive.” But who can do anything disruptive if everyone is playing the same game with the same tools? Disruption is about changing the game – not just working harder, faster and smarter.

This is a response to Bob Emmerson and his recent post at m2mModules: A Constant in a Fast-Changing M2M Environment. The post is a helpful weather report for today’s M2M development environment. Fortunately though, unlike the weather, enterprise mobility is still very young and we do have some hope that we can change the weather. We have a plan for operational innovation in enterprise mobility and Bob’s seven points provides an opportunity to position some of our key ideas.

One: Adopting standards is obviously important but that helps everyone. So no disruption. But suppose a group of vendors came together in pre-competitive collaboration to share processes as well as standards. That would certainly give that vendor network – a Smart Business Network — a disruptive edge.

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Sparks from Hames and Wilber podcast

It has been a long while since I read or heard anything that really got me excited. But a three part chat between Ken Wilber and Richard Hames set off some mind sparks.

Wilber is the prolific author and guiding light behind Integral Theory – teaching that bridges religion and psychology and has much to say about systems thinking, ethics, personal development, business, education and so much more. The value of Integral is in its clear-headed, scientific and holistic approach to both personal and community growth.

Hames is the author of Five Literacies of Global Leadership. The disciplines are very much aligned with the Integral vision for holistic personal development:Five Literacies
  • Networked Intelligence (the ability to connect with others & express the complexity of the ecosystem)
  • Futuring (the ability to visualize & imagine future possibilities)
  • Strategic Navigation (the ability to learn to adapt as fast as change itself)
  • Deep Design (the ability to create wisdom through dialogue)
  • Brand Resonance (the ability to create attention that awakens your unique value in others)

I just ordered the book and only listened to the podcast once so I’m not going to try to expand on the content now. But the thing that set off sparks was the realization that my current labour of love is a perfect vehicle for the vision described by Hames and Wilber.Mobile Process Services as planned in great detail by Brian Keedwell includes most of the elements required for holistic business transformation as envisioned by Hames and Wilber (and others). It integrates continuous learning. It embraces complexity. It depends on networked intelligence and empowered team players to respond to change with extreme agility. It is holistic and exemplifies systems thinking. And it is so radically bold in its approach, it creates a natural affinity for everyone sick and tired of business as usual.

The three part podcast is available at Integral Life: http://integrallife.com/node/75525 (The first part is free but the rest requires subscription.)

Disruptive Innovation and ‘Lazy Meat’

In my last post I took a shot at executive complacency. Granted, it was a bit of a shock-jock tactic to grab attention but the sentiment is worthy. Change and innovation are being stymied by complacency. If we are going to discuss ways of improving innovation at the national level, we must start at the personal level. The buck must stop with someone and in most challenges in a democracy, it must stop with the individual. As Pogo said of our environmental challenges, “We have met the enemy and he is us.”

Complacency is about being satisfied with myself or the way things are. If I’ve got a nice job, steady income, a supportive team and I’m rewarded to align with corporate objectives, then why rock the boat? Besides, I’m too busy and stressed with execution in my domain to worry about things that are “not my job.” On top of that, I can point to activities that prove I am helping to change things for the better.

So when hints of disruption (disruptive innovation) arise from any corner, I don’t want to deal with it until I have no other choice. I linger in denial of both the crisis and the opportunity.

IconoclastThat denial is largely unconscious. It is also a matter of genetic predisposition as described by Dr. Gregory Berns in his book Iconoclast: A Neuroscientist Reveals How to Think Differently. Berns describes the brain as a “lazy piece of meat” because it draws on past experiences to make perception easier. Such “patterned thinking”, often distorted by the fear of repeating painful experiences, impedes innovation. You could say humans are naturally complacent, lazy and apathetic. It’s not hard to imagine that survival in human prehistory was often dependent on not rocking the boat or challenging the alpha males. Today, winners are those that overcome their fears (mostly of rejection) and do it anyway.

A colleague, discussing resistance to adoption of Cloud storage and applications, recently expressed the thought that IT departments generally resist such innovation because they usually take the fall when things go badly. Well, what does that say about the management of such companies? They nurture a culture of fear? They’re more afraid of errors of commission than errors of omission? Such thinking does have painful results. Companies slow to move to the Cloud are losing fortunes in lost operational savings and market share to competitors.

The truth about their thinking is probably closer to ‘they didn’t really think about it much at all’. Their lazy piece of meat simply remembered a pattern – people get fired for errors of commission immediately; if they get fired at all for errors of omission, it will be in the distant future.

Real thinking is, in fact, hard work requiring time and energy for learning. Long before money and other resources are invested in innovation, the first investment must be personal time and energy. In a culture biased towards action, how many executives will actually give themselves or their delegates serious time to think and learn?

Executives today cost their companies too much money to let them think too much. If someone is making hundreds of dollars an hour, we certainly don’t want to see them learning on the job.

But I’m thinking that this is the heart of the innovation gap problem. We really need quantitatively more thinking and learning. And two $100,000 a year executives can certainly think and learn a lot more than one $200,000 a year executive. Perhaps that is a good place to start if we really want to improve innovation. It would certainly help improve the problems we have with both national employment figures and the growing income gap. And it would dilute a lot of the fear hobbling significant innovation.

Innovation today invariably raises issues of great complexity that require solutions that can come only from deep learning across disciplines and domains. If you want the fantastic rewards of operational disruption, which requires systemic or radical innovation, then you need more people with the time to fearlessly study ideas that high-priced lazy meat dismisses as cockamamie.

Executive complacency blocks innovation

I heard it in two different conversations today and I’ve been thinking the same thing for awhile. In essence, the idea is expressed in a Tweet by Christian de Neef, (http://cdn.fasttrack.be ) a knowledge management consultant in Belgium: ”Innovation is an ongoing battle against apathy, complacency and laziness.”

It may not be totally the fault of those responsible for innovation. More often, I suspect, it is the fault of the money people – the senior executives, CEOs and board members who are too lazy to do the hard work of learning the details of innovations proposed by others. So they’re never pursued. As an advocate of education transformation, I am struck by the parallel between so-called “lazy” high school dropouts and complacent executives.

In my mind, the big issue with learning is motivation. Students are often de-motivated by under-funded and one-size-fits-all school systems and the prospect of limited opportunities, with or without a diploma, because the system is rigged and dehumanizing.

Executives are de-motivated because they’re complacent with their comfortable positions and remuneration. They’ve already got theirs so there’s no need to stretch their minds into new ways of thinking and working. It’s better to just play it safe, do what everyone else does and concentrate on what they know best. Unfortunately today, in most boardrooms that is financial management. Why bother innovating when we can ensure comfortable and even outrageous returns – for us – from mergers, acquisitions, political lobbying, and economic terrorism of our workers?

In fairness, if it can be called that, workers and politicians are too lazy to learn new ways of doing things as well. Things may be bad and getting worse, but for the moment 90% of people have got a job so they’re complacent. “Let’s leave innovation to the dreamers; all I want are my toys – my smart phones, my cars, my ….”

And executives hearing them say “Give the customers what they want because that’s the way to more wealth for us.” Round and round the circle goes. What little innovation that is funded is only marginal and incremental and in areas that don’t rock the boat. Disruptive operational innovation is admired when someone pulls it off but few try.

The tragedy is that there are so many dreamers – voices in the wilderness – with detailed proposals for systemic innovation that can deliver incredible value for vast numbers of people. But executives fail to understand because it takes real work to learn how to change the world. There are easier ways to get ahead. Drop outs are getting their message.