Our complex world is changing fast and the prevailing style of management that creates silos cannot react quickly enough. What is a realistic and operational alternative to scale your business organically?
First, why do we have hierarchies?
Silos are a natural offspring of traditionally hierarchical companies divided into functions and departments. Why do hierarchies exist at all? People are very attached to hierarchies and for good reason. They have been ingrained in our psyches for centuries. Even biblically, Moses was advised by his father-in-law Jethro to create a hierarchical structure of judges to help him administer justice and knowledge of the laws to the people and not exhaust himself.
The problem with hierarchies today is that they create artificial barriers, ceilings and silos. These blockages inhibit people’s efforts to achieve the overall goal. In fact the overall goal disappears from sight when employees focus on local, siloed efforts. This is a critical problem today when organizations should really concentrate on maximizing the quality of their goods and services, the involvement of their people and speed of flow.
Traditional hierarchy with its mindset of separation reflects a Newtonian, mechanical worldview where it is believed that the whole equals the sum of its parts. This mindset is further entrenched through a set of measurements/rewards (cost accounting) that encourage local optima. It is a lack of understanding of complexity that leads organizations to still manage today with vertical hierarchy and functions. They believe that in order to cope with complexity they have to “break the complexity down” into components. This is based on the false assumption that separation is the simplest way to handle complex reality.
The driving pace of the digital era
Today, instead, we live in a world of increasing speed due to digitization and of increasing complexity due to the expansion of interdependencies. In an increasingly digital world where speed and complexity dominate, to scale your business you must have:
- Visibility of the entire value chain from supplier to customer
- Understanding of the flow of processes and projects
- A learning cycle based on feedback
In this way, an organization can become fully cognizant of:
- the entire context in which it operates;
- how interdependencies work and can be continuously improved both internally and externally.
Far from alienating those who think differently, in order to survive and thrive businesses must cultivate systemic thinking skills throughout the organization.
We stand on the shoulders of giants
How do we do it? How do we make the transition away from a model that seemed to work for centuries but that no longer cuts it? First of all, we do not have to invent the wheel and we do not have to abandon the concept of hierarchy. The knowledge, understanding and tools have already been developed for a contemporary organization to function systemically. These aspects have been fully addressed in the work of W. Edwards Deming, the ‘father’ of Quality and Dr. Eli Goldratt who developed the Theory of Constraints for management. There are various organizational models out there today that seek to offer a more up-to-date answer. However, ideas are not enough. You have to be able to embed them day-to-day operations. For this reason over the last 20 years we developed and implemented a management methodology that integrates the work of Deming and Goldratt into a coherent path for designing and managing organizations as silo-free systems that can scale organically.
A systemic organization is one where all the emphasis is given to:
- increasing the flow of work towards the goal, and this is done by understanding that work is essentially consists of processes and projects,
- creating the quality necessary to thrive and,
- by removing artificial barrier’s to people’s motivation and intelligence, fostering the involvement that allows employees to learn and grow.
Operationally, all the work of an organization is organized into a network of projects of various dimensions. The ‘hierarchy’ is no longer vertical but based on responsibility for those projects. As a further step in providing an operational solution, we have developed a software to support the management of multi-projects based on Critical Chain, a rigorous and systemic approach to Project Management. We call it Ess3ntial.
The courage to do what we can
How hard is it to make this transition into a new way of working? We do not have to do the impossible, but we must have the courage to do what is in our power. We can take the journey one step further. The dynamics of transformational change are not linear and so we can never know the overall effect of even a small change. Even the small part that we may play in bringing transformation is a cumulative part added to the work already done. The important thing is to start working at the shift.
Since 1999, we have been presenting a new model for a systemic organization in detail both in terms of the thinking behind it and how to conduct operations. Our books include ‘Deming and Goldratt: The Decalogue‘, ‘Sechel: Logic, Language and Tools to Manage Any Organization’, ‘The Human Constraint‘ and most recently, ‘Quality, Involvement and Flow: The Systemic Organization’ . We support our international clients through education, training and the Ess3ntial multi-project software to schedule competencies and unlock the potential of human resources. Based on our proprietary Decalogue methodology .