Many organizations still have traditional hierarchies and silo their people into functions. But the complexity of today’s reality needs something different. With the exponential growth of interconnections and interdependencies, a traditional organizational design can undermine productivity and sustainable growth. Here we summarize the organizational design we propose, based on two decades of international work, specifically applied to organizations with a well-defined goal. It is a “systemic” approach. Traditional hierarchy is replaced by a different kind of hierarchy, driven by the goal of the system and governed by a new design of the organization as a “Network of Projects”.
Seeing the system
A System is a set of interdependent components that work together toward a common goal. Without a goal, there is no system (W. Edwards Deming). When we introduce a systemic approach to organizations, we have to derive that goal organically from the current reality and it is NOT a mission statement. We are able to do that effectively by starting from the identification of the Core Conflict of the organization.This is a systemic method for analyzing an organization.This provides a kind of cognitive snapshot that depicts the situation of “blockage” the system is experiencing. We begin by identifying all the Undesirable Effects that everyone inside the system experiences, and this allows us to capture the root cause of those various symptoms in a precisely verbalized conflict. This conflict exists because of all the unchallenged assumptions (mental models) that people have about their reality.
Allowing the solution of the network of projects to emerge
The way out of this conflict is through the identification of a set of “injections” or solutions (statements invalidating the weakest assumptions) that solve or “evaporate” the conflict.
In the approach we have developed at Intelligent Management over the last decade, this set of “injections” becomes the core of a systemic organizational design that we call the network of projects.
We build the network starting from each ‘injection’ that invalidates the set of assumptions or limiting beliefs that currently keep an organization trapped in an unsatisfactory current reality. These injections are then split into simpler Intermediate Objectives, sequenced according to a prerequisite logic, and each Intermediate Objective is then split into simpler actions. For every simple action, we can then assign resources and a timeframe in order to create a scheduled project.Each project is scheduled according to a very precise algorithm called Critical Chain. The set of projects emerging from the core conflict is the Network of Projects.
Synchronizing the network
The mechanism of synchronization of the entire system is obtained, finally, once theNetwork of Projects is subordinated to the constraint. The constraint is the project, the machine, the part of the organization or whatever limits the ability of the organization to generate value. This constraint can be appropriately (strategically) chosen in order to be leveraged.
Every organization is affected by variation in all its processes, both mechanical and human. We can monitor and manage variation inside the organization using Statistical Process Control (SPC). We identify critical points, where the impact of variation is more important (i.e. before the constraint), working to keep every process stable (in statistical control) in order to reduce variation (where and if possible).
SPC is not just a tool. Rather, it is a way of thinking, a mindset. Understanding variation is the most important part of the task, because the risk of tampering with the system is extremely high. The habit of reacting instead of thinking is very common. SPC is a sophisticated support that helps managers to understand how the system behaves and to take the right decisions.
Variation and intelligent emotions
Variation is not only associated to processes. An important part of the “noise” in the work environment is caused by the interactions among people. Managers have to deal with problems every day: dilemmas (personal or not), conflicts between people, conflicts with the “rules”of the organization (policies). The use of the Thinking Processes Tools has proved to be an effective way to overcome these problems. The Conflict Cloud allows us to find solutions to conflicts and dilemmas in a win-win framework, abandoning, once and for all, the prevalent “zero sum” logic (I win you lose). Recurrent use of the Thinking Process Tools helps managers and co-workers develop intelligent emotions.
Coping with the change
The transition to this new organizational model is not straightforward. It provides a shift from command and control to managing the interdependencies that characterize complexity. Changing the way people operate in the system entails a profound change in their behaviours and their habits simply because:
- The role of the “boss” is replaced by the concept of subordination to the constraint;
- The traditional “functions”, the hierarchical organization designed by “silos”, are not present;
- Project Managers play a crucial role in the correct functioning of the system, even more than managers responsible for the processes;
- The way performances of people and processes are assessed is totally overturned (no local goals);
- The very common prevalent logic “I win you lose”is no more in place;
- Variation is monitored and managed instead of the common habit of “aiming at the target, keeping the process on target”.
And so on.
People are simply brought out of their “comfort zone”. Transformation is only possible if people are willing to change. However, even if we believe, as Dr. Deming did, in continuous improvement and that people are keen to learn, investing in human resources is the right direction to take. Choosing the right people and giving them the support they need for change is the key for a successful transformation.
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About the Author
Angela Montgomery Ph.D. is Partner and Co-founder of Intelligent Management and author of the business novel+ website The Human Constraint , so far purchased in 22 countries around the globe. This downloadable novel uses narrative to look at how the Deming approach and the Theory of Constraints can create the organization of the future, based on collaboration, network and social innovation. She is co-author with Dr. Domenico Lepore, founder, and Dr. Giovanni Siepe of ‘Quality, Involvement, Flow: The Systemic Organization’ from CRC Press, New York.