If a business is not growing, it’s shrinking.
It’s a hard truth to accept. There is no such thing as standing still because plenty of other businesses are moving forward. Even if your market share increases, how much is it increasing in proportion with the growth of the market?
So what is it that holds businesses back, even when they make a real effort to move ahead? In so many cases, they are trying as hard as they can. Perhaps they are investing money in new equipment or in a marketing drive, perhaps they have made their processes as “lean” as they can. In spite of their best efforts, they are still plagued with a series of costly undesirable effects that keep them stuck. Some examples of these are:
- Leadership would like to focus but they are pulled in multiple directions at once
- Quality is insufficient
- staff are disgruntled and not sufficiently engaged
- work efforts are unnecessarily repeated
- communication doesn’t flow fast enough
- production is not able to satisfy the market demand in time
- efforts are disconnected so that time and energy are wasted
- projects fail to come in on time and within budget
In over 20 years of working with businesses of different sizes internationally, we discovered that underneath all these all too common “symptoms” there is a deeper problem. If this problem is not addressed then, no matter how hard people try or how much money they spend on improvement efforts, the business will stay behind.
The limiting factor
Over the years, we’ve seen it time and again. At the very heart of any business’s problems in keeping up is what we have come to call their “cognitive constraint”. What does that mean in plain English? It means that the organization is stuck because of a series of assumptions they make that have never been verbalized. These assumptions amount to limiting beliefs that have never been challenged but that affect everything going on inside the company. Sometimes, these limiting beliefs are typical of an entire sector – if you are able to challenge these you have an immediate competitive advantage in your sector. (At the most extreme level, this is precisely what disruptive solutions do.)
What we have discovered at Intelligent Management is that there is one particular set of limiting beliefs that affects the majority of organizations today.
How are you organized?
What does your company look like? Ask many organizations, even relatively small ones, and they will present you with some kind of an organigram. It will look more or less like a pyramid. This is not because people are crazy. It’s because the “pyramid” addresses a fundamental leadership need: control. The age-old assumption is that by creating levels of hierarchy and separate departments, what goes on beneath and within is “under control”. And so companies get divided up into departments and business units with heads and budgets, all trying hard to do their best, all vying for more budget. What inevitably happens is that companies become fragmented and they are unable to accelerate flow. People lose sight of the overall goal of the company, and worst of all, they lose sight of the customer. Efforts become dissipated and people lose joy in their work through frustration.
The Digital challenge
To compete and thrive today in the Digital Age, what matters most is speed of flow: flow of communications, materials and cash, and flow of feedback from the customer back into the company so continuous improvement and innovation can happen at speed. Any business that is still stuck in the mental model of control through dividing their business into separate units/functions will struggle to keep up.
The flip side – organize for flow
The good news is that control can be achieved in a much more effective way in the Digital Age. This has been our focus for over a decade. By challenging the assumptions beneath the functional/hierarchical model, we cleared the space for a model to emerge that allows companies to organize for flow. The approach leverages the highest level of management thinking produced in the western world. We call it the ‘Network of Projects’ and it allows leadership to have effective control over operations and interactions while at the same time allowing for continuous growth. Because it is a systemic solution, it provides a series of interconnected benefits. These include radically increased focus, highly engaged personnel and smooth synchronization of production with market demand. All the efforts made within the organization are interconnected and aligned towards the goal. Our latest book by our Founder Dr. Domenico Lepore called ‘Moving the Chains‘ concentrates on this organizational solution for the Digital Age. It’s true that digitization is forcing companies to deal with many challenges all at once. It’s also a unique opportunity to shape up for the future and leave behind the inefficiencies and frustrations of an outdated management model.