Saturday, February 9, 2008

Structure Schmucture?

Every business needs to do four important things to manage effectively. They need to establish a plan and manage performance and progression, manage their people and culture, manage costs and productivity, and manage the infrastructure and systems that are required to run the business.

I used to think that structure was not important. You know what I mean by that - org charts and hierarchies and reporting relationships. I used to think that if you focused on the work - what needs to get done - and if people are allowed to work together for the time it takes to get the work done - then structure shouldn't be a huge factor in business. In fact, until recently, I used to think that structure was more of a hindrance than a help.

Wrong. Structure lays out who's who, and what they do, and who is leading them in their decision making. It tells us who's on point to lead, and who's on point to deliver. It is about accountability and results.

The problem with structure is that quite often, we use it as a strategy. And it's not. Strategy describes what we need to do, and structure is how we organize to do it.

OK, so what if the structure runs against the strategy. This is what I see happening a lot, and reason that I am sceptical about structure. Do you ever wonder why you can't seem to get something done? Why you can't seem to get the right people to work together? And why if you do manage to get the people in the same room, they often don't seem to get why they are there and what they are supposed to accomplish?

Strategies tend to change more frequently than before. So, by the time you reorganize your people, the strategy is already falling behind, and the people are frustrated because they can't seem to make a difference. Nothing gets done, or at least, to anyone's satisfaction.

One way to get around this is the develop teams that have specific and shared accountability. These teams are constructed to create a particular outcome that supports and organizational need or strategy.

For example, every organization needs to manage its performance, and this requires expertise from areas such as the strategic planning group, who is responsible for leading the process,
the accounting and reporting group who is responsible for the numbers, the research group who provides internal and external information, the project management group who tracks and reports on initiatives and HR group who leads the performance management process. The work of these 5 teams creates a single, measurable outcome.

So, why not set up an Enterprise Performance Management Team comprised of 5 cross functional teams who dedicate a percentage of their time and resources to Enterprise Performance Management? These teams can come together quite naturally to support the enterprise performance management program for the time that it takes to do so. The rest of the time, they can be focusing on other important work and be part of other teams.

So why is this a difficult concept? What stops people from being able to work together? I would suggest the answer is a 1959 static approach to performance management that assumes people work in silos of one and that the job and requirements don't change from year to year.

The truth is, silo thinking, acting and rewarding creates internal individualistic competition, which is counter to a the dynamic business environment. With the people and the business working against each other, no wonder businesses responding to opportunities or making change happen on time.

In a dynamic work environment, performance management must also be dynamic. It must reward and encourage cross team efforts as well as reward the excellence of the individual team. That way, everyone wins. The organization wins because resources are used more effectively and more efficiently; people are afforded more meaningful work experiences in their day to day work by being part of broader organizational efforts; the organization can plan for succession; and people may want to stay with the organization to grow their careers.

Somebody that I respect once said, "if you don't show people their future in the organization, they will leave." And the best people do leave in any job market, competitive or not, because good people are who everyone wants. Therefore, it makes sense to design the organization's working structure to accomplish the strategies and critical business functions while creating opportunities for growth, challenge and change for employees.

In my mind, defining the organization's structure along the lines of cross functional management functions, cross functional team structures and a dynamic performance management system is the way organizations might be able to ramp up their organizational competencies, and keep their people satisfied and engaged.

Tuesday, February 5, 2008

Process: A Comfortable Couch?

We are on the corporate couch, watching tv. We watch things happen. The news tells us that our customers are aging. Technology is literally redefining the very way we interact as human beings. Our politicians are acting out wars in countries somewhere else. Our children are angry. Our society is changing. Soundbites flash. War on Terror. 911. Iraq. Sale at Sears. We say we are informed. Yet how many of us do nothing? Choose not to engage? We take in an unprecedented amount of information. But we don't know what it means. Worse yet, we don't know what it means to us. We don't know what's important, and we can't see the forest for the trees. Consequently, there is no moment of insight, no point when we say, I can't take it any more, and we hit the off button.

The manager's job is to set direction, describe objectives / goals with tangible targets and establish priorities and action plans for implementation. Then we review our progress and make any course corrections. That's management 101.

But are managers slave to process so that they actually don't think? Is the process to easy? To much formula? How do managers challenge conventions, break down the walls so that new ones can be built.

Innovation is really what planning is about, unless of course you are planning to get out of business or stop producing something of value. It is the art of imagining something, and making it happen. It is profitable creativity. Something that changes the way we act, think, feel, perceive.

In my experience I have worked with many types of managers running many types of businesses - a retail focus - a product to sell - a technology focus - a solution to sell - a community focus - a dream to sell. I have worked with board members, ceos, executives, cfos, directors, managers and regular people who want to participate in the future. and there is a common theme that I have discovered.

We tend to imagine what could be based on our own experience or our ability to execute. Herein lies the opportunity. It takes two types of people to make things happen - visionaries and execution leaders.

Enter the restless visionaries. People who naturally look out and see possibility and get excited about making things happen. Visionaries are passionate about what could be and are irrepressible when they have a vision of what's ahead. Visionaries do not understand the word no. They understand when. They have a conceptual understanding of the how, but it is more like a blue print than a map. Visionaries are people who are comfortable with change, and in fact, they love change. Visionaries are all leaders, regardless of where they are in the org chart. These are the people whose optmism is infectious.

But one can't celebrate the visionary without celebrating the people who painstakingly are able to execute. These are the people who, once they have a solid plan, they move ahead, methodically achieving one milestone at a time. These people are the execution experts, and they are as important as the visionary who brings the idea to the table and keeps it alive until it comes to fruition.

Change is natural, so it follows that innovation must be natural too. However, in the corporate context, sometimes we overprocess to point where we disengage due to complexity, or the fact that it takes too long to see results.

So here is the best way to approach this with as little process as possible.

Just start. Get a bead on the future, and what it will take to succeed. Figure out what the current state is and the gap, and then lay out the first steps. Move forward in increments, using timelines and milestones as a checkin point. Finally, assess progress, celebrate and decide on the next steps.

Beginning at the Beginning

Strategic planning is 90% communication and 10% process. When most people are asked to engage in the strategic or business planning process, they will tend to have 2 reactions; they either love it, or they would rather ignore it and just . . . well, execute something.

I find that those who love it, love the art of discovering new horizons, and then actually plotting out the actions to achieve the end goal. These are the people who love to engage in dicussions about what is going on in the environment for hours, pontificating about the possibilities and coming up with possible solutions. True strategic planning zeolots pull out all the tools, from SWOTS to strategy maps, to flip charts and smelly markers. Often times, however, these are the new comers to the management realm, and while their ideas are important and significant at an operational level, they may not have the strategic push to actually create a new future.

Then there are those who view strategic planning as work. Something you have to do. Something that you get measured on. If this is the only driver, then quite often, very few insights are generated, and very few ideas ever come to the light of day.

Sadly, though, some of the most insightful and greatest business minds fall into the second camp. They do not see the opportunity in engaging in the strategic planning process. So the question is why. Why is it that we have difficulty engaging people in this very important process. I often wonder, how may futures have we missed out on because we do not actively engage in making the possible happen?

I was recently asked by the CEO of a company to find a way to increase engagement of the management team. So I asked them - what is it that makes you feel disengaged? Is it the process, or is it the way we engage in the process. They said it was the latter. The feeling was that they wanted to be more activley engaged in understanding the context surrounding the eventual decisions that are made through strategic planning. This includes such things as long term targets and what it takes to achieve them at an enterprise and operational level.

I discovered through research that engagement is an industry unto itself. It would appear that people in general need mechanisms to communicate and share information. They need forums to share their ideas, and they need a mechanism to make the ideas happen. Once all that begins to happen, then they see the value in participating and seeing the results of their efforts.

Riding the Business Planning Cycle

Business Planning is a management process that is fundamental to the success of any organization. It is the means through which direction is set, strategies are formed, targets are established, and initiatives are activated to achieve the desired change. These are the typical stage gates of an enterprise planning process. There is another very important element to the business planning cycle and this is implementation and reporting.

The planning process of an organization of a significant size (400+ people) can take approximately 6 months.

This includes setting strategic direction, establishing and / or reviewing long term targets and priorities, and then setting out one year targets and action plans, complete with resource and financial requirements to execute. At the same time, operational managers are engaged in developing plans and budgets for their areas, that support the broader organizational plans. Since inevitably the cup runneth over on the ideas vs. the dollars, management is often required to further refine the priorities.

Once all this is said and done, the business plan is written and approved by the governing body of the organization.

But that is just the end of the planning stage, and the beginning of the implemenation phase.

The first stage of implementation is communication. By the time the business plan is approved, every manager has been knee-deep in operational planning and budgeting, and can more effectively recite the cost of a set of pens than they can explain a corporate level strategy. Therefore, it is essential for management to spend some time talking about what the organization is going to achieve by year end, and how.

This is important because most organizations are measured according to the results laid out in the business plan. And even though management may have had the discussion about targets and priorities in May, it's now December, the targets may need reexplaining. For example - ROE targets - what does it take to achieve the target? What may be changing in the business environment to affect our ability to achieve this target? What drivers do we need to continue to monitor?

The next stage of implementation is the rollout to all staff. This is when management meets with their respective departments to walk through the plan with them. To assist management in explaining the step, I find that providing a business plan summary is a handy communication tool. The business plan summary summarizes a 50 page business plan in 2 - 4 pages. Better yet, every single employee has their own copy to refer to.

Following the rollout of the business plan, performance plans for the coming year need to be drafted from the CEO to everyone in the organization. In my experience, this is where the results - driven approach to business planning starts to become real for people. The key measures become a part of every manager's performance plan with the appropriate target. So, for example, if the key measures are employee satisfaction, client satisfaction and budget then these become the performance plan for each manager. By taking this approach, each and every manager is now engaged. I call this having "skin in the game."

Quarterly reporting and strategy review meetings are the final component of the implementation cycle. Each quarter, the enterprise must report on its results to its governing body. Likewise, management must take the take to review progress on the business plan, including how the initiatives are progressing, and to review progress on key targets. Management must look at its current plan against the backdrop of the external and internal environment, and be prepared to make adjustments as needed. This is also an excellent opportunity for management to increase their understanding of the big picture.

At year end, the final report is developed an submitted to the board. The year end report is the final leg in the journey of the business plan, as it lays out how successful management was in implementing the business plan. Once again, this report is an excellent source of learning - it tells management what we did well, what we learned from, what we accomplished, and helps to chart the nexts steps.