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The Wall
The figure below shows the financial performance of a successful hypothetical company. During the startup phase, both revenue and profit increased at a linear pace, and then something interesting happened. As revenue rose, profit growth hit a wall and leveled off. Dooh!
So, what happened? In business lingo, the costs to execute the business rose faster than the costs to acquire the revenue. Since we are not company insiders, we can only speculate as to the underlying cause(s) of the performance slip, but here are two out of a bazillion possibilities:
- More bureaucrats were added at a faster rate than people with the skills and ability to execute.
- The company’s execution processes were unscaleable.
Let’s explore these two performance busters.
More bureaucrats were added at a faster rate than people with the skills and ability to execute.
With revenue pouring in, it’s easy to become sloppy and careless with all that dough. Egotistical managers, unconsciously trying to outdo one another by building personal empires, convince their disconnected and aloof next-level managers that they need more people for business execution, regardless of whether they actually do need them. These new additions are often specialists who are only capable of executing narrow slivers of the business. Thus, they spend most of their time in idle mode; consuming more from the company than they contribute.
On the other hand, the new additions may be ambitious, unskilled fellow managers who are tasked with doing what their bosses couldn’t – increase execution performance with the people that they currently have. By adding more sub-managers, each super-manager builds his/her empire and further buffers him/herself from where the rubber hits the road in the execution trenches.
The company’s execution processes were unscaleable.
Unless the company produces widgets or some other simple product that doesn’t require knowledge synthesis and frequent human situational decision-making skills, its business execution processes may be unscaleable. In a sincere but misguided attempt to control and increase execution performance, the company’s managers actually decrease scaleability and they inhibit performance gains by piling more constraining rules and procedures on top of the people who create, manufacture, test, and sustain the product portfolio. Rather than rolling up their sleeves and jumping in with their people to help them get the job done, these managers spend all of their time running around taking status and ensuring that all the rules and procedures are followed.
Can you think of any other reasons why this successful company may have stumbled?
All in all you’re just another brick in the wall. – Pink Floyd
Learn A Little, Do A Lot
There is no “learn” in “do” – manager yoda
Assume that you have a basic skill set, some expertise, and some experience in a domain where a task needs to be performed to solve a problem. Now assume that your boss assigns that problem to you and, out of curiosity you decide to track how you go about solving the problem.
The figure below shows the likely result of tracking your problem solving effort. You probably converged on the solution via a series of continuous Learning-Doing iterations. On your first iteration, you gathered a bunch of information and spent a considerable amount of time immersing yourself in the problem area to “learn” both context and content. Then you “did” a little, producing some type of work output – which was wrong. Next, you spent some more time “learning” by analyzing your output for errors/mistakes and correlating your work against the information pile that you amassed. Then you repeated the cycle, doing more while having to learn less on each subsequent iteration until voila, the problem was solved!
So, how can this natural problem solving process get hosed and low quality, shoddy work outputs be produced? Here are three possible reasons:
- Lack of availability of, or accessibility to, applicable information.
- Low quality, inconsistent, and ambiguous information about the problem.
- Explicit or implicit pressure to abandon the natural and iterative Learn-then-Do problem solving process.
IMHO, it should be a manager’s top priority to remove these obstacles to success. If a manager ignores, or can’t fulfill, this critical responsibility and he/she is just an obsessive, textbook-trained “status taker and schedule jockey”, then his/her team will transform into a group of low quality performers. More importantly, he/she will lose the respect of those team members who deeply care about quality.
What Happened To Ross?
In the ideal case, an effectively led company increases both revenues and profits as it grows. The acquisition of business opportunities grows the revenues, and the execution of the acquired business grows the profits. It is as simple as that (I think?).
ROS (Return On Sales) is a common measure of profitability. It’s the amount of profit (or loss) that remains when the cost to execute some acquired business is subtracted from the revenue generated by the business. ROS is expressed as a percentage of revenue and the change in ROS over time is one indicator of a company’s efficiency.
The figure below shows the financial performance of a hypothetical company over a 10 year time frame. In this example, revenues grew 100% each year and the ROS was skillfully maintained at 50% throughout the 10 year period of performance. Steady maintenance of the ROS is “skillful” because as a company grows, more cost-incurring bureaucrats and narrow-skilled specialists tend to get added to manage the growing revenue stream (or to build self-serving empires of importance that take more from the org than they contribute?).
For comparison, the figure below shows the performance of a poorly led company over a 10 year operating period. In this case the company started out with a stellar 50% ROS, but it deteriorated by 10% each subsequent year. Bummer.
So, what happened to ROS? Who was asleep at the wheel? Uh, the executive leadership of course. Execution performance suffered for one or (more likely) many reasons. No, or ineffective, actions like:
- failing to continuously train the workforce to keep them current and to teach them how to be more productive,
- remaining stationary and inactive when development and production workers communicated ground-zero execution problems,
- standing on the sidelines as newly added “important ” bureaucrats and managers piled on more and more rules, procedures, and process constraints (of dubious added-value) in order to maintain an illusion of control,
- hiring more and more narrow and vertically skilled specialists that increased the bucket brigade delays between transforming raw inputs into value-added outputs,
may have been the cause for the poor performance. Then again, maybe not. What other and different reasons can you conjure up for explaining the poor execution performance of the company?
Distributed Vs. Centralized Control
The figure below models two different configurations of a globally controlled, purposeful system of components. In the top half of the figure, the system controller keeps the producers aligned with the goal of producing high quality value stream outputs by periodically sampling status and issuing individualized, producer-specific, commands. This type of system configuration may work fine as long as:
- the producer status reports are truthful
- the controller understands what the status reports mean so that effective command guidance can be issued when problems manifest.
If the producer status reports aren’t truthful (politics, culture of fear, etc.), then the command guidance issued by the controller will not be effective. If the controller is clueless, then it doesn’t matter if the status reports are truthful. The system will become “hosed”, because the inevitable production problems that arise over time won’t get solved. As you might guess, when the status reports aren’t truthful and the controller is clueless, all is lost. Bummer.
The system configuration in the bottom half of the figure is designed to implement the “trust but verify” policy. In this design, the global controller directly receives samples of the value streams in addition to the producer status reports. The integration of value stream samples to the information cache available to the controller takes care of the “untruthful status report” risk. Again, if the controller is clueless, the system will get hosed. In fact, there is no system configuration that will work when the controller is incompetent.
How many system controllers do you know that actually sample and evaluate value stream outputs? For those that don’t, why do you think they don’t?
The system design below says “syonara dude” to the global omnipotent and omniscient controller. Each producer cell has its own local, closely coupled, and knowledgeable controller. Each local controller has a much smaller scope and workload than the previous two monolithic global controller designs. In addition, a single clueless local controller may be compensated for if the collective controller group has put into place a well defined, fair, and transparent set of criteria for replacement.
What types of systems does your organization have in place? Centrally controlled types, distributed control types, a mixture of both, hybrids? Which ones work well? How do you see yourself in your org? Are you a producer, a local controller, both a local controller and a producer, an overconfident global controller, a narcissistic controller of global controllers, a supreme controller of controllers who control other controllers who control yet other controllers? Do you sample and evaluate the value stream?
Accountability
Everybody loves to talk about “holding people accountable!”. You know, in the sense of “Bring Me The Head Of Alfredo Garcia“. The dilemma is that lots of people want to hold others accountable without being held accountable themselves. Management wants to hold the workforce accountable, but not vice-versa. The DICforce wants to hold management accountable, but not vice-versa.
When managers clearly define, specify, and communicate expected employee outputs along with the times that those outputs are due, then they have the information to hold an employee “accountable” if those requirements are not met. However, bad managers (of which there are many) aren’t competent enough to know how to clearly define, specify, and communicate what specifically is needed to get the job done. They do, however, know how to specify and monitor due dates – because it doesn’t require much brain matter to do so. Any wino off the street could be hired to dictate and watch unrealistic due dates.
On the other side of the fence, since bad managers don’t contribute anything to the org other than “status taking and schedule jockeying“, employees have no reliable and honest way of holding managers accountable (even if they were “allowed” to; which they aren’t). What’s an employee supposed to do? Call out a manager for not “taking status and watching schedule“? Yeah, right.
Sooooooo. Once you become a manager, a rare good one or a ubiquitous bad one, you’ve got it made. Your buddies who anointed you into the management guild won’t hold you accountable because it’ll make them look bad for choosing you (and of course, they can’t look bad in front of the troops because they have to maintain the illusion of infallibility). Your employees won’t hold you accountable either, because they want to remain hassle-free and you most likely don’t contribute anything of substance that is publicly and scrutably visible. It’s the best of both worlds and, in management lingo, a “win-win” situation.
Lesson Unlearned
Whoo hoo! We finally said screw it, we overcame our fears, and we mustered enough courage and determination to say “hasta la vista baby” to the stifling corpo citadels that we were shackled to. We huddled together, we created a flexible plan, we busted the cuffs, we scaled the prison wall, and holy crap; we actually freakin’ succeeded. We started our own company. And it’s growing. And our people feel useful and appreciated. And life is good. Ahhhhhhh!
Well duh, of course we need to track and manage revenues and costs, but in our company, unlike the herd we left behind (mooo!), those two obviously important metrics will always take a back seat to taking care of, and leading the people who create, develop, build, and sustain our product portfolio. Because we’ve personally experienced living in the quagmire, we’ve learned our lesson. We get “it” and we’ll never forget “it”. There’s no way, we mean no way, that we’re not gonna end up like our previous corpo hierarchs, who managed to turn it all backasswards – numbers first and people second (even though they innocently espoused the opposite).
Ummmm, yeah…… right. Check out the two parallel timelines below that purport to track the growth and maturity of a hypothetical startup company in the technology industry. I honestly don’t know squat, but I assert that the story reflected by the graphical depiction below is pervasive and ubiquitous, especially throughout the western world. If you could possibly be delirious enough to resonate with the content of this blarticle, then you may interpret the situation as a hopelessly sad state of affairs. Believe it or not, I interpret the situation as neither good nor bad. It just is what it is.
Dweeb In the Cellar
Check out the figure below and please heed the advice it dispenses. If you’re a Dweeb In the Cellar (DIC), don’t piss off the people in the highlighted boxes above you. As a DIC, you can (almost) safely piss off anyone else in the corpo caste system. However, each cookie cutter corpo command & control hierarchy is slightly, just slightly, different. For example, if your direct boss and one of his level 1 peers are great friends, you can’t piss the friend off either. As you might guess, it’s usually OK to piss your fellow DICs off, but again, each corpo org is slightly different.
Pray Or Play
Do you follow the rulebook and worship at the altar of the corpo pyramid, or do you break the rules in defiance of the chain of command to get stuff done in a timely fashion and add value to your organization? To some extent, everyone has to obey some basic ground rules so that chaos won’t reign, but do you question those rules from time to time to evaluate whether they’re still applicable? Do you experience pangs of fear when you ask tough questions that “aren’t supposed to be asked”? How do you ask a tough question without implying that someone is being ineffective? As just another dweeb stuck in a vertical silo at the bottom of the corpocracy, how can you point out cross-silo communication problems without pissing “important” people off? Do you faithfully, quietly, and unquestioningly sit behind the pew and pray, or do you at least try to play – in spite of the chance of incurring a potential career ending injury?
Directagers
Director of communications, director of operations, director of engineering, director of marketing, director of strategy. Yada, yada, yada. Everyone is, or wants to become, a “Director” of something. The ultimate directorship, of course, is to be elected to sit on one or more cushy Boards Of “Directors”.
Not discounting the title of “Chief”, the title of “Director” seems to have overtaken “Manager” as the coveted corpo title dujour. Compared to an honorable and esteemed “Director”, a “Manager” is now almost as unimportant as an “associate”, or equivalently, an “in-duh-vidual contributor” (gasp!). The title of “Manager” is……. so yesterday.
So what’s the next title to be inserted into the divisive corpo caste system, the “Directager“? Come on, take a guess.
Right, Right, Right.
Great leaders get the right info to the right people at the right time. They don’t hide behind the “it’s not my job” cliche. They don’t just “delegate this” and “delegate that” like a card dealer at a casino. They don’t just sit back in their throne, get manicures, and “review and approve”. They don’t just passively collect “status and schedule” information. They don’t set ambiguous and indecipherable direction, and then change it at will whenever it suits their personal agenda. They don’t mandate the latest management “technique” after they read about it in a 2 page Harvard Business Review article.
If getting the right info to the right people at the right time requires a leader to generate some of the information him/herself, then they do it.
Delegating only works when the delegator works too. – Robert Half
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