Home Management Performance Management for Agile Organizations: Overthrowing The Eight Management Myths That Hold Businesses Back
Before explaining the customer-centric model, I should make this claim: this model of mine isn’t perfect. It isn’t a panacea; no organizational structure is. All organizational structures have their comparative benefits and liabilities. Each model is based on a certain set of beliefs, assumptions, and business priorities. The functional model, for instance, assumes that people of a similar skills-set will work best when grouped together. In the use of the matrix model, it is assumed that projects and functions can and should coexist in the one organizational structure. The product model is underpinned by the belief that a concentration on product lines will result in better quality goods and services. These assumptions and beliefs shape the priorities of the enterprise.
Although the product model has made a real attempt to move away from the practice of organizing work around functions, it still has struc?tured silos that create the same problems as the functional model. So it raises the perennial questions: What are the other organizing options? What type of structure has the potential to stimulate agile performance?
Figure 7.4 represents a new organizing structure that attempts to minimize the liabilities of the three models we have discussed.
The first obvious characteristic of the customer-centric model is that it’s structured around a series of concentric circles, as distinct from the three linear models just described. Although not unique, companies structured around circular models are rare. The vast majority of organizational structures are founded on hierarchy, with a clear top to bottom chain-of-command. Even the circular models I have cited have “top” management illustrated in the inner circle, implying a different sort of pecking order. Instead of senior management represented at the top of a linear structure, they’re represented at the center of these circular models. And the rest of the organization is illustrated revolving around the “inner circle.” In the circular formation, top management isn’t sitting at the top
Fig. 7.4 Customer-centric model of the pyramid sending directives down the “food chain;” they’re instead at the center of the organization, spreading their vision and directives outward.5
So a significant difference in the model illustrated in Fig. 7.4 is that the customer is placed at the center of the organizing structure. Having the customer at the center of the organization makes a very clear statement that the end-user is fundamental to everything that happens (or doesn’t happen) in the business. In simple terms, it’s a model based on the concept of customer-focus, which we discussed in Chap. 5. After all, it stands to reason that the customer should have a central role, be factored into the organizing structure, and illustrated as such. This makes perfect sense if, as Peter Drucker—the prominent management thinker—once
remarked succinctly, “the purpose of a business is to find and keep a
Another distinguishing feature of the customer-centric model is the way functions are represented. As you can see, they are depicted in this diagram with the six dotted straight lines. In the hierarchical organizing structures there’s generally an absence of dotted lines. And in the matrix structures, dotted lines are generally illustrated as links to the project managers. Solid lines, as distinct from dotted lines, symbolize the functional leader having the most clout of the two bosses, despite rhetoric of equality. Dotted lines therefore show a less dominant line of report- ing—or in the case of the customer-centric model—a less prominent functional boundary.
Furthermore, the dotted lines in Fig. 7.4 indicate that while there are functions, they are not the mainstay of the overall arrangement. You can see the dotted lines only extend to the Frontline and Operations strata. The cross-functional project team layer traverses departments. And the strategic layer, first and foremost, has a tactical oversight that again traverses the functions. With strategic surveillance, executive management shouldn’t have the same functional fixation depicted in the scene at the beginning of this chapter. Functional-based working arrangements characteristic of both the functional and matrix models usually result in a senior manager’s identity wrapped up predominantly in their departmental duties and responsibilities.
Although unlabeled, there are six functional entities shown in Fig. 7.4 . Some organizations have more, or less, functional areas. The point I’m making is that while acknowledging that functional boundaries have some relevance in the structure of an organization, they shouldn’t be the foremost divisions in the structure of an agile enterprise.
The executive leadership, represented in the strategic space, is primarily responsible for supporting the other layers of the business. The executive sustains the project teams, the operations, and the frontline staff so they can carry out their work to their fullest capacity. Besides, another reason the model is illustrated as a series of concentric circles is to make the point that there is no hierarchy. Everyone in the customer-centric organizing structure is on the same level, excepting of course that each stratum has a specific set of responsibilities.
If a business has clear market segments—such as overseas and domestic customers—these groups can be shown in the central circle with a series of dotted lines. The key idea though, is that the company orbits around its customers; the customer is illustrated as central in the organizational structure. Further, it reminds people working in the enterprise, that the customer is “central” to all activity in the business.
You can also see that the frontline strata, who deal directly with the customer, is segmented into several functions. This could include the production department, the administration department, and so on. Although it’s quite possible an enterprise has a homogenous frontline team, absent of any functional boundaries. Either way, it’s logical because of their regular interactions, that frontline employees and customers are represented together, side-by-side.
Moving out to the next strata, we have “operations.” This layer of business is involved in producing the business’s products or services. Product manufacturing, for example, would be part of this strata. Or, in the case of a service business, such as an engineering firm, operations include drafting. All the same, the operations strata supports the frontline with the goods and services needed to sell and service customers.
Within an operations stratum in most enterprises, there are supervisors and managers. Leaders in operations are responsible for supporting operational employees with the resources they need to perform their job role. Furthermore, with the backing of operational leaders, employees working on the frontline can properly service the needs of the business’s customer-base. Leaders in the operations strata—or any other layer of the business—can be identified in this model structure.
The project team strata are illustrated beside the strategic management strata for two reasons. First, cross-functional project teams—be they permanent or temporary—are usually formed to consider changes impacting the entire organization. Therefore, these teams are strategic rather than operational in their focus. For example, a cross-functional project team can be set up to consider policies for improving the organization’s culture. Due to their strategic orientation, it makes sense for crossfunctional project teams to be separated from operations in the structure.
The second reason for the strategic positioning of project teams is that they are best placed to report directly to executive management. Direct access to executive management provides the necessary relevance and clout for the work of project teams. What’s more, strategic teams are somewhat insulated from getting caught up in the cross-fire between functional managers and project managers—the main weakness of the matrix model. In the customer-centric model, members of project teams are also members of either an operations or frontline team. So project team participants have two bosses, similar to the matrix arrangement. But the customer-centric model makes a cleaner distinction than the matrix model between operations and projects.
An organization can have any number of project teams. Project teams can be disbanded at any time, and others instigated when necessary. For example, project teams can be formed around the following strategic matters:
This is not an exhaustive list; it does, however, give a flavour of some areas of business that may benefit from the cross-functional perspectives of a team of employees. There are doubtlessly other areas that could benefit from the creation of a project team. The range and composition of project teams is largely dependent on the industry and the enterprise.
I favor the idea, however, of all employees—aside from their job role— participating in one project team. This may constitute an employee’s organizational citizenship role. Or, putting it another way, employee involvement in project-based work can be the vehicle for performing one or more of their non-job roles—such as the team or innovation and continuous improvement roles that we covered in Chap. 6.
The final layer—the outer layer—is the strategic strata representing executive management. As I’ve pointed out, the executive isn’t segmented into functional areas with functional responsibilities. Functional leadership—as it should—rests with leaders in the operations strata. By depicting an absence of boundaries in the strategic strata, this makes an important statement that enterprise executives should have their eye on the overall perspective of the enterprise. This is preferable to being functionally fixated.
I’ll go one step further: I favor the regular rotation of executive managers. Executives ought to be flexibly deployed to oversee several, and not just one, functional area of the business. There are some advantages in this proposed system of rotation and less downside than may appear at first glance. Executive leaders, as I indicated earlier, also have responsibility for mentoring and sponsoring the work of the project teams in this model. Furthermore, their primary role is supporting the organization instead of the reverse; that is, the notion that the organization is there to support senior management! Briefly, the executive leadership’s main purpose is to provide strategic direction and enable the rest of the organization to achieve that vision.
The customer-centric model is not a perfect organizing model, as I said. But it’s structured to enable organizational agility. The model is an alternative framework to foster an adaptive work culture to meet the challenging external environmental demands I covered in Part I. It’s a significant departure from the all too familiar formal, bureaucratic, functional structure most organizations continue to grapple with. It’s also significantly different from the matrix model, with its inherent challenges with accountability and responsibility. These two models—both function?centric—are ill-equipped to promote the kind of agile performance businesses need for adaptive advantage.
Several other non-functional models have been advanced, including the product model. But as I said at the outset of this chapter, the struggle stems largely from our functional mindset rather than the structures themselves. This functional thinking stems from the long-standing indoctrination of work segmentation and specialization. We find it hard to let go of the performance management practice of functional-based work after 100 years of habit. The ideas of segmentation, specialization, and accountability all originated from the scientific approach to management. The customer-centric model is yet another opportunity to put a dint in this thinking and hopefully stimulate new ways of thinking and working in response to a VUCA marketplace.
In the next chapter, I confront the management myth that a happy employee is a productive employee.
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