Thursday, July 3, 2008

Analogy #191: Plugging Along

Ever since Mary had children, she has been excited about setting up the Christmas tree—especially seeing the glow of all the colorful lights on the tree. Well, Christmas time was here again, so Mary eagerly set up the tree.

After setting up the string of lights on the tree, she tried as hard as she could to get the lights to go on. Unfortunately, nothing happened. Mary thought that perhaps the bulbs needed to be rearranged, so she moved all the bulbs around on the string of lights. Still, there was no light.

Then she thought that perhaps she needed to replace the old bulbs with new bulbs. Mary tried that and still got no light. Mary was starting to get desperate. She thought about how she had placed the string of lights counterclockwise around the tree. Maybe, thought Mary, if she put the string of lights on the tree clockwise they would work. So Mary restrung the lights in the other direction, but still the lights did not go on.

Finally, Mary’s little son Bobby came by. Bobby watched his mother struggle trying to get the Christmas tree lights to go on. Finally, Bobby said to his mother, “Mom, why don’t you try plugging the lights into the wall?”

Mary is not the only one who sometimes has trouble getting things to work properly. Businesses deal with poor performance issues all the time.

Mary’s responded to a lack of performance in her Christmas lights by trying reorganization. First, she reorganized the location of the bulbs. Then she tried an organization of new bulbs. Finally, she reorganized how the string of lights laid on the tree.

When businesses get into trouble, they often first try a little reorganization as well. Think of those Christmas bulbs as being like people. We can reorganize by shifting people around in the organization or in bringing new people into the organization. And changing the way the string of lights is put on the tree is like redrawing the lines on an organization chart—same bulbs, just shifting their orientation towards each other.

Mary’s problem was that without the power of electricity, it was irrelevant how she organized her bulbs. They were not going to light up until she plugged them into the wall socket.

The same is true in business. Unless there is power flowing through the organization, it is powerless to function properly—regardless of the way it is organized.

The principle here is about understanding how plugs and switches impact organizational effectiveness. Often times, a little work on fixing the plugs and switches will create far greater productivity gains (faster and more economically) than work on totally reorganizing the business.

Switches turn power on and off. In the business world, many people can have the ability to give or take away permission to get something done. These are the people or processes which can give the “okay” or can veto the action. The “okay” turns the switch on and the veto turns the switch off.

Plugs are what connect us to the source of power. In today’s environment, one of the great sources of power is knowledge. The more connected you are to the knowledge, the more powerful you can be. Taking away access to that knowledge is like unplugging the string of lights. The illumination disappears.

Three consultants at Booz & Company (Gary Neilson, Karla Martin, and Elizabeth Powers) have an article in the June 2008 edition of the Harvard Business Review. The title of the article is “The Secrets to Successful Strategy Execution.”

In this article, the authors talk about their research into the effectiveness of organizations at implementing their strategies. After studying over 1,000 organizations, they found that about 60% have trouble translating important strategic decisions into action. In my terminology, although everyone had the beautiful string of lights, only 40% were able to get them to light up.

The Booz & Company consultants looked at four factors which might cause the lack of action:

1) Access to information (in my words “are you plugged in?”)
2) Decision Rights (in my words “who controls the switch?”)
3) Motivators (in my words “desire to see the lights go on”)
4) Structure (in my words “how the bulbs and string are arranged on the tree”)

What the authors discovered was that getting the plugs and switches right (information and decision rights) was twice as important as getting the motivation and structure right.

The authors concluded that rather than rushing to reorganize, businesses should first spend time fixing decision rights and access to information. In my terminology, first make sure you have not done anything to cut off access to power. Then you can play with improving the beauty of how the lights look on the tree. Without the power, the structure is irrelevant.

The article provides 17 traits that characterize organizations which are effective at translating strategy into action. All of the most powerful traits revolve around plugs and switches.

#1) Everyone has a good idea of the decisions and actions for which he or she is responsible. (In my words, everyone knows where the switches are and who is in charge of each switch. In addition, each person with a switch knows what they are supposed to do with it).

You can’t be effective at “doing” if people don’t know what to do. And even then, you cannot do it if organizational power is not flowing in that direction. And unless someone is specifically held responsible for monitoring that flow, it can be subverted. All of the “okays” (switch is “on”) need to aligned with the strategy and all of the vetos (switch is “off”) need to prevent hindrances to the strategy.

This means that you can’t have a bunch of half-informed people clamoring to get their hands on the switch. They’ll be turning the power on and off in all sorts of directions. At best, you will get a little flicker of light. At worst, you’ll blow out a circuit. It helps if the keeper of the switch is close to the action and can see the lights, rather than isolated at headquarters.

#2) Important information about the competitive environment gets to headquarters quickly. (In my words, keep the headquarters plugged into what is going on in the field.)

You cannot make good decisions based on outdated or inaccurate information. Decision makers need to be plugged into the current reality of the situation in the field.

#3) Once made, decisions are rarely second-guessed. (In my words, once a switch is turned on or off, it is left alone in that position)

Inability to delegate can cripple action, since it creates a huge bottleneck at the top. Push those switchboxes down into the organization, tell the switch-holder what his or her responsibility is, and then trust them to handle the switch properly. Don’t keep second-guessing them.

#4) Information flows freely across organizational boundaries. (In my words, keep everyone plugged into the same circuitry.)

Most every successful action these days requires interdisciplinary cooperation between multiple functions. You cannot do it alone. Put egos aside and work together. Share your power and knowledge. If you put more than one string of lights on your tree, they only work if they are all plugged into each other on the same circuit.

#5) Field and line employees usually have the information they need to understand the bottom-line impact of their day-to-day choices. #6) Line managers have access to the metrics they need to measure the key drivers of their business. (In my words, they keepers of the switches know how their choices impact the big picture).

The field operators need to be plugged into the rest of the organization, so that they can receive the proper information feedback. Ignorance rarely creates great decisions. Wrong behavior won’t change if you did not know it was wrong.

One of the biggest contributing factors to the housing credit melt-down was that the ones approving the credit were disconnected from the big-picture risks they were creating. By disconnecting the sales making from the risk-taking, a mountain of bad risk was created.

When results are disappointing, rather than rushing in to reorganize everything, focus on your switches and plugs. Make sure the switches are pushed down into the organization, given to knowledgeable people who are empowered to make the decisions. In addition, make sure everyone is plugged into the information grid, so everyone is both informed before making decisions as well as can see the impact of their decisions.

Back in the early days of PCs, before they had much memory, you had to save everything externally on huge floppy disks. One day back then, I had worked long and hard on a project and started to save it onto the floppy disk. While saving, a colleague tripped over the electrical cord to my PC and yanked it out of the plug. The computer stopped, and all of my work was destroyed. Don’t destroy all of your strategic work by getting it unplugged from the organization.

No comments:

Post a Comment