Imagine you were to awaken one morning suffering from a strange disorder: one that rendered your eyesight unreliable.
When you open your eyes, your bedroom appears roughly as it did the night before. Your bed is below the open window, and your dresser is still adjacent to the door.
However, a second look reveals that the curtains that normally hang above your windows are missing. As is the painting that normally hangs, slightly crooked, on the wall facing your bed.
What’s more, you notice some strange additions to your bedroom furnishings. A plaster bust now dominates your dresser. And an empty hat rack leans precariously against your bed head.
As you rise and navigate your way around your bedroom, you discover that your memory provides the accurate version of reality. In spite of the information tendered by your eyes, your curtains still hang above your open window, and your painting still adorns the wall adjacent to your bed. Your sense of touch confirms that there is no plaster bust on your dresser, and that the hat rack is also a mirage.
You only have to spend a day in a typical marketing or sales department to discover that this scenario is analogous to the environment in which management operates.
Various reports and performance indicators (both formal and informal) provide glimpses of reality. However, this feedback falls short of delivering the accurate and complete viewthat managers need in order to be truly effective.
When hobbled with an incomplete and unreliable view of reality, managers’ activities are, at best, inefficient and risk-adverse. At worst, managers unknowingly engage in activities that are harmful to the organisation as a whole.
Hence the need for an objective management structure!
By definition, reality must be the starting point for an objective management structure.
Without the ability to accurately perceive reality, measurement and, accordingly, management is impossible.
Of course, the concept of measurement presupposes something to measure.
This means that the ability to perceive reality is not enough. We need also to determine upon what aspect of reality we should focus.
It is perhaps self-evident that our focus must be determined by our goal. After all, a measurement out of context with a goal is just a number (data, not information)
If your goal were to drive from Sydney to Darwin, your current location, speed and direction of travel are information;
For this reason, the most critical step in designing an objective management structure is defining your goal.
I’ve had many managers assure me that this is also self-evident:
Marketing managers tell me that it’s their goal to generate sales opportunities.
Sales managers advise me that their goal is to generate sales.
In each instance, managers forget that the processes they manage are part of a larger system. As a result, they fail to recognise that their goal must be subordinated to the goal of the system.
One system, one goal!
For simplicity, let’s define a system as a set of interdependent processes.
A fine example of a system — one with which we’re all familiar — is an internal combustion engine
As you no doubt know from your experience with this particular system, the goal of the internal combustion engine is to generate torque (rotational force).
As depicted above, this system consists of four processes:
1. INTAKE (a mixture of fuel and air is drawn into the cylinder).
2. COMPRESSION (this mixture is compressed by the rising piston).
3. COMBUSTION (the fuel/air mix is ignited by the sparkplug).
4. EXHAUST (the resulting exhaust gasses are expelled from the cylinder).
Now, consider this question for me:
If you were the sparkplug in this system, what would be your goal?
1. Would it simply be to generate sparks (as many as possible)?
2. Or would it be to generate (a set quota of, say) 10 sparks a second?
Of course, neither answer is correct.
Your goal could only be expressed in terms that recognise the relationship between your activities and the goal of the system.
Accordingly, your goal would be something like the following:
To produce a spark at the top of each compression stroke.*
* Technically, the sparkplug produces a spark fractionally before the top of the compression stroke.
If your goal must be subordinated to the goal of the system, it’s essential for us to identify your organisation’
Why does this organisation exist?
Whenever I ask this question of a seminar audience, I get a range of answers:
Some managers claim that their organisations exist to manufacture widgets.
Others explain that their organisational goal is produce happy customers.
Others try and cover all bases with statements that reference the organisation¡¯
In each instance, managers are confusing the goal of their organisations with necessary conditions.
The goal of any commercial organisation is, by definition, to make money.* Necessary conditions are the conditions that must be present to enable this goal to be achieved.
* Goldratt (whose work has had a significant impact on the thinking behind this article) explains that the goal of a business is to make money, now and in the future. I would argue (as, in fact, does he) that the latter part of this statement is redundant (we’re all accustomed to recognising the value of future revenues). To learn more of Goldratt’s work, begin by reading The Goal.
While the idea that the goal of a commercial organisation is to make money may initially cause managers some discomfort (believe me, it does), it also provides the clarity we need to start to piece together our objective management structure.
Unravelling organisational complexity
As our internal combustion example illustrated, all goals at a process level must reflect the contribution that the process makes to the goal of the system as a whole.
Unfortunately, organisations tend not to be as simple as our little engine.
In fact, one of the greatest challenges faced by managers is the requirement to understand the interaction between multiple organisational processes.
As has been explained in recent editions of AdVerb, this challenge has been greatly simplified by Goldratt’s Theory of Constraints (TOC).
More to come next time......