Thursday, March 21, 2013

Why the Ivory Tower May Have Authority but is Clueless to What's Really Going On

Even though few would dispute the value of being an engaged leader, many still do not practice what they preach. The harsh reality is great numbers of leaders continue to operate in a vacuum by sequestering themselves away in the corner office and attempting to lead from afar.  Trust me when I tell you that being out of touch is never a good position to find yourself in as the CEO. I rarely come across leaders who couldn't benefit from being more meaningfully engaged on both a broader and deeper basis, and hope that today’s post will encourage you to do just that and engage.

Patrick Lenioni's new book "The Advantage" is a supreme summary to my point.  "Lack of intelligence, domain expertise, or industry knowledge is almost never the problem I see in organizations. In twenty years of consulting to clients in virtually every industry, I have yet to meet a group of leaders who made me think, Wow, these people just don’t know enough about their business to succeed. Really. The vast majority of organizations today have more than enough intelligence, expertise, and knowledge to be successful. What they lack is organizational health.

This point is worth restating. After two decades of working with CEOs and their teams of senior executives, I've become absolutely convinced that the seminal difference between successful companies and mediocre or unsuccessful ones has little, if anything, to do with what they know or how smart they are; it has everything to do with how healthy they are". - Lencioni, Patrick M. (2012-03-14). The Advantage: Why Organizational Health Trumps Everything Else In Business . John Wiley and Sons.

There are hundreds if not thousands of management books which touch the subject and still we fail to improve.  This blog will share some of my favorite thinkers on the subject and yet so many people seem lost when trying to solve their dilemmas. We educate hundreds of thousands of professionals in MBA's, management programs and speakers and we still fail often more than we succeed.  The solution is presented by exceptionally smart people in many different ways and we still don't see the light.  I propose two main reasons for this failure in modern day knowledge transfer.
1. Management believes they know more than the knowledge worker.
2. Because of #1 there's little serious effort to foster and capture intellectual capital and create an environment of learning and sharing.

W. Edwards Deming once observed that, in most companies, a small percentage of employees are clearly superior, a small percentage are incompetent, and the majority of the remaining people will perform as well as the organizational systems and processes allow them to do so. Deming goes on to observe that one of the two primary roles of leadership, then, is to continually cultivate and improve these systems and processes to motivate and incent people to perform at their peak, thereby driving shareholder value. The phrases “if it ain’t broken, don’t fix it” and “if you keep doin’ what you’re doin’, then you’ll keep gettin’ what you’re gettin’ ” are the antithesis of Deming’s continuous improvement model. To drive this point home, some define insanity as doing the same thing over and over again and expecting it to produce different results

Most managers make decisions, solve problems, and take other action believing that they already understand the company's current reality. But they rarely take specific actions to increase their knowledge and understanding of the current reality. In addition, a common understanding of the current reality should be developed, not just an individual one. If this is done right, the rest becomes much easier.  Gemba is a concept which can often quickly address this lack of knowledge.

Gemba a Japanese term is defined as a "real place".  Think about your firm, where is the value really created?  Jim Womack in Gemba Walks states "My purpose in taking a walk is simple: to see and to understand how more value can be created with less waste. But what is the purpose of the value stream along which I’m walking? That is, just what “value” should it provide for its customer? This is a critical question for the lean thinker because diving in to “fix” a process (a value stream) so it can provide more of the wrong “value” can only be an exercise in frustration. Yet I find that many lean practitioners seem hardly aware of the issue." - Womack, James P. (2011-02-21). Gemba Walks  Lean Enterprise Institute, Inc..

Another interesting component of business today is the power which accounting has over direction.  Consider how often decisions are made based on perceived costs or ratios which have no intellectual value whatsoever.  Most management believe cost or accounting based decisions are what drives successful firms.If American business is ever to restore its lost competitive edge, companies must eschew the use of top-down accounting information to control operations. They must empower workers, and managers, to listen to and respond to the voice of the customers they serve and the voice of the processes in which they work.

It will not be enough simply to reform the management accounting information that companies now use to control operations. Restoring competitiveness will require managers altogether to stop controlling business operations with accounting information—even new activity-based varieties of cost management information. Companies first developed the habit of using accounting information to control operating processes—people’s work—only during the 1950s. Before that time, companies did not rely on their accounting systems to provide operational control information. The use of accounting information to control day-to-day operations, almost second nature to managers living today, might have seemed strange to generations of managers before the 1950s.

In Relevance Regained, Thomas Johnson perfectly states. "Companies that give empowered workers and managers ownership of information about customers and processes are not forsaking concern for profit. Far from it! They simply recognize that long-term profitability is impossible if the bottom line continues to dictate people’s actions. Personnel whose actions are driven by the bottom line can  not respond flexibly to customers. To motivate behavior that is responsive and flexible, companies require new management information and new management thinking." Johnson, H. Thomas (2008-06-18). Relevance Regained (pp. 16-17). Simon & Schuster, Inc..

If you are a leader your goal needs to be finding good ideas and fostering them.  Turf wars and silos need to be a thing of the past of you will join the ranks of many failed companies.  John Kotter in Power and Influence noted " 1. Good ideas are rarely lacking inside even poorly performing firms. As a consultant, all I needed to do was go around and interview enough people, summarize the better ideas, and voilĂ ! I would have a first-class report bursting with excellent recommendations. 2. Having a good idea is one thing, implementing it is something else again. The reason firms have excellent ideas in them, and yet still perform poorly, is that the people who have the ideas can’t get them implemented. Bureaucratic and political obstacles stifle their creativity and innovation." - Kotter, John P. (2010-09-28). Power and Influence. Simon & Schuster, Inc..

Change must occur if the traditional top down management is to be removed by bottom up knowledge sharing.  Environmental change demands organizational change. Major internal transformation rarely happens unless many people assist. Yet employees generally won’t help, or can’t help, if they feel relatively powerless. Hence the relevance of empowerment. THE RATE OF CHANGE IN THE business world is not going to slow down anytime soon. If anything, competition in most industries will probably speed up over the next few decades. Enterprises everywhere will be presented with even more terrible hazards and wonderful opportunities, driven by the globalization of the economy along with related technological and social trends. The typical twentieth-century organization has not operated well in a rapidly changing environment. Structure, systems, practices, and culture have often been more of a drag on change than a facilitator. If environmental volatility continues to increase, as most people now predict, the standard organization of the twentieth century will likely become a dinosaur.

If you haven't noticed the theme of this blog is to use some of the best practitioners in this field to show you how common the answer is out there.  To sum up this topic I close with James Womack's recommendation on how to start your change.

"What is the work of management? What value do managers actually create? My answer, informed by insights from John Shook, is that managers create value—that is, they do useful work—through four types of actions: Gaining agreement on the few important things the organization needs to do. This means focusing on how the organization can dramatically improve its ability to create more value, and the right type of value, with less time, effort, investment, errors, etc.

  • Gaining agreement is predominantly the work of senior managers, using the lean management tool of strategy deployment. (But please note that the top managers don’t decide in isolation about the few important things. Rather, they gain true agreement through catch-ball dialogue with different levels of the organization about problems and opportunities.) 
  • Deploying the few important initiatives selected by strategy deployment, solving problems as they arise, and evaluating proposals from lower levels of the organization. This is predominantly the work of middle managers, using the lean management tool of A3 analysis that puts plan-do-check-act cycles into an organizational and customer context. 
  • Stabilizing the organization. This means making every step in every process capable, available, adequate, and flexible so the value stream can flow smoothly from end to end and improvements can be sustained. This is predominantly the work of front-line managers, using the lean management tools of standardized work with standardized management and kaizen. 
  • Creating the next generation of lean managers. This is the work—perhaps the most important work—of every manager at every level, using the lean management tool of A3 analysis. New lean managers can only be created in intense dialogue between mentors and problem owners through many cycles of gemba learning.

If this is the work of management, how does my list compare with what managers actually do every day? In my experience, there is hardly any overlap. Most managers I observe spend most of their time with incidental work—box-checking, meetings that reach no actionable conclusions, report writing, personnel reviews that don’t develop personnel, etc. And in the time left over they do rework. By the latter I mean the firefighting to get things back on course as processes malfunction. Most managers seem to believe that this is their “real” work and their highest value to their organization. I see the gap between the true work of management and the things managers actually do as the muda of management, a vast reservoir of wasted effort and lost opportunities that we all need to address. Removing this muda is one of the greatest challenges facing our movement in the years immediately ahead."  Womack, James P. (2011-02-21). Gemba Walks . Lean Enterprise Institute, Inc..

Patrick Phillips

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