This article represents the second part of a series called “Letter to a CIO”, which reports the discussions between the author of the letter, dr. Domenico Lepore Founder Intelligent Managemnt Inc. and several Chief Information Officers, with the aim of providing them with an effective methodology to address and successfully solve common problems that CIOs face in the Digital Age.
The result of this series of interviews helped dr. Domenico Lepore crystallize the scheme for his last book “Moving the Chains – an operational solution for embracing complexity in the Digital Age”
Beginning of part 3
Freedom from the Trap of Silos through a Network of Projects
Many organizations, just like your own, Bob, still have traditional hierarchies and silo their people into functions. But the complexity of today’s reality needs something different. With the exponential growth of interconnections and interdependencies, a traditional organizational design can undermine productivity and sustainable growth. So here is a summary of the organizational design I’m proposing, based on two decades of international work, specifically applied to organizations with a well-defined goal. It is a “systemic” approach. We don’t throw hierarchy out of the window. Traditional hierarchy is replaced by a different kind of hierarchy, driven by the goal of the system and governed by a new design of the organization as a “Network of Projects”.
Seeing the system
As stated before, a System is a network of interdependent people working in processes and projects all aimed at a common goal. Without a goal, there is no system, as Dr. Deming has taught us. When we introduce a systemic approach to organizations, we must derive that goal organically from the current reality and it is NOT a mission statement (don’t listen to the Pundits). We can do that very effectively by starting from the identification of the Core Conflict of the organization. This is a systemic method for analyzing an organization. This provides a kind of cognitive snapshot that depicts the situation of “blockage” the system is experiencing.
We will begin in your organization, Bob, by identifying all the Undesirable Effects that everyone inside the system experiences (as Dr. Goldratt pointed out, everyone likes to bitch and moan), and this will allow us to capture all of those various symptoms in a precisely verbalized conflict. This conflict exists because of all the unchallenged assumptions (mental models) that you and your people have about your reality.
Allowing the solution of the Network of Projects to emerge
The way out of this conflict is through the identification of a set of “injections” or solutions (statements invalidating the weakest assumptions) that solve or “evaporate” the conflict.
In the approach we have developed at Intelligent Management over the last decade, this set of “injections” becomes the core of a systemic organizational design that we call the network of projects.
We build the network starting from each ‘injection’ that invalidates the set of assumptions or limiting beliefs that currently keep your organization trapped in an unsatisfactory current reality. These injections are then split into simpler Intermediate Objectives, sequenced according to a prerequisite logic, and each Intermediate Objective is then split into simpler actions. For every simple action, we can then assign resources (actually, we assign “competencies”; a resource normally has several competencies, possibly at different level but all potentially useful in different contexts) and a timeframe in order to create a scheduled project. Each project is scheduled according to a very precise algorithm called Critical Chain. The set of projects emerging from the core conflict is the Network of Projects. Each project is monitored (and acted upon when necessary) in terms of buffer consumption and the way these projects proceed towards their goal will dictate the pace at which the organization is achieving its goal. Yes Bob, this is your job: ensuring that all the competencies you have available are used realistically (at finite capacity) and proficiently (used for what they can do in the context of a project) towards a well understood goal. Doesn’t it sound to you like a Strategy?
Variation and the network
When we looked at Leadership earlier, we mentioned “predictability of outcome”. Every organization is affected by variation in all its processes, both mechanical and human. We can monitor and manage variation inside the organization using Statistical Process Control (SPC). We identify critical points, where the impact of variation is more important (i.e. before the constraint), working to keep every process stable (in statistical control) in order to reduce variation (where and if possible).
Don’t be fooled into thinking that SPC is just a tool and a software can take care of it. Rather, it is a way of thinking, a mindset. Understanding variation is the most important part of the task, because the risk of tampering with the system is extremely high. The habit of reacting instead of thinking is very common. SPC is a sophisticated support that helps leaders and managers to understand how the system is behaving and to take the right decisions. You need to be able to base your decisions, Bob, on real knowledge of how your system is behaving and that’s what SPC provides.
Variation and intelligent emotions
Variation is not only associated to processes. An important part of the “noise” in the work environment is caused by the interactions among people. Collaboration is never straightforward. Managers have to deal with problems every day: dilemmas (personal or not), conflicts between people, conflicts with the “rules” of the organization (policies). Using the Thinking Processes from the Theory of Constraints has proved to be an effective way to overcome these problems. The ‘Conflict Cloud’ allows us to find solutions to conflicts and dilemmas in a win-win framework, abandoning, once and for all, the prevalent “zero sum” logic (I win you lose). We don’t have to stay stuck with our biases and inability to collaborate effectively. You will find that recurrent use of the Thinking Processes helps managers and co-workers develop intelligent emotions.
Coping with the change
Let me be clear with you, Bob. The transition to this new organizational model is not straightforward. It provides a shift from command and control to managing the interdependencies that characterize complexity. Changing the way people operate in the system entails a profound change in their behaviors and their habits simply because:
- The role of the “boss” is replaced by the concept of subordination to the constraint;
- The traditional “functions”, the hierarchical organization designed by “silos”, are not present;
- Project Managers play a crucial role in the correct functioning of the system, even more than managers responsible for the processes;
- The way performances of people and processes are assessed is totally overturned (no local goals);
- The very common prevalent logic “I win you lose” is no more in place;
- Variation is monitored and managed instead of the common habit of “aiming at the target, keeping the process on target”.
And so on.
People are simply brought out of their “comfort zone”. Transformation is only possible if people are willing to change. However, even if we believe, as Dr. Deming did, in continuous improvement and that people are keen to learn, investing in human resources is the right direction to take. Choosing the right people and giving them the support they need for change is the key for a successful transformation.
Thinking Processes for Change
The support you give to your people doesn’t have to be improvised. The Thinking Processes from the Theory of Constraints (TOC) first appeared in Dr. Goldratt’s novel ‘It’s Not Luck’ (1994), although a preliminary sketch of the Conflict Cloud had been published in the essay ‘What is this thing called TOC’ that Dr. Goldratt wrote in 1991. Since then, dozens of books and publications have become available, each of which claiming to provide further insight into the way the processes should be used. Oded Cohen and myself dedicated nearly 40 pages of our book ‘Deming and Goldratt: the Decalogue’ (1999) to that end.
The Thinking Processes were devised to sustain and focus the change process underpinned by a process of ongoing improvement advocated by TOC. The three phases of change are:
- What to change
- What to change to
- How to make the change happen
Each phase is supported and facilitated by a purposefully designed Thinking Process. You will discover that all together, the Thinking Processes provide a very comprehensive and powerful mechanism that can ensure effective supervision and guidance over the change process. They also represent an ideal companion to the development of a project plan.
Learning can be very destabilizing on an emotional level because it continuously pushes forward the boundary of our cognition and, with it, the gap between what we know and what we feel we can do with what we know.
In order to leverage in a positive way the tension originated by this gap, we must get a handle on our emotions, understand them and refine them; in other words, we must transform their potentially destructive power into a positive force that sustains change.
This is precisely the role of the Thinking Processes: to help us manage the blend of intellect and emotion in the change process. In this way, “change” loses the somewhat ill-defined feature of a corporate exercise and becomes that transformational effort which is at the very heart of the success of every individual and organization alike.
RECAP: Building and implementing the cycle of transformation
So to recap, Bob, our business world is changing rapidly. Complexity dominates and old solutions no longer work. Your task ahead is daunting but, as I said before, everything you need for the challenges ahead already exists.
Through our journey together, you will acquire the knowledge and skills to become a leader that contributes to the business success of your company. You will be able to shape the way your resources collaborate so that you optimize your IT organization as a whole system. In this way, you will avoid the silo-creating mistakes that inevitably lead to sub-optimization of resources and frustrate your ability to achieve the goal.
You will be learning through a “new curriculum” what it takes to manage for complexity.
You will start by learning how to see the big picture of the current reality of your organization and how to make emerge the systemic solutions to achieve your overall goal.
You will learn to see your organization for what it is – a system – and that includes your customers so you will learn how to serve them better.
You will learn how variation affects every process within your organization and how to manage and reduce that variation.
You will learn that by identifying your constraint you can radically focus and simplify your efforts.
You and your people will acquire the ability to “connect dots” you would otherwise not even see and you can achieve this through thinking, analyzing and acting systemically.
You will learn how to cultivate and reinforce intelligent emotions for continuous change and innovation by using the Thinking Processes.
You will learn to operate and synchronize your organization as a Network of Projects, using Critical Chain, a systemic and highly robust approach to Project Management.
Ultimately, you will acquire a new level of awareness; in every moment of your working and personal life, you are presented with a series of choices, dilemmas, “conflicts” if you will. As a leader, it is your responsibility to identify these choices and make the most informed decisions possible for your organization. As Dr. Deming has famously said, learning is not compulsory, but neither is survival. I hope and trust that your choice will always be not simply to survive but to thrive.
End of part 3.
Here is a series of blog posts we wrote for CIOs.
You Say you Want a Revolution: Where Digital Transformation Is Taking You
Symptoms of Silo Sickness that CIOs Must Cure
Silos vs Systems: Solving the CIO Conflict
How to Grow the Whole Organization: Processes, Projects and the CIO are Key
How CIOs Can Break Free of the Silo Prison with Systemic Management
Digitalization Needs Cooperation: Start Transforming the Enterprise for the Digital Future
Digital Transformation and Systemic Change Management
How To Overcome Resistance To Change – a Systemic Approach
Digital Means We Must All Change Our Thinking
The Leaders We Need for Flatter Organizations
Systemic Organization Management
W. Edwards Deming: ‘Out of the Crisis’; ‘The New Economics’
Eliyahu Goldratt: ‘The Goal’ and other novels, North River Press
Domenico Lepore & Oded Cohen: ‘Deming and Goldratt: The Decalogue’, North River Press
Domenico Lepore: ‘Sechel: Logic, Language and Tools To Manage Any Organization as a Network’
Angela Montgomery: ‘The Human Constraint’
Lepore, Montgomery, Siepe ‘Quality, Involvement, Flow: The Systemic Organization’ CRC Press, New York.