How to Decide What to Focus on When Improving Your Operations
Picture this scenario: you are appointed to a leadership position in an existing organization. Before taking the assignment, your boss tasked you with the vague mission of "making the operation better".
As leaders, sometimes we are lucky enough to get clear directives. More often, we are expected to simply "make things better". What does it really mean to "make the operation better"? How can you as a leader succeed with such a vague assignment?
Knowing Where to Start
Now let's continue with our scenario. After beginning your new position, you notice there are aspects of the organization that are working well and some that are performing poorly.
In summary, the situation is not a disaster, but it does feel like a messy room. The room is still there, but everywhere you look there are things that need to be fixed, improved, replaced and removed. And this does not include all the human "messiness" like internal politics and blame games (after all, it is we humans that make complicated situations truly complex). And please, let's not forget the crush of day-to-day operations and customer issues continues. Unfortunately, there is no time-out so you can fix your group and "get ready" for the future. It is a messy room with no time to clean.
As Reid Hoffman once said, "An entrepreneur is someone who jumps off a cliff and builds a plane on the way down". The same is true for leaders seeking to turn around the productivity of an underperforming organization. You have to improve things as you go.
But still the question remains, as a leader determined to make a positive change in your company and in your organization, how do you know where to start?
Knowing where to focus your attention is a problem that plagues many leaders (myself included). With so many competing issues demanding your attention simultaneously, how do you know what to prioritize and what to postpone to a later time?
Today's managers are often in a race against the clock and receive extreme pressure from all sides to create positive impacts immediately. If you are unable to translate the early stage optimism a new leader enjoys during the first few months into tangible quick-wins, then your stakeholders and employees can begin to lose faith in you as a leader. Once lost, organizational momentum is hard to re-build.
There are many great books and online resources detailing good models for onboarding into a new organization. What is not well described by these programs is explaining what aspects of an organization to start focusing on first.
With so many things needing your leadership attention, where do you start?
A Model to Help You Prioritize
I am fortunate that my background has given me numerous opportunities to improve organizations, cultures and performance inside a global company. These experiences have uncovered repeating themes that, when stitched together, can provide a useful framework for leaders to start with and then adapt to their specific needs. Most importantly, the framework gives an understanding of where to focus their limited "improvement" energy and time to create the most impact.
This framework also helps to avoid one of the most common management pitfalls that energetic, ambitious leaders fall into: trying to improve everything at once. To attempt to improve everything at once realistically improves nothing at all.
“To attempt to improve everything at once realistically improves nothing at all.”
This model, called the Hierarchy of Organizational Improvements, is inspired by Maslow's hierarchy of needs, the psychological framework described by psychologist Abraham Maslow. Similar to Maslow's hierarchy of needs, which describes progressive levels of human motivation, the Hierarchy of Organizational Improvements model describes progressive levels of organizational needs. Each level builds upon the one beneath it, and ultimately culminates in an organization achieving a state of truly High Performance.
Leaders (like you and me) can use these levels to prioritize the various needs in our organizations, and to help create an action plan that will ultimately allow us to build on multiple successes to achieve our organizational goals.
Although the model itself is simple, simple does not always mean easy. Succeeding as a change maker in stressful situations is rarely easy.
Model Overview
I will describe each category of the hierarchy in more detail in future articles. For today, we will discuss the model's structure and give a helicopter overview of the individual levels.
The hierarchy is represented as a pyramid, and is organized into 6 levels and 3 groups:
6 levels divided into 3 high level groups
- Foundational
- Speed and Agility
- Sustainable Excellence
Each level is a prerequisite for the levels above it. It is possible to focus on upper level improvements, but you risk wasting your effort (like re-painting the walls of a house when it has an unstable foundation. The house may stand for a while, but eventually it will crumble and fall down).
Level 1: Control
At the very base of the pyramid is control. Despite mental images of dictatorships, "control" is not a bad thing. Without it, an organization is swimming in chaos and not fulfilling it's function.
Steps must be taken to gain control of the organization: know what the organization is doing, who is doing it, and when and where they are doing it. Without understanding this basic information, focusing on any other improvements leads to wasted effort.
Some symptoms of an organization that lacks control are:
- lack of quality output
- unpredictable output
- staff are confused about what is to be delivered, and who is delivering it
- large amounts of waste due to missing dependencies and work
- large amounts overlap caused by people duplicating efforts
- working on the wrong things due to unclear priorities and bad communication
- low motivation and employee morale
Level 2: Predictability
Predictability is second from the bottom in the hierarchy and improving it depends on having a basic amount of control within the organization. It makes no sense to focus on improving predictability if the organization continues to create new problems for itself due to lack of control.
Once control is improved, then it's appropriate to begin focusing on predictability. Being predictable is key because it allows you to create time and space to focus on your operations. In short, by delivering your output predictably, you are creating trust between you, your organization and your stakeholders.
Without delivering results when they are promised, it is very difficult to stop spending your time firefighting issues and spending large amounts of time appeasing your stakeholders about delays and their concerns.
Level 3: Efficiency
After you have created space to focus on your organization (by establishing control and achieving predictability), you are free to begin focusing on efficiency.
Different business types have different ideas of efficiency. In the most general sense, I am referring to the amount of resources it takes to output deliverable x (whatever x is for your particular industry) in a set amount of time. As a leader, you want to reduce the amount of resources it takes to generate the same amount of output in the same amount of time.
Efficiency gains you more support from your stakeholders because you are producing more (x) or you are able to use fewer resources and still generate the same amount of x, thereby increasing your profit margins.
Establishing your organization in Level 3 means you have mastered the Foundational Basics of a good operation and, if you choose, can focus on developing your group even further by moving into the Speed and Agility improvements (Levels 4 and 5).
Level 4: Shared Understanding
Level 4 moves us beyond the Foundational Basics and is the first level in the Speed & Agility group.
The most important aspect of an organization that succeeds with Shared Understanding is fantastic organization-wide communication. This communication is not only top-down and side-to-side, but happens between all levels in near real-time.
Employees in a Level 4 organization will have a good understanding of:
- the overall goals for the organization and how their work contributes to that overall mission
- What the other parts of the organization "do" (i.e. their function and how they work)
- Who the other people in the organization are
- The customers/stakeholders and their needs
- The rules and constraints the organization is operating within (and how to properly "use" them for maximum effectiveness)
Once understanding can spread throughout the entire organization quickly, then the group is ready to move onto Level 5, Decentralized Execution and Empowerment. Good information is a necessary ingredient in good decision making.
Level 5: Decentralized Execution & Empowerment
Level 5, Decentralized Execution and Empowerment builds upon the common information and understanding achieved in Level 4, Shared Understanding.
Using this common understanding of goals, processes, and dependencies, all groups within the organization are able to observe their own independent problems within the context of the greater goal. When an unexpected obstacle or opportunity appears, each group is able to quickly and autonomously make the majority of decisions. These decisions can be executed quickly because there is no external communication delay, and the sub-group does not need advice or require approval of senior leaders within the organization.
The decentralized decision making dramatically increases the execution speed of the organization. It also liberates senior leaders' focus from the day-to-day operations to more strategic objectives needed to get the organization to Level 6, High Performance.
Level 6: High Performance
Level 6, High Performance is the pinnacle of the pyramid and is the Holy Grail, or ultimate goal, of organizational maturity. In a high performance group, the organization:
- autonomously manages the day-to-day operations itself and is self-organizing (i.e. the leader of the organization's role has become unnecessary) in nearly all situations
- performs at a high level even during periods of change and high stress
- has institutionalized self-learning and continuous improvement. It is able to stay relevant in a changing world and to continuously get better, allowing it to remain a high performance organization
In short, a level 6 group masters change management and continuous learning.
When a group achieves level 6, it's time for the leader to retire and relax at the beach because there is very little for them to do. Or, more likely, it's time to move onto the next challenge within your company.
Employee Empowerment - The Tradeoff
This model of prioritizing organizational improvements works, but it is not without its tradeoffs. Depending on the level in the hierarchy, the model affects the empowerment of employees in different ways.
As you can see in the graph above, in the early Foundational stages, employee engagement is decreased as a byproduct of centralizing control and decision making into a small group of people.
As the African proverb says "If you want to go fast, go alone. If you want to go far, go together". As a leader, you need to move your organization through the foundational steps as quickly as possible. This means that every decision cannot be a group debate and vote. Democracy has its benefits, but speed of decision making is not one of them. During the early levels, do not be afraid to centralize decision making authority to a small group of trusted change makers.
As your group matures into the upper levels, decision making and direction setting becomes more decentralized and diffused throughout the organization.
From an employee perspective, the effect is that at the base levels of the pyramid, they are losing decision making power, and are gaining execution power. They spend less time fighting chaotic problems and fires that pop up and more time actually accomplishing their jobs. In my experience, the satisfaction of doing good work in a stable environment compensates for employees' negative feelings of under-empowerment.
“Satisfaction of doing good work in a stable environment compensates for employees’ negative feelings of under-empowerment.”
As the organization moves up the hierarchy, the levels of autonomy, empowerment, and decentralized authority begin to increase geometrically.
Conclusion
The statistician George Box once said, "Essentially, all models are wrong, but some are useful".
The Hierarchy of Organizational Improvements is a model and like all models it is an abstraction meant to guide you. Common sense and your own leadership experience are the most important things in a leader's toolbox, but when joining an organization that could use some improvement, use the levels to help guide your prioritization and make your's a truly High Performing organization.
Take care, and I'll talk to you next time.