It happened one Friday morning in 1991, just before Christmas. My boss eyed me as I arrived at work, and called me into his office. I found myself staring at a letter outlining my “package”.
As my boss was escorting me out of the building, there was so much I wanted to tell him about what I thought was important to keep doing, and stop doing in the group I managed, but no time.
Since then, I’ve been on the other side of the desk, and much the same thing happens – management huddles behind closed doors, decides that cuts must be made, and who will get the axe.
What’s wrong with this picture? The way we’ve been accustomed to make these decisions is that the managers are the brains, and the workers are the muscle. In a knowledge economy, the workers often know more than the management about what makes the organization tick – so is there a better way?
A big part of the problem, I’m convinced, is that we “visualize” our organizations in the wrong way. We draw organization charts that have no customers, we build process charts that don’t even have people at all. This reflects the heritage of our industrial, “machine” model of organization. I’ve often thought that management fiats such as “Each department must cut 15% of its budget” are rather like losing weight by amputating equal parts of one’s legs, arms and head. At least it’s fair, right?
A statistician named George Box made the observation that “Essentially, all models are wrong, but some are useful.” The top-down, command and control visualization of organizations is no longer useful. It would be more accurate today to say that an organization is a complex network of conversations, relationships, and exchanges of value. In a business organization, the objective is to optimize the value-producing capacity of this network.
Value Network Analysis is an emerging and highly useful method for visualizing your business. A VNA can include not only your internal resources but your entire supply chain, and your relationships with customers. Sophisticated mathematical network analysis techniques underlie the model. And, at the same time, once the network is mapped, it can be intuitively obvious where there are problems – bottlenecks, role conflicts, redundant efforts – and where in the organization value is truly being created.
Conventional thinking imagines the organization as a machine. If something’s not working, we optimize the parts – identify which ones are broken and fix, eliminate, or replace them. If, on the other hand, you see your organization as a living system, the objective is to optimize the relationships among the parts. Looked at this way, there are many more choices that can be considered when an organization is forced to reduce costs.