The following is an excerpt of an article I wrote, titled “Leadership Observations of a Management Consultant.” I will be releasing more excerpts over time.
The Relationship Between Organization and Process
“Organizations describe how work gets managed, not how work gets performed.”
One of the greatest traps that leaders consistently fall into is the belief that organizational structures and processes are the same thing. They are not! However, each can influence the other.
A process defines the work that an organization performs. An organization determines how effectively the people are deployed and supported to get the work done. The process, then, defines the context in which an organization’s activities exist. Typically, an organization is just one of the components of a process that transcends multiple organizations.
As an example, think about a company that produces cellular telephones. The functional departments involved might include:
- Product Development, which is responsible for defining and assembling the new telephones.
- Sales and Marketing, which is responsible for generating interest in the new products, as well as providing input to Product Development as to what features the consumers want.
- Finance, which is responsible for pricing the new cell phones to be competitive and to be profitable.
- Distribution, which is responsible for getting the new cell phones to the consumer as quickly and as accurately as possible.
In this example, the functional departments have their own leadership structures, roles and responsibilities, and activities that they perform. However, the primary process of the company, which starts with the idea for a new product and ends when that product is released to the consumers, crosses all organizational boundaries. None of the functional leaders has responsibility for the entire end-to-end process, but all must contribute something to the overall success of the process execution.
In this example, the functional departments are responsible for performing activities that are part of a much larger process. For the leaders of these functional departments to be successful, they not only need to be able to lead their staff as they perform these activities, but they must also understand how the activities performed by their staff fit into the larger picture.
Reorganize vs. Reengineer
When you think about change within an organization, what is the most common kind of change? Reorganizations. Why? Because leaders today still do not realize that changing the structure of an organization rarely makes any improvements to the performance of the organization.
Consider the example of the company that produces cell phones. There are a number of functional organizations that are involved in the Product Release process. There are a number of steps that must be performed by the different organizations in a particular sequence to release a new product. If the Senior Leader decides to combine the Product and Distribution organizations together to gain operational efficiencies, what is the net effect? Will the required steps of the process change or will the sequence of these steps change? No. Will the individuals who perform these steps change? Possibly, but doubtful. What, then, will change? The way the individuals performing the process are supported may change, the leadership structure will change, but little else will change.
So why think that changing the organizational structure will add anything in the way of operational efficiency? Because leaders are not trained to recognize that efficiency and effectiveness are process issues, rather than organizational issues.
To bring about a change in operational efficiency or effectiveness, the process must be changed, the people performing the process realigned and retrained to perform the new process, and then a new organizational structure must be put around the new process to enable, enforce, and support those performing the new process. Changing the organizational structure should be a derivative of a process change or reengineering effort, not a driver of a process change.
Organizations describe how people are managed, but processes describe how work gets done. Simply changing an organizational structure injects confusion and disruption, rather than efficiency and effectiveness, into an organization as relationships are severed and must be realigned. In the short term, reorganizations by themselves negatively impact an organization as the staff works through the transition period. Long term, though, reorganizations by themselves provide little real value and rarely help achieve any of the goals that impelled the change in the first place.
Leadership must evolve its thinking to focus on the needs of the process, building organizational structures that support how work actually gets done.
Organization Centric vs. Process Centric Organizations
There have been a number of books written about the best organizational structure for an organization. These include the pyramid, inverse pyramid, pizza, matrix, and others. A number of experiments have been inflicted on unsuspecting workers as consultants, leadership gurus, and organizational psychologists attempt to find the panacea of all organizational structures.
The truth is: there is no one organizational structure that works in all situations.
The traditional organizational structure, which is a military-based command and control structure, was developed during the industrial revolution as a way to group similar functions together and create a more efficient distribution of labor. This structure allowed for the development of deep functional competence and excellence within each functional area, but placed the burden of integrating these functions on the senior leadership ranks. As a result, individual workers became experts in their specific tasks, but often had no idea how their tasks interrelated with anyone else’s tasks. Work appeared in the “inbox,” was processed, and disappeared in the “outbox” with little or no understanding of how the work got there or where it went next.
To combat this phenomenon, companies began implementing cross-functional organizational structures. They would take individuals from each of the functional areas involved in executing a unit of work, and place them all in the same organization, calling them a “team.” While this approach did help the individuals in these cross-functional teams to understand how their activities interrelated with everyone else’s tasks, the levels of functional competence and excellence each individual had began to decline because they were separated from the others who performed their same functions and provided expertise and support.
In recent years, a new concept, called Business Process Management, has been gaining wide acceptance. One of the key concepts of Business Process Management (BPM) is that organizational structures are of secondary importance to how an organization’s business processes are managed.
In the example of the company that makes cell phones, there should be a role identified called the Process Owner. The Process Owner is responsible for managing the flow of work as it moves through each of the functional organizations to ensure that all pieces are working together to meet the needs of the customers.
When the Process Owner role is present, what then is the role of the functional managers?
As the term implies, functional managers are responsible for ensuring the competency and the availability of functional resources to perform the tasks required for the process to execute successfully. They are administrative managers who support their resources, enable them to perform their duties by ensuring they have the tools and training required to be successful, and manage the performance of their resources by enforcing the business rules of the process activities they perform.
The Process Owner and the functional managers must work together for both to be successful. The Process Owner must keep the functional managers informed about how each function fits into the overall process and about any changes to the workflow or business rules that govern each function. The functional managers must ensure that there are sufficient and competent resources available to perform the process activities based on the Process Owner’s requirements.
The BPM approach ensures that both the process and the functional resources are being effectively managed. This approach provides the context in which to manage the staff of the organization to increase and focus functional competence and excellence. It contains the best elements of traditional organization structures and cross-functional organization structures, without confusing the role of the process with the role of the organizational structure.
Effective leaders are those who truly understand the relationship between process and organization and can balance the needs of both for the benefit of their customers.