Organization over structure

In the first part of that book, I have tried to introduce the meaning of agile. What everyone calls agile is a manner for an enterprise to be more responsive to any events, positives or negatives, that occurs in an interconnected world.

The concept of Complexity or more specifically Complex Adaptive Systems have also been explained in the Cynefin part.

My thesis is that Agile is a system allowing an agile or responsive behaviour driven by self-organised people in a safe-to-fail container.

Agile is a “methodology”, a scaffolding that makes dysfunctions highly visible, and it’s up to its stakeholders to find their way in a resilient manner.

Today, enterprise lifecycles are getting shorter. The consequence is that leaders have to re-think their business model for more responsiveness. Actual models are assuming that your competition is close to them. This model is no longer valid due to globalisation. Even if you start a project on Grand´Ma´s kitchen desk, your competitors are maybe sitting thousands of kilometres away from you.

Is globalisation the problem? No, it is the reality, and you have to handle it.

It is now the last time to shift from the old 19th Century Mindset to 21st century’s. A single person cannot gather old the necessary knowledge, and people are assets, not commodities.

I assume that all the mindset, behaviours and the knowledge share through a diversity of cultures and frameworks like provided by the Agile Movement can lead to the next generation of an organisation like a living entity.

When reviewed my notes taken with my customers, some pain points are recurring. These are:

• A lack of reactivity to change
• A low level of engagement at work
• Management work wasted by more bureaucracy than productivity
• A lack of accountability at every level
• A lack of transparency
• Decisions are taken of non-tested guesses
• More reactive work than pro-active work
• Image and branding are more important than the fulfilment of talents
• Enterprises are more in a short term surviving mode than a flourishing living mode.

In its “State of Global Workplace”, Gallup tries to measure employees engagement in businesses at a worldwide scale. In the 2018 Study, the American company explained that 30% of people are engaged at work. Indeed, they didn’t measure all the companies in the world. Indeed, we can challenge the methodology but, even if that information is average accurate, what happens with the 70% rest? Who cares about them?

These data sound not very promising. When you dive deeper into it, you discover that 30% is a maximum measured. Countries like German are at 14%, France at 6%. It sounds terrible, right. When you compare the data from 2017 with those of 2018, the USA is stable at 30%, Denmark, who was the best in Western Europe, lost a place and France lost 2%.

Now, without challenging the row data, I will look at the trend. The level of engagement at work doesn’t grow, and it is sliding down.

I’ve been questioning all the new methodologies, concepts and even Agile about what is happening? Are we doing marketing, or do we avoid to address the problem?

Here you have AO, which stands for agile Organization.

To understand what I want to write about, we must be able to identify what is Structure and what is an organization.

The Structure, as explained in the First Part, is the organizational matrix for which you are working. If you want to make a career, the enterprise system is built so that you have to invest your energy in Structure.

On the other hand, the Organization is like an “ecosystem” where you create either knowledge or business value for the wealth of the enterprise.

The Structure is organized in a traditional pyramidal manner. The Organization usually appears more organic or unstructured.

What is a system?

We call a system when more than one person is interacting with counterparts on a shared purpose. By definition, an enterprise might be a system, a Department, a Business Line, a Program, a Project, a team are systems part of multiple other systems.

A single person is not a system; it is an individual.

Fifteen years ago, when I was involved in Lean Management, to understand how a company is running, I meet the housekeeper and the cleaning man. And I asked them what the company is doing? If they didn’t know it, I considered it as a leadership issue.

That approach might sound rude but in the Lean system thinking the way you go to the Gemba (shopfloor) and you look about the alignment of purpose. That approach is called “Hoshin Kanri”.

When you practise such an analyse, you go against the value flow to identify the variations.

That approach gives you often an entirely accurate picture of the Structure and how the enterprise is managed.

Today, I ask the same question to the workers of the third parties.

The collected information highlights the level of transparency. It magnifies the corporate routine and how the communication flows within the enterprise. A perfect example is what happens in Germany. When you are a service provider like I do, you are not allowed to sit with the internals. You don’t have access to the same pieces of information, and you are at the service of the enterprise. That means that you are a workforce and not allowed to give your opinion if you are not asked.

Indeed, this is a stereotype, and some German enterprise is more pragmatic than that. But, there is law supporting such behaviour “ Scheinselbständigkeit “ or hidden employment law.

Ecosystem or Complex Adaptive System

A system consists of boundaries also known as “the Organisation”. The Organisation is a place of multiple belongings where its agents interact in a non-linear relationship to deliver safe-to-fail experiments.

The system itself is a safe-to-fail container. The outcome of these experiments fosters innovation and solution-focused behaviour.

The actions within the system are autonomous or self- managed in that container. The container evolves according to the outcomes of those experiments.

Systems are complex because they are mainly connected. They are adaptive because they change according to what’s happening in the order. The agents (people, ideas, etc.) can co-evolve from the dynamic from that system.

They are very sensitive to small changes. In that system, you develop in an adductive manner to create moments of exaptation (solution-focused, emerging innovation).

Organisation system contains multiple subsystems

• Each subsystem is independent within the constraints of the primary system (organisation).
• The central system is in charge of the organisation purpose or true north.
• Each subsystem has its own goal to transform this true north.
• The organisation is responsible for creating coherence by ensuring the alignment of operational deployment.

What is structure then?

“Structure” brings a safe zone to create value for a customer. It is the first line of defence of the operations.

In traditional enterprises, Structure and Organizations are separated.

The structure is using a communication waterfall and Organization is interactive communication layers.

What to measure?

Prof. André Robitaille has developed a model to measure the different level of communication in an enterprise.

“The interest of a leader and your communication is to know the culture of the company. A culture that offers appropriate support to facilitate the successful outcome of decisions.

The cultural audit analyses the positioning of the organisation in terms of collaboration and formalisation. Then it studied the characteristics of that culture, namely customer focus, links with and between employees, the concept of performance, perceived cost management, collaborative innovation, the identification with the company and the nature of communication.

It allows the communicator to approach reality and, depending on the will of the leader, to build a useful and efficient communication, to choose the best means to sustain life and the evolution of the company.” — A. Robitaille

Robitaille´s communication matrix

1. Transversality: “we win together”, empathy, co-production, “we”, consensus. Information is accessible by all, shared vision, a deep sense of belonging, a cult of transparency, the data is first shared internally than externally.
2. Cooperation: partnership, alliance, sympathy, “we and you”, “win/win”. The information is filtered, partial micro vision, low sense of belonging, a cult of mastery, the data is equally internally or externally shared.
3. Consulting: individualism, competition, self-centredness, “I”, arbitration, “winner, loser”. The information is retained; it is power, no vision, no sense of belonging, a cult of secrecy, data is first external than internal.
4. Feeling, flexibility, autonomy
5. Accountability
6. Policies, Long term, Control

From its research, Robitaille identified that:

• Specialists are in the “networking loam” with freedom and average collaboration level
• Organic or Natural is in “community loam” with excellent collaboration and high formalisation. “Collective complete projects” are in “Community”.
• “Partitioning” is having discussions on details but not in the details. The system behaviour is “complicated” and not engaging: no commitment.
• “Projects” are using excellent communication and an average level of formalism.
• In “Centralism”, the projects are determined top-down by management.
• Product-oriented companies are in “Community”, “Regulatory”, “Centralism”, “Partitioning” and “Individualism”.
• Market-oriented companies are in “Club”, “Management” and “Centralism”.
• Agile organisation are mostly in “Club”, “Project” and “Community”.

Using the Robitaille model to define the difference between “Structure” and “Organization”, we can understand how both systems are behaving:

• Organization is mostly in the “high collaboration” part like “Club”, “Project” and “Community”.
• Structure is behaving like “Networking”, “Management”, “Regulatory”, “Individualism”, “Partitioning” and “Centralism”.

How much “Structure” is enough “Structure”?

The purpose of “Structure” is different than for “Organization”. “Structure” is feeding itself by enforcing the robustness of the enterprise. That idea was valid from an “ordered” point of view for a business model remaining the same forever.

Since the globalisation, the permanence of the business case reveals the weakness of Senior Management. Some examples are well known as Nokia, Blackberry others more hidden:

• The creation of Accenture after the disastrous collapse of Arthur Anderson after the Enron Scandal.
• Microsoft and SAP are projects refused by IBM
• And some other examples related in the “Black Swan” chapter in Part I.

Responsiveness is what enterprises are looking for in a highly connected world. Business models are challenging all the beliefs, and companies like BMW and Daimler have new competitors from entirely different backgrounds. Google and Uber are the most known. These companies are not building cars, but they are changing the customer experience.

What to do?

I like to use circles. Circles to visualize were the core structure is and at what level is “Organization”.

Here some old example coming from a Bank

Each circle represents a structural layer. In that example, that company has three layers. In reality, that layer is the back office because there are no operations visible. That bank had split its structure into three parts too: Back Office, Middle Office and Front Office. Back and Middle are both management entities that produce compliance and no value.

In a bottom-up manner, from a Front Office perspective, the structural “onion” is moving from a control-oriented behaviour to a protection oriented expression. That means, “Team” is entirely in “Organization”, and Middle Office has been improved on the first and second line of defence. Please note that “SAP”, “Autocad” and “,Net” is not related to companies but a domain of expertise.

These models have been used by McKinsey in the 90s in Lean Management.

First switch is to change from control to protection.

While using the Circle model, we can understand where the customer and the bottlenecks are.

For example, the customer is in the first line when contracting the company or is in the second line for an internal customer.

When starting a customer-centric development, the customer is moving from the first or second line to the core (Team). If the customer stays in both first and second levels, you create a bottleneck to the Team, creating the value. The information provided will corrupt through beliefs and interpretation against full transparency.

On the other hand, if the company is still in the old model “framework precedes data”, then the framework is cascading down. The purpose of the line of defence is to control the lower level. In that organisational aspect, each layer tries to justify its existence by clustering the activities so that “Team” doesn’t exist. “Team” becomes a virtual ensemble of disconnected individuals with the purpose to serve the level above. That model was great to ensure robustness, which is toxic in 21-st century work.

Turn the ship around

The change comes from assigning new purpose for each level from control to support.

Customer-centricity means that the customer is part of the “team” system. Then value creation flow is the most performing. This model is the core of Lean Management. It has been applied all around the world for more than thirty years.

With that figure, you understand the different system’s layers active in your enterprise.

• The first line of defence is the corporate structure is the first layer of protection from external threats. It is the minimal level of structure required to bind people together to share a common purpose: the “wisdom” of the enterprise.
• The second line of defence are the specialities supporting the operations to ensure the continuity of the whole business. These specialities are legal, HR, risk management, administration, etc….
• The third line of defence is about operations. It is all you need to create the value for the customer and the income of the whole enterprise.

Second Switch: remove one bottle neck

Once the enterprise has digested the first switch, and all

Once the enterprise has digested the first switch, and all the people in the systems are feeling comfortable, then it is time to remove to other layers. The second and third layers are absorbed by “Team”. It is possible when you are looking at the nature of available work in each system.

Genuinely, you find three nature of work in an enterprise:

• Projects. They are independent initiatives having a single team during a delimited time to deliver a product, a service or something else like a yearly report. Some projects are just for ignition, and they are called “swarms”. Projects always have a team. If one person is working alone on a project. It is not a project. It is a task.
• Programs. Once a project has delivered its value, and the enterprise decides to improved the results through new versions or evolutions, it is called a program. A program is a collection of projects and support activities to support the delivery of more great solutions for a larger timescale. An example is the development of a car. Let’s take the Volkswagen Golf. We are in 2019 at the seventh version of the Golf. It means that the core program is called Golf. The program has at least seven sub-programs assuring the support and the supply of spare parts for version one to seven, another program preparing the next evolution version eight. Each sub-program also has several program layers for e-Golf, GTi, etc.. and Golf 3 Doors, 5 Doors, Convertible, Station Wagon, SUV, etc….When in agile software development engineers are saying that the code is never complete, it is addressing Programs.
• Transactions. These are all activities that don’t deliver value, which are neither projects nor programs. Admin work is a typical transaction. Actually, with the low cost of technology, transactions can mostly be automatised like in an ERP system. For agile practitioners, transactions are known as “impediments”. How to manage transactions will be addressed later in that document.

Originally published at https://myao.blog on September 3, 2019.