OAD Inc. - Organization Analysis and Design

Who Messed Up The Company?
- An Outline of Organization Development
An OAD LLC Article © 2000

Managing a business organization is good news - bad news. The good news is that often there are cushions or security – retirement and health plans, opportunity to advance if desired, recognition if desired, anonymity if desired, and plenty of people to share the blame. You can lead the crowd, be part of the crowd, or get lost in the crowd.

The bad news is the crowd – people. They’re everywhere in a larger business. As a misanthrope once said, “This would be a great job if it weren’t for the customers, and if everyone here decided to stay at home.” People create problems. Some are resistant to change while others seem to thrive in (and create) chaos. Some peoples’ definition of communication and problem-solving is, “It won’t work”. Others communicate to the point that you wish you were stone deaf. Politics, agendas, power relationships, foibles, secrets, incompetence, meetings, meetings to schedule meetings – the human condition.

When a business has enough people employed that the right hand often doesn’t seem to know what the left hand is doing, it is in the birth stages of becoming an organization. Organization – a whole made up of components working toward a common goal. Businesses become organizations because they are successful at what they do - people know what they are doing and are delivering a desired product or service at a profitable price.

However, many organizations fail not because they misread the marketplace or couldn’t develop a good product, but because they didn’t know how to plan and manage growth. It is not uncommon for an entrepreneur who started a business and made it successful only to end up destroying it. Conversely, there are people who excel at taking a ruined business and reviving it to profitability and new growth.

Business success is certainly dependent on the marketplace, capital, equipment, and technology. However, if all these variables are in place but the organization doesn’t know how to take advantage of them it will fail. Through the years organization scholars have professed various theories and treatments for developing a productive organization – matrix, ad hoc teams, hierarchical, flat, centralized, decentralized, profit centered, geographical, product line, etc., etc. All of the theories are good - some in practice, some only in theory. All are aimed at two common sense goals – awareness and responsiveness to the customer and efficient (i.e. profitable) manufacture and delivery of goods or services. The trick is to pick the right organization design to achieve these goals.

Design theorists, however, often overlooked human nature. “You can lead horse to water, but you can’t make him drink.” “Can’t make a silk purse out of a sow’s ear”. In other words you “can’t change the nature of the beast.” Below I will illustrate the most common stages of organizational growth and describe, in OAD terminology, the types of “beasts” commonly found – or needed – in each stage. You will recognize a paradox – the very qualities that make the organization successful at a particular point in time are the ones that later can cause its demise.

Five Stages of Organization Development

Development 1 – Startup

In the beginning there is the Startup. One or several people get together with a great idea - something that can be profitably sold. Some people start a business in the hopes of making a lot of money, but most do it because they want to work for themselves, want to build something, do something different, do something better. Their focus is entirely on making and selling a product or service.

Entrepreneurs can be divided into two categories – the Artisan and the Empire Builder. The former is usually a Lower A/Higher D personality who is skilled in a trade or craft. These individuals are interested in owning their own business, but don’t envision a dozen much less thousands of employees. The latter are interested in seeing the business grow much larger, perhaps become national or international and, above all, making a statement. This article will be describing the Empire Builder, but labeled the Entrepreneur.

Entrepreneurs are Higher A/Lower D personalities – assertive, self-confident, risk oriented, and conceptual or “big-thinking”. They think, act, and react in terms of opportunities. An obstacle is a challenge or brushed away. Detail is delegated or handled in an impromptu fashion when the need arises. Additionally, these individuals are Lower P personalities – a very strong sense of urgency, get it done now and move on quickly, handle activities simultaneously, and little patience for delay, red tape, or people who don’t move fast enough. Finally, while many entrepreneurs are introverts and technically oriented (Lower E), in the startup phase they “push their E’s” to exhibit an outgoing, persuasive, and selling communication style. Higher E’s, of course, come by this naturally. Everyone is wearing multiple hats, communication is frequent and informal, reaction times are quick.

If all goes well the company grows – more sales, more production, more service, more paper, more people. Initially the entrepreneur cannot understand why others don’t work like him (Higher A ego). Why don’t others want to work ungodly hours for the sheer thrill of it all? The knowledgeable entrepreneur recognizes that her strengths of the past are now impeding growth to the next step. The Lower P urgency and Lower D spontaneity has led to a chaotic environment. There are few systems and controls – Higher P/Higher D.

Development 2 – Systems and Structures

Procedures, policies, reporting relationships, and other mechanisms have to be brought in to make order and clarity of an environment and culture that was previously (and appropriately) based on spontaneity, individual responsiveness, and where there could be no clear-cut rules. Now there are too many people to sustain an informal culture and practices. Mentally people are bumping into each other – whose doing what, where, when? Too much is falling between the cracks.

Enter the Higher P/Higher D – patient, proced-uralized, creating systems. Detail oriented, structured, creating clarity. Ironically, at this stage of development many entrepreneurs cannot make the adjustment. They cannot live with the structure, the order, the rules. Many leave and many are asked to leave.

Everyone has a job title, job description, sales call reports, budgets, performance appraisals and all the other necessary ingredients to keep the organization focused and aware of how it is doing. Not only is this necessary to organization growth, it’s necessary to the majority of people who now work in it – customer service, administration, accounting. These are Higher P/D people staffing Higher P/D jobs. The organization becomes more efficient, but more rigid.

Customers generate more paper, internal staff generates more paper, workloads become larger. Key members find they don’t have the time to react to issues in a timely manner and feel victimized by rules and lengthy procedures. The response is to further specialize jobs to free up more time. At this juncture the organization often calls the increased delegation of tasks empowerment, but it is simply shifting Higher D tasks to more or other people. Lower D’s enthusiastically shifting work to Higher D’s, and Higher D’s compartmentalizing and sharing with more Higher D’s. Necessary and knowledgeable specialists abound – and knowledge is power.

[This crisis period is usually short-lived, but can be costly and out of reach to many organizations. Due to the nature (profit margins) of their business they may find it too costly to bring on more people or acquire needed information systems. In this situation I have often counseled a client not to grow. Either remain a niche player or sell out to a larger organization that has the pockets to take the products/services to a wider market. Another alternative is to reshape the entire marketing and distribution network]

Development 3 – Delegation of Tasks

If it can be accomplished more time is freed up for decision-makers who, ostensibly, can be more responsive to, and plan for, the existing and future markets. There becomes a more efficient and planned use of human resources. Often headquarters, regional offices, and even site locations are making policy decisions about customer needs, motivations, and desires. Meetings are formal and held perhaps twice a year. From a corporate center these executives balance the needs of the organization (they are stakeholders) with the needs of the customer and market in general. Often there are two or three layers of people between the customer and the decision-maker. Many of the Higher A’s relish their power; many of the Higher D’s garner and defend their expertise. The organization has now grown to a size that it provides security – pay, benefits, retirement. It is only human nature that many of these stakeholders keep a sharp eye out for personal and collective well-being. I am not implying that the organization is now more focused toward itself than the customer, but its size and maturity has created sub-cultures where self-preservation issues are considered.

Often by the time a problem gets to the decision-maker it has been filtered, sanitized, spun, and become abstract. Often by the time a decision has been made and re-communicated back down, it is too late. The Sales Rep, or Production Manager, or Customer Service Manager feels frustrated. He feels like the dog chasing the mechanical rabbit out in front, with the Rule Book on his heels – A/D Conflict or just keeps his head down.

Development 4 – Delegation of Authority

The organization realizes that it has to have closer communication and faster reaction times to the customers and the marketplace. The best way to do this is to give more decision-making authority down to the field level – true empowerment, or, in organization development terminology, decentralization.

This is very difficult for two reasons. First, many people find it difficult to relinquish power. Higher A’s like power and hesitate to share it. Higher D’s may be uncomfortable with the accountabilities that come with power, but can manage these accountabilities through control – relying on precedent and the rule book. Second, over time the management at the field level has increasingly been staffed by Lower A/Higher D’s – people who are comfortable and effective at implementing decisions made from above as opposed to formulating, executing, and taking responsibility for decisions that are outside of the Rule Book. In other words, the people who were the organization’s greatest strengths are now the bottlenecks. Consequently, at the higher levels there is active resistance, and at lower levels passive resistance.

A culture change of increased dialogue and collaboration (as opposed to one-way directives) is introduced. “Teambuilding” is introduced with the intent of bringing together the key players in permanent or ad hoc committees to discuss problems and opportunities. The biggest internal challenge to this process is the issue of trust – politics, hidden agendas, recriminations. Contexts for discussion have to be present. What are the short- and long-term strategies and goals? Only after these are defined can tactics be developed..

...and that’s where the crisis briefly flares. Pushing authority down results in some people seemingly chasing rainbows (Higher A’s) and others sitting tight until they have written approvals in their files (Higher P/D’s). Senior management feels like it’s herding kittens and some will use this as a rationale to go back to the more centralized, structured paradigm. Yardsticks, time frames, accountability measures, and feedback loops have to be developed. People will be able to contribute with solid ideas and be able to plan, execute, and review; then re-plan, execute, and review - or not.

Development 5 - Execution

What is now required is that the organization has to be viewed from three dimensions. In the past organization structures have been viewed only from two – height and width. Tall multi-layered organizations go through periods of “flattening” in lean times and revert in good. Large organizations have organization charts with many lateral wings to illustrate geography, divisions, product lines, etc. The wings are clipped as certain sectors of the organization become unprofitable; and become reborn in a strong economy.

There is no such thing as a “more competitive world” – business has always been competitive. Cavemen clubbed each other over women or who was going to get the last pterodactyl wing. European galleys blew each other out of the water over trade routes. Late 19th century industrialists just tried to handle competition by eliminating it with cartels and monopolies. They played rough in those days.

What is different is the pace of competition. In the past, gathering of information took weeks or months. Analysis of the information took weeks or months. Orders from the “Supreme Command” took weeks or months to get back to the field. Today written and verbal communication is instantaneous. Labor can quickly move across borders. Capital in a myriad of forms can move worldwide at the push of a button.

Afghanistan has shown that massive troop movements and stationing of support personnel aren’t necessary. Small special operation units forming strategic alliances with segments of the indigenous population were all that was required. Each unit clearly understood it goals and parameters for achieving them. Headquarters managed by exception rather than by rule, but was constantly aware of what was happening via computer/satellite hookup.

The challenge in the new marketplace is speed and quality of execution. Annual and bi-annual reviews by senior executives are no longer sufficient. They have to be back on the hill overlooking the battles rather than at a distant location waiting for a messenger on horseback. Technology allows this. Instant visual, verbal, and written information is now available. Executives don’t use this information to micromanage or lurch from one short-term decision to the next, but to assess and project the terrain of the “battlefield”, the suitability or expertise of the field managers, and have “special operations” people lined up to assist or take advantage of situations. Corporate and field management has to be smarter, faster, and more decisive than in the past - as does the support staff on whom they rely. Top management has to develop teams within teams who can assess, recommend, and, if necessary, execute quickly. If “special operations” has to assess and execute for others too often, a development or change of personnel is necessary. This applies to the top as well. Indecisive, feather- bedding, or chainsaw CEO’s should be spotted and removed.

An understanding and appreciation of different perspectives and styles has to be learned and managed. The analytical, skeptical Lower E contributions have to be combined with the Higher E extroverted, optimistic, “sellers”. The Higher A’s have to recognize, utilize, and appreciate the natural caution of the Higher D. The Lower P has to understand the necessity of Higher P systemization.

The next evolutionary crisis? Who knows. Most likely it will be teams running out of control and dictating policy, practices, and desired culture. Perhaps shades of the Startup development and crisis. As that great philosopher Rosanna Rosanna Danna once said, “It’s always something”.