Hack:
Value beats formality

By Erwin Pfuhler - Transformation Wizard at Erwin Pfuhler Consulting Innovation & Organization

July 29, 2014 at 9:28pm

Evaluations

costs

Moonshots

Take the work out of work

Enable communities of passion

Develop holistic performance measures

Summary

Processes, procedures and comportments have to proof their value to the business.
Formality may have its benefits, but they have to be made explicit and the value has to be bullet proof. The costs of formality like decreased agility, flexibility, poor customer service, hidden costs etc have to be brought on the table.

Problem

Today’s organizations are dominated by bureaucracy. This results in a myriad of procedures, detailed descriptions and prescriptions how tasks have to be accomplished and the need for approval-or-denial-robots, called managers. Requests meander slowly through an organization where agility and ad-hoc decisions are needed. Motivation suffers where passion, dedication and engagement could be. Value is something abstract, far away from the daily experiences of the employees.

No one is able to explain the practical impact of the building blocks of formality. No one is able to tell the real benefit and the associated cost of these rules, procedures and many processes.

It has to be that dead simple that even your grandma understands why this or that is done one way or the other.

In organizations based on formality, accountability is a scarce resource. A good example is the use of emails. Putting a bunch of people on cc means „you have been informed now, in case you do not react it means that I am right or at least not guilty, when something goes wrong“. People who get hundreds of emails of that kind every day, can hardly catch up with their core tasks, performing their jobs.

BUT: Fierce competition from start-ups, new market participants and novel solutions from other industries raise the bar for companies and and their ability to create value.

The need for a shift of perspective from formality to value arises. Every task performed has to demonstrate its value for the organization.

Solution

In General:

You may start evaluating what is already in place and this way you will end up in am endless loop. Therefore start from scratch, on the greenfield and compose the organization from a customers perspective. For every bureaucratic element there has to be a rationale, a cost-benefit-analysis. Maybe a spreadsheet or a simple database might do it. It is important that the values for the variables will be updated automatically. This ensures that as circumstances change, the cost-benefit-analysis of each procedure will reflect it. A dynamic perspective will provide a picture where things improve and where the get worse.

Visualize processes and costs

It is easy to streamline processes, when everything is in front of you and open to see. Just look at the shop floor of a plant and you will easily detect, where not only material, but where time is wasted, when people keep on waiting for the next part to work on it, or when excessive rework is necessary and so on. In the office this is not visible at first glance. Therefore you need not only to map the ideal workflow, but add the actual time spending. Maybe you would use swim lanes to show the time on the x-axis and the tasks on the y-axis.

Each task performed will be associated with the related costs and an explanation, why it has to be done. Finding the rationale for it should create a broader perspective. Together with the costs in front of one it helps to rethink the way of work is done.

Example: Fighting the Email Mania

In every organization costs are related to the usage of scarce resources. Time is one of the rarest resources. Everyone has only 24 hours per day. You can only increase the available time in an organization by hiring new people or by abandoning irrelevant tasks. The later has to be the first step. The cost center approach is a practical one, as long as you take all of the associated costs into account. Emailing and the waste of time is none of it. There are up to now only discussions and the zero email day at Intel.

Thanks to IT, it is pretty easy to count emails sent and to allocate the associated costs to individuals and to departments and projects. Assume every person and organizational entity gets an individual budget for basic email communication. What goes beyond will be real costs, which have to be refunded. This way people will get educated to focus their email communication on what really matters. It will also help them to focus their own time spending. Those who write unnecessary emails not only waste others time, but also their own.

The One-Pager

One page is king. On screen or in print, put your report, your message always on one page or less. Force yourself to make it easily understandable. Can you explain it to your mother, your father or someone from the street, who is not in your industry in a nutshell? Yes? Then go for it! Your communication has to be bullet proof.

Exit Strategy
No process is for ever. Define the conditions and circumstances for the process to stay in place. As soon as they vanish, the process will have to be deleted as well. This will make it transparent for everyone, whose job will no longer exist then or will change. This can help to avoid unnecessary discussions.

Practical Impact

Simply put together: The bottom line will improve dramatically!

Direct financial impact
Why will this happen? Basically everyone get rid of the daily clutter of task, which do not contribute to a positive outcome.

Challenges

In General
At first glance, people might consider this as another burden for them. This will be true for the beginning, but it should soon turn out that the benefits overweight.

The Organization and its Habits
Habits create their own zone of comfort. As long their is no struggle for surviving no one will hardly feel urged to chage the status quo. People have grown up in their system. What from an outside position looks strange and weired, looks for those dealing with the proocedures daily as withput alternative. Some of them make their living by being part of unproductive processes.

Status
Status is always a major inhibitor of change. Those who have to give their consent or dissent, fear for their position, when people get empowered.

First Steps

Two points to start with are possible:
a) Each element of formality has to be evaluated. Where is the benefit? Does it lower costs, does it increase speed? Does it increase quality or any other metric and if yes to which degree?
b) Start from scratch. What is a minimum set of formality the enterprise needs at least.
Then we have to look at the alternatives any less rigid procedure or rule or process should be preferred. These alternatives can be variations of the existing formality, but with more flexibility and agility.

Credits

I should like to thank my friend Andreas Humeny and Chris Grams for reviewing my hack and providing valuable input.

You need to register in order to submit a comment.