Simplify Your Hierarchy For Speed and Reliability

Let’s make a radical statement about success and organizations: all that matters for the success of an organization and those who work within it is speed and reliability.

Think about that for a second. How many organizations can actually say that they are designed for this? Isn’t it true that layers of bureaucracy and the walls of silos create the opposite? And yet so many organizations today are bogged down in the delays and mediocrity that comes with the divisions of ‘functions’ and vertical chains of command and control. It’s like trying to drive a car with square wheels instead of a Ferrari (we’re in Italy right now for projects so we have to mention some top Italian technology).

What kind of structure can we build for speed and reliability?

So how can we design an organization to behave more like a Ferrari? How do we build speed and reliability in an organization?

When we understand organizations as a whole system and not just a collection of parts, then we realize that we must:

1. understand the system we are operating and its intrinsic variation;

2. provide a synchronization and protection mechanism that enables us to manage it effectively.

How can we manage variation? Through Statistical Process Control. This helps us achieve statistical predictability in our processes, the bedrock of Quality.  Then we need to synchronize those processes and protect them from disruption. This can be done most effectively by identifying the constraint of the system, i.e. the element in the system that determines the pace at which the system generates units of the goal. A constraint may sound like something negative. In reality, it’s a leverage point.

This was fundamental insight that came fro Dr. Eli Goldratt. He understood that we can manage a system by focusing on the constraint, i.e. subordinating the other processes of the system to it to ensure it works to the maximum. We protect the constraint from the impact of variation affecting the other processes by placing a buffer before it. Then we can schedule the entire system around the constraint using a very precise finite capacity based algorithm (Critical Chain).

One more time: predictability and synchronization

So, to recap, organizations, as we’ve said many times, are all about processes, so there have to be two major features:  process predictability and high synchronization of these processes. The only way to achieve this is to have an organizational structure that is built for and consistent with that very purpose. It is a structure where:

• interdependencies are clearly laid out through detailed mapping of the processes within the organization
• variation is understood and managed through relentless application of statistical methods
• a physical constraint has been identified
•  a subordination process (to the constraint) is created
• a buffer is placed in front of the constraint

The constraint dictates the performance of the entire organization, therefore a minute lost by the constraint is a minute lost by the whole system. The purpose of the buffer in front of the constraint is to absorb the cumulative variation generated by the system and to prevent this variation from generating disruption to the constraint.

An organization fit for today’s complex world

Ultimately, an organization is something that brings individuals with competencies together. By combining these competencies in a suitable manner we achieve the goal of the organization. In other words, individual efforts can lead to a global result if we can combine these efforts in an orderly way. A hierarchy should facilitate the creation of this order. So it’s not the concept of hierarchy that we challenge but the kind of subordination that a traditional hierarchy calls for. If we want organizations to work well then it’s no longer about subordinating to people “higher up”. Everyone has to subordinate to the constraint.

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About the Author

Angela Montgomery Ph.D. is Partner and Co-founder of Intelligent Management and author of the business novel+ website  The Human Constraint . This downloadable novel uses narrative to look at how the Deming approach and the Theory of Constraints can create the organization of the future, based on collaboration, network and social innovation.  She is co-author with Dr. Domenico Lepore, founder, and Dr. Giovanni Siepe of  ‘Quality, Involvement, Flow: The Systemic Organization’  from CRC Press, New York.