THE WORLD IS COMPLEX: HOW TO DISTINGUISH COMPLEXITY FROM COMPLICATION
Design for Complexity… Design out Complication...2014/05/28 · for the knowledge age, through...
Transcript of Design for Complexity… Design out Complication...2014/05/28 · for the knowledge age, through...
© 2014 ON THE MARKwww.on-the-mark.com
Webinar
Design for Complexity…Design out Complication
28th May 2014
Welcome!
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About Niels Pflaeging
Designing for Complexity, Designing out Complication
Niels Pflaeging is co-founder and associate of the BetaCodex Network, and president of his own consulting firm based in Wiesbaden (Germany) and New York, with which he serves as a top management advisor, internationally.
Niels is one of the world´s foremost authorities on the BetaCodex (formerly: the "Beyond Budgeting model"). He has published four books and many articles on the subject, and since 2002 has travelled more than 30 countries, presenting and discussing the BetaCodex mindset, and bringing it to life through advisory work targeted at profound change, and organizational transformation.
Niels´ second book, “Leading with flexible Targets. Beyond Budgeting in Practice” was awarded the Financial Times Germany Best Business Book award, in 2006. Both this book and his previous one, entitled "Beyond Budgeting, Better Budgeting", published back in 2003, were lauded by critics and readers and became bestsellers.Since 2006, Niels has been strongly involved in organizational transformation initiatives in firms both in Europe and in South America.
His latest book, "Organize for Complexity" (published in German in late 2013 and about to be published in English, worldwide) outlines how organizations can become fit for the knowledge age, through adopting a complexity-robust design.
He is a profilic speaker, speaking four languages fluently - English, German, Spanish and Portuguese. Prior to the BetaCodex Network, Niels was a director with the BBRT for five years. He was also a business controller at multinational firms, including ThyssenKrupp and Boehringer Ingelheim.Visit Niels´ website at http://www.nielspflaeging.com and the BetaCodex Network´s website on http://www.betacodex.org
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About ON THE MARK & Mark LaScola
Designing for Complexity, Designing out Complication
• OTM Core Purpose: Enable Our Customers To Realise Their Envisioned Future• Continuously in business for over 25 years• Over 370 successful re-designs and transformations completed• Over 4000 trained in our design and transformation methods and solutions• 6 continents; 27 countries• Every Function• Cross industry
Com m on Results Footprint Complex change accomplished at an accelerated rate Less bureaucracy/increased speed of product/and/or service delivery Improved quality and lower costs More satisfied customers ‘Off-the-charts’ employee engagement scores
• MS in Marriage and Family Therapy – trained in “systems” theory applied to humans• Practicing OD since 1985, Part of the OD community since 1987 – my professional home, Chair of the Local ODN 1996-99• Personally led or delivered over 700 change projects• First organisation redesign experience in 1987
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Focus of the Webinar and What to Expect
Designing for Complexity, Designing out Complication
A. Define ‘Complicated’ versus ‘Complex’ in organizations and why‘Complication’ has become a problem
– Identify common features of complicated organisations (hierarchy, silo thinking,bureaucracy, matrix structures, fragmentation and its impact on people)
B. Historical trends in organising (How did we get here)
C. Ways of organising going forward…
D. Approaches to making it happen
E. Lessons Learned
– Do’s and Don’ts
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Webinar Ways of Work ing
Designing for Complexity, Designing out Complication
• Type your comments & questions into the chat window at any time.• We will address ?’s along the way and after each section.• Niels and Mark will both agree and disagree in different areas. This
is by design to provide you with varying viewpoints and practices.• We will be posting the slides and webinar recording on our blog
and will send you all out URL’s to download them so watch your inboxes!
• We are happy to send you any articles referenced or provide more detail around any of the points discussed so don’t hesitate to ask:
Mark: [email protected]: [email protected]: [email protected]
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Complexity: Complexity is the natural consequence that occurs at the intersection of a business’ product and service offering, plus its customer mix and their varied demands, magnified by the speed of response required.
VS
Complication: Business complication is the self-made processes, structures, practices, mechanisms, protocols and norms embedded in an operating model and organization design that makes up HOW a business manages and copes with its complexity. It is OTM’s experience that nine times out of ten a business over-complicates its operating model and organization design.
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Pushing Complication onto the Customer
Designing for Complexity, Designing out Complication
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The problem of the dominant m ind-set : to im agine organisations as pyramids is a m isguided m etaphor
Designing for Complexity, Designing out Complication
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Complexity
Designing for Complexity, Designing out Complication
Products &Services
Customers Varying Demand Speed
Fast Cycle Times
Slow Cycle Times
Stable DemandAll Products
Unstable DemandSome Products
Seasonal DemandOne Product
Unstable DemandSome Products
Stable DemandAll Products
Slow Cycle Times
Fast Cycle Times
Fast Cycle Times
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Complication – Onto the customer experience
Designing for Complexity, Designing out Complication
Morrisons & Discounters (Aldi, Netto
Lidl)
Tesco Domestic &
International
Sainsbury
&
Waitrose
Asda Walmart High Street (Coop, Somerfield,
Iceland, Woolworths, Boots, Superdrug, Soft
Discounters)
Food • Sales
• CCSD
• Supply Chain
• Finance
Confectionery • Sales
• CCSD
• Supply Chain
• Finance
Purina • Sales
• CCSD
• Supply Chain
• Finance
Beverage • Sales
• CCSD
• Supply Chain
• Finance
Internal coordination
Pet Care
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Complication – Sub-function into oblivion…
Designing for Complexity, Designing out Complication
ASupply
HHR
CFI Pillar
DProcurement
GFinance
CLean
BC/Logistics
HR OD
EDP
ECategory SC Heads
FCustomer Supply Chain
Max Levels: 5Max Span: 1:13Min Span: 1:3
Each Sub-boundary = Functional, over-specialized, focused on partial work [fragmented value-stream]
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Complication - onto the customer and operations
Designing for Complexity, Designing out Complication
S1 ARC Team
Kim W2 ARC Team
April
S2 ARC Team Aida
E5 ARC Team Becky
W3 ARC Team Larry
G1 ARC Team Jan
Consumer ARC Team Denise
TFC Support Bob
RDP Paul
Mexico ARC Team Lil
Canada ARC Team Carolyn
Supplier Team A
Chris Collections Team
A
Consumer Fin Team
Edith Balancing Team
A Metric
QC Team
A Juan
Travel Dina
MAX Help Desks
Recon Team Memos Team
A
Analysts
Project Analysts
SDL SDL SDL
SDL Ticketing Analyst Quality Control Collections Balancing Supplier payment
Memo Recon Help desk Project Analysts Consumer Fin RDP
Legend
A A A A A
A A
A
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The practical features of Fragmentation
Designing for Complexity, Designing out Complication
B. Work
C. Work
D. Work
E. Work
A. Work
F. Work
Leadership Marketing Manufacturing Sales FinanceCustomerSupport
Coordination Coordination Coordination Coordination Coordination
Fragmented value streams [parts of work]. Boundaries around single parts and pieces of work. Human capital responsible for that piece of work only. Over-specialisation of roles. This creates redundant parts: If one part fails another
has to take over… Need for integration and coordination is significantly greater. Control and coordination of work happens 2-5 levels above where real work gets
done. Customer has to navigate the operational maze thus experiencing it.
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The im pact of fragmentation
Designing for Complexity, Designing out Complication
B. Work
C. Work
A. Work
Fragmented designs: Burdens the diversity of P/S Inhibits rapid Change Creates over-interdepen-
dence of units Fragments the value stream Slows response Looses sight of the customer Outsources complexity onto
the customer experience
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OTM WISDOM: The m ore fragmented a design the m ore effort and resources invested into coordinating and integrating activities to ‘glue’ parts together both vertically and horizontally.
Designing for Complexity, Designing out Complication
RegionTotal #
IdentifiedMost Common
TypeMost Common
MethodAverage Effectiveness
(Low 1 – 5 High)
Head Quarters 46 Info Sharing Meeting 2.8
Western 16 Info Sharing Meeting 3.5
East 18 Info Sharing, Operational
Meeting 4.1
Central 24 Info Sharing, Operational
Meeting 3.7
Southern 16 Info Sharing, Decision Making
Meeting 3.4
Northern 23 Info Sharing, Affiliation
Meeting 2.8
Overall 143 Info Sharing Meeting 3.4
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Trends in Organisation Design
Designing for Complexity, Designing out Complication
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Trends in Organisation Design
Designing for Complexity, Designing out Complication
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Summary of John Nirenberg’s book Overcoming Ham murabi's Curse -- The Realpolitik Of Building New Organizations by Ezgi Yildirim Saatci
The Administration and Bureaucracy Hammurabi, king of Babylonian, ruled the Babylonian Empire for 42 years from 1792-1750 BC, during which, political, cultural, and religious activities were peaked in Mesopotamia. He was a military man who dominated many of his neighbouring cities but he is mostly recognized for his contributions to the fields of administration and law
At the end of his long period of influence, Hammurabi’s legal decisions were collected and emblazoned on a stone tablet that showed 282 laws known as ‘the Code of Hammurabi’. Apart being significant for legal concepts, these codes also indicated major administrative rules. For instance; code number 72 says that: If a builder builds a house for a man and does not make its construction firm, and the house which he has built collapses and causes the death of the owner of the house, that builder shall be put to death.” It was Hammurabi who first established the principle that a manager was responsible for his workers; each act of a labourer or apprentice was considered the act of the contractor itself can be seen in Frederick Taylor’smost enduring management principle of the 20th century emphasizing ‘management does the thinking (takes responsibility for the work) while labour carries out the plan (follows orders)’
With all the aspects of Hammurabi’s administration, it can be said that public administration in the First Babylonian Dynasty under the rule of Hammurabi had many of the characteristics of Weber's ideal type bureaucracy. There were at least three classes (as opposed to levels) of subordinates: rabianum who were the highest; satammu or minor officials; and the lowest class constituted of labourers and herdsmen. Hierarchy and class structures were very important in the form of governance. In other words, the Hammurabi administration achieved 3800 years ago what Weber describes as a modern bureaucratic phenomenon
Overcoming Hammurabi's Curse
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The im provement paradox: In com plexity, work ing on separate parts doesn’t im prove the whole. It actually damages it.
Designing for Complexity, Designing out Complication
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Practical Features of Organisation Designs that support Complexity
Designing for Complexity, Designing out Complication
A. Human capital organized around real workB. Boundaries organized around whole work or deliverablesC. Flatter organisations/broader spans of control
• 3-5 Levels of management to zero mgmt. [Holocracy]• Increased, formalized management mechanisms [not roles]
D. Use of Virtual workers/crowd sourcingE. Capacity of employees -- % of time to focus on other work…F. Move towards value-driven work; finding of relevance and meaning.G. Control, coordination and integration of work happens at levels where real
work gets done [Emery]H. Less specialisation – Multi-functioning organism vs one role/one job known
as “redundant parts” [Cherns]
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Designing for Complexity, Designing out Complication
Multifunctional organism vs. Redundant-part mechanism [multi-tasking versus…]• Humans have the capacity to do more than one task—we can be multi-functional and
multi-skilled. Yet organizations are often designed to break down whole work into parts and assigning people to those parts. Thus, cross training is required to create backups (redundant parts). People are viewed as replaceable by another warm body. Specialization has lead to fragmented work rather than holistic, satisfying work. Whenever possible, develop roles to be multi-functional and multi-skilled.
Boundary location [Establish boundaries on the basis of ability to deal with variances!]• Place boundaries only where absolutely necessary so that a group/team is
responsible for a whole piece of work (including the rework). “Boundaries” are the time, structure, authority and technology “fences” drawn on organization charts, wire diagrams and in people’s minds, between teams, departments and/or divisions. At best, boundaries clarify which groups are responsible for which tasks. Refer to #2 above.
• These boundaries/fences must be formed to assure that any variance that might be created by a group/team can be detected and corrected by that same group before it moves across a boundary into another area. This is known as the “socio-technical criterion.”
[Boundaries = structural, time, geographic/location]Adapted from A. Chern’s original work
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Organisation Designs that Support Complexity
Designing for Complexity, Designing out Complication
Work Work Work WorkWork Work
Business Team 1
End-to-end value streams Boundaries around the entire value stream Responsible for the entire delivery of the value stream Multi-skilled (social and technical skills) roles with
specialisation only where absolutely necessary. The process does not break down if another area fails Produces a democratic organisation Structures flattens and self managed teams responsible to
deliver end-to-end are created Control and coordination gets done where work happens
Coordination
Input Output
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Teams work End-to-end
Designing for Complexity, Designing out Complication
B. Work
C. Work
A. Work
B. Work
C. Work
A. Work
B. Work
C. Work
A. Work
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A solution to enable complexity in a sales organisation
Designing for Complexity, Designing out Complication
Morrisons & Discounters (Aldi, Netto
Lidl)
Tesco Domestic &
International
Sainsbury
&
Waitrose
Asda Walmart
• Food • Beverage • Core
Confectionery
• Customer Marketing
• Customer Finance • Customer Supply
Chain
High Street (Coop, Somerfield,
Iceland, Woolworths, Boots, Superdrug, Soft
Discounters)
Food • CCSD
• Supply Chain
• Finance
Purina • CCSD
• Supply Chain
• Finance
Confectionery • CCSD
• Supply Chain
• Finance
Beverage • CCSD
• Supply Chain
• Finance
• Food • Beverage • Core
Confectionery
• Customer Marketing
• Customer Finance • Customer Supply
Chain
• Food • Beverage • Core
Confectionery
• Customer Marketing
• Customer Finance • Customer Supply
Chain
• Food • Beverage • Core
Confectionery
• Customer Marketing
• Customer Finance • Customer Supply
Chain
• Food • Beverage • Core
Confectionery
• Customer Marketing
• Customer Finance • Customer Supply
Chain
Pet Care
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A solution to enable complexity in a supply chain organisation
Designing for Complexity, Designing out Complication
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A solution to support complexity in a supply chain organisationEnd-to-End Teams serving Factories
Designing for Complexity, Designing out Complication
Supply Stream No.ofteams1
FTE2
York 3 15
Fawdon 2 12
Halifax 2 10
Tutbury 2 12
Hayes 1 5
Dalston 2 12
Brumborough 1 5
Staverton 1 5
Buxton 1 5
CoPack/CoMan 2 8
International 4 16
TOTAL FTE 105
5-6 Roles Per Team
MPS planning
SNP planning
MRP planning
Detailed production planning
Material call off
Supply contracts
IMM project management
Pack change
Supplier management
Product and cost Master Data
Pack techs
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Designing for Complexity, Designing out Complication
A solution supporting com plexity in a customer support back office
SDL TeamService Support
Large MarketEast
Large MarketNorth
Large MarketSouth
Large MarketWest
Testing/InternalSupport
Projectanalysts
BalancingData Maint.
GovernmentETC/ETS
ETMS
MiddleMarket
ConsumerMarket Help Desks Mail/Print/
ImagingSupplier
Payments
MexicoMarket
CanadaMarket
DomesticRecon
Air MemosDomestic
TrainingTech. Operations
Field
FieldReporting/Support
Functions in Above Teams
Global*Interim Teams
Functions:
*To be incorporated into service Teams P.O.A
- Ticketing- Collections- Quality Control
- Operations Team Analyst- Accounting- CRS
Same as domestic team plus:- Air Memos- Reconciliations
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Im pact of performance in Organisation Designs that Support Complexity
Designing for Complexity, Designing out Complication
• Decisions are made faster and hopefully better• Frees up top management to focus on external boundaries and
decision making activities such as setting strategy, etc.• More adaptive to customer demands/customer stays in focus• Faster at fixing problems [end-2-end]• Greater and sustained engagement of employees
Work Work Work WorkWork Work
Business Team 1
Coordination
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Implementation Lessons Learned
Adopt a disciplined, h ighly structured, holistic and integrated approach to the transformation
The number one predictor of a successful re-design is visible, unwavering leadership support from start to finish [success was 4 times more l ik ely]
Change behavior while changing structures/processes simultaneously
Conduct unrelenting stakeholder support
Integrate OD, HR and project management to drive transformation
Clear business direction and design principles
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Approach 1
Designing for Complexity, Designing out Complication
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Iterate: Involve m any people in the process of designing a full network structure
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Contract
Current State
Foundation
Concept Design
Detail Design
Transition
Implement & Stabilise
Evaluate & Calibrate
OTM’s Transformation
CycleApproval, Stakeholder
and Pre-work
Approval, Stakeholderand Pre-work
Approval, Stakeholderand Pre-work
Approval, Stakeholderand Pre-work
Approval, Stakeholderand Pre-work
Approach 2
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Pay Now vs. Pay Later Approach to Change
Designing for Complexity, Designing out Complication
k
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Why Projects Fail :
Designing for Complexity, Designing out Complication
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Foundation Phase Key Activities and Decisions
Designing for Complexity, Designing out Complication
A. Vision & Strategy
B. Priorities
C. Social Attributes and
Values
D. Design Criteria
E. Performance Assumptions
F. Business Case for Change
G. Clear Scope of Work
H. Change Impact Analysis
I. HR Policy
J. Approach and Plan Forward
K. Sponsorship and
Governance
L. Stakeholder Work and Approval
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Thanks for Attending
We will be sending out a URL where you will be able to download slides and a recording of this webinar so watch you inboxes!
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