Organization Design: The Living Company
In an earlier post I argued that movement is closely related to success, well being and even life itself but that most every day experiences take people out of their flow and bring them to a standstill (e.g. retail check-out and hospitality check-in lines, medical waiting rooms, highway toll booths etc.). This enables the provider to “serve” them in a way that maximizes its own scalability and profitability rather than the customers’ satisfaction or success.
The diagram at right shows a simple experience based on this static queue model. All of the experiences discussed above follow this model. It has three process steps where a single customer is served while others wait their turn. Once the customer has been served they are discharged or set free to go on with their business. Finally the next in line takes his or her place to be served. This repeats for all customers in line.
Thankfully a growing number of organizations are realizing that waiting in line does not make for a great customer experience. And since more and more businesses understand the importance of experience for customer satisfaction, retention and purchasing frequency, some are rethinking the dominant paradigm and are bringing movement back. Amazon Go in retail grocery, Virginia Mason Medical Center in healthcare, and the New York City Open Road Tolling (ORT) system are among them.
The diagram at right shows a simple experience based on the dynamic flow model. ORT as well as most electronic ordering and check-in experiences follow it closely. From the customer’s perspective there is no process to follow or observe, and this model can also be cheaper and more effective for the provider.
Walmart’s recently published patent filings demonstrate that various technological innovations, most of them mobile (in-store assistant drones, autonomous delivery trucks, smart shopping carts, wearable tracking devices), are an essential part of turning today’s static store experiences into tomorrow’s dynamic ones.
Zara, the biggest fashion retailer in the world (passing The Gap in 2008) has been operating on these principles for decades now. They design, produce and deliver new product to their stores, all enabled by technology and driven by sales data and customer feedback, within 2-4 weeks from inception. The speed at which Zara operates means a near constant source of new fashion for its customers, resulting in a purchasing frequency of a reported five times industry average.
One of the clear lessons from Zara is that their level of customer responsiveness and innovation could never be achieved without parts or all of the organization itself being designed for flow. But if designing experiences for flow is still in its infancy, designing organizations for flow is not even being conceived of by most of us. We manage our resources including data, ideas and innovation, communications, expertise and even colleagues the same way as we do our customers, amassing them and bringing them to a standstill before processing and releasing them again.
We’re obsessed with Big Data in IT, collecting, storing and classifying as much data as we possibly can in warehouses, reservoirs, silos and other containers. We do brainstorming to generate as many ideas as possible and collect them on flipcharts with the questionable guidance that “there’s no such thing as a bad idea” (there is). We corral and count innovation and other projects in stage gate processes that are designed intentionally to stop forward progress We keep a tight grip on annual budgets and plans in the Finance department, protect IP and the Brand in Legal, control communications on a need to know basis, attract and “retain” talent in HR, attract and “retain” valued customers in Marketing, and so on. Everywhere we look the goal of corporate departments, explicitly stated or implicitly understood, is to collect, protect and control their resources and, if possible, to increase the number of them.
We like to talk about these resources as our companies’ lifeblood, the most important thing we need to survive or to be successful, and yet we pay no attention to their movement. Blood by itself does not ensure life. After all, most people die with their blood intact. It’s the movement, the flow of the blood that counts. Flow is the only way that blood can deliver nutrients to the body and extract waste and other harmful products from it. When blood stops circulating through the body people are declared dead.
If our bodies decided to try out our corporate model of resource management, and our hearts started to store blood instead of pumping it to where it is needed (which just happens to be nearly everywhere in the body), and our lungs started to hold their breath instead of continually bringing in fresh resources from the outside and sharing them with the blood, we would die immediately. Our lives are absolutely dependent on flows both inside our bodies - the circulatory system - and between our bodies and the outside world (primarily oxygen and nutrients such as food and water). Embolisms and other blockages that stop those flows cause death to tissue, limbs, organs or even to the whole organism.
When we’re overly controlling and protective of our resources we may be endangering the life of our companies. Changing our management paradigm from accumulation and control to movement and sharing, i.e. flow, may reverse that trend. There are four key components of the flow paradigm (not forgetting the blood itself of course):
Pumps: The heart is of paramount important but only for as long as it’s pumping blood to the other parts of the system. In organizations, departments becomes pumps when their priorities change to ensure that they get their resources to all other parts of the organization where they’re needed, on a continuous basis. The relationships between departments are more important in a flow based system than the departments themselves.
A Circulatory System: the flow of resources must be directed and channeled to make sure they don’t leak or spill or get diverted away from where they’re most needed. This means co-creating organization-wide processes for sharing and developing resources. Build feedback into the system so that the pump or originating department knows how and when to accelerate or amplify its efforts, as the heart and lungs do during physical exertion for instance.
Filters: organizations need ways to remove things from their flows that are no longer viable resources. This may include unworkable ideas, projects that are going nowhere, people who are being counter productive etc.Traditional business pipeline management practices stop projects in their tracks intentionally and decide upon their continued usefulness before allowing them to continue or removing them. Pumping systems on the other hand use filters to remove unwanted elements while allowing valued resources to continue their path unimpeded.
An Enrichment Environment: organizations, like bodies, need a constant or near constant renewal of their energy sources from the outside. This may include income, new information, customers, talent, equipment and tools, innovation and new ideas, raw materials and so on.. Storage of resources can lead to fat, lack of agility and diminished performance, while on demand exchanges can increase agility and efficiency as well as reduce waste
This is not an easy reframe or paradigm shift. Nearly all of us measure success by the number of resources under our management. But in this emerging world of connectedness, of positive returns and non-zero sum games, it’s the flow of resources and value between people, departments and organizations that is beginning to count for more. Once blockages, accidental or intentional, are removed, resources can flow again and companies, like rivers or bodies or experiences, can come back to life.