Developing broader skills.

In the past, technical employees developed specialized skills by delving deeper and deeper into narrow fields of expertise. They also tended to stay in one position or area for a long time before moving up or out. Many got promotions or became managers because of their specialized expertise and their ability to combine analytical reasoning with intuition sharpened by years of experience. In the future, however, a narrow specialist risks becoming a liability rather than an asset.

More complex technology calls for combinations of new and different skills to operate and solve problems. Changes in engineering education already reflect this trend toward broader expertise. Carnegie-Mellon had merged electrical and computer engineering into a single degree program. Cornell offers a combined civil and geotechnical engineering degree. A high-performance culture demands new skills and capabilities that will enable specialists not only to solve problems by themselves, but also to help others learn what these specialists know. Doing so requires interpersonal as well as technical skills.

So, organizations that promote people solely on their records as individual contributors are likely to pick the wrong people. In the past, we've tended to promote highly structured, analytical, action-oriented people. In the future, we'll need people with agility and flexibility, multi-focused thinkers able to integrate many different kinds of information, who can get above the details of their own departments and detect patterns and opportunities where others only see chaos.

In high performing companies, success depends not just on what functional specialists do, but on their connections and interactions with others. This doesn't just come about automatically. It comes by widely distributing leadership responsibility throughout the firm. Business literacy is a big issue in developing leadership. You can't ask people to exercise broader judgement if their world is bounded by a very narrow vision.

This new evolving world has some perplexing paradoxes:

- Being in control means being a little out of control.

- Although people will work in small groups, they'll have to stay in touch with many more people.

- Even though new technologies allow people to communicate effortlessly with countless others, they risk becoming more isolated than ever before.

Just-in-time training.

In order to deliver more timely training, Apple transformed many of its training resources into ARPLE (the Apple Reference, Performance and Learning Expert). Apple's employees around the world can all use ARPLE, on-line and on-demand by means of its Ethernet technology. As a result, Apple replaced most of its former classroom training with just-in-time multimedia learning platforms. These are constantly updated to reflect current state-of-the-art information and learning.

Carnegie-Mellon University teaches its engineering students advanced math concepts as they need to apply them, not in separate math classes. I've found that employees acquire and apply concepts and skills more readily when they feel they need them, and when the knowledge they acquire proves immediately useful on the job. The software industry uses just-in-time instruction by including built-in help commands that allow users to ask for assistance, and then access different levels of detailed instructions at their own pace.

Just-in-time learning, delivered when and where its needed, takes control out of the hands of instructors and puts it instead into the hands of learners. Adding video-servers and training materials into groupware networks delivers on-demand training that users can access 24-7 at their own convenience. In addition to classrooms where employees learn about implementation by working through case studies, progressive companies use computer networks to structure meetings where employees can work together to solve problems and take advantage of opportunities.

Increasingly, smart companies rely of formal training courses only to convey highly volatile information that's changing too quickly to make it worth saving.

Thoughts on training.

Disney’s “pixie-dust” formula for generating committed employees has four key ingredients - selection, training, support and benefits.

Speaking of training, Lutron Electronics, a maker of lighting controllers, has factories in Pennsylvania, Puerto Rico and St. Kitts in the Caribbean. Employees at all three plants share a common core training curriculum, specifically designed for the unique demands of mass customization and flexible specialization. As part of their development, employees rotate through different work cells in the factory, staying in each until they're judged to be proficient. This qualifies them for greater pay.

Workers in the Caribbean, in keeping with their plant’s make-to-supply charter, are taught to improve their skills on automated equipment. In Pennsylvania, employees are taught the nuances of make-to-order customization, interfacing directly with customers and visiting their sites. When business conditions change quickly, training has to be fast as well, able to provide immediate results.

Lutron leverages the capability of its technical designers across the whole sales and manufacturing process by building intelligence into its products (e.g. light dimmers) so customers can create what they need by adapting the product to their own requirements. Training a small number of people and using technology to leverage their skills is an effective way to defend against the cost of training large numbers of people who may leave and take their skills elsewhere.

Here's some advice about career self-reliance in the new economy. Think of yourself as a business and be clear about your area of expertise. Define your product or service and know who you’re going to sell it to. Understand the value you add for your customers and invest in your own growth. Know where your field of expertise is headed, and be willing to change and start a new business when it looks like your current one is becoming obsolete.

The new employer-employee contract should go something like this: You’re responsible for your own career. Your employer, will help provide you with experience and training that can keep you marketable, but not necessarily give you a job forever. If you work smarter and produce high quality goods and services, in return, the company will give you personal recognition, continuous training, and a good living. For both lower level employees and professionals, staying competitive is the only real job guarantee in the global economy. The twin tasks of teaching and learning should be ingrained as a major responsibility of every employee.

The late Anita Rodick, founder of The Body Shop, explaining that company’s decision to provide courses on aging, urban survival and sociology as well as courses on products and customer service, said, “You can train dogs. We wanted to educate our people and help them realize their full potential.”

Using managers as trainers.

O K, now you've got the hiring process under control, what will you do with the employees to bring them up to speed once you've hired them? Here's a plan followed by the award-winning Ford engine plant in Romeo, Michigan.

The hourly workforce at Romeo were transitioning from a tractor plant which had previously operated on the same site and had never built engines before. Therefore, considerable technical training was required both prior and subsequent to start-up. Since the plant was organized in work teams and the workforce had no previous experience with these ideas either, extensive ongoing employee social-skill development was also needed. Additional training aimed to develop employee business skills, so people could understand the plant's performance goals and track their progress in meeting them.

Several delivery systems were used to provide training for employee development at Romeo. These included instructor-led classroom training, off-site seminars, video training, stand-up computer-based training, self-instructional computer-based training, interactive video training, and experiential on-the-job training. Most classroom training was developed and presented by Romeo employees, most often by the plant's management team. These instructors were given “train the trainer” courses prior to developing and delivering their programs, with special emphasis on including group and team-based activities.

Many benefits were gained when the plant leaders acted as instructors:

- First, they built learning relationships with the participants, and were seen to be real experts in the content being covered. Over time, this developed into an on-going working relationship where the employees felt more and more comfortable calling on the instructors when there was a problem in their functional specialty.

- Second, as the managers taught courses in their areas of expertise, the plant leadership was perceived to be competent and approachable, instead of distant and removed from day-to-day operations.

- Third, the interaction in the classroom kept the leadership up-to-date about issues developing on the plant floor.

- Fourth, employees got their questions answered directly by those who were the most knowledgeable in the plant about the topic of their concern.

- Fifth, there was visible consistency between the training and the plant’s operating philosophy, which stated that the role of management was “to assure people have the atmosphere, resources and abilities to do what is needed to produce the highest quality production engines in the world, and to develop teams of employees who are the best engine builders in the world.”

During commissioning and start-up, many one- and two-day off-site team planning and training sessions were conducted, some involving as many as 600 employees, sub-contractors and suppliers in the same place at the same time. (A large meeting hall was built for this purpose and was subsequently donated to one of the local churches). These sessions were designed to deal with actual situations being experienced by the employee teams during start-up. Some of the tasks undertaken during these meetings included:
- clarifying the wording of the plant’s mission and operating philosophy;
- reviewing it’s application in real life situations to be sure everyone understood what was intended and implied;
- analyzing how well individual teams were functioning;
- clarifying the responsibilities and accountabilities of individuals and teams; and
- resolving problems within and between teams in operating the plant.

This overall training process was subsequently given the "Best Team Training in America" award by the American Society for Training and Development (ASTD).

Selecting and hiring great employees.

A company policy that often needs redesign is the selection and hiring of new employees.

Hiring good people is like getting married - if you do it right, you don’t have to do it often. The first rule of staff degradation is that people who rank a seven on a scale of one to ten usually hire people who rank a five or a six. Aim to break that rule, and never hire anyone you wouldn’t want to work for. An organization’s hiring process should be consistent with the values it wants to live by, so start with that end in mind.

If you’re in a situation of excessive risk, hire someone who's already learned to shave on someone else’s beard. Hire the management team you think you’ll need five years from now if everything works out. Hire people who share your vision and agree with your business principles (make sure these are clear to the people being recruited). Have the best candidates spend time with the people they’re going to be working with. Hire backups for key people; the biggest weakness in smaller companies is often a lack of bench strength.

Options to improve employee selection typically include:

• Change hiring requirements to place greater emphasis on personal values and a willingness to learn, in addition to assessing current credentials and past experience.

• Use work simulations to assess a job applicant’s attitudes and skills.

• Involve those who will work with the new employees in their selection.

In considering these ideas, it’s important to bear in mind that staffing for high-performance requires hiring people who are assertive, ambitious, and have an expansive attitude toward work and life. Current employees should participate in choosing the candidates because it develops their ownership for the success of new employees. In the long run, time spent screening and scrutinizing potential staff should pay off handsomely in terms of commitment, loyalty and service to customers. A formal buddy system, pairing new hires with veteran employees, helps to get people up-to-speed quickly once they're hired.

Skills can always be taught on the job, but attitude is pretty well hard-wired in people and is difficult, if not impossible, to change. As a result Southwest Airlines interviews are full of questions designed to expose an applicant's personality, congeniality, style, and coping skills. Typical questions include 'Describe a situation in which you handled a crisis at work' and 'Give an example of when you were able to change a co-worker's attitude about something.' The right answer is an expansive one, a well-told tale, and it's crucial that the applicant demonstrate a sense of humor. Southwest used to also ask interviewees point-blank to tell a joke.

I'll provide some more innovative and successful examples of hiring processes tomorrow.

Choosing reward and recognition systems.

No design discussion would be complete without including some design options that make pay and rewards more relevant and effective. Ideas about how to do this typically include:

- Rewarding both work group and individual performance.

- Linking pay levels to the number of skills an employee learns and uses. Skills can be associated with business, administrative, and interpersonal competencies, as well as with technical operations.

- Creating reward systems that recognize not just certified skills and knowledge, but also the willingness to use those skills, and the results of successfully applying those skills.

- Tying pay-for-knowledge with performance planning, so employees regularly contract with others who depend on them based on their joint expectations for future performance.

- Providing individual and group incentives in addition to regular pay, based on exceptional project performance, cost reduction, or other important operating parameters that are within the direct control of the employee or the employee's work group.

- Setting up all-salaried pay schemes to eliminate a "we - they" culture in the firm, recognizing that the company's success depends on equality of effort and contribution by employees at all levels.

When considering these ideas, make sure that pay-for-knowledge schemes reward only the skills employees use on a regular basis and that actually benefit the bottom line. Skill training without sufficient application time to consolidate learning, or without proven certification processes (that include opportunities to explain, perform, and problem solve) will result in paying people for contributions they haven't really made. This will in time encourage exploitation rather than responsible behavior.

Setting boundaries continued.

Design options to consider when setting organizational boundaries include:

- Setting boundaries around complete processing segments, so employees can clearly identify, evaluate, and control the inputs and outputs of each segment.

- Placing boundaries so they minimize the likelihood of passing problems from one work unit to another.

- Creating multifunctional teams of employees who are responsible for producing a complete end product or a clearly defined component of the final product.

- Reassigning administrative and/or support tasks so that these multifunctional teams have quick access to all the resources they need to succeed.

As an example, Colgate's liquid detergent plant in Cambridge, Ohio is the sole producer of dish and laundry liquids for the company and currently employs about 400 people. It was designed to have an organizational structure that was different than other Colgate plants in order to avoid their manufacturing and labor problems. All employees at Cambridge were salaried and there were only two job classifications, Operator Technician and Maintenance Technician. The ultimate goal of the plant design was for every technician in each classification to be qualified to perform every task in that classification. The leadership team’s responsibility was to see that technicians had the knowledge and resources they needed to do their job in the most effective way possible.

Every technician belonged to a shift team. There was only one layer of management between the teams and the plant manager. Chris Miller, one of the team leaders, said he saw his job as, “pushing responsibility for decision-making down to the lowest possible level, and having the team members make some decisions that were formerly made by managers and foremen.” A shift team operated the production line from bottle forming through filling, packaging and palletizing, until the finished product was placed in a truck for immediate shipment - there was no warehouse. This gave the shift team members complete ownership over the manufacturing and shipping process from start to finish.

Shift teams monitored the quality and quantity of the product produced. They also tracked key measures related to the operation of their group, such as attendance and training. Team members weren't replaced when they were absent; other team members had to cover when someone was out. During the first year of operation, over half the employees never missed a work day, although, as salaried employees, they would have been paid whether they were at work or not.

There was no job classification for a quality inspector at Cambridge. Instead, the members of each shift team assumed responsibility for controlling product quality. Everyone, up and down the line, constantly monitored both the product and the manufacturing process. When a problem was detected, corrective action could be taken on the spot by the shift team on their own initiative. Knowing there was no inspector to catch off-specification product made team members extremely diligent. All team members were trained in the use of tools and techniques such as Variance Analysis and Statistical Process Control so they'd be able to monitor operations and recognize and correct deviant operating conditions. Computer screens at each work station allowed employees to oversee the entire process, not just what was happening at their own station, and helped them to diagnose problems in the process down to the software level. This speeded up the response time considerably when something went wrong.

Since startup, Cambridge has evolved into one of the largest tonnage-producing Colgate plants in the world. Overhead and costs-per-case have been consistently reduced. Plant effectiveness has set records for the company and hundreds of millions of dollars in savings have been realized. The plant has reached its goal of becoming a prototype for detergent plants world-wide as competitors such as Procter & Gamble and Unilever have used Cambridge as a world-class benchmark. Reuben Mark, Colgate's chairman, has been so impressed by the plant's performance, he directed that all new Colgate plants be designed using the Cambridge model.

The moral of all this? If you don’t want to be the guy with the shovel following the parade, rethink how your business is organized. And do it now, while there's still time.

Redefining an organization's boundaries.

The next step in designing more effective organizations is for functional or business unit managers to get with their teams and decide where to set external and internal boundaries around their departments. The guidelines to follow in this exercise are:

- The organization should consist of self-contained work units that are responsible for discrete product processing segments that have clearly defined inputs and outputs.
Boundaries should minimize the transfer of variation from one work unit to another, and shouldn't separate people who need to work together and learn from each other.

In traditional firms, work sometimes gets transferred from one unit to another because of tradition or history. In an insurance company, for example, I found that claims were partially processed on floor A, then transferred to floor B for further processing, and finally returned to the initial area A for completion. Upon investigation, I found that a long time ago, an employee was transferred from department A to department B and at the time, she was the only one who knew how to do her particular task. So, the work followed her when she moved. Even though she had been retired for many years, the claims continued to follow that route and no one had ever asked why before. Rearranging the flow so the claims processing was all done in department A removed two queuing steps which greatly speeded up the processing time.

The dilemma of separate ownership of processing stages is that no one understands the whole process anymore. So, errors in the early stages go unrecognized until they re-appear as problems later in the process. Sometimes, these problems can't be fixed at that stage and the product has to be thrown away. This is true in service settings as well where once a customer has been badly treated, it's seldom possible to undo the damage caused.

I'll give more examples tomorrow illustrating non-traditional boundary choices and the reasoning behind them.

Innovative sites help to provide fresh input.

At this stage in the design process, I find it helpful to take key members of the design team on a tour of innovative work places, many outside of their own industry. Each tour typically takes a week with four or five full-day or half-day visits scheduled. I've found previous clients to be very accommodating in this regard. Customers and suppliers can also be visited if they've got something relevant to share.

Host companies often claim that preparing for these visits helps them evaluate how they're doing, renews their commitment to making their design ideas work, and allows them to tell the design story to new employees. The more they explain why they did what they did, the more they talk themselves into supporting the essential nature of their new work arrangements.

Design team members value the opportunity to ask questions of their opposite numbers, employee to employee, VP to VP, and appreciate that they're willing to take time out from their busy jobs to share their experience and learning with others. They hear about the good, the bad and the ugly, and from this they form their own opinions about what it takes to make organizational innovations work and how well they're working out.

Here's an example: Some years ago, senior management from TRW's Electronics Systems Group set out to learn about better ways to organize and run their business. They attended seminars and organization design courses. They visited successful plants in comparable industries around the U.S., including Motorola, IBM and Hewlett-Packard. They visited successful plants in other industries, such as the auto and aluminum industries. They toured Japan where they visited ten of the most successful Japanese companies. Afterwards, when they reflected on their learnings, they identified the following common denominators in each of the successful organizations they visited:

- All employees were actively committed and involved in helping run the business.

- The whole organization was clear and agreed on its purpose and on the goals it was trying to achieve.

- There was an emphasis on providing customers with uncompromising quality.

- All employees received prompt and accurate feedback on personal and organizational performance.

TRW's senior management was particularly impressed by the energy these successful companies spent developing and encouraging employee involvement. They resolved to aggressively increase their emphasis in this area. Given what they'd learned, they began by describing how things could be different in a workplace that incorporated some of the ideas they'd seen. To share their vision of the scope of change involved, they contrasted how work was currently done in specific areas with how it might carried out be three years from now. This helped put the magnitude of the task before them in proper focus.

Tomorrow is poetry day. Next week I'll return to the topic of how to consciously design more effective organizations.

Identifying distinctive competence.

Do you know your firm’s Distinctive Competence? What's the unique thing that it does really well? What quality or attribute sets it apart from its competitors? Knowing this critical characteristic is particularly helpful as a firm seeks to find ways to grow further. It helps in identifying the best partners in completing or expanding its distinctiveness.

Many factors create distinctive competence. It may be a function of serving a unique market niche, like Hot Dog On A Stick. It may be delivering a highly specialized product, like Deco Breeze Fans. Or it may be its quality of customer intimacy and superior service, like †he Ritz-Carlton Hotel chain. Or, its low cost, like Wal-Mart. For example, Kodak’s distinctive competence is in imaging. Kodak’s understanding of this has allowed it to expand into seemingly unrelated businesses like pharmaceuticals which use similar processing methods.

Ultimately, whatever it is leads to competitive advantage. When you think you understand and can communicate your distinctive competence, test it with your customers. Is this capability what they think is special about you? Does it create value in the mind of the customers? Is it something they care deeply about?

A business will be much more successful when its employees and customers have a simple, clear impression of why its distinctive competence is important. Defining distinctive competence helps the firm and its customers stay focused.

Recapping the design process.

O K, so in the past few weeks I've written about how to get started designing more effective organizations using the steps outlined below;

- revisiting and refreshing the organization's purpose.

- developing strategies to influence customers, competitors, investors, employees and the broader community in ways that will make it possible to achieve that purpose.

- identifying key employee behaviors and capabilities essential to success.

- creating an operating philosophy that will encourage and support those behaviors.

- agreeing on guidelines to be used in designing jobs, boundaries, decision authority, information flow, reward systems, and developing operating policies and practices that will encourage the desired behaviors.

I suggested that each of these steps involve members of senior management, because as venture capitalists are prone to say, "If the light ain't on at the top, it's dim all the way down." Mostly, this involvement entails pulling learning from previous experiences out of people instead of pushing new ideas into them. I've found the challenge in setting this up is in finding ways to get people to tell me what I would have told them. In this context, asking the right question is more powerful and persuasive than providing a prepackaged answer.

The final step in this first part is to understand the business's distinctive competence, that is, how it plans to be different and better than its competitors.

I'll deal with this tomorrow.

Developing design guidelines.

At Ford Hermosillo, design team members were asked to talk about organizations they'd worked for in the past where they felt motivated, informed, involved and effective. They then described the organizational conditions that made this possible- how decisions were made, how they were rewarded, and how they interacted with others. This allowed them to create the following design guidelines based on their previous collective experience:

Jobs should have broad, clearly defined responsibilities and should provide opportunities for autonomy, variety, growth and feedback.

Informed decision making at the lowest possible level should be developed and encouraged.

Rewards should recognize demonstrated knowledge, skills, initiative, quality, performance and teamwork, and should be based on individual contributions as well as overall plant performance.

Career guidance and development opportunities should be created to encourage all employees to broaden their skills, to increase their knowledge of the business, and to develop to their fullest potential.

Working conditions in all areas of the plant should support safe, pleasant and efficient practices.

Artificial status distinctions should be minimized. Special treatment should reflect functional necessity only.

Open, direct two-way communication should be encouraged and facilitated between all levels and all areas in the organization.

Information should go first to people who need to act on it.

Every employee should understand how his job impacts on the total effort. Functional or departmental boundaries shouldn't separate people who depend on one another or need to work together to produce a quality product.

The primary responsibility of supervision is to help people define and plan to achieve personal and organizational goals, to make sure they have access to the resources they need, and to interface with other groups as required.

Crafting an operating philosophy.

The key employee behaviors identified by the leadership group at Ford's Hermosillo assembly plant were:

* Behave responsibly.

* Contribute ideas and suggestions for improvement.

* Continuously develop skills and abilities.

* Cooperate and work together as a team for the good of the plant as a whole.

Managers were then asked under what conditions they believed this would be possible. Their answers formed the plant philosophy which was subsequently used to guide operating policies and practices at Hermosillo. Here's what they said.

Policies and practices should reflect our belief that:

- People are trustworthy.
(Always start with this assumption and deal with exceptions promptly as they occur).

- People will behave responsibly when they have a clear understanding of what they have to do and are provided timely feedback on their performance.

- People will contribute to their full potential when they have a vehicle to be heard and are not afraid to speak up.

- People will grow and develop their skills and abilities when there are opportunities and incentives for doing so, and when they understand the business sufficiently to be able to actively influence what they need to learn.

- People will cooperate with each other and work together effectively where there are well-defined, shared goals and where there is mutual respect and understanding of each other’s responsibilities.

This philosophy statement served as a further set of criteria for decision making during the design phase and were used to guide the subsequent operation of the business.

I've seen this work in many different settings - paper manufacturing, hotels, hospitals, insurance companies, government agencies, and many others. It doesn't take long to put this in place. Once done, it makes explicit the assumptions behind the design choices, and guarantees the application of consistent values across the whole organization.

Understanding strategy.

A successful strategy defines how a firm will influence the various factors that help it achieve its purpose. When Embassy Suites Hotels started up, its purpose was "to be the easiest hotel in the world to do business with." This was subsequently accomplished using the following five strategies.

Strategies to influence customers:
Create teams of multi-skilled employees and rotate them through different departments so they understand how the hotel as a whole operates. Train these employees in problem-solving and communication skills, and give them broad authority to respond quickly to customer needs on their own initiative.

Strategies to influence competitors:
Expand very quickly. Build properties in 100 prime locations in the first five years. This will slow down the entry of competitors into the all-suite hotel marketplace because of the cost commitment - hundreds of millions of dollars to develop a new and unproven business on a nationwide scale.

Strategies to influence stockholders:
Obtain first-mover advantage with a product that business travelers consider an exceptional value (two rooms for the price of one). Charge premium prices and promote weekend specials to maximize revenue. At the same time, aggressively drive down operating costs.

Strategies to influence employees:
Be very selective in hiring, focusing primarily on a proven commitment to customer service. Have new employees and their families spend a weekend at an Embassy Suites hotel to understand the guest's experience first hand. Provide monthly bonuses based on operating costs and guest satisfaction ratings.

Strategies to influence the local community:
Hire hotel managers who sign contracts to stay at their assigned property for five years (versus the industry norm of 18-months). Encourage all managers to join local community organizations, build strong personal relationships, and play a visible leadership role in local activities.

A smart company uses these strategies to gain a competitive advantage in each of these dimensions. However, it must also know the standards and behaviors that will contribute to its success.

And that's tomorrow's topic.

Clarifying a firm's purpose.

An organization needs to be really clear about its purpose before it can start rethinking how work gets done, how the firm's structure unifies employee's efforts, and how people can be engaged and developed to produce products and services that are consistent with the firm's purpose every time. The purpose statement should be a clear and succinct representation of the enterprise's reason for existence.

When Domino's Pizza started up, it aspired to "safely deliver a hot, quality pizza in 30-minutes or less, at a fair price and a reasonable profit."

Wal-Mart's purpose is "to save people money so they can live better." Sam Walton had a well-defined target in the 1970s of doubling Wal-Mart's sales from $500 million to $1 billion in four years. This seemed a tall order at the time but Wal-Mart hit it. Since then, the company has successfully retained its focus: By 2007, net sales had risen to $345 billion, saving money for more than 176 million weekly customers around the world at 6,779 locations.

Merck, the pharmaceutical company claims, "We're in the business of preserving and improving human life. All our actions can be measured by our success in achieving this." Disney aims to "make people happy."

You can think about stating your purpose in the following ways:

• Aim at a well-defined target, like Domino's Pizza and Wal-Mart.

• Focus on a common enemy; Nike thrived for years on aspiring to beat Adidas and Reebok.

• Have a world-class role model; Trammell Crow said its purpose was to be "the IBM of the real estate industry."

Once the leadership team has clarified and agreed on the firm's purpose, the next step is to define the strategies that will help it achieve this purpose.

We'll cover this tomorrow.

How to design more effective organizations.

Most organizations just sort of happen - they were first created to reflect ideas and practices that existed at the time they came into being, and they've seldom been rethought and re-architected as the years have gone by. So as they've become bigger and more elaborate, they've also become slower, less responsive and less efficient. For the past 30-years, I've been helping companies understand how they're currently put together, and then make new choices that are a better match to what's happening in the present business environment.

Here's an outline of the design steps I've used. I'll cover each aspect of this process in the weeks ahead.

Start by getting agreement at the senior management level on:
- a statement of purpose - what the business will be designed to achieve in the future
- business strategies to achieve that purpose
- a list of the five or six key employee behaviors needed for success
- a statement explaining how the business will be operated, and
- a set of structural guidelines for the design process.

Does the business aspire to be different than its competitors? than others in it's industry? If so, where, how and why?

Describe what it will be like to work in the redesigned business. Provide specific examples:
- here’s how "this" is done today
- here’s how "this" will be done in the future

Department heads then each develop plans for their own areas:
- what will be included in their departments, and thus under their control?
- what will they depend on from others?

Next, make choices in each area about who will do what and who will report to whom
Eliminate tasks that don’t add value and avoid creating dead-end jobs

Identify the most significant sources of variation in getting work done on-time and according to specifications
Make plans to eliminate or control these variations and to maintain the integrity of the process

Determine the flow of information – who will know what, when and why
Decide how employees will be recognized, rewarded and paid

Present all these plans and design decisions for other department managers to review
Modify specific arrangements based on feedback received

Test design decisions for consistency with the operating values and with the design guidelines developed at the beginning

Does anything else need to be modified based on experience to date?

Things we can feel good about…
Things that still need some work…

Designing a high-performing business.

How organizations get created or designed is often a bit of a mystery. Here are five insights about designing high performing organizations that I’ve learned over the years through my professional practice:

- Designing a high-performing business involves specifying job content and task assignments, allocating roles and responsibilities, and defining the relationships between them. Without a disciplined way to do this, designers usually make choices based on their previous experience, their personal opinions, biases, unvalidated assumptions, and/or a desire for more personal power. These are poor alternatives to a proven process of open, collaborative investigation using validated data.

- The designer's basic assumptions determine the behaviors, activities and relationships of the people who end up working for the business (e.g."I trust people to do their job" v/s "I have to watch them all the time"). Traditional assumptions produce traditional performance and predictable problems ("That's not my job"). You can only generate different behaviors and better outcomes if you think differently and use other models and design processes.

- Design begins with a clear vision about what you want your business to become in the future. In today's world, this vision determines direction, not destination. The race to the future will belong to the swift and the adaptable, so design choices must encourage flexibility and agility. As Santayana observed, “No specific hope about distant issues is ever likely to be realized. The ground shifts, the will of mankind deviates, and what the father dreamed of, the children neither fulfill or desire.”

- Design isn’t so much a process of invention as an ongoing process of discovery and collaboration. Good design is always conscious and comprehensive, looking to find the best use for all available resources. It’s built on knowledge, insight and intuition about patterns and relationships inside and outside the firm. It doesn't look for ”the answer,” but selects the most sensible alternative for a given place and time, knowing that when the current context changes, another answer will be more appropriate.

- Searching for a “silver bullet” that will painlessly resolve all existing difficulties is a distraction rather than a step in the right direction. Adopting other people’s solutions won’t work unless you understand exactly how they’ll help you address and avoid the real causes of your problems.