Six Simple Rules

by Yves Morieux

  Every behavior is a solution to a problem.

  Every behavior contains evidence about the resources it mobilizes.

  Every behavior shows traces of the efforts people make to sidestep or minimize their constraints.

  Never explain what people do in terms of an irrational mind-set (doing so tells more about the limitations of your analysis than the limitations of the people being analyzed).

  Removed useless and thus counterproductive organizational elements. First, the company got rid of the hard and soft initiatives that weren’t really addressing the problem. They ended the receptionist “guest engagement” training program and eliminated the financial incentives that were supposed to improve room occupancy but had failed to do so.

  Adjusted career paths. Traditionally, managers at InterLodge advanced in the organization by rising within their specific function. Another change that senior management made was to make managerial promotion dependent on having worked in more than one function. The purpose of this change was to ensure that all managers got a firsthand understanding of what people actually did in multiple functions and how the work in each function related to the work in other functions.

  Changed the context to produce cooperation. The management team gave the receptionists some power over housekeeping and maintenance. The purpose of this change was to impel those functions to cooperate with each other and with the front-office staff in solving customer problems, so the receptionists would not have to rely on rebates or spare rooms (thus creating a context in which those were no longer a resource). We will say a lot more about this change in the next chapter.

  These relatively minor changes had a dramatic impact on performance. Instead of doubling its share price in three years, InterLodge nearly tripled its share price in two years.

  This first simple rule—understanding what your people do and how it generates performance—is an essential precursor to any organizational change. Instead of jumping directly from performance issues to the creation of new structures, processes, and systems, you must seek to understand the root causes of performance at the level of the behaviors and the factors that shape those behaviors. This accuracy of understanding creates conditions such that fewer and more effective structures, processes, and systems can be established in the organization design. (See the sidebar “Performance Is Behavior.”)

  KEEP IN MIND

  Performance Is Behavior

  Performance is the result of what people do—their actions, interactions, and decisions.

  To understand organizational performance, managers must trace that performance back to what people do and the way their behaviors combine with each other to produce overall results.

  Describe what people do, not what they don’t do.

  Identify their goals, resources, and constraints.

  Understand how existing organizational elements shape these goals, resources, and constraints.

  Don’t use black-box explanations based on people’s mind-sets or personality traits.

  Ask yourself how behaviors adjust to each other and how those adjustments shape performance.

  When you know what people do and why they do it—without referring to generic pros and cons that are supposed to characterize structures, processes, and systems, or to missing organizational elements, or to pseudo-psychology, stereotyping, or ad hominem explanations—you can take steps to change the context of what people do, increase cooperation, and improve overall performance. The remaining simple rules give you ways to do just that.

  SUMMARY OF SIMPLE RULE ONE

  What do the executive teams of competing firms actually compete on? Not on their firm’s products or services—this is the company’s output. On the pertinence of their decisions? This is quite tautological. In fact, executive teams primarily compete on the quality of their insights about their own organization. The first basis of competition between executive teams is the understanding of what really happens in their organization. To deal with complexity without complicatedness requires that you must first avoid or get rid of the false explanations derived from the hard and soft approaches that obscure your understanding of what is really going on. You need to get a true understanding of performance: what people do and why they do it.

  Trace performance back to behaviors and how they influence and combine with each other to produce overall results. Use observation, mapping, measurement, and discussion to do this.

  Understand the context of goals, resources, and constraints within which the current behaviors constitute rational strategies for people.

  Find out how your organization’s elements (structure, scorecards, systems, incentives, and so on) shape these goals, resources, and constraints.

  Because you understand why people do what they do and how it drives performance, you have created the sine qua non conditions to then define with surgical accuracy the minimum sufficient set of interventions. You are now ready to use the other simple rules to modify and simplify the organizational elements with adequate knowledge of their impact on the work context and thus performance.

  2

  Simple Rule Two

  Reinforce Integrators

  An integrator is an individual or a work unit that fosters cooperation for the company’s benefit. Given that cooperation is central to addressing business complexity, integrators play a critical role in the organization. That’s why “reinforcing integrators” is our second simple rule.

  In this chapter, you will learn:

  How integrators are different from traditional coordinators. An effective integrator has both an interest in making others cooperate and the power to impel them to do so. Integrators ensure that the organization can satisfy multiple performance requirements without layers of structure and rules. They can replace complicated matrix structures. An integrator is the opposite of a coordinator, a dedicated overlay, or a middle office.

  How to identify potential integrators in the organization. Anybody can play the integrator role as part of his or her existing job. But some individuals or work groups are better placed to be effective integrators than others. Some already have an interest in fostering cooperation; others have the power (but not yet the interest) to do so. Reinforcing integrators involves making sure that there are roles in the organization with both the power and the interest.

  Transform managers into integrators. You don’t need to be a manager to play the role of integrator. But when you think about it, being an integrator should be at the very heart of the managerial role. Yet, because of their reliance on the hard and soft approaches, few managers today function effectively as integrators. We will show the steps that senior executives can take to address this problem, allowing them to transform their managers into integrators whose primary mission is to generate constructive cooperation throughout the organization.

  To illustrate the importance of the integrator role, in this chapter we will tell the story of a company we call MobiliTele, a manufacturer of the technological infrastructure for cellular telephone networks. MobiliTele’s product development process was consistently and egregiously late in delivering new products. When hard fixes didn’t work, MobiliTele used the first two simple rules to speed significantly the development of its products.

  How Integrators Are Different

  Organizations are literally swamped with dedicated roles designed to help different parts work better with each other: coordinators, cross-functional committees, interface groups, overlays, and the like. These roles and functions are the exact opposite of what we mean by integrators because, first, they are not very effective and, second, they contribute to organizational complicatedness.

  There are three things that distinguish integrators from these traditional hard solutions. First, being an integrator is not a dedicated job. Rather, it is a role in the organizational system that an individual plays as part of his or her usual job. It is not a matter of function, but of functioning—a way to perform one’s function. In other words, you can reinfo
rce integrators without adding to complicatedness.

  Second, unlike people in coordination roles, integrators do not intervene after the fact, reviewing the compatibility of the separate inputs provided by various units and then starting an iterative sequence of modifications. Rather, integrators are directly involved in the cooperation, where the action takes place and where the richest sources of information are. By helping units benefit from the cooperation of others, they are a resource to these units. But they also function as a healthy constraint, compelling units to bear the adjustment costs inherent to cooperation when it is for the greater good of the organization.

  Third, unlike traditional coordinator roles that people working in the critical path of the business can easily ignore, integrators cannot be ignored. As a result, they are often the focus of very strong emotions. Because they are a resource and a constraint, integrators typically attract positive and negative feelings, but never indifference. You can use this fact as a clue when identifying potential candidates for the integrator role in your organization. (See the sidebar “Identifying Potential Integrators.”)

  SIMPLE RULES TOOLKIT

  Identifying Potential Integrators

  The feelings people express about their work or the work of others can provide initial clues to identify those individuals or work groups that are good candidates to play the integrator role. For example:

  Those who express high levels of dissatisfaction at work. These people are usually at a nexus where constraints and requirements meet. Their dissatisfaction is usually the result of having to bear most of the adjustment costs because others are not cooperating with them. They have an interest in improving cooperation but not yet the power to do so.

  Those who are resented by others. Being the focus of resentment is often a sign that individuals or work groups have the power to make others bear the adjustment costs of cooperation instead of themselves. Paradoxically, this is a signal that they have their hands on the levers of cooperation and are using this power to their own advantage. Shifting the work context to provide such people with an interest to cooperate with others can turn them into effective integrators for the benefit of the organization as a whole.

  Creating Integrators in Existing Work Roles

  When you look across your company, no matter how it may be organized—back offices, front offices, R&D, manufacturing, sales, product groups, business units, and the like—you can find potential integrators. One obvious place to look is among those individuals or groups in the organization who have an interest in cooperation but not the power to impel others to cooperate with them. These are people who, because they lack power, are forced to bear the bulk of the adjustment costs because others do not cooperate with them.

  You’ve already met one such group: the receptionists at InterLodge. Their work put them in the closest contact with customers, and they were the most directly penalized when customers were unhappy. They had an interest in cooperation but had no way to influence the behavior of other groups—specifically, the housekeeping and maintenance staffs.

  There was no practical way to directly expose the housekeepers and maintenance workers to the wrath of the unhappy customer. But the receptionists could be given a say in the evaluation and promotion of these coworkers. So, one of the specific changes that management at InterLodge made was to give the receptionists a say in the performance evaluation of the housekeeping and maintenance personnel. In the past, it had always been enough for these employees to fulfill the criteria and meet the targets of their individual function. Now, people in the two back-office functions were also being evaluated on how effectively they cooperated with each other and with the receptionists, and it was the opinion of the receptionists themselves that carried a special weight.

  With this simple change, the opinions and context of receptionists suddenly mattered a great deal to the housekeepers and the people in maintenance in a way that it had never mattered before. They now had a clear interest to cooperate with each other and with the receptionists. After all, their careers and the possibility of promotion were on the line. When this change in how personnel in the back-office functions were evaluated was combined with the new cross-functional rotation of managers (which gave managers more of an appreciation for the interdependencies among the various functions), the nature of work changed rapidly at the hotel. The housekeepers checked the equipment in the rooms when they cleaned and let the maintenance group know immediately when something needed attention. What’s more, the two back-office functions were a lot more responsive when someone from reception would call asking for help to resolve a customer problem.

  This increased cooperation enabled the company to better meet its multiple performance requirements:

  Customer satisfaction. Because the rooms were clean and the equipment worked, customer satisfaction started to rise.

  Average room rate. Because the guests were happier with their rooms, the receptionists had to rely less and less on giving them rebates, so average room rate improved.

  Higher occupancy rate. Because the receptionists no longer felt they had to hold rooms in reserve—just in case a problem did arise—they sold more rooms, and occupancy rates rose.

  Lower turnover rate. Once the receptionists were more satisfied at work, the turnover rate in the position was reduced by a factor of six, which cut recruiting cost.

  Greater economies of scale. The cooperation of housekeeping and maintenance resulted in more preventive maintenance, solving problems before they had a chance to occur and affect customers; the company was thus able to further regroup the maintenance function at the regional level.

  Elimination of complicatedness. The useless and counterproductive training efforts, the elaborate role definitions and performance scorecards, and related controls and incentives were all eliminated.

  Thanks to these improvements, InterLodge hotel business unit’s gross margin increased by 20 percent within eighteen months. The rapid improvement in margins allowed the company to surpass its already ambitious goal of doubling its stock price in three years and to nearly triple it in just two years.

  By reinforcing the receptionists as integrators, InterLodge was able to create a genuinely customer-centric organization. As before, the receptionists were at the center of the customers’ interactions at the hotel; they were the employees that customers met and talked to when something went wrong. But now, the receptionists had the power to actually do something about it, by making the housekeepers and maintenance staff cooperate in solving and avoiding problems. From having been dominated, the receptionists became integrators. To achieve customer-centricity, make the organization listen to those who listen to customers. Changing interaction patterns among functions is much more powerful than creating a dedicated customer-centricity function.

  At InterLodge, the management team took a work group that had an interest in cooperation and gave it the power to impel the cooperation of others. Sometimes, however, reinforcing integrators can involve reversing this dynamic: taking a work group with a lot of power that has typically not had an interest in cooperation and making changes that cause its members to develop such an interest. As we will see, this is what happened at MobiliTele.

  MobiliTele: A Search for the Cause of Development Delays

  When we first encountered MobiliTele, the company was taking more than thirty months to develop a new release of its network hardware and software. The industry benchmark was twenty. Because it took MobiliTele 50 percent more time to develop new products than their rivals, MobiliTele’s profit margins and market share were declining while its defects were increasing. Only one of its operating groups, known as the transceiver unit, was able to deliver its work on time, on budget, and without defects. Faced with this poor performance, the company’s executive team started to question the overall engagement of the various development units. So the team launched a survey to probe attitudes across four work groups:

  Program managers were responsible for ove
rseeing the product development process and delivering new releases on time, providing technical specifications, setting project milestones, and monitoring the process across the engineering units that developed the three main components of the system.

  The transceiver unit engineers developed the transceiver, which receives and transmits the radio signal passing to and from cell phones on a network. (You have probably seen such devices mounted on towers and on top of buildings.)

  Collector unit engineers developed the technology that collects all the signals from the transceivers before they are dispatched to users across the network.

  Software engineers developed the software that operated and monitored the entire system.

  As with most employee surveys, some questions addressed how people felt about the work processes involving other departments. When the engineers were asked about the program managers, the response was neutral. There weren’t many complaints but not much positive feedback either (an unusual number of respondents marked “don’t know”). The main impression was that the other units were indifferent to the project managers, their role, and their responsibilities. Their apathy suggested to us that the project managers weren’t really functioning as integrators. As we said earlier, an integrator makes a difference for people, either positive or negative; therefore, people’s relationship with integrators is always emotionally loaded. When you feel indifference for people, it is usually because they can’t make a difference to you. (See the sidebar “Use Caution in Interpreting Emotions and Feelings at Work.”)

  SIMPLE RULES TOOLKIT

  Use Caution in Interpreting Emotions and Feelings at Work