Dr. Earl R. Smith II

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

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One of the inevitable results of growth is change. This maxim is as true for organizations as it is for individuals. When ‘what has been’ morphs into ‘what is new’, opportunities proliferate but dislocations occur that affect every part of a company. I recently helped one navigate these perilous waters. The experience brought several important lessons into focus.

The Company: First, a bit of background on the company. It is in the service business. Its clients are spread over a wide geographic area. The company’s service is mission critical to its clients. As a result, quality control is a major issue – as is reliability. Recently, the company had been experiencing pressures that came with increasing success. The organization had grown much more complex. Managing that increasing complexity had put a lot of pressure on the senior team.

In its prior configuration, the company was divided into two major areas – sales and operations. As in many cases, they were distinct parts of the company. As its customer base expanded, the challenges sales faced became much more complex. Price was only one of the major drivers in a competitive market. The reputation of the company – its branding – was a major asset for the sales force. The ability of operations to reliably provide high levels of service was another. Additionally, each salesperson was now handling a higher volume of business.

Operations were charged with delivering on the schedule and within the terms that sales negotiated. The relationship between sales and operations became strained as volume increased. As the level of business steadily increased, they also experienced more complex challenges. Much like a juggler who keeps adding balls to the mix, operations needed to effectively manage a larger number of production units while keeping quality and reliability at the forefront. Missteps now had a magnified impact on their ability to do this. Small mistakes were introducing turbulence into a process that operations struggled to keep calm and orderly.

The Need for Change: It was clear that the company had become so much more complex that intuitive solutions were proving inadequate. As I went through my initial interviews, I remembered something I had learned at the Sloan School of Management while studying with Professor Jay Forrester, the father of Systems Dynamics – ‘effective solutions to problems within complex situations often tend to be counterintuitive’. In other words, often you have to start out south in order to get north.

It was clear that the culture within the company needed to be professionalized. Seat-of-the-pants approaches were no longer effective and often disruptive. Running with systems that had evolved to manage a much simpler operation was proving increasingly ineffective. It was also clear that the senior team did not really understand the dynamics of the company as it had come to be. This was particularly apparent when, in trying to solve a specific problem, the team was consistently meeting newly created challenges in other areas.

Many would have started with the relationship between sales and operations – working to mediate accommodations and smoothing out the process. I realized that this might be a placed to start but was not the best approach for very long. The company was going through a phase that required a professionalization and rationalization – a total makeover – a sea change. My first objective became designing a process that would result in an entirely new culture and organizational structure for the company.

The Challenge: A basic maxim of organization change is that the culture must begin to change before organizational change becomes possible. These twin processes must run along two tracks – and those two tracks synchronized if change efforts are to have a lasting effect – but the perceived need to a change in the culture has to lead. The team must understand the need to change the way they relate to each other and their responsibilities before they truly and viscerally understand the way organizational and operational changes need to occur. This maxim is far more complex in its implications than it might seem on its surface. For instance, a collateral maxim of change is ‘the people who got you where you are are often not the people who will take you to the next level. Change on this scale implies significant changes in the team. Cultural change implies significant dislocations that take many team members far out of their comfort zone.

The Approach: My first suggestion was a diversion of sorts. Keep in mind that it had to be designed and deployed in a way that the current team found acceptable. Without their buy-in, the effort would probably be stillborn. I came up with the idea of a bridge. I chose the term very carefully because it has two meanings – both of which would prove useful as the change efforts advanced.

The first definition – the one that I introduced in an off-site – was that the new structure was a communications bridge between sales and operations – a span of sorts that connected the two areas. It took the information generated by sales – checked it for completeness and accuracy – then communicated it to operations. It collected performance data from operations and communicated it to sales. The result, I suggested, would be a more orderly process which would highlight and correct sources of errors.

In order to design this process, we needed to map the processes of the company. My suggestion was ‘let’s bring in an expert to map the processes’. I had used this approach successfully with a number of other companies and felt that it might ‘clear the air’. We identified a process engineer who was a graduate student at a local university and employed him to ‘map’ the processes – to identify value added steps, dislocations and the causes of poor performance. The result of his efforts was dramatic. For the first time, the team started to understand the company in a radically different way. I remember fondly the first ‘briefing’. A white board was filled with the process map and the team sat in rapt attention as the consultant described the operations of the company. I could tell that they were seeing things in a very new way.

The first map was of the company as it was currently operating. Some of the team became very excited by this new clarity. Other team members seemed a bit either put off or taken aback by what they saw. Elsewhere, in an article titled Battle at the Cottage Gate, I have described this experience and the tensions and conflicts that can arise. I could tell that team members were realizing that the company was not going to remain the ‘cottage business’ it had been. For some this was a good thing – for others it was a threat.

Based on the first definition of bridge, we began to design its operations. The team – with the help of the process consultant – developed report formats for sales that defined the needed information before a job could be scheduled. They also designed formats of operations – reports that detailed results in sufficient detail to allow a review of results. Based on these, the bridge evolved as a coordinating and mediating part of the organization. The first major change in the organizational structure was the creation of a position on the bridge – a coordinator.

As the bridge began to operate, an amazing thing happened. The error-rate started to drop almost immediately. Sales began to generate more accurate estimates, negotiate better deals, provide information that was more complete and communicate that information more clearly. Operations, based on this increased clarity, were able to sharply reduce errors in delivery and increase both reliability and quality. During this time, a number of the original team members either were let go or decided to quit. They were replaced with more experienced people who had experience with larger, more complex organizations. After only a month of running under the new organization, I decided it was time to introduce the second definition of the bridge.

We have all had these ‘and then the sun came up’ moments. There is particular pleasure in orchestrating one. During one of the all-hands meeting, I made the following comment, “up until now you have been seeing the bridge as a coordinator between sales and operations – a kind of span. Now I want you to think of the bridge in a different way – as the bridge of a ship.” In the quiet that followed my suggestion, I could hear the gears grinding. The team began to realize that we had been, in fact, designing the command and control center for the company. Now the bridge was significantly more than a coordinating center. People who sat on the ‘bridge’ were responsible for running the company. As a result, they set and enforced standards that sales had to meet. They also provided oversight of operations – making sure that they delivered in a way that reinforced the branding of the company.

The Results: We are now several months into the operations of the bridge. The impact on the company and its fortunes has been substantial. One of the first was the development of detailed job descriptions. Where before job descriptions were cobbled together and team members often worked at cross purposes, now there was clarity. Everybody understood his or her roles and responsibilities – and those of the other team members.

A direct result of these new job descriptions was better teamwork. People began to work together much more smoothly. Internal frictions were sharply reduced. Errors and mistakes also dropped significantly. The team began to understand that they really could manage this much more complex organization. They also came to understand that many of the problems they had regularly encountered in the past came not from impossible challenges but from an insufficiently professionalized approach to running the company.

Under the new scheme, accountability is less of a negative concept. Team members understand their responsibilities and take great satisfaction in meeting them. As roles are clearly defined, filling those roles becomes easier – as does filing the slots on the team.

This process has caused a major change in the makeup of the team. Better than half of the people who made up the old team have been replaced. New team members are schooled in the new scheme. Their approach to their roles is much more professional and collaborative. As a result, the new team is much more effective in identifying and meeting new challenges. As growth has continued, they are getting more and more confident in their ability to manage a company that continues to become more and more complex.

From a purely economic point of view, things have also significantly improved. As the error rates have plummeted, the losses that came as a result have reduced sharply. The company is doing more business and the margins are increasing.

© Dr. Earl R. Smith II

Related Articles:

* Knowing Versus Doing – Post-Success Malaise
* The Challenge of Cultivating Innovation – Part 1
* The Challenge of Cultivating Innovation – Part 2
* The Challenge of Cultivating Innovation – Part 3
* Attitudes, Agendas, Interventions and Compromises
* The Challenge of Cultivating Innovation – Part 4
* The Challenge of Cultivating Innovation – Part 5

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Dr. Smith is Managing Partner of The Federal Circle. The Federal Circle partners with teams and existing companies. We help them up their game and win big in the Federal space. We also arrange funding for acquisitions and expansion by acquisition. Our model is based on the belief that, if you select the very best and work with them in a highly professional and focused manner, the results will be truly amazing. He is the author of Amazing Pace: Turbo-charged Business Development – a book that shows how Advisory Boards can dramatically increase revenue. Dr. Smith is also the author of Dream Walk: Parables for the Living – a book of Raven Tales and exploration.

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