Service Oriented Organizations
Many management models, practices and techniques have been created or evolved from IT initiatives. Agile came up, project management evolved and business operation and digital operations became one.
Technology is essentially made of logic, and we have still a lot to learn from it.
From monolithic to Service Oriented
One of the latest technical evolutions in the software development world is from monolithic applications to service oriented architecture.
In the monolithic application, the components were strongly dependent on each other, risky and complex to change, and highly probable for a simple failure to cause a huge impact.
By the other hand, service oriented architecture (SOA) brought a loosely coupled architecture, where each part of the whole system works almost independently in microservices. It means that a failure in a given microservice, despite still might impact another one, its way easier isolate and recover, the impact is considerably less and changes are easier, less risky and faster.
Monolithic Companies
While companies grow, executives face the bitter trade-off between the control required by a complex organization and the agility and flexibility necessary to move as fast as a start up.
Then, a risky phenomenon get started as a domino effect…
…simple processes become complex…
… and lean frameworks become fat…
Human Relationship Limits
Dunbar’s number is a suggested cognitive limit to the number of people with whom one can maintain stable social relationships (source)
Robin Dunbar proposes that humans can comfortably maintain 150 stable relationships, what would help explaining why big companies start getting bureaucratic. As managers feel less comfortable with the number of human relations, they try to compensate with more controls. However, control is not the problem itself, but manual tasks and dummy controls, such as how many minutes people work, or obligating people to create Jira tasks even to go take a coffee.
People get Disconnected from the Mission
When I worked for Farfetch, a luxury goods e-commerce platform, there was a jargon/mission statement (or something similar) called “for the love of fashion”.
Maybe for the founders, commercial and marketing teams, it sounds inspiring, but it surely doesn’t for tech geeks. We were there for the love of technology.
Later, a new Chief Data Officer joined and launched a strategic initiative called something like: “where data meets fashion”.
It sounded way better for data team, I believe. But even this statement will, for sure, get too generic when the data team reaches 300 people, and those focused on each specific part of the data science will probably not feel connected to this.
Strategic Intelligence — the Wisdom of the crowd
The Wisdom of the crowds “[…]is a book written by James Surowiecki about the aggregation of information in groups, resulting in decisions that, he argues, are often better than could have been made by any single member of the group.”.
While the necessity for control increases, the strategic thinking start getting centralized into a few executives that don’t really know how things get done daily, have almost no contact with the customers and don’t face the daily challenges caused by top down decisions.
It reminds me the two times I moved to another country. The decision was strategic and, for sure, was the best choice, but as much as I took the decision, I also had to deal with it’s consequences, and several times I wanted to press Ctrl+Z and get back to my comfort zone.
Distributing the decision power would be like creating a huge cluster of powerful machines to process data and perform complex analysis.
But remember, just as machines, you must provision people with quality data. Quality data in, quality decisions out!
Then, a key question comes up:
How to ensure the proper levels of control without creating a bureaucratic and slow machine?
Service Units
Instead of scaling the framework, breakdown the structure into simple, loosely coupled and semi-independent pieces.
Instead of creating a monolithic, hard to manage, complex to change and slow structure, I believe in a model where we break it into smaller pieces, what I use to call Service Units.
You will find a similar reference in books like Strategic IQ: Creating Smarter Corporations, where John R. Wells talks about something like Strategic Units, but I’ve opted out to go through the Service Unit approach, since it can be compared to the SOA logic and is largely supported by Service Management practices, such as ITIL and VeriSM, to help you addressing specific challenges in this system.
In a service oriented organization, each department, area, sector or whatever you prefer calling those units, becomes Service Units, which always have suppliers, customers and is composed by about 150 people.
Just by adopting the service mindset, we automatically create a few desirable outcomes:
- People may start focusing on their customers, not on the boss
- Smaller units with meaningful mission — where each unit has it’s own mission, related to their primary customers.
“To delight the customer” sounds beautiful, but it’s really hard for the HR or internal IT team to connect it objectively to what they do.
- Simpler to manage — less people, simpler processes, things just flow through solid relationships
- Closer human relationship
But, even a simple structure like this may become a complex service network in a big company. When it starts happening, we just add a simple element that drastically abstracts the overall complexity: the Service Center.
Service Center
The Service Center may be compared to the Message Broker, in a SOA architecture. By simply adding the Service Center to intermediate the relationship between the Service Units, other important outcomes come up:
- Single contact point — instead of understanding the full service network, you have a single contact point to direct your request to the right unit, abstracting the complexity of the system
- Quick and central access to relevant knowledge — every service unit can share relevant self-service articles, service details and any other relevant information with their customers
- Central service controlling processes and software — the SC works as a governance hub, where you can introduce business rules and measure the effectiveness of the system based on common metrics
- Data hub — all processes data passes through the same system, producing the same data model, facilitating a consistent measuring system
- Compliance control point — whenever it’s necessary to introduce internal controls, the SC works also as a hub where you apply once for everyone
And what happens with the executive level?
C-Level exchange managing a system that is now mostly self-managed, by governing it through policies and business rules applied into the SC, resulting in:
- Less interventional control
- Quickly enforcement of essential policies (such as cost approval levels)
- Mitigation of micro-management
- Senior executives quickly ensures strategic movements
- Everyone stop fearing audits over the internal processes
Common Metrics
Every single department was created to add value to another entity, being another department or the end customer, such as operations and commercial.
So, in addition to the traditional metrics of each department, such as throughput, financial, operational efficiency etc., in a Service Unit level, there are two basic, but strategic, KPIs to monitor:
Service Level s— the level in which a Service Unit comply with the quality criteria agreed with their customers
Customer Satisfaction — It’s necessary to hear the voice of that customer for non-objective criteria too
The Service Oriented Organization is a self-managed system that simulates a natural continuous improvement wheel, where people are empowered to make the difference and have a clear direction to do so.
Bear in mind that our role as management professionals its not to create dependency on our coordination efforts, but to create an autonomous system where the decisions can be made and the problems can be resolved without our intervention (organizational reliability engineering?).
This is also a warning for the executive level — if people feel they will lose their jobs by making the system more effective, they’ll simply not do this, and that’s why, sometimes, you should consider hiring outsourcers and consultants and, in all the cases, it’s always strategic to create a safe environment for innovation.
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