Framework No 8: Organizational performance

How to improve organizational performance? This is THE core question managers ask themselves constantly. Because they cannot do everything on their own anymore, they ponder about leverage. It becomes more difficult when the number of people involved increases or the tasks to do are more complex.

There are many levers you have to influence organizational performance. The usual suspects: vision, mission, strategy, targets, formal organization, processes, culture, people. For each lever, there have been endless prescriptions and tools how to do them. For example: core competencies, core processes, USP, balanced scorecard, appraisal systems, management by objective, OKRs, lean [put in your favorite], six sigma, 360 degree feedback, incentive systems, empowerment, etc.

The organizational performance framework describes the underlying reasons why managers struggle to get the performance they wish. It also describes on an abstract level the areas you have to focus on in order to overcome blockers for organizational performance. It is a meta framework that makes fundamental organizational principles visible.

Source

The core of the framework is the work from Stephen Bungay. You can read more about it in this document or in his book ‘The Art of Action’. The framework is also informed by Bungay’s colleague Rebecca Homkes, who along with Don Sull writes about shared context and other findings relating to organizational performance in their recent HBR article, „Why strategy execution unravels and what to do about it,“ The concept of friction is very similar to the notion of fragmentation that Jeff Conklin talks about in his book ‘Dialogue Mapping’. You can get the first chapter for free here.

Category

Organization

What it is all about

Working in an organization can be very frustrating. There is a cacophony of voices, processes, rules, internal difficulties. Sometimes, nobody seems to have a plan. Our colleagues, staff, and bosses are not doing what we expect from them. And if that wasn’t enough, the competition and external environment is challenging and always changing. Puuhh!

Stephen Bungay and Jeff Conklin identified the root cause for this reality: friction respectively fragmentation. We human beings are finite entities interacting with each other. This leads to three fundamental gaps.

First: the knowledge gap. It is impossible to have all the knowledge we wish to have in order to make a well informed decision. Some things cannot be known in principle. This is especially true for wicked problems as Jeff Conklin calls them. And other information we could know in theory is too difficult to get in practice.

Second: the alignment gap. Suppose that you have been brave enough to make decisions based on incomplete information. Your next challenge is then to get it across the organization and align everybody around your decision. Jeff Conklin speaks of social complexity. That means that everybody involved has valid, rational, a lot of times different mental models and point of views on the matter at hand. No wonder that we see a lot of discussion and misalignment.

Third: the execution gap. Even if we are lucky enough to have a decision of what to do and everybody rallied around that goal, we face the unpredictable reaction of the environment! That is other people (customers, users, competitors, stakeholders, society) with their own will and course of action do what they want which interferes with our plans. As Helmut von Moltke once famously said: ‘No plan survives after the first contact with the enemy.’

The natural and normal reaction to these three gaps is as follows: get more information and make more detailed plans in order to close the knowledge gap. Preach your truth and tell people what to do in order to close the alignment gap. And finally, set demanding goals for units and control output in order to close the execution gap.

Doing all this and you get the frustration mentioned above. The organizational performance framework claims that this natural reaction is based on some confusion and the cure is to be found in behavior that is counterintuitive to common wisdom. What you have to create in order to address the three gaps are: clarity of intent, alignment of commitment, and autonomy of units. Let’s look at each of those in turn:

Clarity of intent

We live in a world with an abundance of information and complexity. People are stressed because they don’t know what to do. They want direction.

Getting more information and analysis won’t tell us what to do, because data is not our problem. We are confusing information with insight. What we need is insight. In all this data and information, we have to look out for patterns, meaning, a deeper truth. We have to separate signal from noise. So providing an organization with direction starts with sense making.

Once you have a better sense of the situation you are operating in, the second part of clarity of intent is to formulate a direction out of your insight. Now, the danger is to confuse detailed plans with intent. You don’t have to tell your organization in every detail what your plan is in order to provide direction. In fact, it won’t work — see the quote from Helmut von Moltke. Direction means that you make a strategic choice. You give people a frame for their own decision making by telling them: I want this, not that. As Stephen Bungay points out in his talks, you have to answer the Spice Girl’s question: „What do you really, really want?“ This strategic choice has to be directionally correct. It won’t answer all questions, but puts a flashlight on where to go and what to avoid.

A good example of a clear intent often cited by Rebecca Homkes is J.F. Kennedy’s address to the American nation: „I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth.“

Having clarity of intent is a conceptual exercise. And it is a prerequisite for organizational performance. The next step is to get the organization rallied behind the direction. For that I believe you need an alignment of commitment.

Alignment of commitment

As with the clarity of intent, the alignment of commitment comes in two parts. The first task is to create what Rebecca and Donald Sull call a shared context. I personally and regularly confuse truth with point of view. I believe that my view on a situation is just right. No, very strongly, I feel that I am right! I know the truth.

Or maybe not. For organizational performance, it is very important to integrate the points of view of the people involved. Listen with empathy to others, and you will realize that their point of view is valid and rational. It is something you should take into account. If you are able to create an environment where all points of view are heard and understood, you will get a different (better!) group dynamic for working towards the organizational intent. Jeff Conklin describes in his book that the power of Dialogue Mapping is to create a shared context. He also points out that the second part of creating an alignment of commitment comes quite naturally with less politics.

The second part is allocating resources. With resources I not only mean people, money, and assets. In particular, it also entails energy, determination, and will of the people involved. Certainly you can order things and make decisions on resource allocation. But then you run the risk of confusing order with acceptance. If the people involved do not personally commit to an order, an order is powerless. The hard truth for any manager: you only have the power your people give to you. You need the power of your followers. Allocation of physical resources is a necessary, yet not sufficient prerequisite of alignment. The psychological commitment of people is what makes the difference. Therefore, in order to close the alignment gap, you need an alignment of commitment.

Now that you know where to go, having the support of the organization through aligned commitment, you are facing the external environment. The organization has to go out and do it!

Autonomy of units

As nicely described in Stephen Bungay’s book, you need autonomous units in order to react to the unpredictably unfolding events in the external world. Unit should be understood as unit at any level: individual, team, department, business unit. The clarity of intent describes the WHAT and WHY. Now the autonomous units have to figure out the HOW. Enabling this autonomy has again two parts.

The first task is to identify, match and build competence such that the unit can fulfill the task it has committed to. Relating to competence, people sometimes confuse freedom with responsibility. It is fashionable to empower people, to have self-organizing teams, and let agile scrum teams figure out what to do. This is absolutely right if it is based on a mutually agreed understanding of competence. The superior, stakeholder, or principal has to be sure that the unit has sufficient competence to handle the task. And the unit has to be competent enough to understand that they have the freedom of HOW in order to serve the higher intent of WHAT and WHY. Autonomy without this competence will surely lead to chaos.

Secondly, the autonomous units need to have a bias towards action for outcome. It is always about results and impact. This is directed action. As we mostly work on wicked problems, we have to do a lot of trial and error. Learn fast. Move forward toward our goal. This kind of approach expresses an attitude of getting things done in a pragmatic way. Whenever you miss such drive but see a lot of activity, people confuse output with outcome. One reason for this is the fact that output is much easier to measure than outcome. And certainly we have to show progress in order to feel good about ourselves, don’t we?

So we tend to focus on the things that are easy to measure rather than constantly asking ourselves if we are on track towards our intent. A nice story comes to my mind when I think about this confusion: A policeman saw a drunk searching for something under a streetlight. „What have you lost, my friend?“ the policeman asked. „My keys“, said the drunk. The policeman then helped the drunk look and finally asked him: „Where exactly did you drop them?“ „Over there“, responded the drunk, pointing toward a dark alley. The policeman then asked: „Why are you looking here?“ The drunk immediately replied: „Because the light is so much brighter here.“

Why I found it valuable

The framework provides a meta-structure to understand what is going on in organizations. The various tools for strategy, culture, organization, etc can be associated with the three sections of the framework. Different forms of organizations and their characteristics (for example catholic church, military, multinationals, startups, growing organizations, NGOs, etc) are playing out the three sections in a different way — I will write about this in a different post. So in a way, the framework provides a general theory about organizations. As a mathematician, I like general theories :-).

In addition, it actually can be applied to practical problems. Knowing about the framework, I think differently about how to improve the organizational performance of our product management at XING. Also on this topic, I will write some articles in the future. As a teaser, you can look at our north star for product management at XING. It shows how we try to implement clarity of intent, alignment of commitment, and autonomy of units.

Relevance for product management

Any product person will confirm that product management contains a lot of friction or fragmentation! Constantly, you have to live lateral leadership, manage stakeholders, and make trade-offs. So for product people it is very helpful to know about the root causes of all the friction they experience in their daily work. And they get a hint where to search for a solution to reduce frustration and increase performance.

Two things I like to point out, especially for less experienced product managers (the more experienced product managers will certainly know them): 1. You always work in a context. It is not your job to build ‘just a great product’. Your responsibility is to understand which context you operate in. That means you have to have clarity on the intent and know how your product serves the greater good. It is only then that you can move with your team in the right direction. 2. Freedom comes with responsibility. Autonomy is not an end in itself. It is a means towards an end: superior performance. Because of that you have to earn autonomy. The more you prove your competence, the more responsibility and freedom you will get. As a new product manager, excel at your first line of responsibility: make the team productive, have good user stories and a well-managed backlog, solve the daily issues for the team. Only then get involved in roadmap planning. And product strategy. Listen. Learn. Offer and test your thinking.

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Caution: don’t fall in love with a framework. They support, not replace thinking. Frameworks always have a point of view on reality. There are other views as well. Stop using a framework if it doesn’t help to create insights.

Originally published at produktfuehrung.de on September 10, 2015.