Tuesday, August 30, 2011

Organizational Balloons

We run across a lot of business articles, or books, or consulting engagements, that diagnose the problem that ails us as one of inadequate communication.
Conclusions such as:
“The company is not innovative enough, because R&D has not talked to sales.” Or,
“The marketing has gone poorly, because marketing has not talked to sales.” Or,
“The production has been faulty, because operations did not talk with R&D.” or,
“The company is not making enough money, because marketing has not talked with finance.”
In some ways this is an easy explanation, isn’t it? If we work in a company of 1,000, or 10,000, or 100,000, aren’t we bound to find someone who isn’t talking with someone else? What are the odds that we would not find someone who wasn’t talking with someone else?
We then make an extra effort, implement a project, create another procedure or policy, which with enough attention, focus, and follow-up will succeed in helping R&D talk with sales. In fact, it works. Those two groups are humming along now.
But our time is finite, and the result of this is that the organization can be somewhat like a balloon. With all that focus and energy, while R&D is talking with sales, the people in R&D who used to talk with finance don’t have time to do it as often any more, or are not talking with marketing anymore due to their schedules, or not talking with operations anymore because it isn’t an agenda item any longer.
There are three ways out of the balloon scenario. The first is to add resources, so that the increase in time spent coordinating the current problem area does not take away time spent coordinating other currently functioning areas.
The second is to increase the efficiency or productivity of the coordination effort, so that the gains in time saving are available to spend on the current problem area.
Finally, we can create several smaller businesses out of a larger business. This lowers the time required to coordinate, but it will come at the expense of any synergies to be had from a larger combination.
Large organizations are always going to incur costs related to coordination, and there are always going to be areas where communication needs to be improved. We must keep our eyes open as we intervene to address these if we are to avoid getting caught up in squeezing the balloon.
I would love to hear your thoughts about Organizational Balloons or your stories on this topic if you have them.
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