#### #### Links [Transistor](https://feeds.transistor.fm/essential-dynamics-with-derek-hudson) [Spotify](https://open.spotify.com/show/3DBRCVFep0YbYeLPcVVXQv) [Google Podcasts](https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy50cmFuc2lzdG9yLmZtL2Vzc2VudGlhbC1keW5hbWljcy13aXRoLWRlcmVrLWh1ZHNvbg?sa=X&ved=2ahUKEwin24vksc-DAxUNm44IHYKABVcQ9sEGegQIARAG) [Apple Podcasts](https://podcasts.apple.com/ca/podcast/essential-dynamics-with-derek-hudson/id1542392917) [Podcast Addict](https://podcastaddict.com/podcast/essential-dynamics-with-derek-hudson/3153944) #### Summary Ann, Glen and Derek talk about how to break down silos in an organization. Hint: it's all about the system. #### Concepts - [[Silos]] - [[The System|System]] - [[Purpose]] - [[Value Chain]] #### Quotes >You have to be able to step back and see the system that creates the value, which is not an org chart. The system which creates the value is the flow of taking inputs and adding value to them every step of the way, and then putting it in the hands of a customer who says, "Yes, that's what I wanted. I can't get this anywhere else. Thank you very much, and here's some feedback for next time." >People in organizations have a perspective of value creation that doesn't get tapped... People absolutely want to create value every single day and try different ways of making that better. >You have conflict sometimes with the actual way the organization is managed against how people view their ability to contribute value to the purpose. >The first thing is: have a very clear purpose of what success is both for the organization and for the customer... You have to be very clear on that. And it's hard. It's really hard to do, but you have to be very clear...Then you have to understand the system that you use to create it. >If people can identify it with [the purpose] and they can see that doing their job and supporting other people doing their jobs supports the purpose, then I think they need less supervision and accountability. >A measure of success would be, if we sat down with a new client that we are working with in the future, and said, "Tell us about your business" and they started with the purpose, and move to how they create value, and we never saw an organization chart. #### See also - [[Episode 87 Organization Silos (Business Traditions That Have to Stop Now Part 1)]] %% Those KPIs are designed to have what is it that I can control so that I get more of my bonus based on what I can control in my little silo, in my role in that little silo. We reinforce by the org chart, the incentive systems, we reinforce people to stay in their lane because it's deemed to be operationally efficient So you have to be able to see that system. If, whenever you get pushed, you drop back to the org chart, then you give people the easy out to drop back into their tribe and to say, "Well, we did our part and we don’t care about the rest." But here’s the thing - an organization,... a single corporation, that’s where the bank account is, that's where the shareholder expectations are, that's the entity that contracts with other organizations, that has actual relationships with suppliers and customers - there isn't anything else. Everything below that is something that we make up to try and get a whole bunch of people working together to produce this value. To the extent that we don’t talk about the purpose and the system that we use to create the purpose, then we default to "what’s the stuff that’s coming across my desk?" And then to make it worse, then you put in an individual incentive plan, or a group incentive plan, and then you have to design an incentive plan so precisely that it doesn't screw up the work processes that actually create value in the organization. And there's no end of ways in which you can mess it up, and very very hard to design something that's going to be resilient enough to flex with the business and not put perverse incentives every which way. If you understand the purpose of the organization, then you can see upstream and downstream from the work that you do, and try to make it better, and you can have interactions with customers and suppliers, and try to make those relationships better. But if you don't understand that stuff, you're really stuck with a job description..., the tools at your desk, and the kinds of stuff that goes in your inbox. Then you have to understand the system that you use to create it, and we talked about our tendency is to break the system up into pieces, because the whole thing is too much. And what we've learned from Doctor Goldratt and his theory of constraints is in a complex system usually there's one factor, one limiting factor that can't keep pace with all the others, that affects the output of the system. And if you understand that, then you can understand what the system's capable of. And so what you want to do? First thing we talk about is all constraints are bad. Let's get rid of them. No, it's actually not true. You want to choose the right constraint, which typically is the highest cost, the highest value, the most intricate step. And you want to use that as a control point and then arrange your whole organization around supporting that. So when you talk about on time departure? All kinds of things that no one ever cares about if they're done in time so that the plane can depart on time. But there is a window into in which you get into the yellow zone of the red zone and you risk on time departure. But if you can stay away from that. Then you're contributing and that and so if you talk about, think about those functions even in an organization that doesn't have, you know those as obviously tangible steps. You need to keep things away from becoming the constraint. If they're not the designated constraint. So you you have things like like buffers and excess capacity so that they constraint can be managed. You don't then need to focus too much about operations versus sales versus engineering. You understand if if we're an organization that's going to have a backlog, we're going to take more orders than we can deliver. Then we just need to keep putting more sales in the system, so we have a bit of a backlog. And then we'll manage our production on the inside. And then we and then our simpler system simplifies and then you have to help people understand that when they contribute to lack of variation in the system, when they can contribute to having on time or available capacity always. That they're supporting the system. So there's a there's some process oriented stuff to that, but there's also this question of purpose. And if people can identify it with that and they can see that them doing their job and supporting other people doing their jobs supports the purpose, then I think they last, they need less supervision. And what we you know we're referring to is accountability, which is being set up to being blamed for something.