No principle screams from the page to me than this one, yet rarely have I seen it implemented.
I have worked under various managerial styles, but it boils down totwo approaches for me, integrated or divided. All enterprises of anysize do need to be composed of many organizational units, but that isto divide up the people into manageable groups; it should not dividethe enterprise into separate fiefdoms. Just think how many times youhave seen or been part of a re-organization, and then think about howmany times that has changed the actual work you or anyone else does;the latter adds up to just about nil.
Consider a complete enterprise, with all the usual line and stafffunctions ; ask anyone in that enterprise how it is structured to doits business and you will probably be shown an org chart. The usualhierarchy of boxes and lines, from CEO down to the base units, is thebusiness graphic that is the oldest and most commonly used. However,why does it have to keep changing? That’s because people are notautomons, they need to be grouped in ways that maximize theircontribution to the enterprise, while hopefully having job satisfactionand a boss they don’t loathe; and since people come and go, and sincepeople can change over time, any one instance of an organization (asrepresented by an org chart) will be become sub-optimal as time passes,so re-organization is needed, and it is a good thing if it re-energizespeople and re-marshals the enterprise to be its most effective.
The problem is when management believes that the org chart at anyone time also represents how the work gets done. Worse yet, they alsouse the org chart as the basis for changing/improving how the work getsdone. This is the ‘divided’ managerial style I mentioned earlier, andit directly affects how the enterprise carries out projects.
At any one time, an enterprise has certain amount of capacity toimplement change; the main numbers are how many people there are to doprojects, and/or how much money is available to hire outside people todo projects. These numbers are a primary input to that common-placeactivity of annual budgeting/planning; these numbers arelimited/finite, so managers need to decide how to best use them. In thedivided managerial style, each major tree below the CEO on the orgchart is allocated some portion of those numbers; if you have 10 peopleavailable for projects, the number used may be 120 person months. So,Sales is allocated 20 months, Operations gets 40, Finance gets 35,etc. Management may come up with what it believes areequitable/effective means of divvying up the number beyond justdividing it into equal units, but that is a sham; this is furtherreinforced by the sham idea that if each unit operates and changessuccessfully in of itself, then the total of all the units’ successwill equal the overall success of the enterprise. Does your companyhave internal charges between departments, often referred to as ‘funnymoney’? Then your company is divided, because all that funny moneymeans nothing to the bottom line of the enterprise.
A divided approach is a problem when projects are used to improvethe business, because projects change the work, not the organization.Take an important and common business activity, order fulfillment. Ifyou trace the work from when a customer first orders a thing or aservice, to when its delivery is complete, many (many!) org units willbe involved. So, if each unit independently attempts to change/improvethat stream of work, they will either overlap with other units orduplicate what other units are doing without knowing it.
The main result for IT is that each org unit will want to use itsallocated resources to get its own projects done. So, irrespective oftheir overall value to the enterprise, a number of projects will getinitiated. This will result in overlap or duplication within thesystems IT delivers, assuming the systems are delivered. IT managementwill be faced with conflicting demands on their limited resources, soonly some sub-set of the projects will be proceeding while others waitfor resources. This leads to projects stopping for a while when theyget to a point where they need new types of resources, and then have tostart up again when those resources eventually become available.
So, irrespective of the method used to divvy up project resources,the ‘divide’ approach produces an ineffective and wasteful projectsenvironment. The solution to this problem is to move to an integratedmanagerial approach.
An ‘integrated approach’ recognizes that an enterprise is a teambrought together to operate a business, not a collection of independentfiefdoms; a CEO that recognizes and leverages this approach also knowsthat projects to improve the business belong to the enterprise, andalmost always impact multiple organization units. Given thisrecognition, how an enterprise organizes its resources to carry outprojects then will (or should) be tailored to the mix of peopleinvolved, just like any other aspect of organization. This could beanything, from ad-hoc teams to a full Project Management Office. Anygood structure will do, as long as the enterprise view is maintained.
And that’s all I have to say about that.
David Wright