In January 2009 I was asked to visit this business unit and determine whether or not its performance could be improved by instilling a Lean culture and related methodologies. Instead of taking a traditional Lean view of the organization, I examined it from many different perspectives including strategic, organizational, innovation and Lean. As part of my review, I prepared a current state organizational chart. On this chart I flipped the normal world upside down and instead of putting the President at the top of the organization I put the employees who were closest to the customer. I did this because I felt they were the most important people to the business given they interacted with the customer every single day. One of the greatest improvement opportunities existed in the organizational structure as it just seemed cumbersome and inefficient. There were many layers of management, reporting relationships and roles weren't always clearly defined and some managers had upwards of 30 people reporting to them.
On the last day of my visit, I discussed my findings and recommendations with the business unit leadership team. My first recommendation was to hold a 5 day event to build an improved future state organizational structure and the leadership team whole-heartedly agreed. However, we now needed to obtain buy-in from the Executive who held overall responsibility for this business unit and my Executive department head. So I prepared a formal project proposal and the business unit leadership and I held a meeting with the two Executives. The proposal laid out a compelling business case including what the project would need to achieve in order to be deemed successful (i.e., measures/metrics of success). Due to this and the fact that both Executives were forward-thinking individuals who were open to new ideas, we received the green-light to proceed. Having obtained critical top-level Executive support, the journey was officially underway and we now needed to determine the event approach, timing and team.
Approach, Timing & Team
I had never done anything like this so I began my research with a visit to my favorite book store's management aisle. Here serendipity kicked in and Gary Hamel's book "The Future of Management" jumped right out at me. Once I started reading it I could not put it down and read it cover to cover. For the first time, the root cause of all the problems I had seen and experienced in hierarchical organizations became crystal clear. The crux of the problem was the hierarchical management model and most striking was the sheer level of workforce disengagement and dissatisfaction it created. Businesses were failing their people and if this didn’t scream out the dire need for an overhaul, I really wasn't sure what would. I immediately knew the journey the business unit should undertake - a complete transformation to a 21st century business model.
I began to extensively research and learn everything I could about Semco, W.L. Gore and Whole Foods. I zeroed in on these three in particular as the organizational structure and culture of each varied significantly on the scale of radicalness - the most extreme being Semco, W.L. Gore the next and Whole Foods following this. I thought having the business unit team learn about each would be a good way to show just how far we could go.
I developed training material to help educate and guide the team. My aim was to help them see and understand what was wrong with existing hierarchical models and what could be realized instead - a 21st century accountability-based business. To quote Gary Hamel - "a management model that truly elicits, honors and cherishes human initiative, creativity and passion."
In the midst of my research and training material preparation, I received news that the business unit’s President was being promoted to a new role and a new leader was being put in place. The organization was now going to be headed by two leaders, the new V.P. of Operations and existing V.P. of Sales. I immediately scheduled a meeting with both of them to discuss the approved proposal and outline the journey I thought they should undertake. I discussed the research I had conducted thus far and previewed some of the training material I had created. Half-way through the training material preview, they said “we are in, we love it, let’s proceed.” Obtaining their buy-in was made easier due to the new V.P. of Operations being one of the original members of the organization and possessing a deep understanding of all facets of the business. Both leaders’ receptivity to innovative ideas, especially when it came to managing and leading people, also made achieving buy-in possible.
We agreed to schedule the event for April 2009, allowing enough time for the V.P. of Operations to transition to his new role and for event preparations. We discussed the event team composition and I asked that we have one representative from every area of the business, each being an A player and possessing the courage to speak openly and honestly. After much discussion, we ended up with a team of eighteen people each of whom would be able to bring the unique perspective of their role in the organization to the event. To generate excitement and begin preparing the organization for change, we created a participant invitation and a company-wide announcement that would come from the two business unit leaders.
The invitation informed each participant they had been handpicked to bring their valued and unique perspective and serve as a leader for their functional area. It described the event’s focus on the creation of a new organizational structure, activities that would take place, where event would be held and time commitment required. They were told their participation would enable them to make a significant impact on the future direction of the business. They were also asked to bring an open mind-set, set-aside conventional thinking and continually think of and ask ‘what if’ questions during the event. After the invitation was emailed, each participant was contacted to see if they were willing and able to be part of the team and if they had any questions. All eighteen were very interested, able, curious and excited.
The company-wide announcement outlined the launch of an initiative which would enable the organization to take another step in its evolution. The initiative’s aims were described as well as fact that members across all functions and levels of the organization would be involved. It stated that though formal updates would be provided along the way, everyone was encouraged to ask questions or for more clarification at any time. Also, event participants were encouraged to spread the news about the initiative amongst their peers. Lastly, the date and focus of the first event in the initiative was provided.
Event #1 – April 2009
We began the event with an opening from the business unit leaders who explained why we were there, what we aimed to accomplish and thanking each participant for their time and involvement. I then took the team through training material on management innovation and Lean. Though they are competing paradigms, I knew it was not an 'either/or', but an 'and' need to for the organization to become both innovative and Lean. Also, the team needed to learn how hierarchical organizations evolved and the problems stemming from these types of models. It was an eye opening experience for all involved as it had been for me when I first read Gary’s book. After this I took them through an exercise to uncover existing management paradigms. Having a team comprised of members from all levels and functions of the organization made this interesting as one team member would state something like, “function X can’t be trusted to do their job” and the member from that function would respond “that is not true” and describe the challenges they faced. It was a great exercise to begin uncovering, challenging and dismantling existing views and convictions.
We then reviewed the current state organizational chart as a whole team, after which I split the group into two teams and had each work to draft a potential future state organization. While both teams struggled with this task, one team in particular had a very rough time opening up their minds and envisioning new possibilities. At the end of the event, we had one chart that was an upgrade to their existing hierarchical model and another that held more promise as it was organized around a teaming concept. The business unit leaders and I then determined that we would like to hold another 5 day event with the same 18 person team if possible. We wanted to take another crack at it as we felt we could get to where we wanted to go with some more time. We asked the team if they were up to the challenge and additional time commitment and said that if they weren’t that was completely ok. All stated that they wanted to continue on the journey and see it through. The business unit leaders and I then discussed the event results with our two Executives and obtained permission to continue with another event.
Event #2 – June 2009
I began the next event with a video of a speech given by Terri Kelly, CEO of W.L. Gore, which highlighted new ways of thinking and being and created may ‘aha’ moments for the team. Given their struggle with envisioning a new future state, I then took them through additional training material on Whole Foods’ model as I felt it held the most relevant lessons. At the end of this, it was amazing to feel the enthusiasm of the team as they fully grasped how they could apply all they had learned and truly forge a new path.
Keeping the full team together, we reviewed the first event's two organizational models again. We merged the best ideas with new ideas and at the end of 5 days had created a new organizational model. The model was based on a teaming concept much like Whole Foods, with leaders being elected and not appointed. No leader would lead more than 5 people as it was felt that over this number, the leader's ability to interact and develop their team was diminished. Layers of management were removed as the teams would be provided with the authority, information and tools needed to direct their own activities. So top-down managerial direction was no longer needed as the teams would be accountable for their activities and results.
The field operations would consist of district teams, each comprised of 5 district representatives and 1 elected district team lead. The district teams would roll-up into regional teams each having a regional team lead. The regions would roll-up into division teams led by elected division team leads who were also regional team leads (i.e., division team leads would lead a regional team as well as a division team). In the office, there would be a support team and customer-focused team. The support team would include administrative, accounting, human resources, etc. The customer-focused team would include operations, program management, etc. The office teams would also elect their own team leads.
Now that we had a skeleton of a new structure, we knew we needed to hold additional events to build out the accompanying operational details and management processes. We also decided to first implement the changes at the headquarters office in August 2009. The headquarters was smaller in size and thus, would serve as a great pilot. We would take the lessons learned from this implementation and apply them to the larger field operations roll-out which we slated for February 2010. The journey was now well underway, but many more challenges still lay before us.
Obtaining Executive Permission & Full-Time Facilitation Resourcing
After Event #2, the business unit leadership and I talked about what would be required to bring the desired future state to reality. We concluded that my full-time assistance would be required in order to keep the business running while also enacting the transformation. We prepared a presentation outlining the benefits and drawbacks of the existing model, the proposed future state including associated benefits and risks and the transformation resourcing required. We presented and discussed this with the Executive responsible for the business unit and received her blessing to proceed. That Executive and I then met with my Executive department head and he agreed to assign me full-time to this initiative until the transformation was complete. With permissions and resourcing obtained, the business unit leadership team and I began planning for the Headquarters roll-out.
Headquarters Roll-Out – August 2009
Though we had communicated the results of the two events and our plans to all within the company, we knew that we had an uphill battle to get more than the event team onboard with the desired future state. So we planned a two day event to roll-out the changes to the headquarters personnel. We felt it was important to first educate and provide everyone with a base level of understanding which would then enable them to fully grasp and appreciate the new organizational model.
The business unit leaders opened the event by presenting why we needed to change and what they could expect from the next two days. I then provided the base level of understanding by taking them through shortened versions of the training material on management innovation and Lean. On the second day, the business unit leaders presented the new organizational structure and plans. A key thing that jumped out at us was that people were nodding in agreement with all of the field changes as that was 'for the field'. However, when we got to the office changes it was a different story. Though some people were excited, some didn't believe any of it was going to happen and this was just ‘a flavor of the month initiative’, others believed management and not the event team developed this concept so it was not to be trusted and a few were really upset as these changes truly scared them. Another key lesson was that people had a hard time focusing on the educational piece in day one as all they wanted to know was the answer to the question - "What are the changes?"
We also wanted to give people the ability to choose what job/position they would like to have in the new organization. Our inspiration for this came from the medical field where medical professionals at the end of their residencies could submit their top three choices for final postings/assignments and receive one of those. So the leaders announced all jobs were going to be opened up and people could apply for their top three choices regardless of their current positions. The leaders would endeavor to ensure people got one of their choices and preferably their top choice. To assist people in this process, job descriptions and related baseline qualifications would be provided for each position. Upon hearing this announcement, quite a few didn't believe they would truly get a choice and the job posting process was all a farce as decisions had already been made behind closed doors. Others worried that they would get a position they didn’t want or was not as good as the one they already had.
Upon hearing all of these beliefs and worries, the business unit leaders decided to organize meetings in which they and the H.R. Manager would meet with each person. They met and discussed each person’s concerns, thoughts, feelings, questions, possible top job choices and future aspirations. This proved to be a defining moment and effective response to help people through this transition. People began to see and believe that they really did have a voice, they mattered and the leadership team was serious about this transformation. One problem encountered was the job descriptions took longer to develop and get approved by the Corporate H.R. department than anticipated. So the job posting process was delayed a bit which cause some dissatisfaction. This was an early lesson in the importance of communicating that not all in this endeavor will go according to plan and to remain flexible. Ultimately, everyone received one of their top three choices with the majority of people receiving their top choice. Individual meetings were held with each person to tell them which position they had received and to discuss any questions or concerns if they had not received their top choice.
The next challenge was going through the team lead election process. The elected team leads would serve a term of a year and be paid a stipend as the position would require additional work. We didn't define how the teams were to go about selecting a leader as we wanted them to be able to determine this on their own. We did however set some baseline experience requirements as we knew that team leads needed some minimum levels.
Some teams didn't want to elect a leader as they just wanted management to choose for them, others got a bit political and yet others proceeded through this process smoothly and amicably. Through it all the leadership team kept the lines of communication open which helped each team successfully navigate the process. An interesting situation which arose was one team wanted to elect two leaders to share leadership. In the spirit of experimentation and providing autonomy the leadership team said "if this is what you want and you think it will be most effective, we support you." This proved to be another defining moment when people further realized they indeed had control over their own fate.
We also need to develop other new supporting management processes beyond the job opt-in posting process and team lead election process. So we began to engage each of the office teams in this endeavor and first asked them to create their own team standard operating procedures which would include their team values, management processes and work processes. We didn’t give them a prescribed format, but gave them a general idea of what should be included and why. Having this type of freedom proved difficult and frustrating for most as they were so used to receiving direction and just executing. The leadership team met often with them and served as sounding board, but tried hard not to tell them exactly what to do. Eventually the teams began to gain confidence and traction as they shared what they were doing with each other and improved by merging best ideas and practices. Their team standard operating procedures also continued to evolve as they gained experience and encountered difficulties that they needed to address.
We also wanted to rearrange the office to create an open, collaborative environment. So we asked for volunteers to work on creating a plan for a new office layout. The team was given some general guidelines and parameters and turned loose. The first plan was rejected as it didn’t take into account the need for room to grow. However, their second plan hit the mark and was approved by the business unit leaders. It included open collaborative spaces and tearing down existing cube farms. The team oversaw the redesign from planning through execution and the end product was outstanding. The change in the physical space further aided in the cultural transformation from functional silos to accountable and collaborative teams.
Regional Manager Roll-Out – November 2009
Once the changes were well underway in the office, we turned our focus towards the next phase of the roll-out which entailed further developing the field structure and related management processes. We knew we needed and wanted the regional managers’ help in this development and overall roll-out slated for February 2010. So we brought them in for a 5 day kick-off meeting and took them through the educational training and presented the new organizational structure and plans. It was here that it became crystal clear that we definitely needed to reverse the order of this roll-out by explaining the changes first and then providing the background education. As one regional manager so aptly put it - "I want the ice cream first and then you can tell me how you made it and what the ingredients are".
One of the first paradigms we had to overcome was their belief that field personnel would not get anything done without strict command and control oversight. So we focused on why they held this belief and it turned out that each of them had been burned at some point by what we deemed a three-percenter. (i.e., people deemed to be within the bottom the three percent performance-wise and who seemed to always be doing something that wasn’t appropriate.) We then discussed how we should not design an organization suited to control the bottom three percent of people. Instead we need to build one that engaged the other ninety-seven percent and helped put the bottom three percent on a get-well plan. This discussion helped them overcome this paradigm and we began to engage them over the next several months in the field organization and supporting management processes development. In December we collectively determined that based on the workload in front of us, we needed to delay the field roll-out from February to April 2010. This delay did not go over well in the organization, but it was the right decision and eventually most would come to appreciate that fact when they experienced the roll-out in April.
Amongst many other things, the regional managers and business unit leadership team worked tirelessly on developing geographic regions for the district teams, identifying people to comprise each team, regional team standard operating procedures, a recognition process which would support and encourage the desired culture and a T.E.A.M. (Talent, Engagement, Accountability & Motivation) development plan and process which included on-boarding, 360s, and self-directed personal and business development plans. Meanwhile, other teams within the company were working on developing a new budgeting process which would provide teams with their own budgets and financials, a scheduling process which would enable teams to efficiently schedule themselves and analytics reporting and processes for use by both internal teams and external customers.
We brought in the regional managers approximately 5 times to work on developing various facets of the new organization. As could be expected with a transformation of this size and nature, there were clashes and disagreements on many fronts. However, to see the change in them from the first November meeting to the final April 2010 meeting was an amazing gift. They had become huge proponents for the change as they truly believed in the new management model and culture.
Field Roll-Out - April 2010
By April we were finally ready to present the changes to the field. Since August, over 20 new management processes had been created including a business forum process which brought the entire company together virtually every quarter and voice of the customer surveys for both internal teams and external customers which enabled the business unit to measure and improve engagement and satisfaction levels.
We organized a weeklong event dubbed the National Service Meeting. We brought the entire organization together from all over the U.S. and Canada. This was the first time most of the people had met each other in person as the last time the organization had been brought together was 8 years prior. We had developed and been conducting various surveys throughout this entire process. Based on the commentary received in these surveys we knew that the field was more open to these changes than the office had been. In addition, the regional managers had been holding regular meetings with people in their regions to keep them informed and solicit feedback.
The National Service Meeting began with an evening welcome reception and the next morning kicked into full swing with an introduction outlining why we needed to change, a presentation from the business unit’s largest customer and the presentation of all organizational changes. Breakout sessions which entailed people meeting with their new teams, electing a team lead, receiving educational background material and working on developing their T.E.A.M. development plans and team standard operating procedures also took place during the week long event.
Again, the election process proved to be the most challenging. However, we were more prepared having now run through it with the office and the regional managers who also elected team leads. The regional managers and leadership team were able to successfully work through the field team conflicts and disappointments of some who were not elected.
Similar to what occurred in the office roll-out, there were some who didn't believe that these changes would really take place. However, by the end of the week it was more than clear to them that this was not the case and we felt the tide begin to turn. It was one of the most rewarding experiences of my life as I saw peoples' excitement beginning to rise. I had people coming up to me saying "I have waited to work for an organization like this my entire life. Thank you for the changes and for your involvement in this endeavor." After this roll-out, the transformation was now fully underway throughout the entire organization.
Benefits of existing hierarchical management model:
- It Worked – they had experienced 9 years of success
- Functionally Ordered – it encouraged specialization
- Highly Disciplined - provided service standardization
Drawbacks of existing hierarchical management model:
- Employee disengagement and dissatisfaction
- Inefficient management model - micromanagement prevailed
- Specialization – limited flexibility and resource development
- Irregular Resource Management – uneven workloads
- Inefficient Communication - at all levels
- Limited Innovation
- Lack of Quantitative Metrics
Benefits of new accountability-based model:
- Company comprised of self-managed teams - hierarchy of overseers replaced as peer pressure and teams better ensure things get done. People have freedom to determine the what, how and when of work. Teams have responsibility for scheduling, budgeting, hiring selections, etc. Leaders are elected, thus leadership is earned not appointed. Teams collaborate and work remotely by leveraging Microsoft and SharePoint 2010 tools (e.g., dashboards, blogs, wikis, instant messenger, live meeting, etc.)
- Improved engagement and satisfaction – people are a partner-in-a-cause, not just a resource to get things done
- Cross functional training - creates stronger and more adaptable individuals and teams
- Effective resource management - self-scheduling vs. scheduling by a manager
- Unlimited innovation - ideas could come from and be acted upon by anyone within the organization
- Improved communication - information flows freely and transparently throughout the organization
- Common goals and metrics - enables all to focus and pull in the same direction
- Stronger relationships - with both internal and external customers
- Effective Rewards - provides a combination of recognition and financial rewards, as not everything in life is about money
Motivation is not something that can be commanded. It is something that is internally driven and which only the right environment and organizational model can elicit from people. So our aim was to create an environment and model that would best enable people to satisfy their innate desire for autonomy, mastery and purpose. Autonomy - meaning having control over your own fate. Mastery - meaning being able to learn and develop new skills and knowledge. Purpose - meaning understanding how your individual actions tie into a greater goal or purpose. The benefit of this approach to business is that from successful people come successful organizations. (See more on autonomy, mastery, purpose - in Daniel Pink's book Drive. Also, book Freedom, Inc. has great information on ingredients needed for empowered environments.)
In a world that is ever changing at an increasing pace, we needed to create a model that would best unleash the potential within our people and enable us to quickly adapt and change. I believe the model we created has the potential to do just that and very effectively. Though this transformation is still in its first year and organizational evolution will take years, the factual evidence supporting the benefits of this model will become increasingly evident. That said, a management model that will best enable them to negotiate the rough and ever changing waters of the 21st century is now in place and beginning to evolve.
-One of the most difficult lessons was learning when to step back and let the team struggle and figure it out on their own and when not to. Sometimes things that were so clear to me were not so clear to others. So I had to learn to appreciate that it is through the struggle to figure something out on one's own that key lessons stick and become owned. The easy path would have been to tell them exactly how to do something, but in the long run this would not have been as beneficial as they wouldn't have owned the solution.
-Another key lesson was learning that I don't always need to have the best or even all the answers. This is not a cookie-cutter or one-size fits all kind of endeavor. It is only through the power of many minds working together that the best results truly arise.
-A final lesson was discovering that with a transformation of this magnitude you need to always pace yourself and be cognizant of keeping a pace the team is able to sustain.
From a transformation perspective:
-It is important to realize that when blazing new trails you cannot always put hard and fast timelines on things. For example, the future state creation was originally slated for one 5 day event, but ended up taking two events and 10 days. Then after this, the model began to evolve further as we began to think through all the details. The key is to be sure to take the time to do things right, but not become paralyzed into inaction by thinking you have to do everything perfectly.
-It is critical to constantly and transparently communicate what is going on to all people within the organization. For example, we held Business Forums via WebEx on a quarterly basis and invited everyone to participate. We also encouraged team members to talk to others and keep people informed.
-Another key point is to be sure to take time to step back, do a gut check and ask - "Is this the best route/way or do we need to consider another?" This is especially true around decisions that will have a substantial impact on the organization. As one of the business unit leaders liked to say - "never enact a critical decision without sleeping on it first".
-I would encourage anyone considering undertaking this transformation to have a dedicated facilitator and project manager as I was to this business unit. This will best enable the leadership team to split their time between keeping the existing organization running while also transforming it.
-This is type of transformation is not something for the faint of heart as it is a very challenging journey. The right type of leaders need to be at the helm of the organization and if they aren't, don't even try to undertake the journey as you won't be successful. However if you do have the right leaders, go for it as it truly is a better way to run a business.
-Last, but not least...always keep your sense of humor as it will enable you and your team to make it through this journey in one piece.
The leadership team and all of the people in the business unit we transformed. This truly was a team-led and inspired management innovation. You all are my inspiration every single day.
The people who trusted me and gave me the freedom I needed to do this type of work.