Platt Perspective on Business and Technology

Finding and managing the right simplicity complexity balance 2: benchmarking from where your business is now – 1

Posted in strategy and planning by Timothy Platt on May 4, 2012

This is my second installment in a series on more effectively structuring and managing a business, so that its overall organization and system of operational processes include the right details and complexities and no more or less. I referred to that in Part 1 of this series as finding the Goldilocks spot and cited this as one of the great unsung challenges that essentially every business finds need to confront with time. And the challenge is in not being too lean where more formal structure and organization would help and not being too complex where streamlining and simplicity would offer greater value.

For two common orienting examples, to take this out of the abstract, consider the following scenarios:

• Nonprofits virtually by definition are always short-staffed. A core requirement for being an effective nonprofit is that as much of the incoming revenue stream as possible be directly devoted towards fulfilling the organization’s mission and vision, and one of the largest areas of fixed operating expense that most any organization faces is that of payroll and other employee-directed costs. So headcount is kept to a minimum and everyone on-staff can find themselves effectively wearing at least one more jobs-requirement hat than they can comfortably balance and with this particularly applying to managers and even the CEO as they seek to limit expenses and manage revenue utilization toward mission. Not for profits and for-profits can face comparable challenges in knowing where and how and when to expand headcount, so this is in fact a fairly common “too lean” versus “too complex” problem area and across a wide range of business and organization types. And this is not necessarily as much about staff size, as it is about having the right people and having them distributed across the right set of positions.
• Organizational inefficiencies that can develop with time can lead to simultaneous table of organization, and back-channel and dotted line patterns of communication and oversight. And these can conflict and certainly where the official organization does not by its required structure, bring the right people together in the right ways for addressing needs and goals that were not envisioned when the table of organization was first set up. So time and the inevitability of change and need to respond to it can lead to duplications and conflicts, inefficiencies and significant drift from the Goldilocks points of an organization – and without any of this being seen or appreciated for what it is.

I said in Part 1 that this is not a change management series. My goal here is to offer insight and to provoke discussion that would help limit the need for change management per se. So my approach here is in developing gradual, ongoing, evolutionary approaches rather than sudden fix-it revolutionary responses – this is about developing and following homeostatic course correction as a matter of standard procedures, which is essential for any such effort if it is to be sustained and if it is to provide long-term value.

The key initial step in making this approach work is in benchmarking and knowing where your organization is now. So this posting is all about making that here-and-now benchmarking assessment. And I would begin that with a focus on identifying problems and warning signs where course correction would be needed.

• I worked for several months with a mid-sized nonprofit once where its CEO was so busy doing what should have the job of an executive assistant that he was never quite able to find time for the executive level strategic planning and decision making that should have been the focus of his attention. He sought to save money by not bringing in the staff he needed, and even in just helping him to get to do his job. And saving money he lost opportunity, always acting reactively rather than getting ahead of the situations he found himself and his organization in, and acting proactively. So bottom line, he lost more than he saved, and in ways he could not even see.
• I have seen systematic failures to achieve effectively from competing and unnecessarily duplicative efforts, and as an example of that I cite a manager I had opportunity to observe first-hand once, who would separately assign the same tasks to different people – having them compete to see who could complete them first. Everyone knew he did this and that winning was necessary for job security. So a premium was placed on speed and even at the expense of quality – and these competitors were frequently in direct conflict over who would gain access to essential unduplicated resources. Tensions were high and morale was always equally low and this recipe for disaster hemorrhaged value and opportunity out of the organization, with at least one part of that cost coming from the way it drove away their best employees who would find it easiest to find work elsewhere.

These are extreme examples but I briefly relate them as cautionary notes because they, perhaps on a larger and more extreme scale reflect standard failings that can be found in many businesses and organizations. And remediating and course correcting to limit and prevent these types of problems, all begins with benchmarking where the business is now and where its efficiencies and inefficiencies are. I am going to turn in my next series installment to discuss how this type of benchmarking assessment would be conducted, and as a system of ongoing due diligence processes. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.)

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