The (not so) hidden key to integrating business units
“I’ve got some issues between my two key General Managers” said Ingvild, the CEO.
“Lucky there’s a CEO then” I replied, “but I guess you’re not exactly feeling lucky”.
She laughed. “Not so much.”
“Tell me what’s happening”
“Well you know Sue, she’s our GM of Development. Her job is to come up with what’s next. We discuss as an Exec team, in the end I make decisions about where we want to be in five years or so, whether it fits our purpose, and her area is there to develop the offers and the opportunities in those new areas.”
“OK. Who else?”
“Janet. She’s our GM of Operations, and she’s there to bring into existence the stuff that Sue is confident is viable as well as deliver the usual stuff. So it’s sort of like ‘Sue tests and learns, confirms viability, Janet plays a part in this, then once we’re go, Janet’s area integrates the new stuff into Operations. How she does this is up to her, sometimes it changes one of her areas, other times she starts a new area.”
“Right. So what’s the problem?” I asked.
“Well, it’s basically infighting.” Ingvild continued. “And the crux of it is that Janet’s Ops area thinks Sue’s Development area is unreasonable.”
“Are they?”
“Well…I don’t think so. I’ve seen R&D or Development areas before, and Sue is solid. Not slow by any means, but not churning stuff out at a rate that’s unreasonable.”
“And what does Janet say from the Ops view?”
“She and her people say that Sue’s area has no idea the pressure they are under, that they don’t have time for new stuff all the time. But I’ve got a problem with ‘no new stuff’, because as you keep reminding us, without development this is going to eventually lead to us falling gently off a cliff as our offerings gradually become old school.”
“Is Ops right in their view. Do they not have time for new stuff?”
“Well, that’s the thing. I look at what Operations produces, they’re working hard, getting stuff done at a rate that’s pretty impressive”.
I sat and waited for her to go on. After a while she continued.
“So I’m at a loss. I’ve got a situation with two competent GMs, I’m happy with both of them, but together, it’s just not happening. And before you go on…” she smiled….”I am fully aware that this is my problem and no one else’s.”
“That will save us a lot of time” I laughed. “So here’s what happening. The work of your team is not integrated“.
“No kidding. How much do I owe you for that bit of genius Mr Consultant!”
“But wait, there’s more!” I said extending my arms wide. Ingvild and I had worked together a long time. I leaned forward and said carefully “What you’ve described to me is a production line. It’s a fancy one, but it’s still a production line – things get thought of, designed, tested, decision made, moved into operations, released. Just because they are big areas run by GMs doesn’t change this. ”
Ingvild was listening intently. I went on.
“What you’ve just described is a bottleneck, or a constraint, exactly as you can read about in Eli Goldratt‘s The Goal.”
“You mean that book about the factory?”
“Yep, that book that’s actually about integrating work, one of the basic accountabilities of any managerial role. Answer me this: Is the problem here that Development is not producing enough new things to put into action?”
“No.”
“Is the problem that Operations isn’t able to handle the amount of new stuff that Sue wants to put into action?”
“That sounds more like it.”
“So if you look at your organisation as a system, a system designed to deliver new things to the market, where might the current constraint be?”
Ingvild’s eyes widened a little. “Operations. But how does that help me? I don’t have the profit or the cash to throw more people into Janet’s area.”
I nodded, then continued: “Next question: What do you have Sue focussing on?”
“Development of new products.”
“And when is a new product considered to be ‘done’?”
“When it’s in Operations and we’re comfortable with it. When it’s selling.”
“So what currently determines the rate at which new products can be introduced.”
There was a split second pause. Then Ingvild looked almost shocked.
“Operations does. We can’t get new products going at any quicker rate than Janet is able to put in.”
She stared at me wide-eyed. I didn’t move. She went on:
“So I need to……I know this sounds crazy…..I need to tell Sue to tell her people to slow down. To be less efficient. To take an afternoon off a lot of the time”
“Well, that would be an improvement as it would at least drop the pressure and force some priority thinking.” I said. “But keep going…” I urged as I could almost see the pennies dropping.
“I need to make Operations less of a constraint. And if Sue’s Development people now have time by backing off their development rate….well they can go help out Janet’s people in getting new things into Ops! Janet’s crew are always complaining that the Development guys dump stuff on them and then disappear, leaving them to sort out the details….this would help that.”
I started to speak but Ingvild wasn’t done.
“Or maybe I’ve simply got too many resources in Sue’s area and not enough in Janet’s!”
“Worth looking at…” I replied. “So what does the mean you’re doing”
“It means I’m allocating the resources of the organisation to optimise how work moves through it.”
“Which means the work of your areas will become more….”
“Integrated.” She sat back.
“And I was wrong before.” she continued. I raised my eyebrows. “That was definitely worth at least one coffee.”