Scantlings

OK, this is all pretty rough, but I thought I'd start to put a few thoughts in to simple diagrams. I'll preface all this will saying that I've stolen, purloined, ripped off, borrowed, and generally learned from every person and place I could find. Much of this isn't my own, it's from the hundreds of folks I've worked with, many of whom spent a tremendous amount of time teaching me when I really didn't realized the magnitude of my on ineptitude. Now, I'm gray and the age they were when I was kicking off, and I'm still trying to suck up good ideas from folks who know more than I do, and there are a LOT of folks who know more than I do.

The second item is that I'd really like to hear from all of you, as I think this assembled mob has some tremendous insights on these subjects. I have been impressed over and over again at the accomplishments of the members of our little band and look forward to absorbing some more.

Who's important and who isn't.

A lot of times I have to impress upon my team members that a number of things we do provide clues to what we truly think of ourselves, our teammates and our customers. Years ago the Chairman of Measurex, Dave Bossen drew his org chart for me, providing an example. It was different from any other org chart I've ever seen, and Dave nailed a key point in a simple drawing. I've been using it ever since.



The first line says it all. You are more important if you are closer to customers. The entire point of the organization is to make customers successful so they will come back and be customers again. We all have great examples of this NOT working, COMCAST is one of my favorite, where folks will go to great lengths to stop being customers simply because these entire organizations have become customer-hostile.

I will say that many of my friends who are board members of companies or senior executives actually take some offense at this way of drawing the organization chart, too bad. My view is that if a CEO needs the private parking place, the corner office, the company jet, that person has just indicated that they don't agree with my view of the primary mission of their job. There are plenty of examples where it works out anyway, but I'd argue each of those is swamped by successful examples where the CEO puts the customers on the top of the heap and places everyone talking to customers above herself in the hierarchy.

Only two industries commonly refer to their customers as "USERS".

Drug Dealers and Computer Companies



Says a lot about what they think of their customers.

Once I left engineering, moved through sales/marketing and started my own company, I ended up taking a couple of different views of what I was really supposed to be doing and who it was for. Most of these "views" weren't particularly helpful. For example, the command & control view: "Everyone does what I tell them to and I check up on them to insure they're doing it." Or the strategist view: "Here's the strategy for the company that I created over the weekend. Do this"

But one view has stuck with me as extremely helpful in figuring out what everyone should be doing and what my role as their leader (not manager) should be.

I find it helpful to think about the job as having four "customers". In the picture below they are arranged on the four sides of the box: Customers, Shareholders Employees and Suppliers. Each of these groups has an organization that is assigned to take care of them. For example, shareholders are primarily taken care of by the head of finance, Customers (with a capital "C") are taken care of by the head of marketing and sales, etc....



A few things became obvious to me when I drew the diagram this way:

First, while every company leader believes they should hire a great person to run marketing and sales, they rarely put anything like that much effort into securing one of their most important assets, their employees. I had stuffed my head of HR under my CFO in the organization and was irritated when the HR head complained that everything was a discussion of cost control rather than getting the most productivity from people. Doh! Head Slap! Folks who run finance are often not the most capable at leading people who are trying to help make folks productive. Similarly, while I'd talk to my shareholders when i needed to raise money, I didn't pay much attention to them when I was flush with cash. This made fund raising much more difficult later on.

Second, by putting someone in charge of their side of my box I found that I would work with them to clearly lay out a plan for what we were going to do, how it was going to get done and when. Then it was their job to make it happen. It helped me stop meddling because I knew we had agreement on what was going on.

Third, it made it pretty clear who should have a seat at the table and why. Yes, there are places in this drawing that don't easily map to all the parts of a complex organization, but for the most part, if the team does a great job of taking care of Customers, Employees, Suppliers and Shareholders they will do just fine.

Finally, it's only one of many ways of looking at the organization. I learned that when things are going well and you're trying to accelerate you need a different view than when things are doing well and you need to restructure.

"You manage problems and you lead people."

'nuff said.

"Doing something is almost always better than planning something."

One certainly needs to plan what they're going to do. No all planning is evil. That said, in almost every company I've worked with there is about twice as much planning as there should be, someplace there is nine times as much planning as their should be.

This has become much worse as folks have started to make what I call "The Analyst's Mistake". This is mistaking precision for accuracy. The spreadsheet, while a wonderful tool, tends to encourage The Analyst's Mistake but providing ways to get lots of digits of precision which are based upon some pretty questionable assumptions. When combined with the mind-numbing use of projected presentations, those apparently accurate and precise numbers look quite authoritative.

In contrast, if one just starts doing what looks like a good idea, and pays a lot of attention to fixing what doesn't work about whatever it is one is doing, my experience is that you get to the right answer a LOT sooner.

The software industry has finally started to learn this lesson. When I started in the early '70s software was "planned" and "managed" and "thought out". Which didn't work well at all. Over the last 35 years we've learned that it's far better to break stuff up in to tiny parts that can be well understood, just write them, and then assemble bigger piles of software from tested and comprehensible components. This has completely revolutionized how people can get software to market, and has allowed small teams to run right past gigantic companies with "well managed" software development teams.

The same thing works with sales forces. My own experience is with new technology products, where one often doesn't know exactly why or if a customer will be interested. Plan for months or just go try to sell something? Obviously, the successful technique is to go sell something and learn along the way. To large well structured and established companies, this is viewed as crazy and chaotic, but in example after example it has worked where a well planned market launch and sales approach has failed utterly.

At the root of why I believe this matters is because businesses are far to complex and have far too many exogenous forces acting on them to be "planned" to the level of accuracy that many folks would like. One simply can't know a priori what's going to happen. As a result, one needs to be set up is a well thought out series of tests to see if one's assumptions about the world (customer, product, competitors, etc...) are accurate. (BTW, The Analyst's Mistake can be massive at this point.) Run the tests, measure the results, change the product or sales pitch, and run the test again.

In other words: Do don't Plan

Well, you have done a pretty good job of explaining why the Rafn Company was so successful. All of that stuff you posted sounded just like us.

I would love to chat, but I have a hot date with a 19,000 pound gal today. Bob, Tim, Jordan and the Schattauer Brothers are going with me. Cheers!

Beau, my management experience is largely in what Mintzberg described as a professional bureaucracy, that is an organisation where the front line workers are not amenable to direction by management.

The way they work is determined by their education, and professional standards.

The problem in health is workers are often too customer focussed, and management have to focus them on the reality of budgets, both expenditure and income.

Managers have to use interesting strategies to focus and target workers, and the general principle is for the group to manage activity of the group.

Inside this framework individuals generally manage themselves, but the peer values of the group are also a prevailing influence.

So, all the value of the organisation is in the brains of the workers, all the strategies that will work are in those brains, most of the implementation skills are in those brains, they just need to be harnessed.

In my world a CEO is responsible for the organisational culture, relationships with stakeholders, operations and financial performance, a bit like your quadrant.

The tricky part is delegating well enough to limit your span of control to as few as you can, so you can get around the organisation, management by walking around.

My message to front line health workers was always that we would back them no matter what happened, as long as they could demonstrate their first thought was for the care of their patients, rather than for themselves.

I suspect a lot of devolved, technical organisations are very similar to this sort of professional bureaucracy. They need a CEO who understands the technical side of the business not just an MBA, and are a long way from a traditional line management structure.

Understanding delegation is the key to success.

Olaf,

I hadn't thought about the similarities between software and medicine. There appear to be many. Thanks for laying that out. As you may have guessed programmers (especially the best ones) are a difficult bunch to "manage", and thus traditional management structures often fail. They can, however, be easily lead by a technically competent leader or someone who demonstrates to them that while the leader may not have the technical-chops they have in their particular field that leader is really good at something else and respects the domain expertise of the programmers. I suppose a lot of that boils down to intellectual honesty. Programmers can smell bull shit faster than any group I've ever worked with. As a result, it take a thick skin and real genuine intellectual honesty about the leader's personal limits to get their respect.

I like the idea that you'll back up the front line team so long as they put the benefit of the customer first. That's actually how we do it in my company too. Honest mistakes happen, their are unavoidable, but dishonest mistakes (meaning choices for personal advantage or sloth) aren't tolerated.

I haven't been able to distill "goal setting" in to something simple enough, and I'm keen to figure this out. So many of the messes I've ended up cleaning out have come from ambiguous or conflicting goals set by the leaders. My favorite example of getting it right was John Rollwagen and Seymour Cray at Cray Research. The had one saying and only one goal: The World's Fastest Computers. It was written on the employee's jackets and t-shirts, it was written on the wall and it was one of the most effective tag lines I've ever known. The medical analog could be "Do no harm", or some such. I've always tried to get the "goal" to be as direct and powerful as what John and Seymour did at Cray.

So, let's get deeper into delegation.

The core principle is that each individual has different skills and aptitudes, so a manager should be able to set different levels of responsibility for each individual, I call this the contingency model of delegation.

Span of control is important here, delegating to eight to ten "subordinates" is generally regarded as the upper limit.

Now, to get the most out of each team player, they have to be allowed to make errors (not encouraged) or they won't be working to their limits, and won't learn and develop new skills and competencies.

A manager has to be overt about the possibility of errors, and clearly outline each persons expected response.

A particularly hot issue in health care, where errors become very personal in a framework of litigation and professional regulatory structures, and where culturally we don't make mistakes, or cover them up if we do.

So my message is, we all make errors, it is only a mistake to not bring errors up the line, so we can all learn from them and address them at a systems level.

Again, it's the group addressing problems of the group.

By calling them errors I tend to depersonalise them, mistake is a more personal term.

My grab is every error is a learning opportunity, it's only a mistake if you cover it up, or do it again.

A related topic here is unexpected outcomes.

In my experience, most new discoveries dont come from large projects to discover new things, such as mapping the human genome.

They come as a result of the curiosity of an individual or a small group, faced with an unexpected event.

If Florey had thrown out that contaminated petri dish, he would not have discovered Penicillin.

So, another really important message is about unexpected events, quite a common circumstance in health care and I suspect a lot more common in many industries than we realise.

Every unexpected outcome is a learning opportunity, don't throw out things that don't make sense, share them with the team, research them, that is where the gold is.

Zig Zigler once said, "you'll never make as much money doing anything as you will in sales".

To me, the key message is that everything is about sales. EVERYONE needs to feel that. At my company there are 160,000 people. I can't say that they all feel personally responsible about our sales, but I haven't worked in a company that has had so much pride and conscientious understanding about what we do.

You started off with the inverted pyramid, the 'servant leader'.



I've been in a leadership role for the past 2 years. A lot of people have a negative view of management. But, a good leader can make all the difference in the success of a team. Maybe a leader doesn't need to be a 'manager'. The same concepts apply to leadership. I've found that I enjoy being a leader.

Very interesting topic, BV. Thanks for sharing

My former employer laid out a simple hierarchy: Customers come first, then employees, then the community, then treat your suppliers/vendors as partners, pay for mistakes and the R&D, pay your fair share of taxes. If you do all of these things well, then you'll be able to give the shareholders a fair return.

Sounds hokey...but I think it's a great way to do business.

Jamie wrote:My former employer laid out a simple hierarchy: Customers come first, then employees, then the community, then treat your suppliers/vendors as partners, pay for mistakes and the R&D, pay your fair share of taxes. If you do all of these things well, then you'll be able to give the shareholders a fair return.

Sounds hokey...but I think it's a great way to do business.

Not hokey at all. Far too many companies don't do those things.

One thing that strikes me about these org charts, etc, is that I see little to no attention paid to the people and process of the early-stage product concept, architecture, implementation, and refinement. These charts seem to suit a stable company with a well-defined product and process, where customers are driving the product evolution.

Of course I'm usually in the architecture and implementation part of this, so I'm biased. Believe me, I do recognize the critical nature of marketing, sales, customers. This was perhaps the strongest aspect of the company I retired from. But I will take exception to an org chart where the creativity and engineering are treated as a minor black-box function.

More later -- I've got to run.

Simple litmus test: ask any person, at any level in the company, what the purpose and goal of the company is, and you should get the same fundamental answer. If this doesn't occur, it's an indication that management has failed in its primary responsibility. A group of people can't be collectively successful unless they are aligned around a common objective.

Simple to say, very hard to do. Especially when the number of employees is >1.

In the construction industry FMI (the preeminent industry consulting organization) says a strong construction company stands on a three equal legged stool. Get Work, Do Work, Keep Track.

We followed the FMI way of doing things at our construction company. It worked rather well.

The three employees we sold the company to each occupy one leg of the stool.

It is interesting reading about management from you guys in larger operations with me being employed by a family run small business where the customers interface directly with the owners and the heads of design & engineering and most marketing is by reputation and word of mouth (although we do place a few magazine ads). That being said, every employee knows he/she are working to provide the best product possible for the customer, and the owners know that to get the best from their employees they need to provide a good atmosphere for them, both in the workplace and through benefits.

I know nothing about the corporate world, but I lead a tiny group in a vast, totally impersonal, organization (the USG). It consists of me, 1-3 postdocs, assorted students,and support personnel at masters and PhD level. My job is to cultivate everyone's talents and launch the careers of the trainees. Our collective job is to be brilliantly creative and independent, yet precise, infinitely accountable, and completely safe, in the midst of this grotesquely over-regulated, paper-bound, and risk-averse bureaucracy. I think I have learned a little about leadership and I manage a crisis or two a month by the seat of my pants, but the social/organizational side of this gig feels impossible a lot of the time. It was worse when they were told us we had customers.

I suppose it's obvious that different types of endeavor require different organizational models, but these models have lots of commonality. Perhaps the common organizational relationships can be applied successfully across the board, but I am reminded of the stereotype of the green MBA (or sometimes seasoned pro) who is put in charge of a business that is completely foreign to him. The theory was that a good manager can manage anything, but the practice was usually quite different. As I said, this was a stereotype, but I think there is some truth to it.

In my line of work, our Gantt charts usually had an element of "and then a miracle occurs", and I was always reluctant to drive the process all that strictly. The by-the-book managers and I rarely saw eye to eye. Yes, there's a place for strict schedule adherence, but insisting on that everywhere seldom yielded good results.

I do believe that in many cases the customer doesn't know what they need until they see it (Jobs was good at that). If you only listen to what the customer wants you will deliver a product that evolves within the original parameters. If you can anticipate changes in technology and the marketplace then you can create game-changing results. In my field, that's not going to happen without strong engineering participation in the early process.

Jamie wrote:My former employer laid out a simple hierarchy: Customers come first, then employees, then the community, then treat your suppliers/vendors as partners, pay for mistakes and the R&D, pay your fair share of taxes. If you do all of these things well, then you'll be able to give the shareholders a fair return.

Sounds hokey...but I think it's a great way to do business.

That's the way it should be (and largely used to be) but corporations today are all about share value because the top people are primarily paid in shares. Staff are of no more concern than a file cabinet and customers get the minimum that will keep them from leaving in droves.

No-one else is considered at all.

Charlie wrote:Simple litmus test: ask any person, at any level in the company, what the purpose and goal of the company is, and you should get the same fundamental answer. If this doesn't occur, it's an indication that management has failed in its primary responsibility. A group of people can't be collectively successful unless they are aligned around a common objective.

Simple to say, very hard to do. Especially when the number of employees is >1.

The problem with that test is that the staff doing the day to day will generally respond with the companies product, whatever that may be while the senior people will respond "to make money".

Paul,

In response to your comment about individuals and processes in the upside down org chart, you're spot on. The reason for drawing the overly simple org chart inverted is to signal something relatively simple to the entire company. The message is: You're more important than the egomaniacal CEO and the Board of Directors. I don't think it's possible to get all the detail required and still make the message simple.

I completely agree with you, having spent all my life in tech and most of it in start up companies, that customers will rarely either know or be able to articulate what they need. I also agree that often (indeed, almost always) the great ideas for new things for customer come from technical folks, be they in engineering or in product marketing, who find a way to really understand the customer and also what the technology can deliver. It is the ability to deeply understand a customer who really has no idea what's possible and turn that into a product that is genius and Steve Jobs had a lot of that (even though he wasn't much of a technologist).

Some of my favorite examples are the founders of Uber taking the anger that consumers had about rude, smelly, late and expensive taxi services and creating a killer way to solve the problem. The customer knew that hated taxis, they had no idea that a piece of software could link them private car owners who were willing to moonlight as taxi cabs.

I don't ever think of engineering as a black box someplace that isn't connected to customers - that's "research". That said, as I'm sure you'll agree, there are a heap of engineers who really dislike learning anything about their customers or the customers for their inventions. Those folks need to be left alone and fed information that they can understand by someone I typically call technical marketing or product marketing.

I think all of this is about the mental span that a person can manage. Some folks can deeply understand not only a technical area, like transistor design, but also imagine solutions to problems that are bugging a giant sector of society. Jobs was one of many folks who have built tech companies based on that sort of skill.

BV

For someone in the middle of a really big organization, influence can extend only a short way up (or down) the org chart. One can ask one's self "How many layers up the chain of command is someone who know's my name"? Maybe three, maybe five. But you don't know.

I worked for PepsiCo, back in the day. My boss, Mel, was head of the Corporate Management Science dept. One day, about 6pm, the CEO, Andy Pearson, walked into Mel's office and said "Mel, I want to talk to you about something", but then walked back out again, never to return. Mel told me that he didn't know Pearson knew who he was. Never did find out what was on his mind.

In our business the pumpers and foremen are the closest guys to the wellhead. I always take their calls, no matter who else is on the line. One of our prime functions is to make their lives easier. If I am going to give them the responsibility of keeping these leases profitable and productive, I have to also give them the authority to do so. I've seen too many organizations try to make people responsible for results without giving them the necessary authority. As the boss, you can't try to make every decision. If you have good people, trust them, let them run with it, be there to help and give advice/technical support where they need it, while keeping BS and bureaucracy off their backs so they can focus on their jobs.

When they make mistakes, and they will, be a grown-up about it. We all make mistakes. At the end of the day, I'm responsible.

Obviously, if you don't have good people, and they don't learn or train well, replace them.

I worked for a major oil company for 10 years before I started this one. The President knew my name, the VP would call me at the house on weekends if he needed me. I had/have enormous respect for these men, they deserved the positions they were in, treated their people fairly and with respect, had a wealth of knowledge and wisdom. It was both tough and easy to leave, tough because I was well paid, was advancing in the company, the benefits were amazing and I had a lot of friends there. Easy because I knew I wanted to run my own show.

I don't know about other industries, but oil companies tend to treat staff very, very well. One of the prime assets is gray hairs, experience prevents repeating mistakes, and mistakes in this business are very expensive, so they try to bind their professionals to the company with fairly lavish benefits and retirement plans. Since the top people are usually engineers or geologists, they respect and take care of technical professionals. That said, working for a large company, no matter what your job there is, is still like living in an ant hill. You may be a boss, but you're still an ant.

The oil companies DO seem to still run the way big corporations used to operate. My daughters FIL works for Exxon in Southampton and he describes an environment that is very much like I experienced at IBM and others in the 70's & early 80's.

Speaking from experience though, the big financials are now and have long been the way I described earlier. I think companies like Wal-Mart and others who call their staff "associates" and other such crap are also the same - all on a race to the bottom.

It's interesting that the members here, with their obvious high level experience, all seem to have the right attitude.

You should all get jobs running the huge corporations - the world badly needs it.

Sloop,

Most of what I know I learned from really smart folks who were really REALLY successful in start-up or turn-around situations. This is vastly different from the sort of non-business related politics and BS that occurs in any large organization (business, government, yacht club... whatever). When folks are deprived of any rational system which lets them know the effects of their various actions, they turn to political BS to build a hierarch. People love hierarchy generally and some folks REALLY love it. So, in the absence of guidance otherwise, everyone will start up construct a political organization that resembles some private club run by egomaniacs. IMHO, it takes strong leadership from someone who is acutely aware of the problem to countervail this normal human behavour. Start-up companies and turn-arounds both tend to solve this as near death focuses the mind on outward threats rather than internal politics.

This is the primary reason that I spend a lot of my time viewing my role as a sales person and why the employees are on one side of that square box I drew above. Technically, the employees are a "supplier", in that they supply labor. But they're so critical to the success of the company (or any other organization) that they deserve their own edge to the job. A good litmus test for me when entering a new company is to find out where the HR department reports. If it reports to administration or finance or someplace other than the CEO, then the leadership doesn't "get it"; and the first thing I do when taking over a place is to insure that HR reports to me personally and to let them know that they are in charge of one of our key assets, our people.

I suppose I should make a list of my key indicators of leadership failure.

1) Private offices
2) Even worse private bathrooms within those private offices
3) HR more than three layers of management away from the CEO
4) No one has talked to the CEO in a while, he/she only does presentations or sends out letters/emails
5) No one quite knows where the CEOs, but he's often doing things that are "important" and don't occur at either a customer's site or the company's site
6) People are afraid of the CEO, because reward and punishment aren't handed out predictably
7) The performance of the company (profit, revenue, etc..) is only available to the "senior" people and sometimes not even the entire board of directors
8) The CEO is not one of the company's better sales people
9) The CEO is not someone that a team member would feel comfortable asking for help or out for a beer

That's probably enough. I'd guess that folks disagree with some of these, like the first one, but I feel quite strongly. If Andy Grove, Bob Noice, Bill Hewlett and David Packard never needed a private office, I've no idea why some low-life running a bank or insurance company feels it's important to have an office. Privacy, using conference rooms, works fine.

Here's a picture of where I stand at work (the monitor that's way up in the air). You'll notice that the CEO (me) is in the middle of the room (almost), that there aren't any walls and that the best and most productive members of the team - our programmers - got to choose where they stood/sat first. They chose the windows. It's hard to describe to someone why it's so important to put a team into a bull pen set up, unless you've lived in a fast paced business for a year or so. There is tremendous communications that happens laterally across the organization/team and a lot of it is overhearing conversations, tossing jokes across the room, being able to glance at folks and tell how they are feeling, and a million other small cues on how the team is feeling and performing. Putting a CEO in a private office is like putting the driver of a limo in the trunk and asking him to drive the car using the screen on his iPhone.

So Beau, in an organisation that is too large to fit in a single bull pen, how would you replicate this process?

Olaf Hart wrote:So Beau, in an organisation that is too large to fit in a single bull pen, how would you replicate this process?

Well, our company is 91 people so far. There are 25 in this bull pen. There's another bull pen in Portland OR with 12, another bull pen in Dublin Ireland with 8, etc.... The key is that there aren't any offices anywhere, management sits in the middle where they can hear/see what's going on, conference rooms are provided with windows and the folks who want windows (other than managers) are given them. We bump up the number of small (2 to 3 person) conference rooms so folks can do private stuff.

When I was the #2 guy at Silicon Graphics, there were 18,000+ folks reporting to me. I followed the same basic rule and actually took down walls in our Cray Research division. I couldn't get rid of them all, but I got rid of a LOT of them. The executive offices at Cray were turned into conference rooms (with their own bathrooms). The old-school guys hated it, but it made the point I wanted.

Respect and power are earned, and everyone knows who has them. They are not conferred by which office you get.

As a young man I worked in a bull pen filled with about 80 programmers. In those days, pre cell phones, every desk had a telephone on it. I eventually went around and took the hammer off of the bell in every phone, so they just buzzed rather than rang. The mean time to a phone ringing was about 3 minutes and the bells were driving everyone nuts. That problem is gone now, everyone keeps their phones on vibrate.