Monthly Archives: August 2018

That which is tolerable in the short term, is rarely sustainable in the long term…

If you wanted your business to still be operational in 100 years, would you make different decisions today?

When discussing with business owners and senior managers, their sense of the state of their business, most can provide a very clear and concise answer.  As the conversation continues, invariably the discussion progresses to risks… and interestingly, but not surprisingly, the majority of discussions around risk are centred on more immediate risks, (present day to 2 years typically).  But when the question is then posed, “What is your sense of the ‘sustainability’ of the business?”, the immediate return question is most often, “…sustainable over what time period?”  And that is exactly the point.

What time frame do you actually envisage your business being around for?… 2 years, 5 years, 10, 50, 100 years?  And when you do identify that time frame, does it change your view of how you plan your strategy, or assess risk?  Does it change your view of how you plan and run your business every day?  Does it change your view on the outcomes and impacts your business generates?… And ultimately, is your business strategy and operating model contributing to the sustainability of the business over the expected time period, or is it only sustainable for the next few years?

Questioning whether a business model is appropriately sustainable, forces a much deeper consideration of a number of critical factors, so often left on the periphery of strategic planning discussions.

Factors such as health and safety, environmental impact, human resource stress, home and work balance, pressure and workloads, partnering arrangements, capability requirements, and community impacts are all examples of critical elements that must be considered as part of strategic planning in the context of the expected time period the business model is to be sustained.  Too often these factors are ignored during initial business planning, and overlayed later onto the pre-determined business strategy that has been developed with a focus on maximising profit, growth, market share and productivity.  The subsequent introduction of additional and peripheral human, societal and environmental elements, then leads to clunky or ineffective processes and unsustainable impacts that require continual remediation and reactive responses to resolve.  The consistently high failure rate of small businesses can, in part, be attributed to these impacts.  And at the other end of the scale, these impacts have brought down large corporate entities once considered too large to fail.  There are also countless examples of large companies forced to reshape flagship product lines due to lack of sustainability and entire industries forced to bow to external pressure to reinvent due to the impacts of their outputs, practises and business models.

“…whilst you must make money, your strategy and business model must also protect the resources on which your prosperity depends…”

 

As examples, many times I’ve heard, “…We need to do something about our Workplace Health and Safety culture.”, or, “…We need to be more flexible and promote work-life balance.”  Problem is, these proclamations are made as though they can simply be ‘turned on’ in isolation.  These organisations don’t have a health and safety or a life-balance problem, they have a business model problem.  Workplace Health and Safety and Work-Life Balance are products of the operating model in which they exist.  If not seamlessly woven into the business strategy and business model planning, they cannot exist independently as effective and harmonious cultures without conflicting with profit, growth and productivity-based plans, targets and priorities.  And history tells us it is rare for financial incentives and results to be deprioritised unless catastrophic or tragic events force such an outcome… usually after it is too late.

Business partners, customers, the wider community, and least of all, your staff have an increasingly low tolerance for unsustainability, especially where the impacts have a detrimental environmental and human effect.  Finding out too late that your profitable and growing business is causing harm is an awful place to be, as rectification and remediation of the issues usually demands that you accept and implement changes that will have a detrimental and longer term impact on profit and growth… a situation that for many, can be very hard to reconcile.  And whether it be social media backlash, a product recall, negative news coverage, the findings of a Royal Commission, lack of quality family time, or the fallout from an injury or a death, the longer term reputational damage can be extremely difficult to recover from.

Continually planning and strategising with a view to sustainability forces you to look further out and review the longer term implications of your operation and its impacts.  You will make more considered decisions, and ensure that the critical elements that can bring your business to its knees, are appropriately considered, designed, planned and incorporated into the very fabric of the business.

So, the question remains, “…How sustainable is your business?”  Are you in it for today, or for the long haul?  Whatever the time horizon for your business, your strategy and operating model must enable the operation to remain sustainable for that period… and whilst you must make money, your strategy and business model must also protect the resources on which your prosperity depends.

That which is tolerable in the short term, is rarely sustainable over the long term.

Building a house and transforming a business have more in common than you might think…

A case for organisational design principles…

Regardless of whether you are designing a house, a commercial building, starting a new business or transforming an existing operation, the cause of many substandard designs and implementations can very often be traced back to a common failing.

The following is an analogy, but one I have witnessed first hand, both in a personal and in many business contexts.  It resonates because the impacts of poor design have long lasting effects on those involved and invested, both financially and personally… and I would be surprised if you too hadn’t witnessed similar scenarios.

 

The vision…
You and your partner decide to build a house.
Your vision for your house is that it be the home of your dreams… the last place you will build, a place where you can live comfortably for the rest of your lives, and a place where your family always feel welcome and safe.

To achieve your vision, you agree on a strategy to:

  • Find a block of land with city views with a rundown house on it,
  • Clear the block and build a new, energy efficient house,
  • Design the house yourselves and engage a draftsman to complete the technical drawings, (saving money to be redirected towards energy efficient features),
  • Use sustainable building products,
  • Be energy self-sufficient within 5 years.

Design…
Whilst you search for a suitable block, you commence your house design. You split up the various sections of the house between you and your partner, and design each space around your specialities and preferences…ie: you design the kitchen, your partner designs the bedrooms and so on…
You come together periodically to discuss the progress you are making and the major issues you are thinking through, room by room… and by the end of the design phase, you are both happy with the spaces you’ve designed and the functionality of each.

You find a suitable block, make the purchase and engage your draftsman to turn the design into a plan. The draftsman works as directed, and compiles the design into a working plan. You tweak your designs slightly as the draftsman points out obvious issues, but on the whole, each room and space retains its design elements and you are ready to get final building approvals and engage a builder.

Implementation…
Your builder starts construction.
The build progresses well, but as with all builds, there are inevitable, small issues encountered in a number of spaces by the builder. Some he resolves using his own experience, some he refers to you to decide on. Most of the resolutions are minor with small adjustments to dimensions, alignment with frames and trusses etc, but the plan for each of the affected spaces only require minor amendments.

The build is completed, and as you and your partner stand in your new home for the first time, you are both are ecstatic with the result.

Operationalisation…
A few weeks pass. You move in and start to inhabit and live in the space. A few things catch your eye.
Whilst standing in the kitchen, cooking, you glance to your left and find that you have a clear line of sight straight through the master bedroom door, through to the ensuite and the exposed toilet.
You look straight ahead and notice that the lighting in the living space is annoyingly off centre from the lighting alignment in both the kitchen and the outdoor extension of the living area.
You hear your children playing outside, but you have to move out of the kitchen/living area, where you spend the majority of your time, to be able to keep an eye on them.

In the upstairs bedroom, the laundry shoot in the wardrobe, that had to be moved just 50mm to avoid the underfloor structures, now drops the clothes further away from the laundry wall beneath, meaning the basket needs to be placed annoyingly out in the walkway that leads to the outside door of the laundry, to ensure the clothes aren’t dropped in the middle of the floor.

The solar panel system purchased does not generate enough power to run both the house and the pool, due to an upgrade deal you were able to negotiate on the size of the pool. And, under the house, the planned water tanks have had to be downsized, due to a budget decision made during the cut and fill stage of the build, meaning that the water storage capacity will not allow you to produce a self-sufficient water supply.

As you look closer, you continue to notice other issues over time. The deficiencies in the way the house performs become more frustrating, but over time you adjust to living with them, albeit that your satisfaction is greatly diminished, your dream has been tarnished and plan of self-sufficiency now seems unachievable without significant additional investment.

The point is…
The vision and strategy were sound. Each partner understood the strategy and vision, and each space was designed in accordance with that vision and strategy, however…

  • Each space was designed, planned and built to operate as a singular space.
  • Decisions relating to each space were taken in isolation and based on the design priorities of that space and its designer.
  • Discussions at the planning stage, between the designers of each space, regarding the achievement of the strategy and the vision, were high level, and whilst productive, did not draw out the inter-linkages between each space and the impacts of each design element.
  • As time wore on, these discussions became more and more about the detail of each individual space, and the tie-back to the original intent was discussed less and less.
  • There was no clear, definitive set of design principles on which to base and validate every design decision, amendment decision and budget decision.
  • As such, there was no way to validate that each element of the design and build was actually going to achieve the strategy and vision… There was a large “grey-space” between the strategy and vision, and the execution of the plan.

Execution of the plan was done with the best of intentions, but the result was a disconnected and sub-optimal result, with long lasting impacts on owner satisfaction and usability, inability to achieve the core objectives, inflexible design and ongoing costs exceeding budget.

Of course, the house being built is a metaphor for the development of a new business, an organisational transformation, or large program of work. Regardless of whether we are talking about house designs or execution of organisational strategy, people remain at the heart of all decisions, and as such, the implications of not setting up an environment where sound and confident decision making is possible, are likely to be long lasting and destructive.

Now, let’s revisit these issues in a business context… Do any of these sound familiar?…

  • Each division/department was designed, planned and built to operate as a singular operation.
  • Decisions relating to each division/department were taken in isolation and based on the design priorities of that division and its Manager/s.
  • Discussions at the planning stage, between the Managers of each division/department, regarding the achievement of the strategy and the vision, were high level, and whilst productive, did not draw out the inter-linkages between each division/department and the impacts of each department’s outputs.
  • As time wore on, these discussions became more and more about the detail of each individual division, and the tie-back to the original organisational intent was discussed less and less.
  • There was no clear, definitive set of design principles on which to base and validate every design decision, amendment decision and budget decision.
  • As such, there was no way to validate that the collective outputs of each division were actually going to achieve the strategy and vision… There was a large “grey-space” between the strategy and vision, and the execution of the business plan.

To avoid these issues…
Following the Vision and Strategy setting stage… but before the design and build phase, a set of overarching design principles and use cases are required to be developed, to turn the vision into a tangible set of actionable principles that could be used for all decision making, problem solving, prioritisation and planning.
The process of defining Design Principles commences by focussing thinking and energy towards the core “outcomes” desired, and ensuring that the important aspects of the vision and strategy are articulated in a way that can be related to and understood unambiguously.

Next stage is to refine and adapt each principle in more detail, exploring interconnections and more operational impacts and implications. This is achieved by asking detailed questions as to how the desired outcomes will be achieved, end to end…
Questions such as, “…What experience will the user have when operating in the kitchen…?”, “What are the mandatory aspects that should be hidden from view…?”, “What will the user see from each core work space…?”, “How will key usability features interact and operate throughout the entire lifecycle of each use case…?”, What are the limitations of the solar system, and how much future flexibility is built in to allow for expansion…?”.

In a business context, these principles will span seven core categories, describing how decisions and priorities are to be made regarding People/Customers, Products & Services, Channels of Access, Processes, Information & Data, Technology, and Capability. Questions driving the formulation of these principles might sound like, “…What experience will the customer have when accessing services that cut across multiple divisions or departments of the business…?”, “…How will captured data be reused throughout the lifecycle of the customer…?”, “…What are the core ‘outcomes’ that MUST be delivered for the business to achieve its vision…?”, and so on.

Once finalised, the answers are converted into principles. The result is a decision making and prioritisation validation reference that can be used to ensure that each element of the finished product, and every decision required to be made, every day, always contributes and remains linked to the achievement of the overarching vision and strategic intent.

Disagreements that arise, cease to become arguments of whether one person was right or wrong… but become far more rational discussions of the merits of the principle on which the decision was based. The resolution of these discussions then is either, a). the principle is still considered valid, and the decision stands, or b). the principle needs to be amended.

The sequencing is critical…
Building an effective operating model is an iterative process…

1. Organisational Vision and Strategies are validated,
2. Organisational Level Design Principles are defined and agreed (CEO and SLT level),
3. Divisional level principles are defined next, as extensions of the level above,
4. Manager/Department/Team level principles are then defined, as the next level of detail, utilising the principles from above,
5. Project/Process level principles can also be developed, ensuring alignment at the most operational levels of the business,
6. Design Principles are actively utilised and referenced for decision making and prioritisation across the business, and critically, referred to and reviewed in all ongoing decision making forums.

To achieve the optimal “outcomes” through organisational change when applying this methodology, it is imperative that implementation of the Operating Model follows the following sequence:
1). Design Principles first… 2). Optimal Process Designs or Changes required to deliver the principles come next… 3). The Structure and Capabilities required to achieve these come last.

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