PUTTIN' COLOGNE ON THE RICKSHAW

In last week’s blog post I chronicled the beginnings of the modern organizational chart prompted by the rise of the middle management ranks. This was a path that lead to the modern hierarchical vertical organization structure that I believe is at the root of many management and workplace dysfunctions. I also promised that in this week’s post I’d detail a new way to think about organizational structure that is really “out of the box” and not like the conventional organization charts that have developed over the last 150 years.

However first, lets’ review the different types of organizational charts we typically see in today’s business environment:

• The classic Vertical Hierarchical Chart
• The Matrix Chart (which is still hierarchical in nature)
• The Flat, or Horizontal Chart

Without going into detail on each of these suffice for me to say that all of these are the result of, and result in, the command and control mentality that makes up the way most modern organizations are managed. So what are the options if you manage an organization and don’t want to follow the herd? Here’s an interesting approach…

I’m sure everyone has heard of the miraculous turn-around of the motorcycle maker Harley Davidson back in the 1980s and 1990s? The turnaround was needed because of their dire financial condition exacerbated by the introduction to the US of Honda and their line of top-quality inexpensive motorcycles. The two instrumental in the turn-around were CEO Rich Teerlink and organizational consultant, and coach, Lee Ozley who created a new and interesting approach to organizing the company.

In their book More Than a Motorcycle (©2000), Teerlink and Ozley chronicle Harley’s journey back from a barely alive company to a new kind of organization, that at its core recognizes people as a company’s only sustainable competitive advantage.

Before the miraculous turn-around the classical vertical hierarchical organization was in place and obviously not helping the situation, i.e., it was incapable of facilitating any new thoughts or ways of doing business. If I was to guess I’d bet that the fiefdom syndrome was alive and well in the old HD organizational culture. This is what Teerlink and Ozley faced and if you’ve ever worked in an environment that’s teetering on the edge of extinction you’ll know that changing the status quo is a monumental task. What’s interesting about the HD story is that the organization chart was an instrumental part of the company’s resurrection.

Instead of clinging to the classical hierarchical organization, Teerlink and Ozley conceived an organization that was displayed as three overlapping circles: a “Create Demand Circle,” responsible for marketing and sales, a “Produce Products Circle,” for engineering and production (I find this marriage of manufacturing and engineering an interesting approach to eliminating the natural tendency for these two functions to be at odds with each other), and a “Support Circle” for all other functions. In the center, where all intersect, stands the “Leadership and Strategy Council (LSC),” a small, innovative group that identifies the business issues that affect the entire organization (e.g., strategic plans, human resource policies, and operating budgets) and coordinates “cross-functional interdependent activities.”

See diagram of the way these circles interface with each other.

In addition to the top level Leadership and Strategy Council (LSC), at the three intersections of the circles we find smaller, more focused, LSCs that oversaw the interface and coordination directly between each pairing of groups. The premise was that the overlapping areas represented and emphasized the interdependence between groups. An interesting facet of these LSCs is that the members were elected by the groups not assigned by the upper LSC. This flies directly in the face of how command and control management assigns middle management.

At the heart of the circle organization’s success was something which I’ve preached many times and is the single most missed management concept: values. Teerlink and Ozley realized that this new circle organization was doomed without clear, concise and practiced values. “What’s interesting is that I put vision after [values],” Teerlink notes in his book. “Unless I have the first, I can’t really talk about vision.” Then once they had the vision solidly in place and “bought into” by all the stakeholders in the organization they developed their business strategy and then the organization to affect that strategy. This is the exact opposite to how most organizations develop either of these–usually the organizational structure is charted long before the vision and strategy and without concern for either of them.

The philosophy behind their circle organization was to get the right people, together at the right time, to do the right work, right the first time. Teerlink and Ozley wanted teamwork to flourish without the formal forced teams. They wanted natural work groups that were centered on specific work elements. The circles where identified as the core processes that were determined to be the minimum core processes deemed instrumental in running a successful business. They felt this would be a more accurate representation of shared leadership and cross-functionality.

Ideas, problems, and complaints that typically went “up the organization” were now encouraged to be worked out at the lowest levels–a goal preached by many a management team but rarely realized. Decisions were required to be made as close to the source of the problem as possible. People who had previously held hierarchical command-and-control management positions were transformed from “commanders” into facilitators and coaches. They still existed, but their jobs became more of mentor, rather than directing the daily minutia.

Teerlink and Ozley expected each circle to operate as an empowered work group and encouraged that leadership would be a shared responsibility. “Shared leadership, individual management” emerged as the HD organizational catch phrase.

So what do you call this new “circle organization?” In my mind it resembles the “Panopticon” that was developed by English philosopher and social theorist Jeremy Bentham in the late 18th century. The concept of his circular design was to allow a watchman to observe all inmates of an institution without them being able to tell whether or not they are being watched. The concept was used in the construction of prisons and mental institutions.

The dictionary.com definition of organization chart is: diagrammatic representation showing how departments or divisions in an organization are related to one another along lines of authority. The Panopticon flies in the face of this definition and my hope is that its acceptance starts a quiet revolution in how organizations organize themselves.

Harold S. Geneen once noted: “Every company has two organizational structures: the formal one written on the charts and the everyday relationships of the men and women in the organization.” It seems to me that the Panopticon circular organizational structure accomplishes the perfect melding of these two, sometimes conflicting, agendas.