Define, Analyze & Change
Infrastructure is how companies organize the people side of their business. It establishes roles, responsibilities, authority, focus, and control within the organization. It determines how innovative, creative, response or bureaucratic an organization will be. It defines how things get done in the organization and establishes the boundary of acceptable behaviors. It determines how well people work, and how well they work together. It is what takes a collection of individuals and turns them into IBM, GM or 3M. It is the engine that drives performance.
If you ask a group of executives to define the elements of organizational infrastructure you will get a list — a long list. Ask them to identify the relationship between the elements on their lists and you will get a discussion — a long discussion. Long lists and long discussions do not provide much guidance on how to develop, define and change an organization's infrastructure.
We have defined the elements of organizational infrastructure and the relationship between those elements to create a dynamic model — a model that can be used to develop, define and change organizational infrastructure.
Elements of Organizational Infrastructure
There are five basic elements common to all organizational infrastructures — Goals, People, Process, Structure and Results.
Goals and Results
Goals and Results form the template for infrastructure development. The organization's Value Goal defines how the organization creates value that its customers are willing to pay for. The Results the organization measures and rewards establish priorities across the organization. When the Value Goal is aligned with the Results it creates the blue print for building organizational infrastructure.
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People — what they do and how they do it. Infrastructure defines the roles people play and assures people have the ability and willingness to achieve high performance in these roles. Infrastructure institutionalizes high performance by getting the right people doing the right things.
Process — the policies, procedures and rules an organization establishes. Processes define how things get done inside organizations — how plans are made, goals are set, priorities are established, funds are distributed, people are hired, products are developed, money is spent, communications takes place, decisions are made, problems are solved, finances are managed and people are rewarded. Processes increase performance by taking discreet tasks and organize them into a predecessor and successor relationship. Driving out deviation in processes through methods like statistical process control maximizes organizational efficiency.
Structure creates focus and control. It creates focused action by breaking the organization into distinct areas of responsibility — Research is responsible for technology development, Development is responsible for new products, Manufacturing is responsible for building products and Sales for selling the products that are built. Each organizational unit is focused on, and held accountable for, its unique area of responsibilities.
Structure creates control by distributing authority throughout the organization. A boss has the authority to hold his or her people accountable to create compliance to roles and rules. Bosses use authority to make sure people play their assigned roles, follow the rules and remain focused on their area of responsibility. Structure increases performance by setting priorities and minimizing redundancy of action.
Infrastructure organizes people, process and structure to get the right people, doing the right things, at the right time, right the first time. It maximizes performance creating the ability, willingness and opportunity for people to achieve high performance.
We help organizations define, analyze, and change their organizational infrastructure.
Defining, analyzing and changing infrastructure cannot be done by outside experts. But developing and changing infrastructure from within is difficult because internal resources often lack objectivity and can be unduly influenced by internal politics and careers.
Our clients value our consulting services because we are objective and honest, brutally honest when needed. They tap into our knowledge, skills and tools to efficiently and effectively define, analyze and change their organizational infrastructure.
Defining and Analyzing Existing Infrastructure
The first step in defining an organization's infrastructure is to articulate the organization's Goal and Result. Goals and Results are not to be confused with the organization's Vision or Mission. Vision and Mission define the business; Goals and Results define the infrastructure that will allow the organization to achieve its Vision or Mission. In an automobile metaphor, the car is the Vision while the engine and drive train are the infrastructure that allows the car to move.
'The second step is to place your people, process and structure on a continuum from integration to differentiation. Placing each element on this continuum defines the element and the relationship between the elements.
Organizations differentiate people, process and structure to create efficiency and maximize its ability to do things right the first time. Specialized roles create experts. Institutionalized rules drive out deviation and inefficiency. A tight structure creates focus and control. In the highly differentiated organization everyone is focused on their specific task and trusts that everything will fit together in the end.
The down side of differentiation is its tendency to create bureaucracy. People refuse to do tasks that are not their job. Institutional rules drive out innovation and creativity. And controlling management values loyalty, compliance, and conformity over performance. Eventually this creates a very rigid organization that is resistance to change — the organization starts to do the wrong things, right the first time.
Organizations integrate people, process and structure to create effectiveness and maximize its ability to do the right tings. Generalist roles allow people to be creative in their approach to things. Guidelines encourage people to be innovative. A loose structure provides people with freedom from their roles and responsibilities to do the right things for the business.
The down side of integration is inefficiency. Generalists are not experts and they make mistakes. Guidelines often result in people reinventing the wheel instead of applying what they have learned. And a loose structure lets things get out of control. Eventually the organization becomes chaotic and unable to do things right the first time.
Building New and Changing Existing Infrastructure
If you don't know where you going, any infrastructure will get you there.
Therefore the first step in building or changing infrastructure is to establish the organization's Goal (how it adds value) and it's Results (key metrics). An organization that adds value through organizational efficiency, for example, will organize its people, process and structure different than an organization that adds value by developing innovative new technologies.
Trying to build and organizational infrastructure without a clear Goal and Result inevitably leads to high levels of personality and politics. In this environment infrastructures decisions are made based on who can argue the best and who can build the strongest power base, not on what is the right thing to do for the business. Therefore establish Goals and Results is a critical first step in infrastructure development.
Once we establish your goals and results we work with you to determine how to organize your people, process and structure to maximize results and achieve your goal. If the Goal is organizational efficiency and the measure is controlling cost, quality and cycle time, you will want to move towards the right side of the Playing Field and differentiate these elements. If the Goal is effectiveness and the measure is innovation, you will want to move to the left side of the Playing Field and integrate these elements.
To maximize performance the organization must allow different organizational units to develop different infrastructures within the overall framework. An infrastructure focused on inventing new technologies, for example, will place R&D to the far left (integration) to maximize the freedom to be creative. But manufacturing will have to create an infrastructure more to the right (differentiation) to control costs and build the product right the first time. But, if this difference in infrastructure between these units is too great the organization will become schizophrenic trying to serve two different masters.