Shaping IT Organisations: CIO Strategy Forum presentation by Nigel Dalton

By | Agile, Lean, Organisation, People | One Comment

In which the 3rd Reich*, the Catholic Church, and Monty Python are resoundly thumped by William Edwards Deming in the race to design a healthy, productive IT organisation for the 21st century.

Third Reich example of extreme flat organisation structure

By the time this is published I will have presented the results of many hours research, debate and reflection on the design of modern IT organisations. Sadly, without actions and interpretive dance, the Powerpoint slides on their own don’t add up to much more than pictures. Invite me (or James!) for lunch sometime, and we’ll happily proffer an opinion on the subject.

The pivotal moment in the thinking process came when reading the new book from JoyceThe essential deming by joyce orsini Orsini, a deftly edited collection of Deming’s lectures, missives and thoughts from 1950 to 1992. A brilliant book, it is the closest you’ll get to Deming sitting with you and giving his opinion on a wide range of important matters. Including, organisation structures!

Deming’s simple idea (quoted in a 1992 presentation to General Motors) was to avoid traditional organisation charts in the form of hierarchical pyramids, and replace them with flow diagrams (aka value stream maps), and just put the people on the flow diagram as value was pulled by a customer. So simple!

“A flow diagram is actually an organisation chart. It shows people what their jobs are. How they should interact with one another as part of a system. Anybody can see from a flow chart what their job is. Take the chart, put the names on it. You belong here. Somebody else belongs here. Then anybody can see from the chart what their job is. And their work fits in with the work of others in the system.”

Compare that to the Hitlerian view of a flat organisation (so inexplicably popular since the 1990s, with ever-expanding numbers of direct reports), with this lightly edited paragraph from Wikipedia on the organisation of the 3rd Reich. The grey bits are the changed words. If this sounds like your IT department, run!

‘The CIO often deferred making decisions, avoided clear delegation and allowed subordinates to compete with one another, especially in the recent years. Therefore, a system of governance was formed whereby leading company officials were forced to interpret the CIO’s speeches, remarks and writings on company policies and turn them into programs and strategy.

Any manager could take one of the CIO’s comments, and turn it into a new strategy, of which the CIO would casually either approve or disapprove when he finally heard about it. This became known as “working towards the the CIO“, as the executive was not a coordinated, co-operating body, but a collection of individuals each trying to gain more power and influence over the CIO. This often made IT executive meetings very convoluted and divided, especially with the CIO’s vague policy of creating a multitude of often very similar posts.’

This is also an opportunity to put the many references given in the 30 minute talk, and used in the research, in one handy place. Enjoy.

Reading List

  1. The Management Century by Walter Kiechel III, published in Harvard Business Review, November 2012.
  2. The Essential Deming: Leadership Principles from the Father of Quality (2012) by Dr Joyce Nilsson Orsini. Available as a Kindle book, this is the only place I have read Deming’s theories on organisation structures and the negative impact of org charts.
  3. Value Stream Mapping – understand the theory of this special variant of process map
  4. Management 3.0 (2011) by Jurgen Appelo.
  5. Godwin’s Law by Mike Godwin, 1990. ‘As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches 1.’
  6. Scaling Agile at Spotify (2012) by Kniberg and Ivarsson.
  7. Power to the Edge (2003) by Alberts and Hayes.
  8. Here Comes Everybody (2009) by Clay Shirky.
  9. The Principles of Scientific Management (1911) by Frederick Winslow Taylor.
  10. The Theory of Business Enterprise (1904) by the Thorsten Veblen (the witty economist who invented the concept of ‘conspicuous consumption’ among other things). Best read in Wikipedia.
  11. General and Industrial Administration (1916 in French, 1946 in English) by Henri Fayol. Had Henri not been French, and writing at a tricky time in world politics, his ideas might have spread sooner. Similar to Frederick Taylor in many ways.
  12. Conway’s Law by Melvin Conway.
  13. Servant Leadership – best read about in this chaotic Wikipedia entry which features American Robert Greenleaf’s work.
  14. Peter Drucker’s contribution to management and organisational literature in the second half of the 20th century was biblical. The HBR article above does a great job at summarising his influence, or you can buy this book on Amazon.
  15. The reference to the 3rd Reich organisation structure and model can be found here in its original form (not adapted for CIOs).

Rugby and the origins of agile

By | Agile, Lean, People | 4 Comments

A recurring challenge we face when discussing the transformation of 21st century organisations to more agile and lean ways of working might be paraphrased as:

“My boss has never heard of it and thinks it must be a fad – does this agile thing have any history to fall back on?”

Having just spent a week at the 2011 Rugby World Cup in New Zealand with plenty of time to reflect (kiwis don’t go for half-time extravaganzas), it occurred to me this FAQ – which might better stand for ‘fairly annoying question’ – should be a blog post, suitably peppered with rugby metaphors.

RWC 2011, Georgia v Romania

The long history of agile goes back to the emergence of mass production from a world of ‘craft’ industrial production in the 1800s. Around 1908, Henry Ford, with management theorist FW Taylor (and later AP Sloan albeit Sloan worked at GM, not Ford) developed moving production lines in huge factories focusing on economies of scale (make more of the same thing, use semi-skilled labour single-tasking and doing what the boss commanded of them, and unit cost comes down), building any colour of Model T as long as it was black.

When a new product was finally demanded (the Model A), Henry and son Edsel Ford simply abandoned the old factory at Highland Park in Detroit and built a new one at River Rouge, as land and labour were plentiful – the factory and re-tooling reputedly cost up to $100m in 1927 dollars!

The next great leap forward in industrial production methods was not developed in America, but in Japan with America’s help, emerging after World War 2 under a rather unique set of circumstances as the Japanese economy was rebuilt – limited capital, limited land, and limits set on labour by the USA including the bizarre ‘job for life’ laws which forced employers to develop systems of working that enabled 60 year-olds to be productive alongside 16 year-olds.

The system that emerged is now known widely under the tag of lean, but also as the Toyota Production System (TPS), and in Deming’s writings ‘systems thinking‘. By the second half of the 20th century, there was no capacity for constraining consumer demand to only 1 model of car – variation in consumer demand and the increasing speed of change were the key challenges for Toyota to respond to as it set up for business. It was within the cradle of this 40-year period that Agile was born as the next great model of organising work.

The happy coincidental crossing of national obsessions: rugby and lean.

Rugby came to Japan in the 1890s from England. In 1987, built on over 100,000 grassroots players in their corporate leagues and competitions (including imported players from NZ and Australia), Japan qualified to play at the first Rugby World Cup in New Zealand. (Note: Japan actually only lost the hosting of the 2011 RWC by 1 vote – so they will certainly be hosts in the next decade). The national coach for Japan is of course John Kirwan, a kiwi hero of the victorious 1987 All Blacks team.

Just a year before that first Rugby World Cup, Hirotaka Takeuchi and Ikujiro Nonaka of Hitotsubashi University in Japan wrote an article for Harvard Business Review titled ‘The New New Product Development Game‘ that is recognised as the source of a stream of innovative thinking that first rolled into smarter ways of developing software in the 1990s.

Clearly Takeuchi and Nonaka were rugby fanatics, meticulously documenting the way a good rugby team can flow up the field as a team in a series of overlapping phases of play (like option C in the diagram above)- and using that analogy to describe the way successful product development was happening in Japanese companies. Remember the Honda City and the stir it created in the 1980s? That’s one of several great examples they document in the article.

Ultimately Jeff Sutherland‘s coining of the phrase ‘scrum’ in the 1990s to define a wide-reaching agile method was inspired by that article. Personally, I feel ‘scrum’ somewhat misses the overall point of their work, as a scrum is a tiny fraction of the game’s flow, but we’ll go with it. We’re not all rugby-nerds or kiwis.

The most important thing you (the reader) can do right now is to buy a copy of the 1986 article and read it. It is only $6.95, and yes, there is a frustrating paywall thing on HBR.org, but it will be worth it.

For the 99% of you who are non-readers, here is the HBR summary of the article:

In today’s fast-paced, fiercely competitive world of commercial new product development, speed and flexibility are essential. Companies are increasingly realizing that the old, sequential approach to developing new products simply won’t get the job done. Instead, companies in Japan (and the United States) are using a holistic method—as in rugby, the ball gets passed within the team as it moves as a unit up the field.

This holistic approach has six characteristics: built-in instability, self-organizing project teams, overlapping development phases, “multilearning,” subtle control, and organizational transfer of learning. The six pieces fit together like a jigsaw puzzle, forming a fast flexible process for new product development. Just as important, the new approach can act as a change agent: it is a vehicle for introducing creative, market-driven ideas and processes into an old, rigid organization.

And when you’re done with the article, pass it quickly down-field to the captain of your team. Remember, companies have been using and refining this way of working to beat you since the 1980s, so what are you waiting for? It will cost you 200 times that amount of money to go to the RWC final in Auckland and see the world championship of agile in action for yourself.

My thanks to Marcus Fazio, multi-national consultant extraordinaire, and Japanese expert who reminded me of this all important link between two of my favourite things. I’m sure Marcus, Takeuchi and Nonaka would all have enjoyed this fabulous moment from the RWC last month.

Japan's winger Hirotoki Onozawa runs to score a try during the 2011 Rugby World Cup pool A match New Zealand vs Japan at Waikato stadium in Hamilton on September 16, 2011. (Photo credit: GABRIEL BOUYS/AFP/Getty Images)


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