Professional Development

The Reality of the Corporate Economy

Yves Morieux

I love TED talks, and am very pleased to see so much great information shared for free on the Internet. Even more pleasing to me is that there are a lot of people out there that view and “like” this great content, which means not everyone is spending their time with Honey Boo Boo or the latest season of “Survivor.” Maybe there is hope for humanity after all!

One TED talk that struck me recently is Yves Morieux’s “As work gets more complex, 6 rules to simplify.” Morieux is a business consultant, has his own blog, has been published in the Harvard Business Review, and has a new book coming out April 1st, 2014 (which appears to expand on the topic of the TED talk). He also has a thick french accent, but if you can get past that he has some novel ideas to share. Below is my best effort to transcribe his talk:

“I have spent the last years trying to resolve two enigmas: why is productivity so disappointing in all the companies I have worked for – I have worked for more that 500 different companies. Despite all the technological advances: computers, IT, communications, telecommunications, the Internet… why is there so little engagement at work? Why do people feel so miserable? Even actively disengaged? Disengaging their colleagues, acting against the interest of their company, despite all the affirmation events, the celebration, the people initiatives, the leadership development programs to train managers on how to motivate their teams. At the beginning I thought there was a chicken and egg issue, because people are less engaged they are less productive, or vice versa: because they are less productive, we put more pressure and they are less engaged. But as we were doing our analysis we realized there was a common root cause to these two issues that relates in fact to the basic pillars of management. The way we organize is based on two pillars:

  • the Hard (Structure, Processes, Systems, Metrics, …)
  • the Soft (Feelings, Sentiments, Interpersonal Relationships, Traits, Personality, …)

“Whenever a company reorganizes, restructures, re-engineers, goes through a cultural transformation program it chooses these two pillars. Now, we tried to refine them, we tried to combine them, the real issue is, and this is the answer to the two enigmas: these pillars are obsolete. Everything you read in business books is based either on one or the other or their combination. They’re obsolete. How do they work when you try to use these approaches in front of the new complexity of business?

“The hard approach basically is that you start from strategy, requirements [and produce] structures, processes, systems, KPIs, scorecards, committees, headquarters, …

Yves Morieux Organizing for Competitive Advantage

“What happens? Basically on the left you have more complexity. The new complexity of business. We need quality, cost, reliability, speed. And every time there is a new requirement, we use the same approach: we create a dedicated structure/process/systems, basically to deal with the new complexity of business. The hard approach creates just complicatedness in the organization.

“Let’s take an example: an automotive company. The Engineering division is a 5-dimensional matrix. If you open any side of the matrix you find another 20-dimensional matrix. You have: Mr. Noise, Mr. Petrol Consumption, … For any new requirement you have a dedicated function in charge of aligning engineers against the new requirement. What happens when a new requirement emerges? Several years ago a new requirement appears on the marketplace: the length of the warranty period. Therefore the new requirement is repairability, making the car easy to repair… So what was the solution using the hard approach? … If repairability is a new requirement, the solution is to create a new function: Mr. Repairability, and Mr. Repairability creates repairability process, with the repairability scorecard, with repairability matrix, and repairability incentives, that came on top on 25 other KPIs. What percentage of these people[s salary] is variable compensation? 20% a most, divided by 26 KPIs, repairability makes a difference of 0.8%. What difference did it make in their actions, their choices? To simplify: zero.

“But what a cost for zero impact: Mr. Repairability, process, scorecard, evaluation, coordination with the 25 other coordinators to have zero impact. Now, in front of the new complexity of business the only solution is not drawing boxes with reporting lines – it is basically the interplay, how the parts work together, the connections, the interactions, the synapses. It is not the skeleton of boxes, it is the nervous system of adaptiveness and intelligence. Whenever people cooperate they use less resources – in everything. You know, the repairability issue is a corporation problem: when you design cars, please take into account the needs of those who will repair the cars…

Yves Morieux Effect of Cooporation on Performance

“When we don’t cooperate we need more time, more equipment, more systems, more teams. When procurement/supply chain/manufacturing don’t cooperate we need more stock, more inventory, more working capital. Who will pay for that? Shareholders? Customers? No, they will refuse. So who is left? The employee, who have to compensate through their super individual effort for the lack of cooperation. Stress/burnout/their overwhelmed/accidents – no wonder they’re disengaged. How do the hard and the soft try to foster cooperation?

  • The hard: in banks, when there is a problem between the back office and the front office – they don’t cooperate – what is the solution? They create a middle office. What happens one year later? Instead of one problem between the back and the front, now I have two problems: between the back and the middle, and between the middle and the front. Plus I have to pay for the middle office. The hard approach is unable to foster cooperation; it can only add new boxes, new bones in the skeleton.
  • The soft approach: to make people cooperate we need to make them like each other. Improve interpersonal feelings: the more people like each other the more they will cooperate. It is totally wrong. It is even counterproductive. Look, at home I have two TVs. Why? Precisely not to have to cooperate with my wife. Not to have to impose trade-offs to my wife. Why I try not to impose trade-offs to my wife? Precisely because I love my wife. If I didn’t love my wife, one TV would be enough. We will watch my favorite football game, if you are not happy here is the book or the door. The more we like each other, the more we avoid the real cooperation that would strain our relationship by imposing tough trade-offs and we go for a second TV or we escalate the decision above for arbitration.

“Definitely these approaches are obsolete. To deal with complexity, to enhance a novel system, we have created what we call the smart simplicity approach, based on simple rules.

  1. Simple rule #1: Understand what others do. What is their real work? We need to go beyond the boxes, the job descriptions, beyond the surface of the container, to understand the real content.
  2. Second, you need to reinforce integrators. Integrators are not middle offices. They are managers, existing managers, that you reinforce so that they have power and interest to make others cooperate. How can you you reinforce your managers as integrators? By removing layers. When there are too many layers, people are too far from the action, therefore they need KPIs, matrices, they need poor proxies for reality. They don’t understand reality and they add the complicatedness of matrix KPIs. By removing the rules, the bigger we are, the more we need integrators, therefore the less rules we must have to give discretionary power to managers. And we do the opposite: the bigger we are the more rules we create…
  3. You need to increase the quantity of power so that you can empower everybody to use their judgement, their intelligence. You must give more cards to people so that they have the critical mass of cards to take the risk to cooperate, to move out of insulation. Otherwise they will withdraw, they will disengage. These rules, they come from game theory, and organizational sociology.
  4. You can increase the shadow of the future. Create feedback loops that expose people to the consequences of their actions. This is what the automotive company did when they saw that Mr. Repairability had no impact. They said to the design engineers now, in three years when the new car is launched on the market, you will move to the after-sales network, and become in charge of the warranty project. And if the warranty project explodes, it will explode in your head. Much more powerful than 0.8% variable compensation.
  5. You need also to increase reciprocity by removing the buffers that make us self-sufficient. When you remove these buffers, I hold you by the nose, you hold me by the ear. We will cooperate. Remove the second TV, their are many second TVs at work that don’t create value, that just provide dysfunctional self-sufficiency.
  6. You need to reward those who cooperate and blame those who don’t cooperate. The CEO of the Lego Group, Jørgen Vig Knudstorp, has a great way to use it. He says ‘blame is not for failure, it is for failing to help, or ask for help.’ It changes everything. So then it become in my interest to be transparent on my real weaknesses, my real forecast, because I know I will not be blamed if I fail, but if I fail to help, or ask for help.

Yves Morieux Smart Simplicity Rules

“When you do this, it has a lot of implications on organizational design. You stop drawing boxes, dotted lines, full lines, you look at the interplay. It has a lot implications on financial policies that we use, on human resource management practices. When you do that you can manage complexity – the new complexity of business without getting complicated. You create more value with lower cost. You simultaneously improve performance and satisfaction at work, because you have removed the common root cause that hinder both: complicated-ness. This is your battle, business leaders. The real battle is not against competitors. This is rubbish, very abstract. When do we meet competitors to fight them? The real battle is against ourselves, against our bureaucracy, our complicated-ness. Only you can fight and can do it.”

How can your organization improve using these novel rules?

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