A couple of academics and a consultant wrote a piece in Harvard Business Review called, “Why Strategy Execution Unravels—and What to Do About It”. They could have just as easily titled it, ‘Why a Lean Transformation is Like Pushing a Rock Uphill’.
The article is all about the lack of alignment around strategic objectives. This is nothing more than pointing out that there is not alignment around the company’s core value streams; that any and every strategy requires cross functional value stream agreement, coordination and cooperation; but companies are by and large organized around functions.
“Only 9% of managers say they can rely on colleagues in other functions and units all the time, and just half say they can rely on them most of the time. Commitments from these colleagues are typically not much more reliable than promises made by external partners, such as distributors and suppliers.
When managers cannot rely on colleagues in other functions and units, they compensate with a host of dysfunctional behaviors that undermine execution: They duplicate effort, let promises to customers slip, delay their deliverables, or pass up attractive opportunities. The failure to coordinate also leads to conflicts between functions and units, and these are handled badly two times out of three—resolved after a significant delay (38% of the time), resolved quickly but poorly (14%), or simply left to fester (12%).”
For all practical purposes the article does little more than reinvent the wheel – pointing out that functional silos are a colossal obstacle to taking the business to a higher level. The authors go on to write about the lack of flexibly structured approaches to getting the silos to cooperate entail – when circumstances change preset dictates about what the various silos were directed to do come apart. They urge cultural solutions – hire and promote people who will do a better job of seeing the big picture. They point out that cooperation forced by the top guy is not sustainable.
What the authors fail to do, however, is to ask why there is a lack of alignment in the first place? If the most important things the company needs to do – its strategic objectives – are defined by value streams and radically better value stream execution is prevented from being achieved because the company is organized around functions, why isn’t the solution to simply organize around the value streams instead of the functions?
There is no good answer to that question; no logical reason whatsoever for organizing around functions rather than value streams. It is that way for the most fundamental of reasons – because it has always been that way. Changing it is rarely considered in part because it is so widely assumed to be the only way to organize, but even more so because senior leaders define their power over control of their silos. They aren’t about to give them up because they are worried about where that would leave them.
The authors discuss adding waste to the business to solve the problem – “More than 80% of the companies we have studied have at least one formal system for managing commitments across silos, including cross-functional committees, service-level agreements, and centralized project-management offices—but only 20% of managers believe that these systems work well all or most of the time. More than half want more structure in the processes to coordinate activities across units—twice the number who want more structure in the management-by-objectives system.” They ignore the most insidious waste most companies deploy to try in vain to achieve alignment – the waste of increasingly complicated IT solutions; especially ERP which is little more than a massive attempt to achieve cross-functional alignment.
Would be lean companies waste a lot of time on unnecessarily bridging gaps between silos with tools such as A3 planning and hoshin kanri. Setting up folks and even departments with titles like Continuous Improvement Manager or Lean Coordinator are typically the same thing- attempts to get folks from the different silos to play nicely with each other. That is not to say that those tools have no value, but in companies aligned around value streams instead of functions you will see a whole lot less of it.
Executing the strategy doesn’t need to be all that difficult or complicated. Figure out what it is you want to achieve; map the value stream from start to end customer (and it always ends up with customers if the strategy has any merit); set about doing all the work needed to execute according to the strategic objectives.
Now you have two choices: Have everyone involved in the comprehensive value streams – the folks needed from all of the different silos to make the strategy happen – simply stay in the value stream and call it a department with its own boss, metrics, accounting, and all of the rest of the trappings of an organizational unit and continue to enjoy the fruits of their cooperative accomplishments. Or you can send them back to their old silos and let the rock they pushed uphill roll back down and wonder why they are all back to optimizing their silo objectives instead of the strategy.
Put another way, why would you do a value stream mapping exercise, uncover all sorts of problems and encounter all sorts of improvement opportunities; and then send everyone back to the old silos that (1) created the problems to begin with, and (2) made the problems and opportunities impossible to see and solve before the value stream mapping exercise?