Archives for posts with tag: chaos

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Organizational design produces the vision of an organization and a desired behavior. The gaps between what the organization is and now is doing, and where it wants to be and to be doing, expresses the challenge to be tackled by gap analysis and gap planning.

Gap Planning determines how the gaps are to be closed or reduced. It is the preparation of the design’s “initial  drawings” which provide the instructions required to close or reduce the gaps. Gaps can be filled by adding things, eliminating unnecessary things or by changing things.

Assessment

Before any assessment can take place, each stakeholder needs to understand and agree on the new direction of the organization:

  • Communicate widely the vision, mission and pie in sky design
  • Design the data-gathering process and explain to all stakeholders that an enterprise-wide gap analysis will take place
  • Discuss with each stakeholder the benefits and difficulties involved in the transformation process
  • Establish the initial design and data-gathering lead teams
  • Determine the stakeholder task force
  • Establish expectations for ongoing communication, and communicate the philosophy for staffing the organization

Using a combination of survey and group interview techniques, gather information on the effectiveness of the current organization. Data gathered should include: core processes and their effectiveness, additional customer data, critical tasks or key activities, work load, roles and responsibilities, decision-making authority, qualitative data on management practices, and internal issues and suggestions for improvement. Enterprises need to consider the current culture, how change has been implemented in the past, and how is has been received by employees at all levels.

Gap Analysis

In planning the analysis, it is essential to clarify what information is most relevant. This involves specifying intended outcomes and possible unintended outcomes. It also involves plans for assessing how well processes have been implemented and where improvements are needed.

We use the example of a luxury car dealership to illustrate the gaps. In this example, there are several gaps that are important to measure. From a service quality, these include (1) service quality gap; (2) management understanding gap; (3) service design gap; (4) service delivery gap; and (5) communication gap.

Service Quality Gap

Indicates the difference between the service expected by customers and the service they actually receive. For example, customers may expect to wait less than 10 minutes for their loaner car but reality is an average waiting time of 20 minutes. Most cars are being dropped off early am and 10 minutes before work are more valuable to people than after 5pm.

Management Understanding Gap

Represents the difference between the quality level expected by customers and the perception of those expectations by management. For example, in a car dealership customers might expect expediency on their repair but management focuses more on excellence than expediency (for many legal reasons).

Service Design Gap

This is the gap between management’s perception of customer expectations and the development of this perception into delivery standards. For example, management might perceive that customers expect someone to answer their telephone calls timely. Customers might think “timely” is less than twenty seconds and management defines “timely” as less than 40 seconds, thereby creating a service design gap.

Service Delivery Gap

Represents the gap between the established delivery standards and actual service delivered. Now, management might establish a new standard of answering each call in less than 20 seconds but average time of answering is 27 seconds, creating a service delivery gap.

Communication Gap

This is the gap between what is communicated to consumers and what is actually delivered. This happens frequently when dealerships offer low-price oil changes and then charge customer for questionable labor.

Gap Fillers

The most important criteria used in evaluating the gap plan is whether it will the enterprise to push in the right direction, avoiding a chaotic transition and helping the organization to utilize opportunities. It’s extremely important to refer back to the mission statement, and understand if the gap plan will help to fulfill promises made in the statement.

When an individual or a group is confronted with a gap between where they are and where they most want to be, they can respond in four different ways: absolution, resolution, solution, and dissolution. Learning and creativity are enhanced more by design (dissolution) than by research (solution), more by research than trial and error (resolution), and more by trial and error than by doing nothing (absolution). The goal is to design an organization that considers dissolution as their main goal. Dissolution of boxes,  paradigm, linear thinking. Through organizational design, all stakeholders will contribute to the creation of a world they are envisioning to live in.

The efficiency and effectiveness of the gap fillers selected in gap planning are not only matters of selection one of a set of available gap fillers, but are also a matter of creating gap fillers not previously available. Organizational business design unleashes creativity in developing a vision to be pursued by an enterprise. But creativity also has an important role in selecting the gap fillers by which to pursue it. Therefore, the selection of gap fillers can also be more a matter of design than research or common sense.

Last but not least, the gaps treated as challenges in gap planning are almost never independent of each other.  Therefore, their solutions interact systematically. The selection of solutions to close the gaps should take into account these interactions, especially their joint efforts on the enterprises’s overall performance.

Tomorrow we will discuss asset planning.

For your reference, you can find the previous chapters here: Part 1, Part 2, Part 3, Part 4, Part 5

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“It turns out that an eerie type of chaos can lurk just behind a facade of order – and yet, deep inside the chaos lurks an even eerier type of order.” – Douglas Hofstadter

One of the fundamental characteristics of today’s enterprise environment is change. Today’s rate of change can often be experienced as chaos. All of us are grappling with the implications of technology, demographic changes and the impact of the human race on the planet. And we have an armada of experts that tell us how it will affect us physically, psychologically, socially, and organizationally. The fact and necessity of change needs to be a major consideration in the management of any enterprise. In addition, it is imperative for executives to be competent in introducing, responding to, or coping with fluctuations in the environment.

Before an enterprise can deal effectively with chaos and the always-present change, it needs to craft a situational analysis. It provides a comprehensive view of the system they manage. It also helps with determining its projected future, where it will be if it continues on the current path and be prepared for situation where the unexpected happens. These projections are imperative to understand how the enterprise will be affected unless it changes.

Situational Analysis Content

The situational analysis needs to contain at minimum:

  • Flow of business transactions from initial order to final delivery
  • Information flow required by underlying business transactions
  • Flow of financial resources
  • Culture of the enterprise. Differentiating between real culture and externally communicated culture (Policies)
  • Conflicts within the enterprise and between the enterprise and other stakeholders
  • External Trends and implications to the performance of the enterprise

This situational analyis is a much more in-depth look at the overall health of the enterprise compared to the typical SWOT analysis. In addition, we do recommend enterprises developing an ultimate apocalypse scenario.

Ultimate Apocalypse Scenario

The goal of the ultimate apocalypse scenario is to understand when and how the organizational system will break down if there are no adjustments. We all know that enterprises will eventually intervene and adjust. (Often too late or not early enough.) To be clear, this scenario is very unlikely to happen. But it helps enterprises to understand when and how the system will break down if no changes are implemented.

Fact is, the majority of organizations will not change their course unless they are in a state of crisis. Let’s just have a look at the current state of the U.S. government: For how many years have we heard we need to change fiscal direction? For how many years have we listened to politicians talking about the crisis of entitlements? Only after we stepped away from the brink of the financial abyss, we started to have an intelligent discussion about fiscal policy. Projections about our impending bankruptcy revealed the crisis of of our fiscal policy unless we change our behavior.

The ultimate apocalypse scenario should be communicated through a lively narrative. Humans react favorably to real stories, to vivid images. Just explaining the the federal deficit might reach 50% of GDP doesn’t evoke any emotions. A scenario where nobody will buy our debt and bond vigilantes will run the fiscal policy of the US evokes strong emotions.  The ultimate apocalypse scenario provides an enterprise with an opportunity to control and influence a significant part of its future. The goal of the enterprise is to influence the future and not be influenced by the interventions of others.

In Part 5, we will discuss Pie in the Sky planning.

And, in case you missed the first three parts, you can find them here: Part 1, Part 2 and Part 3.