Posts Tagged ‘Organization Design’

Open source cars

Posted by John Foster on December 8th, 2009

wilder-young-frankensteinIn the immortal words of Dr. Frankenstein, played by Gene Wilder in Young Frankenstein, “It… could… work!!!!”

In my Free Advice for GM series, I suggested an “open source” model of organization as a radical way to remake SATURN into a viable brand.  Well, last week I was at a conference where Bob Johansen of the Institute for the Future presented their Ten Year Forecast.  One of his examples of the future (in action today) is a company called Local Motors. Check it out, they are already running a car company along the lines I suggested for SATURN.

It’s a small scale, regionally focused car company that uses a growing base of active participants to design, build, and sell cars.  Their first model, called the Rally Fighter, was designed by a student! The Rally Fighter

Does anyone know a SATURN dealer?  Send them my way so we can create another example of building cars in a more sustainable, interesting, and profitable way.

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Ready for some feedback?

Posted by John Foster on August 13th, 2009

Last week we held the first session of the Rypple Learning Collaborative over at Mozilla in Mountain View.  We had participation from Method Home, Pixar, The Federal Reserve Bank, Kiva, Littler Mendelson, Electronic Arts, the Stanford d.School, Facebook, IDEO, and Mozilla.

We hope this effort generates some new insights and ideas that help people do a better job asking for and giving feedback.  So, we spent much of our first time together  sharing our direct experiences with people giving and receiving feedback and generating a list of observations about what seems to work and what doesn’t.

Feedback involves 3 roles, not just 2

Feedback involves 3 roles, not just 2

We framed our discussions with the idea that feedback involves not only the person asking/receiving and the person giving/providing, but a “crowd” of people around that pair.  Traditionally, much of the attention given to this topic is on the mechanics of the interaction between the two obvious players.  We included the third role to push our assumptions with a social systems view.

We all shared stories describing real feedback situations to help us recognize some patterns in real behavior.  Once we get a good picture of how people actually behave (not how they should behave), we will try to uncover what works well and what causes people problems.

An early insight from our shared stories is that it makes a positive impact on a feedback exchange when a person is ready for it.  That is, when a person is asking for feedback, they seem to be more able to handle it well than when a person gives it.  So this prompts the question, “What makes someone ready for feedback?”

Our next step is for LC members to begin conducting feedback experiments within their organizations.  From these experiments, we will expand our observations and gather more ideas to push our thinking.   We’ll start posting them on the Rypple Effect blog in a few weeks.

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Free advice for GM…er Penske #4

Posted by John Foster on July 31st, 2009

We’re moving downstream of the GM break-up so this post is obviously not going to help GM explicitly, so listen up folks at Penske!  This is about how to imagine SATURN as a (really) different kind of car company.  The brand heritage points us in this direction, but the operations history never quite got there.  While establishing itself as a new car brand, the most significant difference in their approach to running the company was the creation of a new dealer network from scratch, and calling it a retail network to indicate a stronger belief in customer service as a competitive advantage.

Using the organization ecosystem model from the first post in this series, I would place Saturn in the “independent” corner and really push the envelope on how to design, build, and market a car using an open source model, borrowed from the software industry.  As you know this model has produced some amazing products like the browser Firefox from Mozilla.

In fact, some of these ideas are already in rough formation.  From Wikipedia I’ve learned that Penske will not be buying the GM factories and will eventually have other car companies build cars sold as Saturns. At this point, GM will build the Aura, Vue, and Outlook for Penske for two years. To replace GM as the brand’s manufacturer, Penske is in discussions with several global automakers, including Renault Samsung Motors of Korea.

Pit Crews have focus and pride

Pit Crews have focus and pride

What if they really push for something different and create an open source project for each model?  With the Penske passion for cars and the SATURN commitment to customer service, it’s not hard to imagine a really cool hometown facility that attracts car nuts with prototype vehicles, computer workshops, and a heavy dose of car culture.  Rather than staffing these “stores” with sales people, SATURN could staff them with car designers and engineers that help guide the process and manage the inputs via the open source process.  Interested players could be organized in “pit crews” who develop relationships with each other over time and work on specific elements of the car prototype.  Perhaps stores could work in regional “car craft” networks that involve small scale manufacturing and parts suppliers in the creation of regionally specific models.

Once the prototypes are in final form and are on the road being tested, contracts with larger manufacturing companies could be established to put the vehicles into limited production.  The viral connection to each model would be a grassroots sales force that would bring back the days of localized automotive pride, only it would be distributed throughout the country instead of centered on Detroit.

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What’s really wrong with performance reviews

Posted by John Foster on July 30th, 2009

I’m sure many of you have seen the recent column by Jeff Pfeffer in BusinessWeek.  It’s a very nice analysis of the flaws in corporate performance reviews.  I respect and agree with everything he says in that article. And, I think there’s a more fundamental issue underlying the failure of performance reviews.  The whole concept is backwards.

Photo by Charlie//Alexandra White on Flickr

Photo by Charlie//Alexandra White on Flickr

It’s designed to manage performance as if it could actually be managed.  In order to actually manage performance, a manager would have to be present while the employee works a great deal of the time.  When a person starts to veer off “best practices,” the manager could then intervene with helpful comments and suggestions, or in extreme cases simply whack the person with a ruler to keep him in line.

Sounds crazy doesn’t it?  Managers can’t do that, they’ve got better managerial things to do.  Performance reviews are designed as if people were machines that need annual maintenance to fix broken parts or an upgrade to new software.

In a human-centered model, we’d assume that an adult worker of normal abilities would be able to understand the task at hand, and apply skill and judgment to meet work goals.  In this system, we’d assume that the person would be motivated to do a good job and be curious about how to do it better.  This might be a stretch too, but given the choices, I think this approach has more potential.

Yes, it’s a major shift in paradigm, but it’s one that aligns with the people who are already doing well, not with the people who are not.  That is, people who are successful at work and in life tend to ask questions, learn, and grow. Why don’t we design processes, tools, and practices that support the more successful people, not prop up the weakest links?  Call me Darwin if you will, but I believe this approach will help those who aren’t behaving in the most successful strategies shift towards them (not get left behind).

For a great example of this approach (helping successful people do what they already do better) is Rypple.  It’s a platform for asking questions and giving feedback that’s driven by the only person who really cares about your performance… you.

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United Breaks Guitars

Posted by John Foster on July 8th, 2009

United Breaks GuitarsNow this is how to leverage the web!  Check out a new song by Dave Carroll called United Breaks Guitars.  And for more on the story behind the song visit Dave Caroll Music.  We’ve all had frustrating experiences with poor service and it’s really amazing that such a scene can actually occur.  I myself had a small tiff with a stewardess… I mean flight attendant… on United recently.  She wanted my 2 year-old son to leave the seatback phone in the holder and I thought the relative value of the inflight phone service (nearing zero) and the distinct advantage of having a 2 year-old entertained while the flight boards (priceless) were a good trade off.  My wife was worried I’d get us kicked off the plane for an FAA safety violation (see Ben Stiller in Meet the Parents) but I backed down.

It is quite fun to poke at these people for being so mean, difficult, or otherwise ornery.  But the real issue isn’t the person involved, these incidents are symptoms of a much larger core issue.  Bad service comes from companies that don’t take care of people.  United isn’t about “destination management” they are about airplane management, so they emphasize mechanical and safety issues, not human ones.  Sure, they say they are there for “your safety” but really they are there to control things. When Southwest Airlines hit the scene with an emphasis on people and the customer experience, they immediately became the most profitable airline around.

Another example is the battle between Microsoft and Apple.  While Microsoft has a clear advantage in revenue and profitability (so far), it is clear that customers prefer the Apple experience.  When a single business can dominate an industry so fully like Microsoft or United, they can get away with poor service because customers can’t vote with their wallets.  But as soon as that advantage is removed, the crash and burn is inevitable (and fast)… as in Kmart versus Walmart.

I think this is so obvious I can’t imagine why other businesses don’t pull it off.  But just in case it’s not that clear to everyone, here’s a few reasons it works:

1. People make buying decisions, so treating people well leads to more favorable buying decisions.

2. The loyalty effect is an important driver of sustained profitability.

3. If you want your customers to be treated well, you MUST treat your employees well.  See the Service Profit Chain for more on how this works.

Got any more points to add?

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Free advice for GM #3-Put SAAB back on the edge

Posted by John Foster on June 23rd, 2009

I was going to go with Saturn next, but a tweet from Diego on Metacool got me motivated to play with SAAB.  He says, SAAB should get back into rallying, which lends support to my understanding of this brand.

Rally to the edge

Rally to the edge

Technology, cool, edgy, unique.   Born from jets.  Svenska Aeroplan Aktie Bolaget is Swedish Airplane Company in Swedish.  Somewhere it all fell apart and they ended up another mediocre GM-mobile that had no style, no technology, and poor quality.

The organization behind an edgy car has to be edgy.  This is called brand integration (the outside and the inside have to align).  To create edgy things, people have to take risks and push the envelope.  Edge is by definition NOT THE MAINSTREAM.  Okay, I’m ranting… but it’s amazing to me how something edgy can get so rounded off to fit into a corporate model, that it’s no longer viable.

The interdependent organization archetype is a great model for SAAB because it could bring together an array of people and companies from many centers of excellence to work on the coolest automotive technology in the world.  There would need to be lots of experimentation (and failure) going on to find out what new ideas work and what theories don’t hold water.  You just can’t pull this kind of behavior off, if you are trying to please heads of engineering and design at the top of a corporate pyramid.

Key traits of the new SAAB organization:

1. Ad hoc reciprocal structure- each car should be viewed as a project, with full design-build responsibilities.  The designs should connect to the heritage of SAAB (e.g. efficient drag coefficient) but the technology should represent the best of what’s possible in the current market.  These teams should work under temporary agreements with other companies to bring resources necessary for manufacturing.

2. Each model is an experiment- transparency while prototyping (instead of secrecy) promotes involvement from others and improves quality.  Check out Martin Eberhard’s post on how blogs helped at Tesla Motors.  Instead of a long line of reductionist designs, hidden in secrecy while the companies round off the edges to save money, the clean slate approach gives the model team a chance to be truly innovative.  An open process pushes everyone to solve the complex tensions between viability, feasibility, and desirability.  The prototypes should be rallying all over the world to show off and test the new ideas.

3. Entrepreneurial leaders- leadership in today’s auto market is coming from disruptors like Tesla and Fiskar Automotive.  These are entrepreneurial ventures with something to prove and lots of backing to get there.  Each model should be considered and investment and live up to a market based promise of innovation.  Leadership teams should have to start over again with each model to prove this new idea is worth making (and buying).

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Free Advice for GM #2- A Chevy for Everyone

Posted by John Foster on June 15th, 2009

Continuing in a series of posts about GM and organization design, let’s take a closer look at creating the right organization for Chevrolet.  I know restructuring is not this simple; so take this as the first installment in a high level comparison of organization design options, not a comprehensive plan of action.

A return the the chevy brand essence?

A return to the Chevy brand essence?

Let’s start with Chevrolet, because that’s the easiest to imagine given their current situation.

To me, Chevy is Americana.  This is the car that represents the American Dream, value, performance, and accessibility.

Chevrolet should help people get their first car, the family car, and have a competitive truck option.  This market means head-to-head competition with Toyota and Honda, so it has to be efficient and cost competitive and produce top quality, reliable, desirable vehicles.  Check out this post on The Truth About Cars for a quick review of the Chevy brand.

Key Traits of the new Chevrolet organization:

1. Efficient hierarchical structure. Clean lines of authority to provide clear direction, efficient decision-making, speed to market, and drive focus on customer needs as the basis for every action.  This market is not about sexy cars, it’s about helping people feel good while they get places safely and manage household costs.

2. Make each model a business. Get past the silos of design, engineering, marketing, etc. and organize each model around a General Manager, with a P&L outcome and a target consumer to drive functional integration.   Fidelity Investments organizes this way (dozens of P&L units), and it works really well.  Develop a rabid consumer orientation as a rallying point, rather than being fractured by functional expertise.

3. Restructure the supply chain. As pointed out by Charles Mann in Beyond Detroit, source great parts from the best suppliers by developing a modular platform.  Don’t try to own everything, focus on total design, build, and sell.

4. Engage employees. Focus on great leadership and build pride (See Jon Katzenbach). The days of management v. labor must be left behind.  This organization needs every single person engaged in a mission to deliver cost competitive, high quality vehicles.  Organize production around manufacturing teams provide job rotations to help employees learn, grow, and develop as a natural component of work.  Use the portfolio of models to allow employees career movement.

5. Reward performance. Pay individuals, teams, and business units more when they meet performance goals in revenue, quality, and costs.  Create healthy internal competition between the businesses.

Next up, how to recover the SATURN brand through an open-source organization.

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Free Advice for GM #1

Posted by John Foster on June 9th, 2009

If you are interested in organization design, you should read Beyond Detroit in the 17.06 issue of Wired magazine. Chris Anderson offers a great introduction arguing that a new era of global business (long heralded) is really here.  The point is, that with the Big Three disintegrating, it’s time for the “little guys” to proliferate in a market of automotive technologies that includes many, many more players and will produce much better results.

Saturn WreckedDespite the deep malaise in the auto industry and the lackluster efforts by the federal government, articles like this show there is light at the end of the tunnel with practical ideas and solid advice. I thought I’d join the fray with an idea for how GM might move forward to a better place. I’m not claiming to be an auto industry expert, but my distance from it might be an advantage (at IDEO we call this the “naïve mind”).

Awhile back, I shared a framework for organization design inspired by the animal kingdom. Fundamental to that approach is the concept of biodiversity in an ecosystem.  Changing circumstances require entities within the system to evolve and adapt or they will die. And evolution is about letting an existing trait emerge and thrive when new conditions emerge and demand it. See this interesting blog post by Robert Patterson for more on this line of thinking.

While GM has had dozens of brands and even some difference in their range of businesses, they have sought to keep everything operating on the same model and use scale as a lever to create efficiencies. This “no variance” strategy crushed Saturn, one of their best hopes for survival.

So a mortal enemy of a sustainable organization is homogeneity, and GM is the poster child of homogeneity.  Using this framework, we can explore how GM might diversify their organizational structures to be more successful in four different consumer categories, with four different auto brands.  It’s likely that these different consumers want different things from their cars, so the organizations should operate differently to meet those needs.

Below you can see four GM brands plotted on the “organization ecosystem” model to guide our exploration.  Based on their unique brand attributes, and the demands of the market and consumers of those brands, each of the companies could be structured and operate quite differently. It’s funny to me that two of these brands are being jettisoned in the current restructuring actions.

Check back here for my next several posts and deeper descriptions of each example.

How could GM have an ecosystem of companies and brands?

How could GM have an ecosystem of companies and brands?

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Infectious Action

Posted by John Foster on May 26th, 2009

Here in Palo Alto there’s a movement afoot.  The folks over at the Stanford d.school are hoping to get a portion of downtown Palo Alto to become a pedestrian mall.  Check out the post on Metacool by Diego Rodriguez for more details and to join in the action.

I love that they have a class called Creating Infectious Action (CIA) there.  Based on the recent scare caused by the swine flu, infectious transmission of very small things is a force to respect.  I loved Stephen King’s view of this topic (The Stand) as it plays on all of the big fears involved in such an outbreak.  The point is, if you want to make change happen, understanding how this dynamic works is like being a change magician.

Damon Centola at MIT has done some great research to point out how social networking theory needs a bit of a makeover.  In short, the original “small world” theory (Granovetter, 1973) proposed that people who don’t know each other very well can spread behaviors, information and diseases through a dynamic called long ties.  This appears to hold up just fine with simple contagions that can be passed between two people with no other effort (like the flu), but not to hold up if the contagion being passed requires 2 or more people to reinforce it.  Think of it like being a carrier of a flu virus which requires you also to kiss someone else in 10 minutes to activate the infection.  If you catch the bug, but don’t kiss someone within the time limit, the bug dies out and there’s no spread.

Complex Contagion Bridge

For something like the Palo Alto pedestrian mall to come to life, there’s quite a lot of reinforcement that needs to happen, long ties are too weak in this case.  It’s a complex contagion that requires conversation, discussion, influence, and discernment.  In order for it to take hold, a person has to first “catch” the idea via one of the hundreds of people posting it on Facebook or a blog (long ties/small world) and then they have to discuss it with people they know well (strong/high bandwidth ties).

According to Damon, complex contagions operate under four social mechanisms:

1. Strategic complementarity (huh?)… that is, several complimentary factors in play at the same time. Like how technology and cost go together to support innovation.  Until costs come down, some technologies are not enough to create action.

2. Credibility… this is the “everybody’s doing it” influence factor at work.   Research by Chip and Dan Heath shows how hearing the same thing from multiple sources helps get something to “stick”.

3. Legitimacy… if close friends do something together, “innocent bystanders” feel more able to join in.

4. Emotional Contagion… ever feel the vibe of a big crowd and just go for it?  That’s this one.

So don’t just let Facebook do your work with a simple post.  You have to mix it up with people mano a mano, get some demonstrations going, and experience live interaction to get a real change to take place.

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Which animal are you?

Posted by John Foster on May 19th, 2009

Are all animals hierarchical by nature?  Are humans? Bob Sutton posted a great topic comparing managers to baboons.  And of course the easy inclusion of the Office character Michael Scott shows the ubiquity of our “dominant mindset” thinking about organizations.  It is clearly the case that most organizations we know are hierarchical.

Some of you may know about biomimicry and how it can inspire great design. I read the Starfish and the Spider and had a few chats with Ori Brafman awhile back and it got me really interested in the idea of organizations as animals. With animals there are thousands of strategies for “survival of the fittest” and many of them don’t involve hierarchy.  So couldn’t there be many types of organizations that don’t involve hierarchy?  What advantages would the organization have if it was built from a different fundamental structure?

The real lesson from biomimicry here, is that animal adaptations come from interacting with the environment.  That is, they are not internally developed as a strategy, but they are externally evolved based on the forces around them.  So given the business environment you are in, what animal could inspire your organization design so you could succeed better?

By the way, this is not like adopting a mascot because it’s cool or cuddly, it’s about understanding the different mechanisms that help animals function and thrive and (wait for it, a big word is coming..) making isomorphic design choices for your organization.

Here’s a design device that provides three ideas to stretch your thinking about systems, tools, processes, and behaviors, using three animals for inspiration:

Animal Inspirations for OD

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