Free Advice for GM #2- A Chevy for Everyone

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.

Free Advice for GM #1

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?

Infectious Action

Here in Palo Alto there’s a movement afoot.  The folks over at the Stanford 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.

Which animal are you?

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

Pondering feedback, goals, and transparency

27258052_3e374c654e_mEver notice how just knowing something is real can change your behavior?  Like when you look in a mirror and notice a piece of food from lunch stuck in your teeth?  Or you’re cruisin’ down the highway only to glance at the speedometer and notice you are going 20 MPH over the speed limit?  Most people react suddenly in these cases and make adjustments.

I find this is especially true when two other conditions are present: a clear goal which helps you know what feedback to value, and transparency of this goal (and progress toward it), which helps others help you maintain your commitment and keep you honest.

I just had a great chat with a new friend, Kate Niederhoffer, about how to put metrics in the hands of people inside organizations, along the lines of how biofeedback helps people make good health care decisions. Like how Cardionet puts a device in your chest that tracks and reports information about your heart so you can act BEFORE a big problem and get medical intervention to keep you in good shape.  For a deeper read on metrics in social systems check out Kate’s blog, social abacus.

So how can we use these ideas to help people in organizations get information early enough to act in ways that keep things in line?  So much of what is happening is subjective and hard to capture, but the more clearly we state our goals, and tap into people around us, the easier it is to recognize patterns and adjust our behaviors.

One company that is on to this issue in a big way is Rypple.  They’ve built a web-based feedback platform that can help you ask questions and aggregate input.  Then you can discuss that input with a few advisors and make adjustments in your behavior.  This is just the tip of the iceberg and I expect they will have many more cool features to make this process even easier. What if Facebook or Twitter provided more aggregation tools based on all of the input you gather from your friends and followers?  How would this change your behavior?

One more thought: organizations are so complex, how can we help people gather feedback from many streams and see patterns in easy to understand images (like your teeth in the mirror)?  Check out We Feel Fine for some inspirational ideas.

The rise of the atomic organization

Human kind has had a long love affair with hierarchical organizations, and I think they still have their place in the world, but given the number of large failures of this type of organization lately, I’m with the group (Gary Hamel, for example) who thinks it’s time to expand our options and do some serious experimentation with fundamentally different organization models.

Much of the interesting discussion around this topic centers on social networks.  Great people like Rob Cross and Clay Shirky have shown that there is considerable power in the emergent relationships we all have around us.  Esteemed management consultant Jon Katzenbach and his colleague Zia Kahn describe the informal organization as an overlay to a traditional organization chart that acknowledges the way things really work.  I’m sure they are all on to something big.

Yet, one of the best tests for how an organization functions comes when people ask, “can you show me the org chart?”  Despite many efforts to engage in peer-to-peer activities, “bottom-up” feedback, and a kinder-gentler management philosophy, I find the “org-chart test” often reveals that power and authority still reside at the top of the house.

My experience at IDEO has shown me something quite different is possible.  As my colleague Bob Sutton says, IDEO does not play by the same rules as most businesses (or non-profits for that matter).  See Tim Brown’s blog about how IDEO uses design thinking to create innovative outcomes.  For the past few years, we’ve been trying to understand more about the conditions that enable design thinkers to thrive.  One significant output of this work is a concept called the “atomic organization” which is not simply a social network, but a fully different paradigm for organization behavior.

It’s ambiguous and slippery, but it’s not chaos.  It is a governed, open system with rules, deadlines, and high performance outcomes.  But there is nobody “in charge”, there’s no corporate strategy, and there’s an amazing amount of transparency and interconnectedness.  Ask for an org-chart at IDEO and people either laugh knowingly or simply don’t get the question.

Atomic ExampleSo we asked dozens of people here to draw their version of IDEO.  The synthesized result is a formal structure with consistent parts and rules that show a right way and a wrong way to organize, but a fundamentally different premise of control.  This approach works from the individual out, much like an atom has a nucleus with electrons orbiting around it, and atoms bond together to create molecules, people at IDEO exist at the center of their org-chart with several orbits full of people surrounding them.

This type of organization is both planned and emergent… it can evolve, grow, and contract.  It can be used to get decisions made and others to act.  Atomic organizations have gravity and density, and can be added together to create organizational mass and aggregated impact.  They make it possible to have multiple leaders of the same business unit, include “non-employees” without calling them outsiders, exist at a scale that is comfortable and manageable for the people within, yet still has incredible reach.

So who’s in charge?  That depends… what’s your question?