The disconnected company
By William C. Copacino -- Logistics Management, 8/1/2003
It should be so easy. If separate departments in a company worked together fluidly, as a team, pulling in the same direction, and for a common purpose, that company's effectiveness would dramatically improve, and the job-satisfaction level of its employees would be so much greater.
But that kind of positive experience seems to be rare. Instead, I more often hear about finger pointing, frustration, lack of understanding, poor communication, and even cruel jokes and accusations of incompetence directed by one department at another—many times directed at several other departments.
When the idea of teamwork is lost, maximizing functional performance becomes a company's overriding goal. Maximizing functional performance, of course, can be a good thing. But when it becomes the main focus, companies miss out on opportunities for broad-based, systemic improvement. Here are just a few examples of these mistakes:
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Focusing on the lowest purchase price rather than on the lowest landed cost;
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Driving higher sales volumes but realizing a lower marginal return due to poor design of promotional programs or poor cross-functional coordination;
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Taking eight months or more to bring new products to market; and
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Operating with imbalanced inventories because manufacturing is focused on hitting targets for capacity utilization.
How do some companies end up in these circumstances? Why do some rise above such parochial behavior while others do not? The answers to these questions are not always clear. But there are four steps that companies can take to help them avoid or minimize this problem.
First, it is essential to engender a process-oriented view and process-focused thinking in your organization. Smaller companies do this naturally because they are able to see all of their business activities. This is much harder for large companies to achieve. Many large companies aggressively manage based on functional metrics because it is, frankly, an easier way to delegate responsibilities and accountability. Easier, but wrong. The leading companies focus on cross-functional processes and aligned metrics. They don't abandon functional metrics, but instead use them secondarily to process metrics.
Second, the creation of process owners and cross-functional teams is essential. This is an unfamiliar and therefore difficult step for many companies. But it is critical for creating the management perspective and teamwork that's needed for success.
Third, rotating managers' assignments is beneficial. Some companies keep individuals in the same position for their entire career. Not only does this limit cross-functional understanding, but it also limits personal and professional development.
Finally, having effective leadership and a common set of values are important ingredients for creating a connected company. And, of course, it is essential to develop leaders who manage to those values.
A "disconnected company" is a poor performer and often an unpleasant place to work. Companies can take a big step up by recreating themselves as a "connected company."
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