Speeding Up Complex Companies
14 February 2007 Kevan Hall
Kevan Hall believes that complex businesses must scrap traditional management skills to improve speed and reduce costs. In an extract from his book, 'Speed Lead: Faster, Simpler Ways to Manage People, Projects and Teams in Complex Companies', the CEO of Global Integration explains all.
The world's leading companies attract highly talented people who are well educated, trained, motivated and more diverse than ever before. However, these people are frustrated that, as their companies grow, they become more complex – slower, harder, and more expensive to run and less satisfying places to work.
These talented employees are also equipped with startling levels of technology to help them do their jobs. There is no doubt that globalisation and information technology have combined over the last 20 years to create an unprecedented period of growth and much higher levels of integration inside large companies.
Yet as companies grow, they become more complex and consequently they start to slow down.
SUCCESS CAN SLOW BUSINESSES DOWN
The fast, entrepreneurial spirit of the old days starts to erode. This is due to a number of reasons: having to cooperate with diverse colleagues in many locations, controlling different business lines and functions, coordinating complex activities and coping with the sheer scale of the organisation.
Eventually – and paradoxically – this complexity starts to undermine the qualities that made the company successful in the first place and a pattern starts to emerge:
- Activity slows down and people find it increasingly difficult to make decisions and get things done
- The organisation becomes difficult, expensive and time consuming to run
- People spend more time and resources on sorting out internal complexity and less on customers and competition
- The company becomes a messy and less satisfying place to work – the spirit enjoyed in the early days is hard to maintain
As the internal world starts to slow down, the external world does not. Every year we need to deliver better, faster and at lower cost. If we don't, our customers can usually find someone else who will.
Over the last 12 years, Global Integration, a company specialising in 'speeding up complex companies', has trained over 40,000 people in 40 countries. It began by training people to cope better with complexity, having learnt that it was better to cut through it.
It was soon realised that the traditional line management skills that make companies successful early in their careers were holding them back in a more complex world. By working with hundreds of real teams, many different ways of working to reduce and cope with complexity have evolved.
Through research, four major sources of organisational delay, cost and dissatisfaction have come to light – the 'four Cs': cooperation, communication, control and community. In each of these areas, traditional ways of working have become too complex to cope. Participants on training programmes say that they are spending over 80% of their time on the first three Cs and they believe that up to half of this time is wasted.
It does not have to be this way.
As organisations grow and work becomes more complex we must cooperate in order to get things done. In large companies, we have to cooperate with colleagues from other departments, locations, cultures and time zones. We need to build trust and good working relationships with diverse groups of people who we may never meet face to face.
These increasingly complex connections are a major source of confusion and delay. Managers in complex organisations spend up to 50% of their time in meetings (either face to face or through technology) and on teamwork. They think that half of this time is wasted.
The top 25 companies in the Fortune 500 alone employ over 6.5 million people – more than the population of Denmark. The average company in this group has 250,000 employees, of which at least 20% experience high levels of meetings and teamwork. Every day, each of these companies employs around 12,500 people to sit in unnecessary meetings and teams – and they hate it.
There are two big opportunities to cut through the complexity and constraint caused by unnecessary cooperation:
- 'Spaghetti' teamworking, where everyone is involved, has become a slow and expensive way to cooperate. Thankfully, despite decades of obsession with teams, we seldom need this style of true teamworking. By focusing more on individual accountability and 'star' group (hub and spoke) working, we can get things done faster, at lower costs and provide more interesting work.
- Meetings are a huge source of waste and frustration. Most writing and training focuses on how to make the traditional meeting process more efficient. But 50% of meeting content can just be discarded with little impact. Where meetings are essential, focus on participation and real involvement – not passive 'death by PowerPoint'.
The amount of communication in companies has rocketed in recent years, but the quality of it has generally fallen.
The perceived need to coordinate and the easy availability of communication technology means that managers in complex organisations now receive, on average, over 130 incoming messages a day. This number is rising fast as new communication technologies become available. Unless we take control of this communication, most managers can expect the number of messages they receive to double in the next four years.
For example, email is a great tool, but managers tell us that many emails are a complete waste of time. On average each of the top 25 Fortune companies pays someone to write, send, store and delete over 250 million pointless emails every year.
There are three big opportunities for reducing the torrent of unnecessary communication and improving the quality of what remains:
- Only send the communication to people who really need to be involved
- Focus the content of communication on what the recipient actually needs to know
- Choose and use communications technology more effectively
As organisations grow, they tend to increase control. They create powerful central functions to coordinate activities. They create rules and systems to maintain the feeling of control that they were used to during simpler times.
IT and communications technology help us think that we can control to a higher level of precision, over greater distances and much more quickly than we could in the past – but it does not mean we should. Over-control leads to micro-management and a lack of local responsiveness. When your head office is in a different country and time zone, it can quickly get out of touch with local priorities and realities.
Managers believe that control in their companies is increasing at the expense of flexibility, speed and responsiveness. However, it is possible to clarify and shorten the lines of control:
- To control operations centrally we need to understand them centrally, complex organisations usually have greater understanding at the local level, so move control to where it should be to give the fastest and most effective results
- Escalating decisions to the centre will always introduce delay and extra cost and is often a sign that a company has failed to build real local capability
- People don't like to be controlled and often resist it – they prefer and expect autonomy
In the past, a sense of community, trust and team spirit was often a free by-product of being in the same location as our colleagues. Building community in organisations on multiple sites, and especially in global companies, is expensive and time consuming. It works best when we are face to face, so travel can becomes a major expense.
A study of 89 travel managers for American Express, conducted by Accenture in 2004, found an average air travel spend of just under $30m each. This represents an average of 65,000 business trips a year for each of these companies. It takes no account of time and other travel expenses.
There are four important lessons to learn about creating community:
- Trust is essential to cooperation, but complex organisation structures often create tensions and divided loyalties that can work against the best interests of the company
- Community is no longer a free by-product of location, it has to be built consciously – there are simple principles and practical tools to do this
- Not all community is worth having – companies should focus on their investment
- When it comes to designing a corporate culture to encourage speed and cooperation, there is a right answer
We are now at a management watershed where traditional approaches to people management are holding us back. There is a need to stop investing in outdated skills and find far simpler ways to manage people in complex companies.