Yves Morieux: As work gets more complex, 6 rules to simplify

493,754 views ・ 2014-01-23

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I have spent the last years
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trying to resolve two enigmas:
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Why is productivity so disappointing
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in all the companies where I work?
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I have worked with more than 500 companies.
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Despite all the technological advances --
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computers, I.T., communications, telecommunications,
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the Internet.
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Enigma number two:
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Why is there so little engagement at work?
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Why do people feel so miserable,
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even actively disengaged?
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Disengaging their colleagues.
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Acting against the interest of their company.
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Despite all the affiliation events,
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the celebration, the people initiatives,
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the leadership development programs to train
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managers on how to better motivate their teams.
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At the beginning, I thought there was
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a chicken and egg issue:
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Because people are less engaged, they are less productive.
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Or vice versa, because they are less productive,
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we put more pressure and they are less engaged.
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But as we were doing our analysis
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we realized that there was a common root cause
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to these two issues
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that relates, in fact, to the basic pillars of management.
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The way we organize is based on two pillars.
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The hard -- structure, processes, systems.
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The soft --
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feelings, sentiments, interpersonal relationships, traits, personality.
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And whenever a company
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reorganizes, restructures, reengineers,
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goes through a cultural transformation program,
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it chooses these two pillars.
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Now, we try to refine them,
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we try to combine them.
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The real issue is --
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and this is the answer to the two enigmas --
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these pillars are obsolete.
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Everything you read in business books is based
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either on one or the other
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or their combination.
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They are obsolete.
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How do they work
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when you try to use these approaches
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in front of the new complexity of business?
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The hard approach, basically is that you start from strategy,
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requirements, structures, processes, systems, KPIs, scorecards,
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committees, headquarters, hubs, clusters,
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you name it.
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I forgot all the metrics, incentives, committees, middle offices and interfaces.
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What happens basically on the left,
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you have more complexity, the new complexity of business.
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We need quality, cost, reliability, speed.
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And every time there is a new requirement,
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we use the same approach.
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We create dedicated structure processed systems,
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basically to deal with the new complexity of business.
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The hard approach creates just complicatedness
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in the organization.
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Let's take an example.
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An automotive company, the engineering division
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is a five-dimensional matrix.
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If you open any cell of the matrix,
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you find another 20-dimensional matrix.
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You have Mr. Noise, Mr. Petrol Consumption,
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Mr. Anti-Collision Properties.
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For any new requirement,
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you have a dedicated function
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in charge of aligning engineers against
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the new requirement.
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What happens when the new requirement emerges?
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Some years ago, a new requirement
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appeared on the marketplace:
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the length of the warranty period.
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So therefore the new requirement is repairability,
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making cars easy to repair.
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Otherwise when you bring the car to the garage to fix the light,
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if you have to remove the engine
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to access the lights,
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the car will have to stay one week in the garage
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instead of two hours, and the warranty budget will explode.
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So, what was the solution using the hard approach?
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If repairability is the new requirement,
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the solution is to create a new function,
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Mr. Repairability.
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And Mr. Repairability creates the repairability process.
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With a repairability scorecard, with a repairability metric
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and eventually repairability incentive.
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That came on top of 25 other KPIs.
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What percentage of these people is variable compensation?
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Twenty percent at most, divided by 26 KPIs,
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repairability makes a difference of 0.8 percent.
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What difference did it make in their actions,
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their choices to simplify? Zero.
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But what occurs for zero impact? Mr. Repairability, process,
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scorecard, evaluation, coordination with the 25 other coordinators
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to have zero impact.
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Now, in front of the new complexity of business,
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the only solution is not drawing boxes
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with reporting lines.
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It is basically the interplay.
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How the parts work together.
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The connections, the interactions, the synapses.
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It is not the skeleton of boxes, it is the nervous system
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of adaptiveness and intelligence.
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You know, you could call it cooperation, basically.
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Whenever people cooperate,
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they use less resources. In everything.
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You know, the repairability issue
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is a cooperation problem.
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When you design cars, please take into account
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the needs of those who will repair the cars
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in the after sales garages.
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When we don't cooperate we need more time,
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more equipment, more systems, more teams.
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We need -- When procurement, supply chain, manufacturing don't cooperate
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we need more stock, more inventories, more working capital.
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Who will pay for that?
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Shareholders? Customers?
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No, they will refuse.
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So who is left? The employees,
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who have to compensate through their super
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individual efforts for the lack of cooperation.
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Stress, burnout, they are overwhelmed, accidents.
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No wonder they disengage.
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How do the hard and the soft try to foster cooperation?
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The hard: In banks, when there is a problem
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between the back office and the front office,
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they don't cooperate. What is the solution?
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They create a middle office.
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What happens one year later?
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Instead of one problem between the back and the front,
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now I have two problems.
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Between the back and the middle
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and between the middle and the front.
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Plus I have to pay for the middle office.
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The hard approach is unable to foster cooperation.
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It can only add new boxes, new bones in the skeleton.
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The soft approach:
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To make people cooperate, we need to make them like each other.
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Improve interpersonal feelings,
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the more people like each other, the more they will cooperate.
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It is totally wrong.
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It is even counterproductive.
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Look, at home I have two TVs. Why?
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Precisely not to have to cooperate with my wife.
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(Laughter)
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Not to have to impose tradeoffs to my wife.
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And why I try not to impose tradeoffs to my wife
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is precisely because I love my wife.
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If I didn't love my wife, one TV would be enough:
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You will watch my favorite football game,
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if you are not happy, how is the book or the door?
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(Laughter)
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The more we like each other,
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the more we avoid the real cooperation
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that would strain our relationships by imposing tough tradeoffs.
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And we go for a second TV or we escalate
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the decision above for arbitration.
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Definitely, these approaches are obsolete.
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To deal with complexity, to enhance the nervous system,
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we have created what we call the smart simplicity approach
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based on simple rules.
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Simple rule number one:
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Understand what others do.
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What is their real work?
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We need to go beyond the boxes,
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the job descriptions, beyond the surface
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of the container, to understand the real content.
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Me, designer, if I put a wire here,
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I know that it will mean that we will have to
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remove the engine to access the lights.
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Second, you need to reenforce integrators.
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Integrators are not middle offices, they are managers,
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existing managers that you reinforce
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so that they have power and interest
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to make others cooperate.
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How can you reinforce your managers as integrators?
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By removing layers.
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When there are too many layers
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people are too far from the action,
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therefore they need KPIs, metrics,
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they need poor proxies for reality.
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They don't understand reality
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and they add the complicatedness of metrics, KPIs.
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By removing rules -- the bigger we are,
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the more we need integrators,
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therefore the less rules we must have,
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to give discretionary power to managers.
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And we do the opposite --
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the bigger we are, the more rules we create.
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And we end up with the Encyclopedia Britannica of rules.
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You need to increase the quanitity of power
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so that you can empower everybody
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to use their judgment, their intelligence.
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You must give more cards to people
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so that they have the critical mass of cards
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to take the risk to cooperate,
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to move out of insulation.
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Otherwise, they will withdraw. They will disengage.
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These rules, they come from game theory
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and organizational sociology.
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You can increase the shadow of the future.
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Create feedback loops that expose people
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to the consequences of their actions.
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This is what the automotive company did
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when they saw that Mr. Repairability had no impact.
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They said to the design engineers:
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Now, in three years, when the new car is launched on the market,
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you will move to the after sales network, and become in charge
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of the warranty budget,
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and if the warranty budget explodes,
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it will explode in your face. (Laughter)
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Much more powerful than 0.8 percent variable compensation.
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You need also to increase reciprocity,
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by removing the buffers that make us self-sufficient.
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When you remove these buffers,
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you hold me by the nose, I hold you by the ear.
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We will cooperate.
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Remove the second TV.
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There are many second TVs at work
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that don't create value,
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they just provide dysfunctional self-sufficiency.
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You need to reward those who cooperate
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and blame those who don't cooperate.
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The CEO of The Lego Group,
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Jorgen Vig Knudstorp, has a great way to use it.
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He says, blame is not for failure,
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it is for failing to help or ask for help.
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It changes everything.
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Suddenly it becomes in my interest to be transparent
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on my real weaknesses, my real forecast,
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because I know I will not be blamed if I fail,
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but if I fail to help or ask for help.
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When you do this, it has a lot of implications
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on organizational design.
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You stop drawing boxes, dotted lines, full lines;
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you look at their interplay.
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It has a lot of implications on financial policies
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that we use.
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On human resource management practices.
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When you do that, you can manage complexity,
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the new complexity of business,
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without getting complicated.
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You create more value with lower cost.
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You simultaneously improve performance and satisfaction at work
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because you have removed the common root cause
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that hinders both.
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Complicatedness: This is your battle, business leaders.
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The real battle is not against competitors.
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This is rubbish, very abstract.
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When do we meet competitors to fight them?
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The real battle is against ourselves,
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against our bureaucracy, our complicatedness.
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Only you can fight, can do it.
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Thank you.
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(Applause)
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