Wednesday, June 29, 2011

Balancing Global & Local Authority within the Organization

Organizations frequently have difficulty managing diversity as they scale to larger number of programs/projects. A balancing act is required to determine how much freedom to give versus how much control to take when determining how to manage and govern. Most clients I have spoken to describe the pendulum as having swung in a specific direction.

Many organizations I have worked in or what appeared to be laden with a top-down, restrictive, and prescriptive governance approach, or conversely, are not properly engaged with what's going on, suffering from ad hoc, siloed initiatives that appear out of control.

Many folks I talk to have a very partisan/polarized view around which state is better. The agile community tend to bristle at any oversight and governance that comes from outside of the team, many rightly point out that governing from afar isn't particularly effective, and the people doing the work have the best context and knowledge around what decisions are necessary to manage their work.

More traditional mindsets advocate that enterprise initiatives run through strong governance, typically by some kind of counsel that reviews spending priorities,make sure that projects are being run according to appropriate quality, budget, etc. these folks point out that extra work and control is required to make sure that all the pieces in an organization are moving in the same direction, share common standards, and that work is aligned with strategic objectives of the organization.

I strongly advocate that both of these perspectives have something to offer...

A global perspective and strategic thinking is required to get you where you need to go, however, it won’t get you all the way to your destination

A good metaphor for global governance and global authority is a cruise line. A cruise line is a great vehicle for moving a large number of people in the same direction. The cost of moving each person is relatively low, and it's easy to drive efficiency when using such a large vehicle.

In other words, global authority is great for setting direction, driving uniformity of purpose, and increasing efficiency.

Unfortunately, a cruise ship is not very agile, if you try to turn too quickly using a cruise ship you will most likely fall over.

Organizations that rely exclusively on top-down, command driven approaches, and standardized/commoditized processes we'll never have the flexibility required for today's fast changing business environments. While costs might be contained, this type of organization is unresponsive to the market, and takes a long time to deliver.

No one would ever think that you could take somebody all the way to their destination by using a cruise ship. Left unchecked, relying solely on the global authority will cause your organization to crash.

Optimizing based solely a global perspective can interfere with organizational agility, causing a stall, or even a crash

Local autonomy is required to be flexible and responsive to change, but can be expensive, and makes coordination and alignment difficult

Likewise a good metaphor for local authority is a motor boat. Motorboats allow you to travel fast,and they can get a small number of passengers exactly where they want to go with precision in a very short period of time.

Also, motor boats are more fun to ride than cruise ships :-)

In other words providing local authority/empowerment enables workers to make decisions as they need to to create value, less time is spent focusing on the organization and the organization's way of doing things, and more time is spent looking outwards, and what the market is demanding.

Motorboats are not just fast, they are agile. Organizations with a high level of local authority can react to, and even anticipate change, delivering quickly and being responsive to their customers.

Motorboats however, are not fuel-efficient, and are not the best choice for long-distance travel. I don't know anybody who would consider taking a motor boat all the way across the ocean. Local authority and team empowerment allows you to be fast, but it can be expensive(per passenger) and a lot of resources can be consumed in order to accomplish something.

it's hard for organizations to get any kind of efficiency through common approaches if there is no centralized authority or centralized governments, too much localized authority creates a suite of many organizational silos, all operating independently from each other.

local authority can make it hard to optimize and react to global market trends, and bigger issues that are hard to see from a local perspective.

This can cause smaller initiatives (and even larger ones) to be completely upended, and marked as failure because of forces much larger than within an individual units control.

When left unchecked local decision-making can erode organizational value, creating independent silos that conflict with each other

Use global authority to set global priorities, enterprise policies and align capacity to objectives, use local authority to come up with the tactics on how to respond

Since I'm talking about ships, the Coast Guard provides an excellent example of how global authority and local authority both play an important role in meeting both strategic and tactical objectives.

Overall objectives and strategic directions are made at the highest levels of authority. Policies, solutions, and tactics vary greatly depending on the exact situation, and context.

organizations should not be overly focused on one-size-fits-all solution/processes/standards, there are a huge variety of problems to be solved, there are a large number of solution sets, and approaches handling these problems.

What's even more important to ensuring a successful mission is that units on the ground are empowered to make decisions just in time based on information gathered using tight feedback loops like OODA(Observe Orient Decide Act).

Higher-level authority figures trust localized units because of the deep level of training that they have received, very detailed policies and instruction sets around how to handle work have been provided for a large number of situations.

Localized authority is empowered to respond to needs that they recognize because troops on the ground have been giving the tools and training to do so. Tight feedback loops between localized units and global command centers ensure that adjustments can incur should individuals strayfrom strategic objectives.

How does this apply to organizational governance and authority?

Create “containers” made up of policies, decision rules, and explicit boundaries that empower workers to make decisions independently ,but constrained by the needs of the organization

In this model senior-level authority figures in organizations switch from trying to govern all decisions to actually creating a governance framework that is based on clearly understood policies. These policies allow managers and staff to operate and respond to their individual context while ensuring that they still align to the greater objectives of the overall enterprise. Behavior can be codified into decision rules that dictate the value of making a certain decision. For example if the goal of the program is to create a lightweight product, a decision rules could be configured allowing engineers to spend a certain amount of design time per pound of weight shaved from the product.

I've been working with a number of clients on extending the Kanban approach to address concerns like governance, portfolio/strategic prioritization, and other enterprise concerns, I believe Kanban, and many of the concepts described in "The Principles of Product Development Flow" by Don Reinersten, provide the basis for creating a localized/global authority mechanism. This mechanism would leverage explicit capacity and demand allocation, decision rules for prioritizing work, and ensuring that enough feedback exists across multiple levels of the organization.

In another post I'll describe this kind of framework in more detail.

1 comment:

  1. Hello Jeff
    It sounds to me like you are describing Holacracy. See