What is that intangible quality that separates truly great organizations from the competition? Is it the individual efforts of employees, the way technology is used to deliver products or services? Or is it the way in which employees communicate and work together? Or is it something more? The following is the first of a series of articles which addresses the topic of Operational Synergy -- what it is, how you can develop it within your organization and why it can be a competitive advantage to any organization.
What is Organizational Synergy?
Operational Synergy is a concept used to describe the state of an organization when the people and processes work together to continuously expand the ability of the organization to deliver products and services to its customers, while maintaining competitiveness. It is the result of a disciplined process and a management philosophy that enables an organization to integrate its diverse skills and capabilities in a way that makes it possible to produce outstanding results consistently. Simply put, it's organizational effectiveness at its absolute best.
We use the term Operational, because it is about doing what is required to produce business results. Synergy occurs when the organization's diverse skills and capabilities are fully integrated so that their interactions produce results that are greater than the sum of the individual contributions from the individual contributors.
Effective
Processes and People
Operational Synergy requires effective business processes supported by an information infrastructure based on technology that enhances the flow and availability of information to those who need it. However, the essential ingredients, the critical elements that make it all work, are much more elusive. Effective processes are relatively easy to invent or copy, with reasonably talented people. Technology and the skills to make it work can be purchased. In theory, you can put great business processes and technology together to attain great efficiency. But that is only in theory. There is that small factor called the human element that must be considered. Organizations are merely social constructs that exist only in abstraction. Real work occurs as a consequence of the interactions of people in organizations.
Empowerment is Key
The best tools and processes in the world can be stopped dead by a malcontent workforce and poor technology can achieve tremendous results in the hands of employees who are committed and empowered to achieve results. Operational Synergy then, if it is to exist, occurs as a consequence of the interactions of people in organizations.
What work gets done and the quality of that work is dependent on the quality of the relationships among the people in organizations -- the way information is shared and how learning is used. What work gets done is also impacted by what Chris Argyris, a noted author and organizational consultant, calls Organizational Defensive Routines (ODRs). An ODR is any "policy or action that inhibits individuals, groups, intergroups and organizations from experiencing embarrassment or threat and, at the same time, prevents the actors from identifying and reducing the causes of the embarrassment or threat." This phenomenon produces what he refers to as "undiscussable, undiscussables." That is, there are issues that cannot be discussed, but worse the fact that these issues cannot be discussed is itself not discussable. It is as if they don't exist.
For example, the fact that the CEO holds three hour staff meetings with no set agenda, no process for the meeting itself and no follow-up, can be "undiscussable" if one is more concerned about being politically correct than results-driven. But issues such as these inevitably thwart Synergy because the information and learning that would resolve the issue and improve the effectiveness of those involved is simply not available (at least to the CEO anyway!). Perhaps the worst news is that there are always people who are aware and in a position to do something about the situation but believe they cannot, because, at some level, they fear those in power.
No matter how well designed and defined the processes are and how advanced the technology, issues and problems are inevitable. We live in a fast-paced world, a global economy where the only thing that's a certainty is that things will continue to change. Therefore, to create and keep Operational Synergy, the sharing of new information, and the learning that accrues from the interactions about that information, are essential. Without open communication and trust, the organization will lack the dynamic flexibility to change and capitalize on a new opportunity or respond to a competitive threat. In other words, the messengers and those in positions of power must engage in active mutual support, built on a foundation of mutual respect, trust and appreciation.
What Does It Take To Get There?
Before we talk about the process of Operational Synergy, it is important to understand that organizations exist as systems. This distinction provides the context for understanding the process of creating Operational Synergy and keeping the Synergy alive irrespective of the circumstances within which the organization finds itself dealing. Given that it is people that make up an organization, the organization could be called a Human System. Let's take a look at what makes an organization a system and what the consequences of this level of existence are for performance.
According to Webster, an entity must have an arrangement of things so related or connected as to form an organic whole to be considered a system. An organization certainly qualifies on all accounts. The "arrangement of related things" can be seen as the different parts of the organization coming together to design, build, market, sell and install a product. Further, providing service to that customer also requires the interaction of this "arrangement of related things." Certainly the organization is organic. It is born, it grows, it ages, it thrives, it becomes ill, and all too often, it dies. Whether it grows or dies is dependent on how this "arrangement of related things" (especially the people) are combined and how they interact.
And just like the human body, there are multiple internal systems within the organization which can be differentiated and which are all interconnected or integrated so that the whole system works. Within both the human body and the organizational body there is a hierarchy among the internal systems and within the systems there is a hierarchy of components.
A virus introduced into this fully integrated whole system (whether the human body, the computer network or the organization itself) may begin by impacting only low-level components and systems. Because all the components are connected, an untreated virus can bring down the whole system. Even a known virus that is detected can sometimes behave in unpredictable ways. Since we don't always have sufficient experience with the treatments we might use, sometimes even the treatments produce unintended and unexpected consequences, which also must be treated.
And so it is with organizations. Failures and errors of all kinds impact the system -- some more than others depending on the level at which they occur. Even an issue that seems very minor can end up causing a major issue throughout the system. For example, a minor defect in a product or a surly receptionist can begin to irritate a major customer. Since customers tend to relate individuals as being representative of the entire organization, rather than seeing either as a problem with some small part of your organization, the customer sees it as a problem for the whole organization. In other words, the customer sees a system problem.
The consideration of the organization as a system is at the heart of the matter of the need for open communication and trust. Many people are in a position to observe problems before they get to be system wide issues. In an environment of open communication and trust they are very likely to deal with those problems, or take them to someone who can. So even in the case of a defective product the person who notices the defect may not have the authority to delay shipment, but in an environment of open communication and trust, they are empowered to take the issue up with someone who does have the authority without fear of reprisals from anyone else in the organization. If an employee feels the fear of reprisals or other threats to their organizational well being, they may very well lack the confidence, support and the safety necessary to take appropriate action.
The Process of Operational Synergy:
The Elements and the Actors
Operational Synergy is the result of a disciplined process that allows you to plan and implement successful change in your organization leading to a results-based, high performance culture where every employee has the opportunity to do great work. This process can be applied within each system at every level of the organization and, as with any other business process, it must be rigorously executed to produce the desired result. The Steps in the Process are as follows:
- Contracting: Explicit (not implicit) agreement on purpose, roles, responsibilities and expectations of group members.
- Data Collection/Diagnosis: Data/information to determine current reality.
- Feedback and Vision/Mission Creation: Based on "current reality," the "desired" reality is determined by key stakeholders and decision-makers.
- Goal and Outcome Agreement: Clear goals to close the gap between the "current reality" and the "desired reality."
- Action Planning: Determination of specific projects/actions with appropriate measures of success
- Implementation: Execution of projects paying close attention to measures of performance and
taking corrective action where appropriate.
- Evaluation, Learning and Planning Next Steps: Learning from data/information from planning and implementation. Using the new information to determine need for additional Contracting or Data Collection/Diagnosis or changes to Vision/Mission and begin the process again.
It seems simple doesn't it? So simple that many managers are tempted to skip a stage. But after developing and applying this disciplined process in hundreds of client engagements, the best advice we can give is
to be rigorous. I don't mean rigid. Use information sources that are readily available, don't reinvent the wheel. If you have surveys, or reports that you have confidence in use them. The unfortunate truth is without consistent concerted action; organizations remain pretty much the same. Changes in organizational culture occur very slowly. Each step builds upon the prior and every step is closely linked to the rest.
This process can be used to make change in an organization, implement a new business process or as a business planning tool. The critical success factors are to:
- Engage the right people.
- Be clear about what is to be accomplished.
- Make decisions based on data and information.
- Establish measures for success.
- Share information and new learning frequently and relentlessly with all involved.
- Use new learning to take more effective action.
It is easy to see why open communication and trust are so important to creating Operational Synergy. The power of the process is in the sharing of information, which creates new learning that can be applied to developing new and/or better business processes. Without open communication and trust, the information flow would slow or stop and the process would falter.
Ultimately, an organization's success comes down to three organizational capabilities and how they work together:
Skilled, Effective Leadership: to provide vision, guidance and direction and create and maintain the environment of open communication and trust.
Knowledgeable Employees: who share the vision, understand their role and what's expected of them.
Effective Organizational Systems: business systems (e.g. Production Management, Performance Management, etc.) that provide for effective operations, and information technology to enable efficiency within the organization.
As the organization continues to develop these capabilities and implements the disciplined process we've outlined in this first chapter, overall organizational performance improves as a higher level of Operational Synergy develops. Readiness to develop Operational Synergy starts with the leadership of the organization. In our next installment we'll discuss the role of Leadership in developing Operational Synergy.
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