Organizational Design in the Corporate Setting: Group behaviors to make Design work

Speaker A Several that seemed knit together an interesting fabric around these cross boundary behaviors. Carlos talking about distributed innovation, and William at the very beginning, talking about near decomposability of organizations. Gila talking about just blowing the doors off of that concept and going global with cross view, just no boundaries. And then Russell talking about kind of the same concept, the hospital sector. We're going to talk about that same thing. We build on that in an applied setting within Walmart. Talk to you about what we've seen. And it's interesting. The muscle to do that, the muscle to do that cross boundary work doesn't come naturally. It just doesn't any more natural than you wake up in the morning, look out your window and say, wow, there's a garden in my yard. Who put a garden there? Gardens don't just happen. Weeds happen. If you're in my house, long grass happens. But gardens you have to put there. And the ability to do what everyone has been talking about today, you have to put there and build that muscle. So I'll set the stage, and then I'll turn over to Kai for the last piece, and he'll talk about a method that we've used within Walmart to actually start to build that muscle in some of our executives.

Speaker B Okay.

Speaker A Walmart'S big. And big means there's a lot of opportunity for variance. 1.2 million associates in the US. 2.2 million globally. And design happens all the time, design and redesign. So it's trying to put some consistency around that. We finally decided we need to develop a framework for how we want people to think about this. Obviously, there's a playbook behind each piece of this with a host of tools and templates. But just to kind of set the stage, we start with define whatever organization we're called to go work with, whatever level. Usually it's the SVP or above. What does this organization need to do or look like in a year or three years or five years? What are the goals? What are the objectives? What are the barriers we need to overcome? Once we have a picture of the future, then we go to assess. And that's where we're going to start to dig into the data and do focus groups and interviews and do some root cause analysis. And if we're not trending to where we want to be, why is that?

Speaker B Maybe.

Speaker A And then we'll prioritize some of those obvious root causes and try to get ahead of that with a redesign. And we get into the blue space here into design, which is where we.

Speaker B Kind of like to live.

Speaker A And we'll talk more about that in a minute. But at that point, it's just blueprint. We haven't really changed anything. We have some ideas about what the new structure could be or the new work processes could be, but it's on paper. And anybody outside of the project team has no idea until we get into implementation and change management and actually rolling out these plans, and then after a time, it's time to start it again, which is intentional that it looks like a cycle, because it truly is. This is how we look at Ford design as a broader process at Walmart. At maybe 30,000ft, if you click down to maybe 10,000ft, you see something that I know you're all familiar with. If Amy were here, she could just take the microphone and tell us all about it. But the Star model is what we've embraced at Walmart. It's a fantastic model for any company, but it works especially well with us. It's simple, easy to explain. And whenever we sit down across the desk from an executive, I start with the star model. What's your strategy? What capabilities do you need to get there? And then we explain that those capabilities, like the garden, don't just happen. They are the outcome of this interplay between structure and lateral process, and then metrics and people processes. People practices. Sorry. What we have found is that in the corporate setting, and I know many of you have seen the same thing, we had some conversations, Paul, this morning. These pieces play pretty well. We're pretty good at the connection between strategy and if we slow down well enough, capabilities and structure. We're really good at structure. People can move boxes and lines, and we're pretty good at that. And the connectivity between those three, we can do that. Even metrics and rewards. We have our dashboards, we have our scorecards. We know what to track, what gets measured, gets done, and we've embraced that. What typically is harder, however, is this idea of lateral capability, what everyone's been talking about today. How do I work across boundaries and what are my processes to make that happen? And then finally, the people practices, which, of course, has elements of that as well. Roles and responsibilities, decision rights. How do we resolve conflict? How do we raise issues? Or do we just keep our heads down and keep working? So holistically. The star model works really well for us. We have found, though, that we struggle in these two areas. If we really simplify it, you might draw an.org chart like this. And the very first thing we do when we organize work around centers of work or around groups is we start to draw these lines and create boxes. I mean, it's necessary, but it has a downside. It starts to look like maybe a jail cell, and it kind of starts to feel like a jail cell at times.

Speaker B I think I've been that guy in.

Speaker A Cell number two, right? And it gets really hard to pass information because then the next thing that happens is you have this problem where if I'm this person here and I need some information from the guy over there and this sounds like I'm being overly simplistic, but I've seen this. I have to float my question up the food chain that has to go into some integration meeting, hopefully over to cell three, down to the person that has the answer back up. We float the answer sideways and back down. And then I want to say thank you. So they say thank you floats up. Thank you goes down. I'm kidding about that part, but that's sometimes how work works. I've actually seen an organization, not in Walmart where the SVP over this large design branch actually said, I want everyone to put a sticker on your laptop that says, don't share anything with anyone. It was an internally competitive environment and it had gotten fairly unhealthy. Now, that doesn't happen too often, but a semblance of that does happen often where groups just don't share or even if they want to share. It's a very laborious and bureaucratic process. Here's what we would propose should happen. This is how work should happen. I like to say that this may be designed, but the work happens in the white space in between the boxes. And as we're able to span those organizational boundaries and go directly to the person that may have the information or connect the right questions or get the right people in the room to make very fast decisions, things get better. We see faster decisions, we see faster conflict resolution, we see faster innovation. And really it's about making I think someone used the word permeable, permeable boundaries across the organizations. Like I said, that doesn't happen organically. So we have found a process and evolved a process that has worked very, very well for executives across most, if not all of our divisions. And that's what Kai's going to talk about.

Speaker B And we'll leave this here for a second because exactly what Eric is talking about. To increase the speed of decisions, we found out we can design a structure that's absolutely amazing. We can build processes working with our continuous improvement team, or us helping create roles responsibilities, where it's crystal clear what your role responsibility is. We can have those processes by which you are to communicate with one another, interact with one another. And we find out still that even with all of that, we aren't getting to the solution to give us the return on investment that we need as an organization. And so we look at how do we start to operate better across those organizational boundaries? And this is one practice, and there are some delimiters to this practice that we all want to be able and be reminded of. One of the key ones is we don't advertise this. So internally, this isn't something you sign up to take. It's done by referral. A leader has to be willing to commit himself or herself to the scrutiny of walking through the process. The second one is our group gets paid for by our internal customers. So whether we do this in China or in South America or in the UK or in South Africa, our internal customers put skin in the game. The next key aspect to this is the commitment level, is that if it's important enough for them to do this with us, it's important enough for them to put it on their calendar and it's not a one time event. And you heard earlier that there's a six month process to this, and this is very similar in that vein. And that we found out that if you want to make design process improvement, people practices get better, that we have to have sponsorship, we have to have leadership. That was alluded to in several of the presentations. So you looked and we examined what was seen and what was written and what we already know. And so we're going to talk to you about the points in that process. You talked about the DNA getting the organization to understand how to interact better. We become what you call professional reminders, and we contract with and we spend the time specifically with those groups who want to engage with us. These are the things that although on the surface seem very apparent and very easy, it's very complex and it's difficult to do. You have to understand crystal clear the mission goals up and down the organization. And those who are invited to this process are not just the ones within that particular function. This is the surprising aspect to it. So it's not just that leader in his or her direct reports, it's also those with whom you interact with on a very regular basis. So if it is our technology group, we probably have somebody from HR in the room, somebody from legal in the room, somebody from finance room, somebody from operations, those with whom they interact on a very regular basis. The next piece is can you cooperate influence across your boundaries? Because we found out that those groups that perform extremely well, that are highly aligned, perform much better together. We gather a lot of this work, obviously from work and research that the military has done, the elite military has done, and elite performing teams clear roles and accountabilities and interdependencies.

Speaker A Yes, absolutely.

Speaker B We can use a lot of different tools to get to this. But one of the best things that we found out is that those teams who perform at extremely high level, those who are lined, who are lines, don't wait for someone to tell them what their role and responsibility is. We strongly encourage them and prepare them to have conversations where they proactively say here's what I believe my role and responsibility is, and here's why I believe it is, and they have a conversation. So Arden was talking how she said they had difficulty in having those tough conversations dealing conflict, that's a significant amount of time that we spend with this group is how do you have those conversations without taking it personally. And so we set up rules of engagement, protocols, how we were going to act together. And yes, it works not only in your professional life. We also touch on the personal because they do cross over. Next one is the team members committed to winning. They're so committed to winning as a team that they're actually willing to sacrifice their own parochial self interest on how their function should be successful. When you can see that behavior in action, you know that you have crossed a point where that team is going to perform better, where that organization is going to perform better, where the design will be easier, the change management will be easier. Because now you have a team that understands how to do this and what the big picture is and they're willing to give to it. It's one thing to say, it's another thing to give away your best performer for six months, eight months, a year to make the project happen. Next one is the shared sense of accountability for business results because we all have this shared sense of accountability. We also hold each other accountable. We also have conversations that are very tough conversations so that we can make each other successful. We call out and make it safe to tell somebody when they're screwing up and not take it personally, which is back to those rules, principles, ways of interacting with one another, declare decision making process and rules. Those who have done this and does it extremely well. Some of the groups take this so much to the heart. They put up on their walls how they make their decisions. So the team, if they have an issue with that, can now come to them and have the conversation on why wasn't my project selected? Why didn't you go the way with everything that I did, all the research I put into this, well, let's go back and look at how we make our decisions.

Speaker A And if I can just add to that, absolutely. This is one of the hard ones. Even really successful leadership teams struggle with decision making. And one of the reasons is there's an addiction to consensus. There's an addiction to consensus decision making so that we're not going to move forward until we all get the warm fuzzy, until we all can hug and everyone makes eye contact. Are you okay with this?

Speaker B Are you sure you're okay with this?

Speaker A And what happens is we sort of gravitate toward this compromise that kind of suboptimizes all outcomes just so no one's extra offended. And the antidote to this addiction to consensus decision making is what we call with our leaders consultative decision making. And there's going to be one person who owns the decision and everyone else can have input and consult on that process. And then they're all going to go.

Speaker B Home, have a glass of wine to.

Speaker A Come back and the person who owns is going to tell us what we're going to do.

Speaker B And our role as a team is.

Speaker A To respect that person as a decision maker, full stop. Because the opposite of that is consensus, and that slows us down and suboptimizes everything. That's a hard one for teams. So we spend multiple sessions working through leaders, identifying that even in the meeting we'll say, oh, look, that's consensus right there, and say, oh, jeez, we're still doing it. It's human behavior. It's about behavior change.

Speaker B It's very difficult.

Speaker A But if they can't get over that one, the whole list gets tougher. Sorry.

Speaker B And it continues to be challenged because they're professionals, highly compensated. They know what they're doing. They've been very high levels in the organizations they've come in from, or they've grown up through this organization. Ron, you've probably run into this a few times, okay, where people will have great conversations outside of the room, at the water fountain, at the bar, at the coffee shop. The rules we establish say, have those conversations inside of the room. If you're going to put it on the table from your intel days, you throw it all on the table right now. But you have to make the rules, and somebody's got to break the barrier. That's why it can take us time working with different groups, because they don't change their behavior overnight. And if the leader doesn't exemplify that, it slows the whole process down. Able to quickly and cannibally manage and resolve conflict. We spend time with them on what that looks like. Again, people who have been extremely successful, sometimes as individual contributors, sometimes working their way up, have never sat down to really see, do I truly, truly listen well? Do I know when to stop listening and to properly, as my friends in the UK tell me, properly assert myself, and how between the two, to resolve conflict?

Speaker A The story that we've heard from one of our really good leaders in one of our Latin American countries is that when he adopted this country, he became the CEO of this operating unit. And he had learned that this leadership team was very kind of passive aggressive and a lot of the meetings were smooth, and they hated each other in the hallway. And his very first or second meeting, he went to the marketplace and bought a fish wrapped in a newspaper. And you can imagine how it smelled to begin with, they put it under the table and everyone could close the door in the boardroom. 3 hours later, the meeting starts and the whole room smelled like a dead fish. And a half hour went by, 45 minutes went by, and he said, I am so disappointed. I'm paraphrasing. I'm so disappointed in you as a leadership team. The next time there's a stinky fish in the room, you better call it out or you're off the team. And from that time on, that whole team uses this phrase, stinky fish. Anytime there's a seed of a conflict, they'll say, that's a stinky fish. Let's talk about that. That muscle doesn't exist until you build.

Speaker B It, and engaging in that is very important thing. It's not about how we convey that's critically important. Earlier today, we talked about frames, frames of reference, ways that we receive. And that's what's critically important. It can't be in a way that we receive the information. It's got to be in the way that the individual whose behavior needs to adapt or transform or change, how does he or she receive it? And attending that is critically important. We found if you want to make the shift from where you are now to a higher level of alignment to higher performance, to a better design, to faster change management, okay, click here. Next, simple process. Again, the process is simple. We'll share it with you. We use something that Howard Gutman from Gutman Development Strategies has put forth, modified it, obviously, and continue to use that. Yes, there's other things that are out there. There's a whole host of them. Lens Neon and his team does great work. I'm sure that that's a viable one. We've just found that this one has worked extremely well for us, and we've done it a couple of dozen, 30 times, probably with different leadership teams across our organization. Okay, we got to have first a leader that recognizes that there's something wrong. It's best when they identify it themselves. We have to admit there are sometimes when another executive simply tells them, you need to get this taken care of.

Speaker A Or their HR person calls me and says, you got to go talk to this leader, they won't listen to me.

Speaker B That happens sometimes too. So obviously, best case scenario is they identify themselves and they come to us. Other times, we have been asked to step in following the kickoff overview. So we tell them right up front, very transparently, here's what the process is, here's what it looks like. Here's how much time it takes. Here's what you're going to be doing as far as your role. Here's what our role will be. Here's the expectation. After that, structured interviews. We may do survey, depending on how we know or do not know that operating unit or that function. After that, we gather the data. We do an analysis of the data. We present the data back to that leader and his or her HR person.

Speaker A And by the way, the structured interviews reflect these characteristics. How well are you doing at these eight things? Then we bring that data in.

Speaker B It's our questions. And then we go from there. We have the debrief with the leader. We don't want him or her to be surprised. Before we come and share with them and their team the data that we collected, we sift through it. This is a tough one for us. Sometimes if we get a name that comes up again and again, we'll leave it in the data. Other times, sensitivity, the nature of it. You've got to make a call whether you're going to or not. Is the data going to be enough to move them from where they are to where they need to be without it. We'll make that call. Okay? So we identify that. We find out in the session with them full day long exercises where they interact. They have the conversation, they look at their own data. They coach themselves on their own data. So unbeknownst to them, we actually walk them through the process where they're practicing the actual behaviors that they're going to need to exercise on a regular basis to be a horizontally high performing, aligned team. To demonstrate you can do this. By the end of the day, they've established some new protocols and responsibilities that have a name and a time associated with it that they're going to handle new ways of dealing with each other. They return to work, they go back to the environment. They practice these. We will check in periodically. Part of our obligation is when we do the first session, we're going to come back four to six months later and we will do a follow up session to find out are they getting better, worse, or staying the same and why. And then we determine if it's specifically a skill issue. If it's a skill issue, we begin to work on the skill. If it's not a skill issue, and we've already dealt with motivation, then the leader has a call to make. We go back, we readdress this and then we help them move from where they are to the next level performance.

Speaker A And if they're tracking his leadership team and they're going down their list of protocols and living them and they all agree that they're actually tracking, then it's time to take it down to their direct reports and four or five, six months later take it down to their direct reports. And there are very large parts of the company where we've gone four or five levels down every single leader. And you actually start to see culture change. And these protocols around decision making and conflict resolution and the way we act in meetings actually start to move the needle. It's pretty exciting.

Speaker B It's very exciting. And again it goes back to us. We found this significantly helps us when we're doing design and when we do change management. Questions. You have this. Can we go back to slide number six?

Speaker A Of course.

Speaker B So if this is how work is done, why don't you redraw the boundaries, put all the green ones in one column and the yellow ones in one column more generally?

Speaker A How do you draw the boundaries? That's a fair question. Sometimes what you might be seeing on screen here is more on a project basis or an ad hoc basis, not on a full time basis. So the greens for example, might need to act like greens once a week or the yellows might need to act like yellows once a quarter to make decisions about real estate investments. But they're not going to live together as a team because that's not their full time day job. So they need to be able to flex that muscle when the need arises without actually reorganizing around those needs on a quarterly basis.

Speaker B That is a fair question. It's a great question. For an example, if we're going to take another product and bring it into the organization and it's going to go out a particular way, I need an operations individual to be associated with that. But operations can't exist without our ISD team knowing that something else is going to be going on and that they're going to bring in a new product which our finance people have to be aware of, which then our supply chain guys have to make sure that they're going to be able to actually manage what's been given as far as this new piece of merchandise that we're now going to put out. And then are we going to just do it here? Are we going to do it internationally? So to Eric's point, when something new comes up or something that's major, we've organized it a particular way. But the real way that work does get done more effectively is that we can create the freedom for the crossing of those boundaries without his point going up and down through the silos, which, again, as large as organization is, for a while there, we got more mature and started to create a lot of silos and boundaries. And now having to cross over them to be more flexible, as big as we are, have to learn how to.

Speaker A Do this more effectively.

Speaker C Hi. From your experience, has it been any strong emotional reaction to this intervention of this facilitation, positive or negative, and how the manager can manage it over these four, six months that you let them let the teams interact? Do you give also any advice to the managers of how to deal with any positive or negative emotional reactions?

Speaker A Do we hear the question do you.

Speaker B Want to take out? Yeah. When we deal with them, we have a really good conversation, a very straightforward conversation with the leader before we actually do the session. We show them the data. This is what your team is saying. This is what they're saying about you, and here's how you need to prepare for this. And by getting them to that level, they're already starting to adjust their behavior and they're listening to us on a coaching level where we're doing actually some development right then and there. And we'll work with them frequently at their requests after the fact. And again, remember, for the majority of the times they come to us asking. So that means there's a readiness to change if it's someone where we have to we've had some very strong reactions, which is the denial part. And those are ones that we are very wary of, where we may not take it.

Speaker A We're talking about groups that may have been together for years with these dysfunctional behaviors. And within a group, you have silos. And what dysfunctional behavior breeds is animosity and contention. And we dig our heels in and we build stories in our head about why that group's incompetent or why that group can't be trusted or why that group's always late or whatever. And what we're doing is if we had more time we go into the actual agenda for the day but there's a long process and we end up getting those animosities on the table and those stories on the table why is it you think that group is incompetent? They've had complete head concerned over twice since you had that last experience. They're all good now but you won't give them a chance as an example. So it is emotional. It's a bit cathartic. There are times in the meeting sessions where about halfway through they pull the side and say what are you doing? You're going to blow up my team? No trust the process. By the end of the day they say you know what that was the best thing we ever did gets emotional.

Speaker B Thank you.

Speaker D You've shown a functional manager involved at every one of these links. In my experience creating these cross functional teams to do these kinds of projects gets strongly resisted by a functional manager who's now out of a loop. So for example your yellow branch leaves three functional managers out of that loop and those people now say why do I exist? It's like we've had two previous presentations that talk about managers have to behave differently for this kind of thing to happen because those functional managers tend to be older more organizational seniority in the system and so on. How do you get them to accept this kind of loss of control?

Speaker B One of the key protocols that we end up coming up with is assume positive intent. So how many of us got out of bed today to make somebody else's life miserable? Okay well there's always exception. We know that and that's okay. However when we're in a logical state of mind none of us would say that we got up to make somebody else's life miserable. And yet in an organization that won't have conversations with each other low trust, low speed, poor results high trust, high speed, better results and it has to be both. And this is where we get caught a lot of times. We have groups by the way that are extremely productive and dysfunctional. They work their rear ends off. They spend tons of we've seen them tons of hours late nights. I've worked harder than anybody by golly.

Speaker A That'S a brand I'm going to live.

Speaker B By and I don't like the rest of these people. I'm just going to get done myself. So there are groups that can go back and forth and still get things done. They're not high performing. It's not sustainable and it's not sustainable.

Speaker A Just following on from that question just to push you a bit more. On this issue of consensus being a bottleneck, I was wondering, is that a structural problem or a behavioral?

Speaker B And what's your role as kind of.

Speaker A Coaches that work alongside the HR department to mitigate that? That's a great question. It's both, right. Structure defines the silos, and that gets into decision making. It slows things down, kind of gums up the decision making works. Right. I was working with leaders. The example we use is, what if John got a discount on lunch today? It was going to be pizza, but we had to order all the same pizza. We're going to order 20 plenty of pizza, but they ought to be 20 of the same. One person doesn't eat meat, the other person must have meat. I'm lactose intolerant. Kai wants all the veggies. What we're going to end up with is a pizza that nobody likes. It's going to take us 3 hours to decide and it's not going to be good. Right. So consensus becomes a bottleneck in a way. Maybe a different word that I would use, but certainly consensus slows things down and suboptimizes results most of the time. But if we were to identify someone as you're the pizza orderer guy, go and talk to folks, kind of get a feel for what the dynamic should be and then just make a decision, it'd be faster. More of us would come away happy, and we'd probably hit our objectives. So that's why we say that consensus in most cases, unless there's nothing at stake and feed's not an issue, then go ahead and do the warm fuzzy consensus thing. But most of the time that's not helpful.

Speaker B I'm going to cut it there. I think we're going to hang around afterwards. But I'd like to thank both Eric and Kai for coming.