In this episode of the strategy podcast, I want to talk about the fifth mistake I see companies make when it comes to executing strategy. This is really, the mistake here is ignoring what I call organizational physics.
It’s really about making sure that you understand how work flows through an organization in the most effective way, and making sure that happens.
What I see companies do is they come up with all their ideas, they push it all forward, and they push all these ideas into the organization, and before you know it, you’ve found the organization to be extraordinarily busy and then at some point and time, it feels like there’s organizational gridlock.
There’s just nothing happening. Things are taking forever, and that’s one of the most common problems I see CEOs complain to me about. This is the organization is just slowing.
It’s not making enough progress quickly enough, and this really comes from either ignorance or unawareness or ignoring the way work flows through an organization, the organizational physics of workflow.
And so, let’s talk a bit about how work flows through an organization, and I think it’s useful to me, I find it useful to kind of connect it to a metaphor that helps me understand it, so the metaphor I use is traffic. All right, so traffic on a freeway. When the freeway’s open, cars go as fast as the drivers want. Some of them go slow, some of them go fast, but if there’s lots of capacity, open capacity on the freeway, all you really need to do is make sure people are maintaining their speed to make sure they’re making maximum progress, but at that, when there’s actually cars on the road, you’re not getting a lot of work done.
More cars need to come on. That’s actually to carry more of the load, and that works well, and at some point, though, traffic congestion starts to build up, and there is a point where you’re balancing, you have, if you will, maximum density versus maximum speed, and that’s really the point at which you’re getting the maximum volume of work done at any given time. Maintaining that sort of maximum balance between speed and workload is essential to getting the work to flow as quickly as possible and at the greatest magnitude possible.
Now, many companies think that means we operate close to 100% capacity, that’s how that’s going to happen, but that’s not how workflows. If you look at a freeway system, the road with no traffic on it, the cars might be able to drive 80 or 90 miles an hour with no problem, but the maximum flow happens when you’ve kind of got about a speed of around 40-45 miles an hour usually, because that’s kind of the place where you don’t get too much congestion to slow things down, but you’ve got enough cars on the road to get a lot of work done, and you’re maintaining a constant speed, and that’s kind of what we want to have happen inside the organization, and that may mean that some people are operating at 50% capacity, others are operating at 100% capacity, and some may be just not doing very much at all.
But that’s okay because you’re not necessarily trying to optimize every individual working at 100% capacity. What you’re trying to do is get the organization as a whole to get as much work done as possible, and the easiest way to do this, if you look at what happened and how they manage traffic flow, is to regulate the release of work into the environment, so this has been done, and this kind of process approach has been done very successfully, and companies that manage multiple projects all at once, what you see is if you regulate and restrict the number of projects, if you will, that a company can work on at any given time, they make a huge amount of progress, and the principle has to be, focus on a few, when one of those that’s in flight has been completed, then you can add a new one into the system, and that gives you again back into the three, say, that you’re working on, but you always need to finish before a new one starts, and that means you need something, someplace to hold the ideas of what’s next, what initiatives need to follow, the ones that are in flight, put them in a parking lot, as you house new ideas, add them to the parking lot.
Once you’ve completed one, reprioritize the issues that are in the parking lot, pick the most important one, push that back into the work, and then when you’ve completed another one, you pull one from the parking lot and can repeat the process, but it’s that workflow regulation that helps you get to the maximum flow, and don’t be so concerned with any individual person in the company being underutilized.
The important thing is that if there’s one person that’s underutilized, there’s going to be other people who are working at 100%, and they’re not going to end up being able to, the other person that works at 100%, all you’re doing is pushing more work towards those people who are already bottlenecked. And so you need to have the whole system working at maximum capacity, and that means slowing it down a little bit, and focusing the work on the things that are the most important.
I hope this strategy podcast has been helpful and useful in your work. My name’s Alex Nesbitt. I’ll see you in the next podcast.