TOP Management Failure: First Organizational Example
TOP Management highlights that Technology, Organizations, People need to be considered in concert for success. Miss any one of the three dimensions, and you risk failure. This next series of posts will highlight mistakes. I suspect that you have a few of your own. I’d appreciate your examples in the comments below. The more we can illustrate the risks, the more likely are people to make the effort required for success.
I’m going to start with an organizational failure. An example of a TOP Management organizational failure is a situation where some critical aspect of the organization — policies, procedures, structure — is not considered in the introduction of an organizational change. My favorite organizational failure example comes from a 1994 article by Profs. M. Lynne Markus and Mark Keil: If we build it, they will come: Designing Information Systems that People Want to Use.
Markus and Keil open with the question, “Why are some information systems that companies have invested millions of dollars in developing never used or avoided by the very people who are intended to use them?” They acknowledge that some systems aren’t built well or have project management problems. It makes sense that these systems don’t get the expected use. More concerning are those systems that do work well technically, but still are failures in terms of the goals that put the project in place. They say (in 1994) that they believe that such failures cost U.S. businesses millions of dollars. I think it is fair to assume that this number is in the billions today (links to data supporting this point would be appreciated).
Their example focused on a system designed to help the sales representatives of CompuSys produce error-free product configurations before providing a price quote. (While CompuSys is a pseudonym, I’ve always found it helpful to think of the task a Dell sales rep would do, though it’s probably not Dell given the time of the example). While this system worked, the sales reps wouldn’t use it — even after a multimillion-dollar program to improve user interface, training, and the like. Markus & Keil note:
..we found two reasons for the failure to use [the configuration system]. First, sales reps were not motivated to do what the system enabled them to do. Second, using the system made it harder for them to do what they were motivated to do. Either of these problems alone would have reduced [the system's] use. Together, they were fatal. And the expensive redeployment effort did nothing to address either one.
Sales reps were incented on sales volume, not error free configurations. “It’s not that anyone wants to be inaccurate and make a lot of errors, it’s just not something we are measured on.” …and the configuration system made it take more time to get to the quote than instigated the sale. End of story for this change.
Markus and Keil go on to provide a variety of possible improvements, all of which fit into the TOP Management model. They suggest that CompuSys could have:
- Changed its strategy to “design for error-free configuration”
- Changed the incentive system for the sales reps
- Changed the implementation process to highlight the overall firm value of using the system
- Integrated the configuration and quote systems — made it a passive task to use the configuration system (see background on active/passive)
They also note that while these changes make sense, part of the trouble is that technical and organizational changes are often not under the control of the same people. This gives me the takeaway point for this post: TOP Management needs to be practiced all the way from the top — as a change at any level is in progress — it has to be part of the organization’s DNA to put Technology, Organizations, and People all on the table for consideration at the same time. Excellent management of any one aspect isn’t enough. For success, we must intertwine these dimensions of organization and work design.
5 Responses
September 2nd, 2009 at 11:14 am
[...] Technology and Organizations « TOP Management Failure: First Organizational Example [...]
September 2nd, 2009 at 7:36 pm
Here is an organization failure with a happy ending…
UPS implemented a computer-based dispatch system starting in about 2002. This new system would allow a supervisor to see forecasted volumes based on actual pick-up scans and have a very good idea of how much work each delivery route would be delivering. This would allow the work to be balanced out and appropriate levels of routes to be put out on a given day. The idea would be to optimize the routes so that less miles were driven, less time would be spent by the driver “sorting” the load, and deliveries would be more efficient.
What ended up happening was that dispatch supervisors wanted to please everyone and realized there were a lot of things they could do to “customize” the routes the way the delivery driver wanted. The system could be easily manipulated. So a huge multi(multi-multi)-million dollar system, that was supposed to pay for itself in a short period of time in increased productivity, was in fact making for less productivity. UPS cared a little bit, but business was booming and so no one really cared too much. We did save about 2 million miles year to year upon implementation as a company, but compared to the implementation cost…still a huge loss.
Along comes the economic storm. We realize that this dispatching system can really work. The third level manager above the dispatch supervisor gets involved in daily conference calls with the dispatchers, letting them know how important it is. And providing incentive (not getting questioned for poor results in front of your peers) to do well. This upper management person learned the system very well to the point where he could call out the bluffs and clear away the manipulations. As you point out in your article, when the top end of the management structure gets involved, the new technology can really gain steam.
Now the technology is utilized. There are no longer daily conference calls, the message has been sent out that the technology will be used, and used appropriately to gain productivity. But it took 7 years and a lot of conflict. Imagine how much of a better situation UPS would be in if the implementation had been taken 7 years ago?
September 3rd, 2009 at 2:16 pm
Great example, and excellent trigger for my next post. I’m going to talk about crises as triggers from the People perspective of TOP Management. As your example shows, sometime we’ve done the organizational work, and even built a good tool, but it can take something beyond this to get people to make change. In your example it was the financial crisis. For others it may be H1N1. Thanks for the thoughts.
September 7th, 2009 at 7:03 pm
[...] ignored, technological and organizational innovations. (Great example of this at UPS in a comment to a prior post. Thanks, Paul!) Crises are a case where the People dimension of TOP Management [...]
September 10th, 2009 at 1:39 pm
[...] (For an example of what could have happened if they didn’t practice TOP Management, see this post.) It was by tying these issues together that they built a solid platform and were able to engage [...]