Looking Under the Hood: What Organizations Have In Common
Sharing Rummler’s six fundamental laws of organizations
When I’m not writing about leadership or talent development, I work with organizations as an external performance consultant. I help clients realize valued results — usually related to helping them achieve desired performance.
My expertise is not based on experience but science — specifically the application of science. Doing the work strengthens my understanding of performance-improvement science and principles.
Worthwhile consultants don’t learn their trade using trial-and-error or learn by doing. They practice their trade using an evidence-based methodology.
Diagnosing business problems is like medical diagnosis
A large part of what I do is diagnostics. Think about how medical doctors diagnose. Suppose, Jane, a patient, complains to Dr. McNally about arm pain. Examining an x-ray of Jane’s arm, Dr. McNally compares Jane’s arm image with mental models of what a healthy arm looks like. In Jane’s case, Dr. McNally discovers a Monteggia fracture in the ulna bone.¹
Before she could diagnose, Dr. McNally learned extensively about healthy human anatomy, including systems such as circulatory, skeletal, and muscular. Doctors are able to apply this knowledge to patients like Jane. Here’s why: Regardless of our exterior appearance, internally all of us generally have the same functioning systems.
As with humans, organizations use functioning systems. Geary Rummler describes this similarity in his book, Serious Performance Consulting:
Although organizations are very different on the outside (big or small, public or private, products or services), inside they all have a common anatomy. This knowledge of the underlying organizational anatomy is very helpful in the initial discovery stage…of analysis.
Organizational anatomy makes performance consulting possible. To provide value, I need to know this anatomy and help clients leverage my expertise to tackle underlying problems that are difficult to diagnose.
The six fundamental laws
In Performance Improvement, Rummler discusses the Fundamental Laws of Organizational Systems. These laws help me with my diagnosis when clients discuss their operational problems with me.
If you work for an organization and troubleshoot problems, keep the laws in mind. They can give you perspective and help you figure out what is really going on.
Law 1: Understanding performance requires documenting the inputs, processes, outputs, and customers that constitute a business
When starting a new job, departments might provide organizational charts to explain how the organization is structured and list the names of employees and their roles. What new employees most likely won’t receive are high-level process maps that explain what the organization does and how departments accomplish their work.
Documenting how the business should work and comparing the documentation with the current state is an effective way to find opportunities and problems. This is true, especially when examining one group’s output that becomes another group’s input. Rummler and Brache note that the greatest opportunity for improving performance happens when examining these handoffs.
Law 2: Organization systems adapt or die
Rummler and Brache state that adaptation isn’t a single event. Rather, adaptation is an ongoing process. Organizations that wait for something to happen and then react, adapt ineffectively.
At one organization where I worked, executives called this firefighting, in which the organization lost about $15 million from the bottom line for a fiscal year. Reacting to single events instead of adapting continuously increases operational costs and wastes everyone’s time unnecessarily. If executives shift their focus from surviving one-time events to using systems thinking and process improvement to correct internal operations, they could minimize one-time events. For the company where I worked, executives managed to shift their thinking and reduce costly operational disruptions.
Law 3: When one component of an organization system optimizes, the organization often suboptimizes
As Wiseman and McKeown note in Multipliers, department heads often work to optimize their own subsystem without considering the larger system. By doing so, they may inadvertently cause process issues in other departments.
Rummler and Brache provide an example of a sales department that becomes so efficient at generating orders, operations had trouble delivering products to new and existing customers. Customers become angry and the organization’s reputation and potential sales became at risk.
Departments that focus only on optimizing their subsystems tend to cause silo thinking — thinking about one’s own department without considering other departments. Not only does this cause unnecessary conflict between departments and problems with process flow, but it also makes cross-functional work among departments difficult.
Departments heads need to collaborate, evolve, and adapt in concert to resolve interdepartmental issues such as mitigating product damages and defects.
Law 4: Pulling any lever in the system will have an effect on other parts of the system
Training, replacing systems, and reorganizing can have substantial effects on different parts of the business, and not all of them positive. Read these change examples:
- Decreasing the thickness of an appliance’s casing saved thousands in raw material cost but generated hundreds of thousands in damages.
- New safety procedures decreased injuries at a processing facility, but the new procedures slowed production so much that customers didn’t receive their orders on time.
- Converting in-person sales training to web-based training decreased training delivery costs dramatically, but sales teams couldn’t learn without in-person support.
These represent silo thinking or single-box solutions that frequently occur in organizations.
Law 5: An organization behaves as a system, regardless of whether it is being managed as a system
Organizations that only manage vertically using organizational charts manage the organization inefficiently. To manage as a system, organizations need to manage horizontal processes as well as organizational charts.
Law 6: If you pit a good performer against a bad system, the system will win almost every time²
Organizations that have bad systems tend to turn good performers into mediocre performers. Reflecting on the previous five fundamental laws, organizations that aren’t managed as systems, in which silo thinking is the norm, tend to restrict positive performance.
Not only are good performers hindered because of bad systems, sometimes those in charge cause problems. In Multipliers, Wiseman and McKeown provide several examples of how diminishers make extraordinary performance impossible. As a colleague once told me about his dysfunctional department:
Until I experienced this, I would have never believed that one VP could demoralize a department into producing only mediocre results.
In organizations, most likely you will find silo thinking. You will also find managers who react to presenting problems that turn out to be symptoms of a larger problem. By reacting quickly to solve the problem, the solution could cause more problems within other departments. To help organizations transform their bad systems into good systems, management needs people to practice leadership at all levels. Thinking systemically is a step in the right direction.
This is an excerpt from Chapter 5: Analyzing Like Detectives from my book, Nine Practices of 21st Century Leadership: A Guide for Inspiring Creativity, Innovation, and Engagement. For this blog, I made several improvements.
¹ Please don’t ask me about my medical knowledge. I’m not an expert. The example is for an illustrious purpose only.
² In my leadership book, I mistakenly left out the word, “almost.” I asked my managing editor to correct this, but I don’t know if current copies being sold have the correction.
About the author
Gary is a Leadership Author, Researcher, Consultant, and Podcast Guest. His latest book, What the Heck Is Leadership and Why Should I Care?, is available in paperback, eBook, and audiobook. You can learn more about Gary and his other books at https://www.garyadepaul.com.