Looking Under the Hood: What Organizations Have In Common

Sharing Rummler’s six fundamental laws of organizations

Rummler quotation: Although organizations are very different on the outside…they all have a common anatomy.
Rummler quotation: Although organizations are very different on the outside…they all have a common anatomy.

Diagnosing business problems is like medical diagnosis

Image of human body systems: circulartory, nervous, respiratory, digestive, skeletal, and muscular.
Image of human body systems: circulartory, nervous, respiratory, digestive, skeletal, and muscular.

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.

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.

Quote: The success…depends on the effectiveness/speed w/ which they adapt to changes in the external environ. & in…their ops
Quote: The success…depends on the effectiveness/speed w/ which they adapt to changes in the external environ. & in…their ops

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.

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.

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:

  • 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.

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.

Until I experienced this, I would have never believed that one VP could demoralize a department into producing only mediocre results.

Final thoughts

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.

Notations

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.

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.

Written by

Gary is a speaker, author, researcher, and leadership futurist. https://www.garyadepaul.com

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