Saturday, July 19, 2003

A meandering tale wanders back to the topic at hand

What a meandering tale this is turning out to be. But at least I'm amusing myself, and I'm chipping away at that encrusted fork.

The main point of "Follow the Money" is that we (humans) invented money, that it is an expression of who we are, and that the nature of economic relationships between people or groups of people tell us an awful lot about the nature of their relationship more broadly. Moreover, it suggests that when organizational relationships are dysfunctional, there is often a corollary dysfunction in the financial relationships and that to 'fix' one, you have to 'fix' the other.

For instance, I once consulted to an organization where the "presenting problem" was weak revenue in a particular division. The CEO believed that they simply needed some market research so they could better position themselves in a tight market.

In fact, after many months of interviews, market scans, financial analyses, etc., we concluded that the CEO's diagnosis was incorrect: the market was huge, underserved, and anything but tight. The requirements of the most attractive market segments were clear, and meeting them was entirely feasible - if - the various divisions could collaborate to deliver what they wanted.

As it turns out, the primary obstacle to success lay within the company. The divisions were so busy bickering with one another, thwarting each other's efforts, and generally working at cross-purposes that the market barely made it on to their mental radar screens.

Seeking to understand the source of the problem, we learned that the conflict was neither personal nor a matter of corporate culture. Rather, it had to do with financial and structural differences in the relationship between the executive office and the various divisions. Some divisions operated as little mini-companies: they had almost complete control over their own finances, and could keep most of the money they brought in to reinvest in the business and to incent performance. Others were expected to bring in profits, but were not allowed to keep them. In other words, they were expected to produce, but had little or no control over the means of production. The autonomous divisions tended to bully the non-autonomous ones, while the latter group invested its energy finding work-arounds that provided more control (another word for this is subterfuge). Oh, by the way, the division we were hired to help was the most extreme among the "low autonomy" group.

Obviously, this is not a recipe for collaboration. No amount of team-building would have been enough to change the built-in imbalances and conflicting incentives between the different divisions. I shudder to think of the grueling months, weeks, and years of retreats, "sharing" sessions, and the like that could have resulted from the belief that the lack of collaboration was personality- or communication- driven.....Or of the endless data presentations that would have been endured by all if we had stuck with the original "market research" diagnosis.

Incidentally, the "every division has its own deal" financial structure was a vestige of a past era, when authoritarian leadership was the model and silo-ism was in the ascendant. So, in a sense the problem we encountered was much bigger than financial arrangements, communication, the market, and/or leadership style. The point is that without following the money and addressing the dysfunction located there (which was not easy), it would not have been possible to move forward in any of these arenas.

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