1: Madmen in the Halls
The legacy of the nineties has been a dangerous corporate delusion: the idea that organizations are effective only to the extent that all their workers are totally and eternally busy. Anyone who's not overworked (sweating, staying late, racing from one task to the next, working Saturdays, unable to squeeze time for even the briefest meeting till two weeks after next) is looked on with suspicion. People with a little idle time on their hands may not even be safe. As one of my friends at Digital Equipment Corporation told me during the company's darkest days, "There are madmen in the halls, looking for someone to ax." Of course, the ones they were looking to ax were the folks who weren't all that busy.
Crisis of Confidence
Your company may not now have actual ax-wielding crazies roaming the halls, but their specter is almost certainly still with you. This is the remnant of the crisis of confidence we've just come through. Consider: As this is being written, American and western European business is in a period of extraordinary prosperity. The rest of the world is a basket case and we are healthier than we've ever been. And yet just a few short years ago, we were all in an agony of doubt. How could we survive, we wondered, against the competition of the ravenous third world, willing to work for peanuts and liable to undersell us in any market anywhere? How could we stay even with the superbly educated Japanese, or those clever and hungry workers coming out from behind the Iron Curtain, or the Taiwanese and Koreans with their superhuman work ethic and their awesome skills? Acting on our doubts, we went through a purge of excess capacity (i.e., people with homes and families). We trimmed as though our very survival depended on trimming.
Wasn't it reasonable to put our house in order in this fashion? Maybe it was in the short run. It probably contributed at least somewhat to our present strength. Yet the lasting side effect of the purge–the notion that busyness is the essence of business–can only do us long-term harm.
The Price of "Putting Our House in Order"
During the last ten years we have downsized, "right-sized," laid off, and fired people's butts. We have cut payrolls, closed plants, sold off divisions, and generally scared all our remaining employees to death. We nodded in approval as characters like Chainsaw Al (at one time the worst CEO in America) did their dirty work. We bid up the stocks of companies like AT&T who led the trend, i.e., led the retreat.
The principal target of the cuts has been that bugaboo of organizational efficiency: middle management. We asked ourselves, "What are they, after all, those middle managers? What are they but fat? What do they really exist for other than to be cut out in the interest of efficiency?" And so we cut. We surgically removed the middle layers of our organizations, flattening the charts and widening the scope of management at each level.
Was that a good thing to do? I have my doubts.
Maybe middle management exists for some reason above and beyond filling the space between the top and the bottom of the hierarchy. Part of my purpose in this book is to examine what's supposed to happen in the middle of a healthy organization, the critical role of middle management.
The main activity of those managers is reinvention. It is the middle of the organization where reinvention takes place. This is where the dynamic of today's organizational functioning is examined, taken apart, analyzed, resynthesized, and assembled back into new organizational models that allow us to move forward.
What got cut out of the most aggressively purged organizations is the capacity to change. The so-called restructurings have, in most cases, optimized the present steady state, only at the expense of the future.
Does It Matter?
Well, so what? Some companies have always been prone to trade away the future to make the present look a little more rosy. In the short term they prosper, and in the long term they don't. What's different this time? The difference is that today even the companies that didn't cut the heart out of their effective change centers have made it more difficult for those centers to operate. Change and reinvention require a commodity that is absent in our time as it never has been before. That commodity–the catalytic ingredient of all change–is slack. Slack is the time when reinvention happens. It is time when you are not 100 percent busy doing the operational business of your firm. Slack is the time when you are 0 percent busy.
Slack at all levels is necessary to make the organization work effectively and to grow. It is the lubricant of change. Good companies excel in the creative use of slack. And bad ones can only obsess about removing it.
Imagine that you took on an assignment to direct a film about happenings inside a hugely successful company. How would you portray the company? How, in particular, would you make it look successful? One tempting answer is to convey its great success by showing everyone who works there to be immensely busy all the time. After all, you might reason, how would the company have become so successful if its people weren't putting in substantial extra effort?
My own experience consulting inside some highly successful companies (Microsoft, Apple, Hewlett-Packard, IBM, Dupont, to name a few) cannot corroborate a relationship between busyness and success. Very successful companies have never struck me as particularly busy; in fact, they are, as a group, rather laid-back. Energy is evident in the workplace, but it's not the energy tinged with fear that comes from being slightly behind on everything. The companies I have come to admire most show little obvious sense of hurry. They are more like an extended family, embarked upon a project whose goal is only partly expressed in getting something done; the other part of the goal is that all involved learn and grow and enjoy themselves along the way.
Work, particularly knowledge work, can be extremely enjoyable. That's why so many of us become addicted to it. If you take sensual pleasure in your work, and those around you are doing the same thing, if it's clearly okay in your corporate culture to enjoy what you're doing, chances are that yours is a company headed toward success. Sign up for the stock plan.
The Busy Worker
Extreme busyness is injurious to the real work of the organization. I will make that point as carefully as I can in the chapters to follow, stressing the effect in particular on management. But first, I ask you to consider how busyness may hurt the effectiveness of even the lowest-level workers.
Take, for example, the secretary. (You remember secretaries, don't you? A once-common element of corporate life.) A secretary's job may involve document preparation, appointment scheduling, coordinating, and generally facilitating the smooth functioning of one manager's work life–let's say yours. We'll call her Sylvia.
A good secretary is a treasure, as anyone who has ever worked with one knows, and Sylvia is definitely a treasure. With Sylvia around, everything goes more smoothly. When you're away from the office–it never looks this way officially, but whom are we kidding?–Sylvia is effectively in charge. She is the one who coordinates and distributes work to be done. If she ever left, it would set you and your organization back a few months, at least.
But now into this happy scenario drop a consultant with a charter to reduce cost, the "corporate restructuring agent." Whoa, he says, what's this? A secretary? And what's she up to this very minute? He parks himself beside Sylvia's desk with his trusty stopwatch in hand. To no one's surprise, he finds that Sylvia is really only busy 43 percent of the time. The rest of the time she is . . . available. She's available to do stuff that you or your people find you need to have done. That's part of what's so great about Sylvia: When something comes up, she can usually get cracking on it right away.
A look of triumph now comes over the consultant's face. If Sylvia is only busy 43 percent of the time, 57 percent of her cost is potentially savable. Why, all we have to do is dump Sylvia into a "pool" and allocate 43 percent of her time to you and the rest to other people. Or have you share her with some other manager who needs only 57 percent of a full person. Or even get rid of Sylvia entirely and hire a temp for that 43 percent of the time that you really need someone. (You can be sure that the consultant will be checking back later to find out if you really need that much help.)
What an improvement. Sylvia's gone or gone 57 percent of the time, and 57 percent of what she was costing the organization goes directly down to the bottom line. Wow. In place of a person who was idle 57 percent of the time, we now have someone who is busy 100 percent of the time. Talk about efficiency!
The problem, of course, is that the now-slackless secretary or portion thereof is simply not as responsive as Sylvia was. This highly efficient person doesn't get cracking right away on anything new that comes up, because this highly efficient person is too busy.
How We Work Together
Modern organizations are huge networks of interconnected work. The nodes of this network are you and your coworkers. The connections are pieces of work in progress that get passed from one person to another.
As a practical matter it is impossible to keep everyone in the organization 100 percent busy unless we allow for some buffering at each employee's desk. That means there is an in-box where work stacks up.
With enough buffer at each desk, the work flow can now be organized to keep everyone busy all the time.
A side effect of this optimally efficient scheme is that the net time for work to pass through the organization must necessarily increase. Think of it from the work's point of view: The time it takes to move entirely through the network is increased by each pause it has to make in someone's in-basket. If workers were available when the work arrived at their desks, there would be no wait and the total transit time would be reduced. But availability implies at least some inefficiency, and that's what our efficiency program has drummed out of the organization.
Making efficient use of workers in the sense of removing all slack from their day has an attendant cost in responsiveness and results directly in slowing the organization down. This is not an entirely happy tradeoff. As Bill Gates testified in the early proceedings of the Microsoft trial, "In the past, only the fittest would survive. Today, only the fastest will survive."
It's possible to make an organization more efficient without making it better. That's what happens when you drive out slack. It's also possible to make an organization a little less efficient and improve it enormously. In order to do that, you need to reintroduce enough slack to allow the organization to breathe, to reinvent itself, and to make necessary change.
3: The Myth of Fungible Resource
Typical restructuring efforts concentrate on making a company more efficient. I have argued that the potential to do harm in this endeavor is substantial. In other words, improving efficiency may in many cases be countereffective. But that is not to imply that improving efficiency is therefore easy. It isn't. In fact, it takes a huge amount of work and real ingenuity. It's hard to make an organization more efficient because the workers of that organization have been constantly trying to make themselves more efficient. They've been doing that for years, since they are frustrated by waste and bored by idleness. The efficiency expert who now comes into the organization is obliged to plow over terrain that has been plowed over by many thoughtful persons before. Up against this daunting challenge, who can blame him if he takes the odd shortcut from time to time to show a little apparent progress?
The Oddest Shortcut of All
The tendency to shortcut is further encouraged by the sense–almost always present when restructuring is in the air–that apparent progress is every bit as good as actual progress. Dividing Sylvia between two bosses, for example, is only apparent progress, since her improved efficiency is offset by her reduced responsiveness. But if the efficiency expert has only a week to trim the fat . . . Well, you can understand the temptation.
So what's a useful shortcut for an efficiency expert who needs to show some quick organizational "improvement"? The shortcut that is most frequently employed is to assume that individual workers are entirely fungible....