How to Simplify the Complex Organization

In a recent Harvard Business Review blog, the author Rick Wartzman wrote about Peter Drucker’s 1981 lecture at the New York University, “Managing the Complexities of Large Organizations.”  The challenges and complexities back then are even more pronounced today as technology and market changes seem to accelerate rather than slow, and many companies won’t let go of yesterday’s outdated business models and processes.

Drucker offered his audience six questions that he believed should be asked to simplify business and challenge the status quo.  The first two questions are to be asked of the organization, the second two are questions for those who work for the organization, and the last two questions leaders should ask themselves.

1. What does the customer value?
Drucker makes the point that this might be the most important question, yet the one least asked.  In an age where customers are getting stronger and more demanding, understanding what the customer wants and needs is without question essential to success.  Leadership teams need to be relentless in the pursuit of the answers.  Don’t assume you know what your customers see as value.  Asked your customers to answer this question because it is better to get it right than to assume you have it right.

2. What is our business (today) and what should it be (tomorrow)?
Do not take this question lightly because it isn’t necessarily so obvious.  Markets, competition, customers and technologies are changing rapidly, particularly with the speed of technological developments.   What brought you to today’s success will not necessarily take you to tomorrow victory.  This speaks to Drucker’s law of abandonment (“If leaders are unable to slough off yesterday, to abandon yesterday, they simply will not be able to create tomorrow”).   This question should cause a great deal of discussion and lead to considerable disagreements.  Ultimately it should provide you with alternative strategies to consider.  

3. What is the task?
There will always be tasks—that is a given. The challenge is which tasks are important and which should you not do.  Too often the day-to-day problems create more tasks upon more tasks.  In order to manage the complexity of running the day-to-day business, Drucker suggests you ask employees to answer these questions: What is your task? What should you be expected to contribute? What roadblocks do you face?  What tasks should your eliminate?

4. What are your ideas? What new things should we try?
All employees should make innovation a priority, not just the R&D staff.  However, not everyone has the same capability to be innovative and drive change in an organization.  Drucker suggests that one way to instill an innovation climate is to hold a session a few times per year with employees. When you meet with them tell them you are not here to make a speech, but rather to listen.  Ask them where do they see opportunities and threats in the organization?  Drucker feels this is one of the best ways to instill entrepreneurial vision throughout the organization.

5. Who in this organization depends on me for what information?
Traditional command and control structures are giving way to more flexible and fluid arrangements where cross functional collaboration is becoming more important than ever. Making sure the right information is delivered in the right form at the right time to the right people is essential.  After determining who is dependent on you, the obvious next question is, who do you depend on for information?

6. What would happen if this were not done at all?
In today’s lean organization, every manager is challenged to manage his/her time.  Drucker recommends keeping a detailed log to track your activities and time spent.  Don’t rely on your memory.  After a few weeks, analyze your records and ask yourself what would happen if you stopped certain activities.  If the answer is nothing, then the conclusion is to stop doing it.  Drucker states, “It is amazing how many things busy people do that will never be missed.” 

Try these simple but engaging questions in your organization.  You might be surprised at the results, and let us know if they were helpful.  If we can be of help in any way, give us a call.