Organizing work to deliver specific objectives is the task of modern management, or so we thought. But measuring the efficacy of this cannot be simply left to the markets, although it could well be the most convenient way.
Think of a company which is privately held and very successful, the measurement of tasks to fulfill objectives is only partially falling in the area of market participants, who have a stake in the company. Same is true for individual departments combining with each other to deliver objectives; the productivity of management is not simple to evaluate either.
Management of productivity on the other hand is the basic task of management, without management this would have been like the dark ages, left to the vagaries of chieftains, some of whom did a great job of leading from the front. But nothing of this could be made sustainable.
Before modern management was well understood, Drucker and Michael Porter included, most of what constituted ‘corporations’ was a way to reduce transaction costs as Coase helped us to understand. But then a lot of progress happened from Taylor to Ford to Deming and the plethora of Management Gurus, who facilitated the process of making management a science of making organizations more productive in their pursuit of wealth creation.
The first fifty years of management saw a lot of focus on shop floor management and making work flows as productive as possible with the help of industrial engineering. But within the next twenty years it was Deming and Drucker, who in their own traditions questioned the inadequacy of such an approach.
Productivity to produce certain results in complex organizations needed organization of inputs and outputs and this required a far deeper understanding of the nuances from strategy to execution, from financial engineering to operations management. But if we limit our current exploration only to productivity of work, I would talk about some very mundane but important pointers to modern management principles around structure of management. Unfortunately most structures were designed almost hundred years back when organizations were simple, now they span continents in thousands of offices.
Structure is completely linked to collaboration and without collaboration all organizations will fail. Most organizational work suffers due to the constitution of work organized in vertical flows, both top down and bottom up, but rarely moving horizontally. Whereas the expertise to solve puzzles could well lie outside of the vertical silos we may have created.
On the other hand think of functional work groups (that are configured horizontally) who are skilled in their functions and if you ask them to do tasks which are falling in their domain expertise, they would execute flawlessly.
Unfortunately organizational work does not fit entirely the contours of such vertical or horizontal silos, the combining of horizontal and vertical actually provides the best answers to most puzzles. But performance management of such a matrix engagement is never simple as key performance indicators that are to be delivered jointly are difficult to evaluate.
Modern performance management of productivity is therefore slightly weak when it comes to work-organizations that are configured in a matrix structure. In a global set up this could be even more contentious, as local puzzles have to be solved locally while global issues need far more concerted attention.
We come to a simple basic rule that could define this predicament better, framing of the right puzzles is the way to go. If the puzzle is better defined and articulated, the team that could solve that could be better organized. Gone are those days when static structures would wait for problems to come their way.
So we are progressing to a situation where most of what will be done in corporations is creation of teams that would move from one puzzle to the other in flexible work groups. Rigid organizational structures and boundaries would wither away to pave way.
Productivity of management is constrained by structures that direct a particular way of work as opposed to another which would need different work groups to come together. This however does not mean that functional expertise should be ignored or hierarchies to be disbanded. There must be a way to get the best of both as matrices combine functional talent with problem solving ability, while directing and controlling will be more delegated to where the puzzle is getting solved.
Finding the right puzzles to solve is the first act of leadership, getting the right team around that puzzle is the handiwork of good management. Incentives should be so designed that the second is firmly aligned to the first and delegation of authority rests at the right nodal points of this matrix.