Great by Choice

Why do some companies thrive in uncertainty, even chaos, and others do not? Based on nine years of research, buttressed by rigorous analysis and infused with engaging stories, Jim Collins and his colleague, Morten Hansen, enumerate the principles for building a truly great enterprise in unpredictable, tumultuous, and fast-moving times.  The DoD, while not driven by stock prices and profits, can apply many of these findings to ensure their major programs, organizations, and enterprises can achieve spectacular, long-term results.


The Over Regulation of DoD

The Economist recently published a piece The Over-Regulated America critical of financial and healthcare reform laws that were noble efforts to prevent another crisis, abuse, or skyrocketing costs but imposed a huge burden.  Politics aside, the DoD faces related burdens of over-regulation and would benefit from exploring the author’s recommendations.

America needs a smarter approach to regulation. First, all important rules should be subjected to cost-benefit analysis by an independent watchdog. The results should be made public before the rule is enacted. All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorizes them.

More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.

Deputy Secretary of Defense Dr. Ashton Carter in September 2010 as the Under Secretary for Acquisition laid out the Better Buying Power strategy.  It included:

  • Reduce the number of OSD-level reviews to those necessary to support major investment decisions or to uncover and respond to significant program execution issues
  • Eliminate low-value-added statutory processes
  • Reduce by half, the volume and cost of internal and congressional reports
  • Reduce non-value-added overhead imposed on industry

Dr. Carter’s leadership in championing these reforms has been much needed in OSD.  While I haven’t seen any interim progress reports, there is still ample room for improving DoD operations.  The OSD culture will take years to change from an over-regulated mantra to more of a facilitating and guiding approach.  I hope leaders and staffs can see the benefits and are laying the ground work of real reforms within their organizations.

Each new policy, while well intended, is additive to the mountains of policies that organizations struggle to understand, apply, and comply with.  It would be very interesting to see cost benefit analyses and sunset clauses for each major new policy.  The approach would force DoD leaders to assess the true impact, including the cost and energy, of implementing this new policy, and weigh it against the anticipated benefit.  As it takes significant energy, debate, and political power to repeal a bad policy, a sunset clause would limit the long term growth of policy mountains.  If 5-10 years later the policy still has value, it can be reauthorized with any necessary updates based on feedback, effectiveness, and assessment of the current environment.

Similarly, Congress via the National Defense Authorization Act (NDAA) imposes dozens of new policies on the DoD annually.  As the Congressional Budget Office (CBO) scores legislation for the economic/budget impact, the GAO could develop and publish a cost-benefit analysis of all proposed defense legislation prior to voting on the NDAA.

The DoD bureaucracy needs to be aggressively simplified and policies streamlined.  While we operate in a very complex enterprise, the over-regulation of DoD has taken a considerable toll in delivering cost efficient, effective, and innovative solutions.

Management Innovation

Management Innovation eXchange (MIX) has 25 great Moonshots – challenges designed to focus the energies of management innovators everywhere. What needs to be done to create organizations that are fit for the future?  Here are three of my favorites:

Make direction setting bottom-up and outside-in
“All stakeholders need a role in setting strategic direction.”
As the pace of change accelerates and the business environment becomes more complex, it will become increasingly difficult for any small group of senior executives to chart the path of corporate renewal. That’s why the responsibility for defining direction must be broadly shared—with all organizational members and interested external constituencies. Only a broad, participatory process can engender wholehearted and widespread commitment to proactive change. When it comes to setting direction, influence should be a product of foresight and insight rather than power and position.

Create a democracy of information
“People at the front lines should be at least as well informed as those in the executive suite.”
Most organizations control information in order to control people. Yet, increasingly, value is created where first-level employees meet customers — and the most value is created when those people have the information and the permission to do the right thing for customers at the right moment. Information transparency doesn’t just produce happy employees and happy customers, it’s a key ingredient in building resilience. Adaptability suffers when employees lack the freedom to act quickly and the data to act intelligently. The costs of information hoarding are quickly becoming untenable. Companies must build holographic information systems that give every employee a 3-D view of critical performance metrics and key priorities.

Retool management for an open and borderless world
“As the distinction between ‘inside’ and ‘outside’ disappears, managers must learn how to manage beyond the legal boundaries of the enterprise.”
Emerging business models increasingly rely on value-creating networks and forms of social production that transcend organizational boundaries. In these environments, management tools that rely on the use of positional power are likely to be ineffective or counterproductive. In a network of volunteers or legally independent agents, the “leader” has to energize and enlarge the community rather than manage it from above. Success therefore requires developing new approaches to mobilizing and coordinating human efforts.

Learn more about reinventing management including hundreds of stories, hacks, and barriers at Management Innovation eXchange.

Change the Pentagon Culture – McNamara Style

Robert McNamara, 22 Nov 1967The Pentagon desperately needs to change its culture to transform operations, business practices, and achieve hundreds of billions in savings.  Steve Denning has another great post, How Do You Change An Organizational Culture?, with sage advice for Pentagon leadership.

In general, the most fruitful success strategy is to begin with leadership tools, including a vision or story of the future, cement the change in place with management tools, such as role definitions, measurement and control systems, and use the pure power tools of coercion and punishments as a last resort, when all else fails.

In the post, he describes Robert McNamara’s success, not at the Pentagon, but at the World Bank and key lessons for the next World Bank President.

  • Do come with a clear vision of where you want the organization to go and promulgate that vision rapidly and forcefully with leadership storytelling.
  • Do identify the core stakeholders of the new vision and drive the organization to be continuously and systematically responsive to those stakeholders.
  • Do define the role of managers as enablers of self-organizing teams and draw on the full capabilities of the talented staff.
  • Do quickly develop and put in place new systems and processes that support and reinforce this vision of the future, drawing on the practices of dynamic linking.
  • Do introduce and consistently reinforce the values of radical transparency and continuous improvement.
  • Do communicate horizontally in conversations and stories, not through top-down commands.
  • Don’t start by reorganizing. First clarify the vision and put in place the management roles and systems that will reinforce the vision.
  • Don’t parachute in a new team of top managers. Work with the existing managers and draw on people who share your vision.
Read Steve Denning’s full post here.

Nilofer Merchant: The New How

Nilofer Merchant has done some brilliant work on how to effectively develop and implement strategies collaboratively.  Her book, The New How should be required reading for anyone embarking on a major initiative, particularly acquisition reforms.  Her blog is filled with countless nuggets of valuable lessons and has been part of my core RSS feed.