The new book from Steven J. Spear and Gene Kim takes a look at what makes for winning organizations and develops what they call a new theory of performance management - why do some organizations really seem to fly year-over-year while others do not? Why is it that some organizations can really take advantage of the tricks and techniques of Lean or DevOps or Theory of Constraints or agile software development or <pick your approach>, while others never seem to find their footing? Wiring the Winning Organization attempts to answer these questions.
The short answer to these why questions is that winning organizations are designed to win, while the others are designed to trap people and ideas in chaos - what the authors call the danger zone. The Deming line about “every system is designed to get the results that it does” ran through my head over and over again as I read the book. And the design of the system is up to the leaders - at whatever level they might be.
I appreciate the clarification that the authors provide about how organizations create value - or more specifically the different layers at which value is created in any organization: the physical or mental labor that goes into creating goods and services (Layer 1); the tools and technologies required for Layer 1 to work (Layer 2); and then the “social circuitry” of how an organization brings everything together (Layer 3). It is the social circuitry of Layer 3 where the emphasis of this book resides - and the authors bring in many cases where the social circuitry enables organization, and several examples where it blocks organizations.
The answer to the questions about why some efforts succeed while others fail fall squarely in Layer 3 - the social circuitry of an organization. And this is where the book places its focus as well. It is in Layer 3 that organizations are either pushed into the danger zone or the winning zone. The danger zone is frustrating and chaotic, and the people in Layers 2 and 1 cannot seem to get anything done, whether they are highly skilled or not. The winning zone is where the work flows smoothly, challenges are handled, and the organization wins.
The core of the book is around three ways winning organizations work in Layer 3: Slowification, Simplification, and Amplification. Slowification, essentially, is acknowledgement that there are times to go fast and times to take it easy. Planning and experimentation are supposed to be times of learning, checking, testing - system 2 should dominate. And production and operations are the places where we want fast, system 1 thinking to be the primary mode. But when things go sideways or something unexpected happens, we want mechanisms to slow down and take us out of the routine to think, plan, experiment and prepare. Even in high-intensity settings like space flight, one can find mechanisms to shift out of the standard mode and into system 2. Another way to think about this is that there is a time for planning and a time for doing. Both should be happening, but they should not get confused with each other.
Simplification might sound obvious - make things simpler, break them down, improve everything. This is NOT where the authors take the discussion, as I was initially concerned. If systems thinking has taught us anything it’s that improving everywhere does not lead to better results. We have to improve at the few places in the few ways that will actually improve the system as a whole. Simplification, in the context of this book, has three elements: incrementalization, modularization, and linearization. Incrementalization: Make the smallest change or smallest build that makes the biggest difference, rather than changing everything at once and hoping you made the right choices. Build on what is known to work and make incremental changes from there. Iterate. The agile software development and Lean Startup have taken this concept to heart and spread the concepts far and wide. Modularization: work on elements that are relatively well contained (coherent) and don’t have strong ties to other modules. The authors suggest organizing around flow or value, as opposed to the common organizing principle of functional silos. Breaking things down by function often leads to local optima and a focus on “efficiency” that only serve the silo, rather than overall value delivery. And then linearization - within the modules, define the flow of operations and handoffs. Enable standardization. Enable flow. Make it simple for people to do the right thing, and know they are improving.
Amplification is all about a well-functioning feedback mechanism. There must be a way to trigger a signal, the signal must be received and acted upon by the right people and in the right timing, and the resulting corrective action must be implemented and studied to see if it had the desired effect. While this topic takes up the smallest footprint in the book, it’s because some form of feedback is required for slowification and simplification to work. How do we know that it’s time to shift from System 1 to System 2? How do we know whether those incremental changes/tests are working? Feedback. The examples discussed in this section primarily reference back to the cases already described, highlighting how the feedback loop enhances the story.
The book doesn’t directly recommend a course of action to build your own winning organization. Rather, it shows how the multitude of approaches out there fit into the framework they’ve created. Given who the authors are, it shouldn’t be too surprising to read that the Toyota Production System (not just the Lean tools) and DevOps (and a few others) are suggested as approaches which cover most of the ground of Slowification, Simplification and Amplification. Many familiar techniques and approaches do some of these three, but not all. Organizations combine approaches to get all three of Slower, Simpler and Louder. While there aren’t directions per se in the book, there are questions at the end of major sections that are designed to nudge the leader-reader in the right direction. One topic I’m curious about is how leaders might take these kinds of questions to do some diagnostics and improvements within their organization to move more and more towards being a winning organization.
In the end, the theory presented here makes a lot of sense to me. Success doesn’t come solely from having a great product or service or from having a raft of brilliant scientists and engineers. It’s in how we structure the organization and make the value flow.
The publisher’s page for the book includes more details, a reader’s guide, links to videos related to the content, etc. Note: I was given an advance copy of the book to review.