- Do you recognize these meetings?
- How can we save time for an explanation of terms?
- The DNA of the firm
- What happens in the business strand?
- What are we doing every day with the business DNA?
I have been guiding a mid-sized firm on the path to becoming a decentralized, autonomous organization for the past three years. In this time, we have encountered vastly differing challenges. Some were extravagantly long workshops to explain structural and strategic themes. Is a chief needed to regulate this in the end? Could we just demand that normal employees work well, structurally and strategically? In this article, I will introduce the meta-method of business DNA that arose from this process.
Do you recognize these meetings?
A group of colleagues from all different teams come together. Today they want to bring their cooperation problems to the table. They prepare an agenda. It dictates that at the end of the two-hour conversation, clear agreements should be made as to how cooperation should look in the future to avoid hassles. Because these are tricky aspects of content and of humans, a level-headed, competent colleague should moderate the meeting.
To start with, each party presents their points. The first controversies arise about the use of terms. For the salesman, the project is a sort of mission. The office worker might see a special process to be completed. For production, it is about the process determined in a quality handbook with which process improvements can be achieved. Generic terms like work hours, quality, standard, motivation, etc, are also understood differently. It quickly becomes clear that it goes on like this in detail. What sales describe in ERP as information is differentiated by the liquidators into information fields and entry fields, whilst the engineers speak generally of the production of data fields. The moderator doesn’t see another change. He nixes the agenda and decides to clarify the terms. About 45 minutes later, the general terms are there. Another thirty minutes goes by until the themes are sorted into headings. Time synchronizes the different uses of the different words between parties. Including the chaos at the beginning, one and a half hours of the two-hour meeting have already been used. Considering the calendar of all those present, the group only prioritizes the themes. Then they make a follow-up appointment where the explanation of contents can finally be undertaken. It would be nice if the story ended here, but it doesn’t.
The participants leave the meeting. The majority are dissatisfied. Again, they couldn’t get any results. Despite the moderator! At least they understand each other now. And the themes are prioritized. So they go back to their workplaces. Colleagues are waiting there with questioning faces. “And, what happened?” “Catch us up?” “Where have we outvoted the others?”. You try to summarize the results as best as possible. Quickly, a discussion begins amongst your colleagues as to which headings and definitions are complete rubbish. Through this, you forget the common definitions with the other departments. Then, in the follow-up meeting, it turns out that four of the original twelve have sent replacements for different reasons. In the end, the first meeting is repeated. Again, terms are explained. Again, a common understanding emerges. In the end, the time again passes much too quickly and finding a solution is postponed. Summary: lots of people talk a lot, not much comes from it.
This description is a bit over-the-top. Businesses would be right out of the game if all meetings were like this. But with structural or even strategic coordination between departments, we all know one such situation, or something similar. Finding a solution is slow, boring and frustrating. Now imagine yourself in a firm where there is no formal management team that bang on the table and say what should happen. You are probably thinking that that is impossible. But we found ourselves in this exact situation. In this firm with about seventy employees there were no instructional people anymore. No team leader, no department manager, no authorized officers. Only the managing shareholders still had formal power. And it should stay just like this. In the best case, their assigned powers are divided amongst us. The return to “table banger” is out of the question. So we thought about the situation and came to a solution.
How can we save time for an explanation of terms?
The addressed problems are characterized by the following points:
- Dealing with a structural or strategic question.
- The solution requires coordination across different departments for behavioral changes.
- A common understanding of the headings to which the problems are allocated supports its success.
- The agreements to be made have different effects on processes and relationships, and therefore also on people and their cooperation habits.
We recognized that the majority of wasted time disappeared by explaining headings. Right afterwards, we fritter away the discussion on who is to blame. First, in connection with finding a compromise in both fields, we can then talk about the upcoming content. What is lacking is a generally valid schema for the placement of structural and strategic problems. This concept needs to make way for today’s circumstances as well as for the imagined solution. That way we can recognize whether we are making progress. That way we can develop a meta-tool with the firm DNA for a common reflection of business relationships.
The DNA of the firm
It can be applied just as well in a classical hierarchical structure as in a DAO (decentralized autonomous organization)¹. The basic assumptions of the pattern are:
- Each business is a partially matter-of-fact and partially social.
- The appropriate component is directly designable, the interpersonal is mainly indirect.
- There are no firms without people.
Here, I will explain the elements using a DNA metaphor.
What comes together? In DNA code, two strands are always growing together: firms and people. Each strand arises from different foundations. In the middle, they link up. From above and below, the chain continues. In this article, I will limit myself to the description of the customizable firm strand. It consists of the following elements:
A business model describes systematically at least the quantitative, and in the best case also the qualitative connections and dynamics between tasks and revenue. Traditionally, its foundation is business and finance plans. From those, budgets, financial needs and so on are derived. The business model generation canvas is a more modern approach. In it, people like customers, suppliers, cooperation partners, internal workers at the firm, etc, play important roles. The business model forms the backbone of the firm. All activities are rooted in it.
This presents how the organization is structured to implement the business model successfully. It replies to challenges with:
- Responsibility within the business environment. Who in the business reacts in which time frame to whom?
- Internal – other areas, teams, etc.
- External – customers, suppliers, associations, etc.
- The reaction to growth. Will we manage to enlarge the business model – in quality, amount, region and time? How many from whom and what do we need for that? Which requests do we want to, can we, should we satisfy?
- Our implementation assets. Which competencies does the firm need to be able to deliver valuable offers for the customers? How can we make sure that they are available in the right amount of time and of the correct quality level?
This is about the roles that we need to practice the business model. Each feature that arises of the organization structure requires a role. Many firms know at least three role groups, staff members and middle to upper management staff. In them many diverse parts can be found. Like workers, clerks, shift managers, foremen, department managers, team leaders, factory directors, CEOs, COOs, CFOs, … connections between the business model, the construction model and role structures are normally only known by a few people in businesses – if at all. To deliberately reflect the dependencies, salvage the value of recognizing the economic, political and cultural risks early on.
It answers the following questions:
- How does my firm make decisions? With which models, methods, tools, etc.
- Who decides what with these tools?
- In which framework can who decide what?
Examples of approaches:
- Mid-level management use the consultative decision to prioritize their project list.
- Question the firm strategy and adapt it annually in an exam with industry experts and the business advisory.
- Heads of departments determine salary adaptation on the basis of achieving the requirements of a performance review according to the formula XYZ.
- New settings are decided in the personnel area in consultation with specialist departments and the managing directors.
Examples of the scope of decisions:
- Department managers could have up to 10 000 dollars in commissions at their disposal.
- Senior clerks could be awarded a credit framework of 100 000 dollars. The agreement of a branch manager or the responsibility of at least two senior clerks is required.
- Purchase managers release partial orders that automatically generate SAP-LOG13.
- How do we communicate with each other? With consideration to:
* Direction – up, down, diagonally, all over the place
* Settings – methods, technologies, tools
* Expected demeanor – thinking, processing, working, sharing
- With which contents can the exchange take place? Who has the right to discuss and pass on general/structural/strategic themes?
- How do we allocate the questions/expect conduct, functional or processual?
Communication and decision design are a mixture. From the conversations and information we decide to act. The separation makes sense in the model, but in reality they always run into each other. For this reason we connect the business’s graphic communication design of the business with people’s decision design and vice versa.
The day-to-day experiences of all firms runs through recurrent procedure-pipes. It is helpful to describe these individual courses so that everyone can at least understand them. If their quality increases, that can be recognized through the dependencies between each other and also the process hierarchy. The procedure processing usually sits across from the formal, functional, hierarchical organizational structure. This regularly leads to conflicts between routine, responsibility and decisions.
This is where the interpersonal of all businesses takes place. These levels stand for social power as well as internal clashes in the workforce. Modern management ideas are meant to prefer cooperation to competition. Companies are glad to count on harmony and good moods. But this denies that conflict is a part of life. Here, a blind spot arises in communication design. The necessary practices are lacking to be able to successfully overcome controversies. The degree of maturity at this level shows how often your firm reminds you of a zoo or a kindergarten.
What happens in the business strand?
Process and relationship layers get matted the longer we work together. So it makes sense to consider them separately from time to time. The model pushes on the mixture of the business’s relationship level in connection with the relationship level and vice versa. The interaction of the decision design, the communication design, the process level and the relationship level, is where the everyday takes place. Here, we become conscious of our actions. Here, problems arise – but we are reaching for successes. The connection between the organization structure and the role structure defines the framework routines stem from. Often, a clear view is blurred by these. To be able to change something, it is important to be able to consciously question these structures over long distances of time. In the business model lies the model of the firm. It should always resonate in the day-to-day of your business. It still requires a regular effort to show its influence. Only this way can a business recognize whether it is still strategically successful or if it is going another way.
What are we doing every day with the business DNA?
Once, an employee of a firm came to me. He wanted my support with a communication problem. He told me how his colleagues from the other departments simply ignored his regular requests – “They just don’t want to hear me!” He explained to me his repeating problems with project implementation. As a project manager in a software firm, he handled very customer-specific features. He passed these on to the developers. A little while after, he received the solution release. It often transpired that a part of the solution complied with the requirements, but there were also some new features as well or different, smaller requirements were lacking.
To analyze his problem, we consulted the DNA. Together we recognized that he was feeling the effects of the relationship level and the communication design. The source, though, was the process level and the business model. Development was required to always press ahead with features in connection with the improvement of the entire product. Special customer requirements could hardly be taken into account unmodified. As well as this, the development process didn’t allow any disconnected programming. There were no independent features. With reflection he recognized that both the business model as well as the process level had to be adapted to clear up his communication problems. Although this knowledge displeased him, it helped him to understand his colleagues better. Now he can steer his anger toward the correct place in the organization.
The meta-tool of business DNA enables businesses to include their employees better in structural and strategic changes. It ensures a mutual understanding. With it, we can steer energy and time away from gossip about the solution implementation. Imagine. It’s easy if you try…
 More information about decentralized automonous organization can be found on Wikipedia at https://en.wikipedia.org/wiki/Decentralized_autonomous_organization
Find more informaiton about Gebhard Borck and business DNA at his website, http://gebhardborck.de/. You can also make an appointment with him here: http://gebhardborck.de/ueber-mich/meine-zeit/termine. (links in German)