SOURCE: Kay Sever | February 23, 2023
In January, 2023 I introduced the term “organizational dynamics” as a key factor in optimization success. Dynamics is defined as the science of the motion of bodies and the action of forces in producing or changing their motion. If we apply this definition to companies, “bodies” are individuals or groups within a company. Dynamics refers to how individuals or groups act, react and interact in the workplace. The profit (or loss) linked to organizational dynamics is often unmeasured and is not recognized as a factor in
achieving what I call “full” optimization at a site or company.
THE LINK BETWEEN PROFIT AND ORGANIZATIONAL DYNAMICS
Most of the profit you generate, measure and report profit comes from producing and selling products. You do not track or report income linked to organizational dynamics because the financial system was not designed to show you those numbers. Does this mean that profit is unaffected by organizational strengths and weaknesses? NO it does not! It does mean that reported profit is a net number that already includes the financial impact of your organizational dynamics.
Executives and management teams need numbers to confirm/prioritize problems and take action to fix them. We know this is true for day to day operations. It is also true for identifying and analyzing weaknesses in organizational dynamics that cause financial losses. Without numbers linked to these losses, executives and management teams are powerless to take action to strengthen the organization and stop the losses; as a result, the weaknesses remain and the losses continue year after year.
WEAK SPOTS COMPROMISE YOUR OPTIMIZATION GOALS
Optimization implies achieving and sustaining a state of “best possible” performance over the long term. Even if millions of dollars are invested in new equipment/systems to reach that goal, it is IMPOSSIBLE toachieve or sustain this state if significant dollars are lost due to weak organizational dynamics.
ROI is a key indicator of optimization success when new equipment is acquired. If an organization contains weak spots, losses generated by those weak spots will CANCEL OUT some of the ROI gains achieved with new equipment and systems. This is why people in a leadership role need an awareness of ORGANIZATIONAL DYNAMICS. They must understand how to intentionally build strong organizational
dynamics so they can stop losses that partially offset the return from equipment performance.
In summary, “best possible” performance means “being the best” with equipment AND people, which means that optimization requires a two-pronged approach. Equipment performance and organizational performance must be focused on in tandem to achieve/sustain best possible results for the long term.
CASE STUDY SCENARIOS LINKED TO ORGANIZATIONAL DYNAMICS
Last month the first organizational dynamics case study for 2023 was introduced. This scenario and others shared in the future were all taken from my personal experience helping executives and management teams achieve optimization and build stronger organizations. These scenarios will be described generically because they can occur in many companies regardless of industry or product. They are meant to raise your awareness of factors that affect results in ways you never considered as a decision-maker and member of an executive/management team.
SCENARIO #1 – continued:
In last month’s case study, management was made aware of a reoccurring loss in the production value stream that was caused by a weak management practice. The workforce was aware of the problem. NO MONEY was needed to fix the problem. One change to a management process would fix the problem and stop the loss. Management knew about the problem but took no action to solve it. Why did management ignore a problem that created a known loss that needed NO MONEY to fix? Last month we listed possible reasons for this choice and introduced the trickle-down effect that occurs within organizations as a result of this choice. This month we are going to “drill down” to
raise awareness about root causes of this choice.
WHERE DO ORGANIZATIONAL STRENGTHS AND WEAKNESSES COME FROM?
People are first hired for a management position due to their technical knowledge of a process or their expertise in improving performance. The day they transition from a technical role to a managerial role, their responsibilities and day to day focus completely change.
They stop being hands-on and must depend on people who report to them to “do the work”. They become a process overseer and a problem solver as they enter the “management subculture”… seldom viewed as a separate and distinct influencer on financial performance and the organization.
The management subculture gives people with management authority three things: 1) a set of expectations/policies/procedures about how to oversee and problem solve, 2) guidance on “objective decisions” they are expected to make, and 3) “subjective choices” they are permitted to make that they could not make as a technician.
Given this definition of a management subculture combined with my 3-year study of the impacts of management systems on optimization success, I submit the following to you for consideration:
The management subculture is the source of most strengths and weaknesses of every company’s organizational dynamics model.
In Scenario #1, characteristics of the management subculture were the reasons that this management team chose not to fix a problem that only they could fix, allowing known losses to continue.
An AH-HA Takeaway: When this management team made this choice, they DID NOT UNDERSTAND that they were doing more than choosing not to fix a problem… they were showing the organization that they had “opted out” of achieving the company’s best performance!
This insight barely cracks the lid on the power a management subculture can have IF a management team is running on AUTOPILOT (i.e., without awareness of their subculture and how to “operate” it to create the best result for the company). Raised awareness about the elements of a management subculture and knowing how to focus the power of those elements on optimization is the solution.
SUMMARY:
There is SO MUCH TO SAY about the power of a management subculture. Some of it operates in the foreground and is quite visible. Other powerful aspects of it live in the background… invisible, subtle, often overlooked as a contributing factor to organizational dynamics and financial results. We could go on for months connecting a management subculture’s “power-and-influence” dots. Stay tuned!
Next month: Join me when we will talk more about the choice this team made and how that choice hit the bottom line and reverberated across the organization.
Thought for the year: There is an astounding lack of management awareness about the power of moments… moments when opportunities to capture millions of dollars hang in the balance… moments when courage is the defining factor in preventing or stopping losses and shaping a corporate culture capable of sustaining optimization over the long term. Executives and management teams that have this awareness are empowered to help their people achieve optimization and accomplish great things!
Kay Sever is an Expert on Achieving “Best Possible” Results. Kay helps executive and management teams tap their
hidden profit potential and reach their optimization goals. Kay spent 3 years analyzing the impact of management systems on
optimization success. As a result of that study, she developed a LIVESTREAM management training system for Optimization
Management called MiningOpportunity – NO TRAVEL REQUIRED. See MiningOpportunity.com for her contact information and training information. Email Kay directly at [email protected]
To comment on this story or for additional details click on related button above.
- About Us
Kay has worked side by side with corporate and production sites in a management/leadership/consulting role for 35+ years. She helps management teams improve performance, profit, culture and change, but does it in a way that connects people and the corporate culture to their hidden potential. Kay helps companies move “beyond improvement” to a state of “sustained optimization”. With her guidance and the MiningOpportunity system, management teams can measure the losses caused by weaknesses in their current culture, shift to a Loss Reduction Culture to reduce the losses, and “manage” the gains from the new culture as a second income stream.
