SOURCE: Kay Sever | October 2, 2026
So far in 2026, I have shared what I have learned about AI capabilities (which change continually), AI components, AI metrics, and the complexities of linking AI to existing IT systems. I have also discussed corporate risks that may not be discussed by AI developers (accuracy, depth of knowledge, resources needed, AI integration timelines, what data to share, how to protect its confidentiality, etc.)
Over the past two months we focused on production problems, how we humans know when we have a production problem, and the DATA AI MUST HAVE to understand a production problem and make recommendations for solutions.
This month we are going to touch on organizational problems, their potential cost and how we need a new perspective to prevent the losses they cause. Why is this topic important to consider?
A weak organization can cost a company millions of dollars in profit… profit that could have been reported but wasn’t. Many of these losses are never measured or identified. Why is that? Because organizational losses can be created by one department but show up as higher costs in another department. Financial systems are not designed to reveal these losses, so these losses are not discovered and remain hidden from management’s view. They are either buried somewhere in the ledger as unidentifiable excess costs OR were lost before related accounting entries were booked (i.e., production losses).
Examples of Organizational Problems That Cost Millions of Dollars
What kind of organizational problems are we talking about? Examples include:
- Communications and information do not move as expected from department to department… Delays in responses, incorrect information passed downstream, problems that result from these delays and errors.
- “Silos” exist that operate somewhat independent of the rest of the organization… Problems that happen downstream from a “silo” department.
- Employees and departments are not behaving as each other’s customers or suppliers… The cause of rework, excess cost and poor quality.
- There is a lack of production process knowledge within administrative groups that serve or make decisions for production departments… example: substandard parts ordered to claim savings in corporate – result is production loss, unplanned downtime, overtime, etc. Loss was not caused by operations.
- There is a lack of collaboration between departments when problems/solutions involve more than one department. Millions can be lost over time with this issue. This weakness trickles down into Project Management, causing scheduling delays, overages and maybe the wrong solution for a problem.
- Departments do not understand how they contribute to the success of the entire value stream. This lack of awareness weakens value stream management practices and culture.
Is Your Organization Weak/Underperforming and Causing Losses?
How do you know when organizational problems exist? One quick assessment can tell you if you have organizational weaknesses that need to be addressed:
Are my people working like a sports team with a shared goal of achieving their best (both vertically and horizontally on the organization chart)?
If you do not see the behaviors that would reflect that attitude, you can be certain that your organization is not performing at its best level, which means you are likely encountering hidden losses that may be way bigger than you think!
It’s Time for a New Perspective on Organizational Weakness/Dysfunction
Relationships between production and admin functions/departments should be viewed as a source of PROFIT for every company. Those relationships do not directly produce saleable products, but they can negatively affect:
- Cash flow (higher production costs, lower production volumes, lower quality of products, shifting the timing of sales, and lower sales quantity).
- Management credibility (examples: silos reflect a sanctioned double standard, no expectations or accountability for collaboration in problem solving)
- Management must view the “interactive touch-points” on the organization chart as profit opportunities to stop the losses they cannot see.
What’s The Fix?
No capital is required to fix organizational weaknesses and stop their associated losses. Management must act first to stop these losses. Set new standards and new expectations (beginning with the team itself). Change the way problems will be solved and projects will be managed. Management must make execution at “interactive touch-points” on the organization chart a priority for excellence. Permit departments to work together if they are not allowed to do so now. An effective tool I have used many times to facilitate this work is Process Orientation.
Can AI Assist with Strengthening Organizational Weaknesses?
1) Remember that AI MUST HAVE DATA before it can understand a problem or recommend a solution. The losses caused by organizational weaknesses are not linked to those weaknesses via labels or accounts, which means there is NO DATABASE FOR ORGANIZATIONAL LOSSES that can be shared with AI. The dollars of loss can be calculated off-book, but depending on the elements and scope of the loss across the organization, each calculation is unique.
2) Once an organizational loss has been quantified, ONLY MANAGEMENT can make a change that will stop the loss! Often all that is required is management making a different choice for a procedure and making a unanimous commitment to be consistent in that choice. Keeping this commitment is easier because management now knows profit dollars are at risk if things go back to the way they used to be.
For AI to be of assistance in recommending a solution, the management team’s actions and reactions within an organization and the interactions between departments would have to be documented over time. No such database exists!
In conclusion, given the data requirements for AI to be of assistance in this application, it is my opinion that there is not an opportunity to engage AI in stopping losses caused by organizational weaknesses.
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 has developed a LIVESTREAM management training/coaching system for Optimization Management called MiningOpportunity – NO TRAVEL REQUIRED. See MiningOpportunity.com for her contact information and training information.Optimization/AI Integration – AI Scope: An Overview
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- 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.
