One of the biggest challenges for larger organizations is the lack of productivity which ties back to organizational structures. If a company wants to create something complete new, e.g. a new business modell, then there must be a phase of idea creation, conceptual work and finally implementation – all of that is surrounded by decision making processes on all stages.
Start ups typically can move fast because of their lean structure, but maybe often also because of the fact that the decision making is left to a realtively small group of people. Typically there are no lenghty democratic processes to get to a decision, founders and the VC define the direction and the team executes.
This is often different in larger organizations (for good reasons) but at the same time is introducing a lot of challenges. It can even lead to ridiculous situations where the productivity – so the actual outcome of an initiative is almost zero although there was much effort put in from a pure resource perspective.
You can illustrate that easily:
In the above illustration you have a lot of (typically senior) people involved in discussing requirements, forming decisions, discussing these decisions again.
The lower part of the diagram shows the amount of hours floating into the „real“ creation of the product, so conceptual work, testing, implementation.
It becomes clear that the ratio of the two components (discussion and decision making vs. creation and implementation) is key to improve productivity.
This is even more important from a cost perspective, because typically more senior people are involved in the discussion and decision part:
What should larger organisations do?
If you want to increase your productivity and improve your speed to market their is only one choice: find the right balance of allocating resource to discussion and decision making vs. creation and implementation.
You’d probably never get to that state of how a start up can do it, but I am convinced that even larger organizations can change to a diagram like the below. What is required?
- Clear decision making processes
- Lean descision making structures
- Stick to you decisions
- Empower the implementation team / the experts
If you follow that you might change the productivity pattern to:
This will allow you to increase productivity while you reduce cost at the same time.
I am convinced that companies who want to be successful in the long term must follow that pattern – otherwise there is a high probability to get a victim of disruption. Thoughts?