Where Does Bad Corporate Culture Come From, and Can It Be Corrected?

Bad corporate culture arises naturally from human nature, lack of management savvy, and bad or clueless management behavior. Corporate culture is built from the combined experiences of the members of the organization, the quality of their interactions with each other and outsiders, the results of the organization’s efforts, and the psychological tone set by top management and every level of management beneath it. All of these factors are expressed in, and some are caused by, management behavior, and poor management behavior will always affect the culture negatively. The good news is that you can work to correct and improve the culture at your own level.

After Cost of Quality … Cost of Culture?

The “cost of quality” concept advanced management science, but what’s next? As the science of business management has progressed, cost measurement has long been a key endeavor, as it provides a lot of the information needed to know how the business is doing and to make decisions, solve problems, and make improvements. In the past few decades, areas of cost measurement such as cost of sales and cost of quality have provided helpful insights for management teams, and improved the competitiveness of companies that understood them. Famous business gurus have weighed in on cost measurement with great positive effect. W. Edwards Deming once said “The greatest costs in business are unknown and unknowable.” Finding ways to measure those unknown costs has produced significant gains in the understanding and effectiveness of business processes, and significant progress has been made in assessing increasingly tougher areas of business, but one area has always escaped effective measurement, though it has perhaps the biggest impact on business performance of any: the culture of the organization.

Dysfunctional Organizations Are Like Dysfunctional Families

Dysfunction causes organizations and families to fail to meet their goals.  I wish I had time to do actual digging (and research) on this, but other things like … making a living … make that impossible.  Still, I have my observations, and here they are:

The impact of dysfunctional relationships and behaviors is almost always negative.  When an organization is dysfunctional, such as when one part of it has inordinate power, it will be challenged to meet its goals.  Quality, timing, and cost will all usually be less favorable than planned.  Projects will be routinely delayed, costs will routinely be revised upward, quality will be at risk of being forgotten in the quest for profitability and timeliness, products will be at risk of many and/or severe defects, and customer satisfaction will lag behind more capable and less dysfunctional competitors.  Similarly, a dysfunctional family will have parallel problems with achieving its goals.

Failing to Fail Can Be the Worst Scenario

The worst companies are the ones that fail to fail: they never do especially well, and they never do badly enough to close or be bought out. Instead they muddle along, fortunes rising and falling, hiring and laying off in waves, providing lackluster returns to their owners/shareholders and poor quality products and services to their customers. They never get their act together, and generate far more human misery than an organization that fails or succeeds outright.

Knowing the Important Costs is Often Difficult

Companies can’t be faulted entirely for missing important costs.  It is human nature to measure what is easily measured, and to optimize that which is measured.  Admittedly, that’s like the drunk looking for his wallet under the street light, instead of where he actually lost it, because the light is better under the street light.  The important costs may not always be the obvious ones, however.  The savvy manager who understands human nature will look more deeply into costs and find hidden opportunities.  I will discuss the nature of costs and give some examples of hidden costs and the mishandling of cost information.

Effective Planning for Big Projects

First a disclaimer: I don’t claim to be the world’s expert on project management, and I urge anyone who is involved in or interested in project management to seek good sources of information and study, as this is a profession requiring a lot of skill and knowledge to do well. That said, I believe my decades of experience (planning projects up to 4 years in length and over $1 billion in cost) gives me some basis to write this. You may notice that I tend to focus more on the timing aspects of large scale plans. I am not ignoring the financial side of the discipline, but not stressing it either, because I have usually had a parallel financial planning effort, run by accountants and financial experts, to lean on. You may also notice that I am trying to address the realities, the impact of human nature, on the work.  That said, be aware that good planning requires a focus on all three major components of business processes and projects: time, cost, and quality. I have summarized with a list of suggestions at the end, and hope you find this entry helpful.

A good plan both models the project and communicates it to the stakeholders. In business there is always a need to plan, and it takes project management skills and savvy to develop effective plans with manageable amounts of detail. The basic purpose of the plan, besides modeling the process in time and guiding execution, is to communicate the plan to the stakeholders, a group that goes beyond those who must execute it. The plan also gives a traceability to the project, documenting its history as it helps the project team react to problems and delays that will crop up. If your plan becomes too detailed you may not be able to keep up with the status of the many events. As you read on, I will include descriptions (in italics) of a plan I recently received that violates a lot of the guidelines I describe here, and I will describe some of the problems it imposes on the planner, the readers, and the organization as a result.

How Do You Know a Process/Database/Document is Not Needed?

It seems to be endemic to bureaucracies that they create a lot of worthless, wheel-spinning work.  This can be extremely frustrating if you are a normal person who cares about doing a good job and making a positive difference in whatever you do.  I often find myself digging deeply into a database or document trying to get that last bit of data correct, or to improve it in some way, when suddenly I realize that I am probably the only person who will ever look at that data, and that my work will end up in a file somewhere, probably backed up in umpteen different corporate storage vaultsand servers as well, and will come to a complete zero as far as providing anyone with anything of value.  This leads to my subject: How do you know?

Business Process Standardization in Complex Organizations - Making It Work

Standardization of internal business processes, like any other tool (and a concept or procedure can be viewed as a tool), can be a double-edged sword. It can have many benefits if used properly, or can be harmful if poorly designed or misapplied. One of the great challenges for any organization, especially large ones within which many divisions produce different products for different markets, is knowing when and where to standardize processes, structure, and tools. This entry is intended to address standardization in the most difficult circumstances: large corporations with many divisions, both vertical and horizontal. To clarify, horizontal divisions might consist of a marketing group who define customer needs, a design group who dream up products to meet those needs, an engineering group who design the individual parts of the products and make sure they fit together and produced, a production group who assemble the products in quantity, a logistics group that transports products to customer locations, and a sales group to complete the transactions with customers. Vertical divisions could exist to address parallel product or customer types, or unrelated products that shared other synergies such as a common resource or common technologies. So what do you need to know to use standards effectively?

The Cost/Benefit Ratio and the Acquisition of Information

 

One of the most frequent and frustrating occurrences I see among corporate managers is the failure to understand the cost-benefit ratio of information.  This is the idea that it costs a certain amount to obtain each bit of information, and that cost rises as you approach 100% of the information you might need (or think you need) while the value of each bit of information falls.  To relate it to the Pareto principle, in almost any situation you can get 80% of the information for 20% of the cost, but the other 20% of the information will cost you four times as much.  This is perhaps a bit of an overstatement, but illustrates the concept. 

Maximizing the Effectiveness of Supplier Relationships

In every supplier relationship there are key pieces of information, besides the actual product or service provided, that have to be exchanged for business to be carried out successfully. All too often, requirements or deliverables are not clarified sufficiently, leaving one (usually both) parties short on something - information, money, or end products and services. So what considerations are involved, and how can a manager make sure both organizations get what they need, when they need it, in a way that provides maximum benefit to both?