Business Structures, Systems Often Foul Up Decision Process

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During a recent seminar, an executive asked what share of business problems ``come from (organization) structure, from human-resource practices and from top-management decision making.'' My answer startled him:

- Structure, 50 percent.

- Systems (my addition), 35 percent.

- People (that face I see in the shaving-mirror each morning is a ``person,'' not a ``human resource''), 15 percent.

- Top-management decision making, zero.

Our chiefs are hardly flawless decision makers. And the notion that ``people are everything'' is incontestable. I nonetheless contend that top managers make lousy decisions and people fail to shine largely because burdensome structures and misaligned systems get in the way.

Consider Union Pacific Railroad, whose recent revival may be America's top, unsung corporate success story.

When Chairman Mike Walsh arrived at Union Pacific from Cummins Engine in 1986, he not only looked at market potential (discovering that trucks had captured all recent gains in ground transportation revenue), but also staged 100 meetings around the country with all stripes of company workers. Walsh concluded that the railroad's oportunity was boundless if it could respond to emerging customer needs for timely delivery; he also became convinced that ``we couldn't get from there to here with our current structure.''

Forget experiments: Walsh instead decided to ``push the needle all the way over ... to do everything, on an across-the-board basis.''

In 120 days, the massive operations bureaucracy was reduced to rubble. Eight layers of management between the executive vice president for operations and the local yardmaster were cut to three. Staff positions were vaporized by the hundred. Daily operations were handed over to 30 ``Top Guns'' (superintendents), commanding units compact enough for the boss to know all employees and customers. Similar bombs burst in sales, marketing and finance.

Today, with doubled productivity and profits to show for his trouble, Walsh insists that only an ``all at once'' approach works. While acknowledging the risk of putting everything up for grabs, he argues that organizations are ``capable of taking on more than their leaders give them credit for.''

Changing the structure was just prelude. Revised decision-support systems were essential to aid newly empowered field employees and integrate decision making between functions at the lowest levels. (The most trivial integration had previously occurred in the chairman's office.)

First, Walsh created a ``supply/demand team'' to coordinate marketing/sales and operations activities several levels down. Fully exploiting Union Pacific's matchless, computerized Transportation Control System was another key step. …