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
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. …