When Rummler and Brache look at the organizational level of performance, they have a bias. An organization is a system, with inputs that it processes to produce outputs. And an organization is made up of systems — at every level, you can (or should) identify the inputs, processes, and outputs that occur.
The organizational must develop goals, design functions, and manage performance in order to succeed.
We know that organizations don’t collapse immediately — some, like General Motors, keep lumbering along almost on sheer inertia. Without those strategic goals at the organizational level, the functional areas will come up with goals of their own — goals that work for them, but perhaps not for the organization as a whole.
When I went to work for GE Information Services, the company’s main business was “remote computer timesharing” — providing mainframe-based computing power to a range of customers. I learned that we had two main groups — the Mark III service, running on a proprietary operating system on Honeywell computers, and the Mark 3000 service, running on IBM mainframes.
There was endless rivalry between the two groups. Mark 3000 began as an effort to serve customers insisting on IBM compatibility. GEIS had been in business for a long time, though, and had powerful capabilities on the Mark III service. Tech folks were certain they could deliver high-quality service without any need for IBM mainframes.
Sometimes this led not to creative competition but to the groups working at cross-purposes. An overemphasis on the mainframe (or on two different mainframe worlds) led the company for a time to overlook a transformation in the marketplace — the personal computer.
I remember Talmudic debates about “3270 simulation” versus “3270 emulation” — ways to make a PC act like a mainframe terminal. I also remember people scoffing at early efforts to create user-friend, PC-based front ends to mainframe systems. The attitude seemed to be, “They oughta wanna learn the commands.”
I see the Mark III and Mark 3000 fuctions as a digital version of manufacturing lines, like “desktop” and “laptop,” or “sedan” and “pickup truck.” Their decisions didn’t seem to incorporate much information from marketing or sales (sales tended to see itself as an order-taker, renewing contracts that had been renewed many times before), nor from customers, nor from technological areas outside the company.
Rummler and Brache:
When the focus is placed on the internal and external customer-supplier relationships, the standard organization chart becomes less important. However, the reporting hierarchy can facilitate or impede the flow of work.
To take another example: early in my career, I was an Amtrak ticket agent in Detroit. After a rocky start, Amtrak began putting new passenger cars into service, replacing a “legacy fleet” that looked as though it had been purchases at the railroad version of a flea market.
Area management arranged for some first-class service on the Detroit-Chicago line. As with the airlines, first class was more comfortable, less crowded, with more attentive service. Unfortunately, it was more than double the coach price.
Marketing insisted that the ticket agents ask each coach passenger “coach or first class?” The goal was to promote the service (and, I suppose, enhance revenue). The reality is that the only people willing to pay more than double the rail fare were rail buffs — and very few of them were taking the five-and-a-half-hour trip to Chicago.
The net effect of this was to slow down ticketing, as agents went though explanations for people who ended up saying, “For twice as much money? No way!”
The point isn’t that first class was a dumb idea — it was, and is, very popular in high-volume areas like the New York – Washington route. But on a six-hour trip where the speed never went over 60, and often fell below 40, the value proposition seemed much more proposition than value.
And training — as in, “selling skills for ticket agents,” say, or “providing superior first-class service” for onboard employees — was not going to change that basic fact.