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Sensing a Need to Operate Differently

This excerpt from "The Corporate Lattice," by Cathy Benko and Molly Anderson, highlights some of the work Pitney Bowes has done to transform its workforce operations and culture.

Monday, November 1, 2010
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This article accompanies Lattice vs. Ladder

"We're really having to learn how to change our work processes so that you can have people halfway around the globe working on the same thing," says Mike Davis, senior vice president of global human resources at General Mills. "Our global teams are telling us the work process has to change, because if team members have to wait to check in on every step, they lose a whole day waiting for replies on check-ins across time zones."

Pitney Bowes has adopted these concepts as the underpinnings of its transformation from a product company selling postage meters to a solutions company helping customers manage their "mailstream." For most of its history (more than one hundred years), the company manufactured and serviced postage machines.

Its workforce was highly segregated among employees in factories, customer service, and management. Most factory workers performed a single task in the line, usually from memory. Their work was repetitive and routine.

By the mid-1990s, newly appointed (and since retired) CEO Mike Critelli had intensified the company's focus on mailstream management, with greater investments in technology to produce digital mail machines customized to customer specifications.

This shift changed the "how" of the company's work, because building and servicing the new machines involved a high level of interaction with customers and was technically more complicated than in the past.

The transformation required a fundamental change in the company's operations, starting at the factory floor and moving all the way to the top. Factory workers were rearranged into self-directed teams that read blueprints and did troubleshooting in real time. Factory foremen learned how to be coaches who inspired teams to perform, no longer relying on a command-and-control approach. Engineers and the sales force, and eventually even the finance and marketing departments, switched from a task-based view to a results-driven, team-based one.

Pitney Bowes is not alone in sensing the need to operate differently. A number of companies have adopted flexible teams as their basic operating unit. Companies use cross-functional project teams that form and disband as needed instead of having tasks move serially from department to department. "As companies become more global enterprises, careers are increasingly being built on demonstrating skills at marshaling resources of more temporary teams than permanent structures," says General Mills' Davis.

Notes Pfizer's Tanya Clemons, "It stands to reason that being continually adaptive in response to the ever-changing marketplace requires three things: more autonomy on the part of the individual, greater global collaboration among virtual team members, and a vast proliferation of project-based work."

Indeed, the average number of projects has increased fortyfold in the past two decades. The United States had almost 8 million project workers in 2006, with 1.2 million net job openings in project-based industries likely each year until 2016.

To put it in monetary terms, the Project Management Institute estimates that approximately one-fifth of global GDP spending, or about $12 trillion, is now spent on fixed-capital projects such as power

plants and factories.

For most of the twentieth century, companies were organized in either functional silos or individual business units (or both). As an early sign of the emerging lattice, starting in the 1970s companies began to adopt a matrix organizational structure to increase information sharing and speed the assignment of resources to new areas.

In contrast to a functional organization, where an employee has one manager and is a member of one department like sales or production, employees in a matrix structure often have one "solid line" and other "dotted line" bosses. For example, a salesperson might have one reporting line up to the head of sales and a second reporting line to the regional manager. People work in cross-functional teams by the very design of the matrix structure.

Matrix organizations bring with them their own set of challenges -- including, at times, employees' receiving conflicting directions from multiple bosses, a lack of single-point accountability for success or failure, and political infighting over resources. But matrices provide compelling benefits too. They promote collaborative working styles and enable business decisions that consider multiple perspectives such as function, product, customer, and geography.

Lattice organizations foster these positive behaviors along horizontal structures, bringing the best resources and information to bear on intersecting issues and opportunities. For example, widely dispersed virtual teams -- often with a variety of experts based in different global locations -- are delivering strong results.

Fifty-four global teams studied in thirty-one companies, including Intel, Textronic, and Royal Dutch/Shell, were found to be not only more productive but also more innovative than face-to-face teams.

According to the study, "Far-flung global teams make decisions faster with more input from others and develop policies that are implemented worldwide with fewer problems than conventional teams meeting face-to-face often and regularly." Teams find productive ways to communicate, partner together, and tap in to the power of diversity.

As we detail in the next chapter, collaboration is an important enabler of dispersed ways of working. In addition to capitalizing on the best qualities of matrix reporting structures and far-flung team configurations, lattice organizations are going even further along the path of job redesign.

Just as an easily reconfigurable production system is a success factor for mass product customization, so too is the design of modularized jobs -- unbundling activities that make up traditional jobs so that work can be allocated in a greater variety of ways among team members, increasing opportunities for efficiency, learning, and fit with life -- a key element of the lattice organization.

Static, task-based job descriptions are being replaced with competency-based descriptions to provide more adaptability in how work is divvied up and accomplished from one day to the next. Job modularization is also enabled by team-based control and decision making about how projects get done and who is responsible for which piece.

 

The film business is an example of a highly adaptable and fluid work structure. The entire industry is project based, with teams composed of "diversely skilled members who work for a limited period to create custom and complex products or services."

One study showed that only 19 percent of people in the industry were employed exclusively by one firm. The rest worked as subcontractors and had "boundaryless careers." Team members decide among themselves how to accomplish the tasks at hand, customizing the fit between work assignments and individual abilities and circumstances. The needs of the business and the needs of the individual are matched in real time.

The lattice organization rethinks who does what, with an eye toward making movement across and within teams as seamless as possible. Given the highly contextual nature of how and what work gets done, a company's task is to provide teams with the tools needed to manage the right match between the company's needs, the capabilities of team members, their career-life needs, and the career-enhancing developmental opportunities that projects afford.

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"Work units have to collectively make these decisions, and they have to make them based both on the needs of the work and the needs of the employees," explains Lotte Bailyn, a professor at the MIT Sloan School of Management.

"It can't be done individually. It has to be done collectively by the people who work interdependently. It needs to involve people in decisions about how to get a product or service out productively and address the needs they have in conjunction with achieving this result."

One example of the approach is physicians, who among the elite professions have the highest proportion of people working fewer than thirty-five hours a week beginning in their late thirties. Doctors' ability to work part-time later on seems to be a payoff for the grueling hours of residency early in their careers, and it appears to ease transitions between periods of working and not working.

Economist Claudia Goldin and her colleagues at Harvard University found that doctors move in and out of the labor force, interrupting their careers for a year or more at a time, with far less financial penalty than in other professions, such as financial services and law.

Such career-life transitions are possible because of a restructuring of the way work is done in many medical specialties. Instead of going solo in individual practices, doctors are often employed in group practices, which function as teams that jointly configure their schedules to provide high levels of accessibility and quality care for patients at a sustainable pace and workload for doctors.

In obstetrics, for instance, doctors in group practices take turns handling the demanding times they need to be on call for births and sometimes rotate the patients so that women get to know every doctor who might eventually deliver their babies. Medical practices like these have, surprisingly for the nature of the work, turned out to be models of group work and flexibility.

Redesigning jobs so that people can more readily move from one job to another greatly enables career-life fit, but it also delivers on the career-enhancing developmental opportunities people seek. A large-scale study of functional flexibility -- conducted at thirty-six hundred Dutch companies employing more than eleven thousand people in a variety of industries -- showed "a positive relationship between functional flexibility and skills development," in large part because people felt they had "greater autonomy in directing their skills, involvement in decision-making, and access to training."

In another example, three health care organizations in the United Kingdom changed their approach to staffing so that many of their people could step into several different roles, depending on the need for workers at any point in time. These organizations found that the arrangement created increased opportunities for staff development -- a competitive advantage in a tight labor market.

As market uncertainties rise, companies look for options to deploy their people. By designing jobs with an eye toward development of transferable skills, companies gain adaptability.

 

Rethinking work creates a nimble organization that can operate with efficiency and effectiveness. In the case of Pitney Bowes, the work redesign led the entire organization to be more customer-focused and ultimately more profitable than before.

According to Amy Titus, a former BearingPoint consultant who was involved in the Pitney Bowes transformation, the shift resulted in "everyone in the chain adding more value, in part because they understood customer needs, and in part because they were much more engaged in their work."

Reprinted by permission of Harvard Business Review Press. Excerpted from The Corporate Lattice by Cathy Benko and Molly Anderson. Copyright 2010 Deloitte Development , LLC. All rights reserved.

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