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The Six Disciplines Blog


Thursday, August 25, 2016

Having Organizational Performance Problems? The Problem Is NOT Lack of Resource

There’s a commonly-held premise that the problem for most organizations is not having enough resource. It’s not a lack of resource. The problem is how you allocate it.

In this short video, we’ll walk you through the challenges, and what to do about them.

The transcript for this video is displayed below for your convenience.

“I would like to toss out this premise that the problem for most organizations is not having enough resource. It’s not a lack of resource. The problem is how you allocate it.

Let’s take a look at this graphic, and I’ll explain a little more what I mean by this. When you craft strategy, you start creating a conflict and here’s the conflict. If you look at the lower line on this graph, that represents the trend of your business or your organization, some sales trend or earnings trend or whatever way you look at the key metric for success in your business. If you keep doing the same thing you’ve been doing, this is what that trend represents, if you analyze all the things going on. Now the trend could be flat, could be declining, it could be growing, depending on the industry you’re in.

The second line, the upper line, represents what you would like to happen to achieve your strategic vision. So if you think out 10 years, you want to have a certain market share or be a certain size or whatever your vision is, the upper line says what we’d like to happen, the lower line says, “Here’s what’s going to happen if we keep doing what we’ve been doing.” It sets up the question about “We’ve got to close this gap.” How do we close this gap?

And that leads to this diagram. Most organizations think of themselves as having a certain amount of resource. That’s that box on the left. And if you take that resource, most organizations think that they’re using all of it, pretty much, to run the business or pretty close to all of it, and then they lay on top of it, “Well, here, we need some other things to close the gap, the thing that the strategy just said we needed to do.” And so you end up with more to do than you can do because you’re trying to run the business and change it at the same time.

This is the way it looks to most organizations, so the natural thinking is, “Well, I need more resource to do this.” However, research shows that, in most organizations and in my experience in working with hundreds of organizations, it’s not true. And the research shows that in the typical organization, about 35%, 37% of all activities are not really connected to the purpose of the organization, to the strategy. The question is, where is it? Where do you find that wasted activity? And it’s not easy to find.

But if you assume it’s there, one approach for addressing it is to displace it. Since you can’t find it, you take a different strategy, which is to decide what’s really critical for your new strategy, and you make that important enough that it pushes aside the lower priority items. We call this the displacement approach in managing your resources.”

THE Resource to Improve Your Organization's Performance

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Since 2005, the Six Disciplines blog offers posts about performance excellence, strategy execution, business coaching, leadership development, innovation, and business process improvement. This blog has received prestigious awards for leadership and management and has been syndicated by several major media sources.