Business Chaos & Digital Order
It has happened before, but never like this…
The prevailing business model has cycled between order and chaos many times before. In the 1960’s the first wave of computing brought order to the mountains of analog data within corporations. The era of ERPs calmed the disorder of multiple disconnected functional systems. And now, chaos is back, big time.
Look around; your organization is in chaos.
Signs of disorder surround you: multiple sources of data truth, uncounted numbers of non-prioritized projects operating independently, multiple apps that don’t link up, and millions of hours wasted on email gone amuck and bad meetings. Worse, much of this disarray is invisible:
Important processes are conducted manually using e-mail, instant messaging and tracked with isolated spreadsheets.
Critical files are scattered everywhere, existing on shared folders, network drives, and user desktops.
Single purpose apps and legacy system isolate teams and create silos of essential data.
You don’t see the chaos because you think this mess is inevitable, an insurmountable problem, the price of doing business, so it’s accepted as business as usual.
But it’s not inescapable, but it is extraordinarily expensive and wasteful.
Three Costs Of Business Chaos Let’s calculate just three costs of workplace chaos.
1. Cost Of Searching, Coordinating, & Reporting According to McKinsey & Company, IDC, and Interact, knowledge workers waste 30% of their time doing the following:
Searching for the latest version of a document (or record)
Coordinating tasks with employees, partners, and customers by emailing and instant messaging
Reporting status of past activities via spreadsheets and meetings (virtual or otherwise)
All this unproductive activity adds no value to the business or customers. If we made a value-stream map of these pervasive activities, the boxes would reveal no added value.
The average knowledge worker in the US across all industries is paid about $80,000/year. This means $24,000 per employee per year is wasted.
A company of 1,000 people wastes $24M every year.
For employers with 50,000 people the cost is almost $1.2B/year. The cost to the US economy is $1.47 Trillion annually. Even worse, this waste leads to investing in more systems and apps you don’t need.
2. Cost Of Project-itis Nearly all organizations launch hundreds of disconnected process improvement projects, of which 75% fail, according to John Kotter of Harvard Business School (HBS). Project fragmentation consumes countless employee hours that produce small benefits. And many of these projects are redundant or in conflict with other initiatives. And each project requires human and financial resources.
The CEO of a $1B Fortune 100 company recently discovered that none of the leaders knew how many projects were active in the organization. It took one month to inventory all the projects. They discovered 1,400 in-flight projects. 50% were redundant, and most projects failed.
1,400 projects, 4 team members each, spending 6 hours/week on each project, 8 weeks average project duration, $80,000 average salary, and a 70% failure rate. Of the $10.8M in salaries spend on projects, $7.5M is wasted ($5,376/project).
In the face of this waste, what do most organizations do? Launch more projects of course.
3. Cost Of Meeting Madness Most employees waste 31 hours per month of unproductive time attending 62 meetings (a month), according to research studies by University of California, Microsoft Research, BBC News, and Salary.com. That equals $1,240/employee/month of unproductive costs. This means that a 50,000-employee company wastes another $744M annually.
All told, just these 3 costs of chaos total $1.9B for a 50,000-employee company. And for a 100-employee firm the cost is $3.9M annually ($39,000/employee).
This digital chaos exists because it’s hidden and because no one in your organization is actually tracking the costs or is held responsible for solving the problem. These costs live in organizational orphans, parts of the organization that are un-owned, unmeasured, and unloved.
No person’s incentive compensation is on the line here, despite the massive waste of time, energy and real cost.
Chaos Makes Robots Look Good Given these huge productivity drains, no wonder automation looks attractive. Robots don’t go to meetings or endlessly look for the latest version of a document, pour through emails, or manually build spreadsheets. The robots (or automation software) can collect and output information instantly (if the APIs are right).
Perhaps the only reason robots and automation look more productive is because we don’t burden robots with time wasters like searching for the latest file, coordinating with others, or sitting in status meetings reviewing spreadsheets. Take 30% of the robots’ time off-line and they wouldn’t look so productive either.
So how can organizations eliminate the cost & chaos in the digital workspace?
Solution: The Organizational Operating System (OOS) Close your eyes and imagine that you are looking at a dashboard containing a exact digital replica of your organization, a model that depicts every process, project, app and system, as well as every participant in your company and those of your trading partners. With this model, you can focus in to see and control those critical processes that make the organization productive. Then you can pull back and see your entire organization as a whole.
A control system with these capabilities would finally allow you to see how all your organizational elements fit together.
The Organizational OS could be used to automatically manage projects and processes in a manner that’s linked to each balance scorecard “perspective”. For example, processes related to the “learning and growth” or “financial” perspectives could automatically calculate performance against measurements and targets.
This Is Already Real: Two Examples The OOS imagined here is actually a reality today, and being used by forward thinking organizations to outperform their competition with greater speed of execution, lower costs, higher quality and compliance.
Implementations typically start by automating one process at a time, and then expand to include additional business processes.
To make the idea of an OOS more understandable, here are two examples where business success depended on a highly functional ecosystem of organizations, apps/systems, and privately shared data.
The first involves a cyber security software firm that sells its products and services through channel partners. Implementations require the orchestration of processes, apps, and data across several organizations, including the customers. The security firm used an organization operating system (OOS) to automate workflows, integrate data and apps, and synchronize privately share information across multiple organizations. The results included flawless implementations and increasing sales through an expanding network of happy channel partners.
The second is a mid-sized investment management firm that was struggling to improve internal operations that depended on coordinating services internally and with several external service providers. Changing domestic and international regulations also hindered business growth. They needed a way to increase operational and reporting efficiency, protect sensitive data across a network of providers, guarantee compliance, and integrate information from multiple data silos and apps. They used an organizational operating system (OOS) to synchronize and integrate their complex workflows and data-flows internally and with a network of service providers.
Disorder is expensive. Order supports profitability and growth.
But this means reimagining your entire organization as a digital enterprise that includes every single element within it.
You choose, analog chaos or digital success. Learn more about how an Organizational Operating System (OOS) can help your company.