In most organizations, On-Boarding is about HR administration and an overview of the company, your department and function. After the required few hours, it’s into the workplace. And may the force be with you! Very little is learned about other departments, the overall business model, and how work flows through the organization
Departments and functions are not standalone businesses, but a link in a long value chain that ends when the product is shipped (or the service is performed) and the customer pays the bill. However, most departments focus more on their own goals and budgets than the customer. And in most cases, such an inward focus drives work behaviours. When the focus is on meeting departmental or functional budgets, it is easy to create strong silos and ignore the overall business value chain, the customer, and revenue.
Silos are great for missiles, but not for organizations.
At one company a few years ago, the results of a silo-focus mindset was made painfully clear when the new CEO asked why the company was performing so badly:
Bill Catucci, new CEO of Canada AT&T, asked senior executives why the company was losing C$1 million per day. He heard the same reply wherever he went. “My department is performing fine. If there’s a problem, it must be caused by someone else.”
The Enterprise Value Chain and the Hand-Off Zone
While the concept of the Enterprise Value Chain was first put forth by Michael Porter with the intent of using it to help better define business strategy, it was soon taken over by technology and used in building ERP and Salesforce automation systems. The real value is to understand that an organization is a connected system and not a collection of separate departments and functions, each with their own internal goals and budgets. The benefit of having an “enterprise value chain” view of a company is in the ability to add value at each step, eliminate waste (usually rework or waiting time), and ensure quick and complete handoff along the chain from department to department. Get the right product to the right customer at the right time and collect payment on time.
And here is where things usually break down. The Hand-Off Zone!
When the handoff is fumbled, incomplete, or not taken seriously, mistakes happen in quality, extra time for waiting and rework is added, and business value is destroyed. It’s as simple as dropping the baton in a relay race. The baton represents the product or service and the runners the various departments or functions in the chain.
How many department leaders or function heads make communications and hand-offs with other departments a priority?
And we wonder why EBITDA is so low! Often it’s the hidden costs of lost time, rework, waiting time, and lack of communication about forecasting that are the real hidden costs incurred by a silo culture.
When was the last time you stressed the importance of the Hand-Off Zone to all employees and then mapped the value chains and the departmental hand-offs?
Want to grow EBITDA? Focus on the Hand-Off Zone!
Written and Posted by: John R. Childress
Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid
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John also writes thriller novels!