Productivity in an Age of Disruption

The more client time I spend in the Productivity Zone, the more I have come to see it as a two-layer ecosystem along the following lines:

In this framework, there is a bedrock layer provided by systems that are designed to maintain state, and there is an overlay action layer provided by programs that are designed to change state. These two missions are so different as to warrant separate governance models top to bottom. Unfortunately, few Productivity Zone orgs adopt this practice. The end result is a mixture of systems and programs in which systems are constantly struggling to maintain state while programs, despite best intentions, never really change state.  

The need to keep these two capabilities separate can be summarized by a set of distinctions outlined in the table below:

Both capability sets are fundamental to enterprise success, and all organizations in the Productivity Zone, be they in finance, HR, IT, marketing, customer success, security, facilities, procurement, quality, or other, are expected to deliver on both sides of this ledger. But how exactly should one organize and manage to do so?

The first step is to appoint a head of systems whose sole charter is to take responsibility for the left-hand column above. The playbook here is organized by functions, each charged to recruit people with expertise in the systems they deploy and maintain. Decision rights over what goes into those systems are held by the delivery team who are held accountable by a CFO or COO who is the sponsor and funder of their work. Investments in new systems and systems maintenance are budgeted annually out of corporate overhead and are not charged back to consuming organizations. Think of services like facilities, email, and security, as well as functions like finance, HR, and quality. 

Programs are an entirely different matter. Each one represents a combined effort between a consuming organization that wants to change state and a delivery organization that can help enable that change. Here the playbook is organized around a Program Management Office (PMO), that is governed by a “four-in-a-box” structure as follows:

In this model, while the business sponsor is the ultimate funder of the program, the function executive actually gets the budget for delivering the program.  Thus, both organizations share decision rights in the governance of the program. For day-to-day operations, those decision rights are delegated to leaders involved in executing the program, each of whom reports directly to their respective executive. The project manager is responsible for delivering the funded effort on time, on spec, and on budget. The program manager is responsible for leading the change in state inside the consuming org. The program is not done until that change has been achieved and verified.

Managing shared decision rights can be challenging as the consuming org wants something highly customized whereas the delivery org wants to reinforce repeatable best practices wherever it can. There is an escalation path to the executive layer if needed, but this is one place where solving it on the ground is by far the best practice (not to mention great career development for anyone with executive aspirations). 

Programs are also funded during the annual budgeting cycle, but the process is very different from funding systems. It is organized around individually sponsored and funded program contracts, along the following lines:

No program is funded without a contract, and contract performance is tracked separately, thereby ensuring accountability both for achieving state as well as for not redirecting program budgets to other purposes. 

There are still a myriad of challenges to address in any Productivity Zone function, for there is never enough budget, time, or talent to do all that needs to be done. But organizing around the systems/programs distinction ensures that what resources there are will be used to greatest effect.

That’s what I think. What do you think?

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