This could result in an implosion of organisations or companies unless ‘management’ finds a formalised structure and approach to tame the ever growing challenge on hand. I say Frankenstein because, the functional organisation was finessed through deliberation and decision rather than normal organisational evolution. Top managements and CEOs today consciously invest a lot of time, money and energy in fortifying the functional organisation, not because their knowledge or wisdom is required to run the functional silos but more often to remind the functional specialists of enterprise objectives and/or keep settling conflicts between functional satraps. It is a pity that the top management does not devote similar quality time and perseverance to find staying management structures or approach to ‘manage’ these fat functional frankenstein organisations (FFFO).
Why the Functional Organisation
The post WWII ‘industrial era’ saw many entry barriers of businesses crumbling including tariff barriers. Inanimate assets like land & capital, ceased to provide competitive advantage anymore. Even today, one can find them sulking in a corner while the superbrat, the human capital slowly but surely took centre stage. Knowledge creation and accumulation by individuals brought in new barriers flowing from inanimate resources like technology, processes and systems. This is when functional specialists started creeping in and kept feathering their nests for years to come. Functional specialisms ushered in a new era that brought about the supremacy of human capital but resting in an ‘individual’, the Knowledgeable Professional (KP). Gone were the days where a supervisor (Manager) could control the results because of their command and control over their employee’s livelihoods. As Drucker noted, this was an era that belonged to the knowledge worker, and managers had to start learning afresh how to manage such animate or animated resources.
The KP learnt through formal education and practice the explicit knowledge related to the best technology, systems, processes, tools and techniques. The need and value for the KP and the Specialist even gave birth to a new function, HR that spawned an entirely new industry, the Human Resource industry. University education teaching explicit knowledge in both technical domains (Engineers and other sciences) as well as business (CAs, MBAs, etc.) flourished. Individuals with such standardised knowledge and training were sought after by companies as they could be easily groomed in specific (inanimate) nooks of an industrial or business organisation for productive work of existing activities. This was the era of continuous expansion of scale and markets. Other than manufacturing technologies and processes, not much else was changing. Economies of scale, distribution and marketing followed by predatory acquisitions sucked in these KPs before anyone else could. These formally educated individuals, probably formed the mother crystal of a neo-middle class in most industrialised societies with unabated economic growth and globalisation. As they gained more and more traction about their respective functional domains in a continuously competitive industry, they were heralded and traded in the employment market to reach almost elite status in contemporary society.
A couple of decades passed by in different markets and specialisms to cement the arrival of the functional organisation that needed KPs and were more than willing to pay a competitive price for the functional specialist. More and more specialisms kept evolving as organisations metamorphosed from the simplistic fabric of production, sales and accounting to more complex matrices involving Operations, (Production, Quality, Supply-Chain), R&D, Sales & Marketing, Finance & Controlling, HR, IT, etc. Use of computers and software in industry not only reinforced the arrival of the KP, but opened the sluice gates for a plethora of new specialisms to evolve. ERP systems and new communication platforms gave rise to an entirely new IT Services industry with its illegitimate child, the Business Process Outsourcing (BPO) industry following in its wake. Book keeping, records and paper were fast becoming fossilised to be replaced by a data warehousing and analytics obsession.
So much kept happening over the last two or three decades for managements to manage, that they had no option but to resort to ‘control’ as much as they could. Standardisation and Simplification became the buzzwords in business administration. What that led to is a labyrinth of functional domains, a honeycomb of labels and acronyms to separate and identify the different nooks and corners of a complicated organisation comprising multiple specialisms.
The FFFO had arrived!
Simple Accounting had long given way to Finance and that in turn had to provide space for Controlling, a function that came in to reduce the cacophony in financial analysis and reporting. The Standardised ERP systems made SAP a generic name for business process control; Marketing got edged out by R&D for Product Life Cycle Management (PLM) and technical masters had to report to Systems Engineering. Installation of Machines or Commissioning of Projects had to tolerate the birth and supremacy of Project Management. Sales (both B2B & B2C) got relegated to partial obscurity with the advent of e-Service, e-CRM and e-commerce while Engineering wares got distributed into Soft and Hard Wares and even the toddling HR function got segregated into specialisms like Recruitment, L&D, Comp-Ben and Compliance. All that and more needed an army of functional specialists leading to functional silos galore. The trend continues and is getting fatter and deeper by the day. No wonder, top managements got blinded by this blitzkrieg of specialisms flying at their face. By this time, most or all management personnel were coming from business schools that taught diligently and persuasively about the various specialisms the participants needed to master or find delegates for.
Managements did not question why; theirs was to do or die…They just found the specialists!
Knowledge walked in and out of companies steered by the price tag offered by the employer/ buyer. The knowledge worker, the KPs and functional specialists were finally the winners. The winner takes it all, they say. But, nothing lasts forever. Not when growth of enterprises or an economy plateaus or shifts to newer knowledge platforms. It was not so long when the supply side caught up as every player in the competitive game gobbled up the same explicit knowledge through their carriers, the KPs or the experienced ‘Functional Technologists (FTs)’. MBAs, Engineers, Technologists, Chartered Accountants, HR or ERP Specialists, were all taught the same stuff in schools or universities growing like weeds all around the globe. The KPs and the FTs brought in the same specialisms sooner or later to design, plan and execute similar improvements using the same explicit knowledge that they had picked up in schools and at work.
The result was a level playing field with every company and its managers adept in almost the same techniques, processes, systems and efficiency tools as another. Competitive advantage was no more to be found in these ‘inanimate’ components of an enterprise’s activities. Most of what the KPs or FTs could bring in belonged to the ‘simple tasks’ that could be replicated or done by any competitor in the same industry. But the functional organisation was there to stay.
It is getting more and more standardised than ever, just like anything that is allowed to stay on for long including our bellies or habits. If one were to compute how much top management resources (unplanned time, money and energy) gets spent to manage the ever burgeoning conflicts between or due to the fat functional fiefdoms, you would conclude that it must be management inertia or amnesia that prevents deliberate investments in preventing the same. Maybe external observers or facilitators can only draw focus and help managements to find some panacea before it is too late.
- What can be done? Who can save us (the management and the managed)?
- Where does the FFFO fit?
The Middle (general) Manager
The role of middle management has all but vanished with most organisations bordering on becoming a wardrobe of ‘doers’ as specialists. They have all been forced to don the rigid cap of a functional manager.
Middle managers were supposed to get the job done and come up with ideas for improvement, change and push the top management to go for change (happens only when it is radical). They were the guys close to the mill and function as the bridge between the strategic and the operational. The top management could indulge in their strategic pursuits as long as the till depended upon the middle management grinding the mill to a crescendo. Top managers appear to have either reverse metamorphosed into a cocoon sheltered by a temporary shield of material comforts or simply succumbed to the functional Frankenstein’s embrace. What was earlier managed between middle managers at operational levels is more and more hitting the CEO or the executive management. The root cause may lie in the mountain of functional specialisms that has been stashed in and continues to grow in the functional silos. Specialists in their solitary functional confinements continue to preen their feathers, justifiably proud and possessive of their little toys while the kaleidoscopic wonder of the world around just passes by.
Middle Managers in general management roles working in tandem with the Functional Silo Managers is one way to bring back order, efficiency and turn the heat off for the top management!
However, that would mean conscious development of ‘general managers’ from within to manage conflicts, bring specialists and other stakeholders on board with an eye on the Enterprise Objectives and not functional KPIs alone. Such managers also need to be market & technology savvy (related to the enterprise’s business) not specialists, be able to empathise with the animate and animated resources and lead them towards achieving the enterprise objectives. Development of such General Managers cannot be done without the express fiat and approval of the CEO and the board. The FFFO needs to be corrupted with organisational change to identify, develop and empower Middle – General – Managers at the same level of power hierarchy as functional management to generate the best results from functional specialists and their expertise.
Hi-Tech is just Fashion
Enterprises do not succeed or sustain themselves based on Hi-Tech or Low-Tech but on what gives them competitive advantage in the markets they play in. But, Hi-Tech has become fashionable over the last years. Anything fashionable sells at a premium and so do people who get labelled as Techies or Specialists in technology. The idea that we live in a hi-tech world has led to a marked overdependence on the techie or the specialist. Even the technically savvy have been shooed off for specialist trainings resulting in organisational penury in mind-sets that takes ownership of risky propositions, unpopular choices and execution of ideas with high hurdle rates – the necessary ingredients for growth and sustainability.
Functional specialists or technologists are trained to follow the line, the code, the practiced or finessed functional regimen. Their explicit knowledge is about how to manage inanimate resources, not animate(d) resources – KPs, FTs or general managers with a different point of view. These animate(d) resources are those who generate different ideas through different motivations. They are who bring in ‘out of the box’ thinking that could lead to something remarkable, creative or radically different from what or how something has already been done somewhere by somebody in the past. Case studies do not teach how to be creative or risk friendly, they teach people to follow the past logic, be rational not emotional. Everybody talks about the changing world we live in but most choose to go by what or how it has worked in the past. Let us not forget, that a techie without management capability or wisdom is nothing but a well-paid specialist for a certain niche and what he is not trained for is to manage similar or different people with different views, opinions, ideas or trajectories.
Management today is about managing the Who and Why of What has to be done. It is about engaging, explaining and empathising with other ‘individuals’ not merely their specialisms, and finding a way to bring them on board aligned to the enterprise or the organisation’s purpose. Functional management on the other hand is largely about finding the most effective and efficient way the ‘decided upon’ task or objective can be achieved. But, when the decided upon task or objective is not about one function, the decision is not just there until conflicts are overcome, choices are made and all concerned people including different functions have been brought on board for the ‘effective and efficient’ way to ensue. It would be unfair to expect FTs to manage human capital, including techies, and get returns on it. Some may be able to do it very well but that would not have anything do with their functional knowledge, rather with their ‘HaTaCs (Habits of Thinking and Action)’ – how they grew up into individuals or adults since their childhood. Human resources, the only capital that can create continuous competitive advantage, if left to functional specialists with their standardised approaches would only leave an overworked top management and a frustrated HR function.
If Hi-Tech sells to venture capitalists, funding agencies and some starched government bosses, one may enjoy the premiums paid by the techie-buyer, but the premium brings no management competence, instead raises great expectations for the buyer – that the tech-solution being paid for would be ‘managed’ by the representatives who were selling – the top management/ CEO. Once the tech-solution is sold to a buyer, managing the techies and the rest of the organisation that makes the tech-solution a reality for the buyer is the task of management not that of the techies. Where are the roles in today’s FFFOs that are supposed to do this, barring some Project Managers for few approved projects? Why do projects go wrong in time, quality or budget? Is it because the techies didn’t have the tech that was promised? Is it because the PM didn’t know how to plan and operate pert charts or task planning?
The culprit hides under the thick hide called management that is not anymore there to fulfil the tasks like bringing not-agreeing or dis-agreeable people on board, going beyond opinions, views or proposals. Who makes the choices – decisions? Who brings different stakeholders of a project on board? Who negotiates ‘change’ with different stakeholders including the management or customers? Who ensures that the techies work as a Team, for the enterprise, for the larger objectives and not mere functional milestones/ KPIs?
Functionally divided managers cannot take cross-functional decisions, they can only suggest and wait for the others to agree or disagree. The very basis of a functional structure is to give the functions their freedom to follow their silo objectives or KPIs, to invest more and fast into functional expertise. Functional specialists without cognitive awareness or knowledge of managing others with different trajectories than their own either shut up when a cross-functional decision is being debated or walk out of a collective formation if they see a decision not going their way. Functional silos need General Management to take decisions and remain accountable for the cross-functional or enterprise results. This role has been more and more subsumed into the top management or the CEO.
Middle Managers in general management roles working in tandem with the Functional Silo Managers is one way to bring back order, efficiency and turn the heat off for the top management!
Where the FFFO fits!
Despite all the challenges the FFFO presents to management, there are contexts where the functional organisation continues to bear fruit and hence, is there to continue.
Companies that grow through acquisition strategy need their acquired functional expertise and their core expertise to be protected and continuously developed as that remains their major entry barrier. Enterprises that have to create competitive advantage through their functional technology, systems, and processes need their FTs to churn out continuous improvements through their independent functional machines. The FFFO fits perfectly where a single large functional group has to work seamlessly to ‘produce’ the results, be it in service or product delivery or product development.
If one looks at Fig. 1, the improvised Stacey’s Matrix when applied to Growth Management, the FFFO fits very well for Simple Tasks qualified by Stacey as those where there is Agreement from all stakeholders and all is ‘known’ and available to ‘do’ the tasks. Simple Tasks form the majority of daily tasks that has to go on in any organisation. The FFFO is also ideal for the Complicated Tasks on the Certainty axis, where functional expertise is necessary to be deployed to find out the most efficient and effective way of ‘doing’ such tasks.
But, for Complicated Tasks on the Agreement axis or those that ‘could’ be taken up in the zone of Complexity, the FFFO is the game spoiler. Tasks where options have to be created, Choices have to be made, Decision for execution have to be taken or investments have to be made (risks have to be taken) are general management tasks requiring leadership thinking on behalf of the entire organisation. FFFO comes a cropper for such growth creation tasks, while for the Simple and Certainty axis tasks, FFFO fits the glove snugly.
The power of the Fat Functional Frankenstein organisation appears to have relegated Management to merely managing the In-Animate context while the Animate has been simply outsourced to Mr. Maslow’s prison wardens. The ask from the Management today is to manage great, difficult, knowledgeable people who are relatively well paid, are not easy throwaways and have their own firm ideas, beliefs, goals, and frustrations but no time. To bring these great individuals on board to work as a Team and contribute towards remarkable achievements, management needs to have time, patience, vision and wisdom on their side.
If the CEO or the board has to run the day to day management – networking, visioning, choices, decisions, execution on time & quality – of an enterprise, it has to be a very small organisation or they have to be extremely clever yet very hard working wise(mave)ricks. There are always a few to fill up case studies of the future but, not enough to feed the management industry. Unless the CEO creates space in the organisational structure for non-specialists who can also dream of the future, the extraordinary or the different, most would be scrambling somehow to finish a task, a project, a plan – an assignment.
Isn’t that school boyish?
Busy specialists forced to work as managers have no time to dream of the future. They can only pedal harder their habits that makes them frantic, intensely occupied, stressed and cynical. The FFFO is growing in size and casting an ever increasing shadow over the fertile green patches of an organisation. It may not be long before it leaves behind a burnt garden bereft of any life for resurrection.