Work Levels’ Link to Strategy and Productivity – With an Evidence Base
By Michelle Malay Carter on January 3, 2008
In 2005, I attended a fascinating session led by Julian Fairfield at a Global Organization Design Society?conference.? In it, he discussed the relationship of work levels to strategy.? He presented a historical account of?organizations gaining a competitive edge by shifting their entire business strategy up by one level of complexity.?
Because work levels is an relatively obscure concept, the leaders of these organizations may not have articulated their strategy methodology in such language, but essentially that is how breakaway performance occurs.
One?way to become an industry leader?is to shift from the status quo “either/or” thinking to higher-level?”and” thinking.? For example, the US auto industry in the 1960’s offered EITHER low cost OR quality.? The Japanese raised the bar by raising the complexity level of the strategy by finding a way to offer low cost AND quality.
In my last post, I discussed how another key piece of executive organization design work is to find the appropriate strategic leverage level for individual functions as well.
For the evidenced-based management crowd, Julian Fairfield, a management consultant from Australia, shared the results of?his experiences with raising the highest work level of a function by one, and I’ll share them with you.
| Function | Measure | Gain From Level Shift |
| ?Quality | Scrap rate Defect rate |
?12 – 15%?to?1.8% 1-2%?to 0.000001% |
| ?Purchasing | Cost of purchase | ?10-12 % reduction |
| ?Sales | Sales per mortgage banker Value per mortgage |
?2/week to 5/week $80,000?to?$130,000 |
| ?Maintenance | ?Multi-system plant uptime | ?64%?to?85% |
| ?Marketing | ?Value share | ?7% share gain for 3 years |
| ?Operations | ?Labor and machine productivity | ?100-200% improvement |
Are you convinced that work levels theory and its meta model, Requisite Organization,?is worth investigating?? If you are hungry for more on a Friday, here’s a well-written, relatively short article, Thinking about Organization Strategically,?by Don Fowke that includes Julian’s ideas from that conference within a slightly larger context.
Questions?? Comments?? Ah-ha moments?? Throw me a bone.? It’s been a quiet comment week.
Photo titled,?shifty,?use allowed with attribution to Sarah Jane.
Filed Under Executive Leadership, Organization Design, Requisite Organization, Strategy
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