Employees First, Customers Second (Part 3)

By guest author Vineet Nayar

[The miniseries from Vineet Nayar’s book Employees First, Customers Second: Turning Conventional Management Upside Down continues with an excerpt from the third stage of the EFCS process: Inverting the Organizational Pyramid. Nayar is the vice chairman and CEO of HCL Technologies. His book is available from Harvard Business Press; on Amazon, Powell’s Books, and Flipkart; and in bookstores.]

Inverting the Organizational Pyramid: Building a Structure for Change

Even when people see the need for change, after a culture of trust has been created, and employees have started taking actions towards positive change, structural flaws can still get in the way of optimal results and it’s important to remember that the success of a single initiative is not the same as sustainable change. HCLT and many other companies around the world try to conduct new-age business with centuries-old structures—hierarchies and matrixes that many thought leaders consider obsolete.

At HCLT, our biggest problem with the organization structure was that it did not support the people in what we call the value zone: the place where value is truly created for customers. In a services company in a knowledge economy; the value zone is often buried deep inside the hierarchy and the people who create the most value for the company work there. Paradoxically, these value-creators are almost always accountable to bosses and managers—typically located at the top of the pyramid or in the so-called enabling functions—who do not directly contribute to the value zone. But, because these “superiors” hold formal authority and the value-creators are accountable to them, they occupy a zone of power.

So, to shift our focus to the value zone, we turned the organization upside down and made management and managers, including those in the enabling functions (such as human resources, finance, training, and others) accountable to those who create value, not just the other way around. Without making this structural shifts, change is much more difficult, if not impossible. And only by making adjustments to the organizational structure does the change become sustainable and able to outlast the leader who initiated the transformation. [This chapter] gives important details about inverting the organizational pyramid. […]

A Lesson from the Poultry Farm

During my school years, I took a summer job on a poultry farm near my home. I worked with a number of friends, and our job was to gather eggs from the henhouses, which were on one side of the farm, and carry them to the storage sheds on the other side. The poultry manager gave us detailed instructions about how we were to do the job. Each of us would gather a basket of eggs in one of the henhouses, carry it to one of the storage sheds, then go back for more, crisscrossing the farmyard until all the eggs had been collected and deposited in the storage sheds.

We followed orders for a day or two. Then, being pretty smart young kids, we decided this egg-handling methodology had its limitations. It was slow, boring, and inefficient. We got paid once the job was done, not by number of hours worked. If we could deliver all the eggs in a shorter time, we could get off work earlier and spend our free time playing soccer or doing whatever else we liked.

We started experimenting. What if we carried more eggs per handful? What if we used one of the henhouses as a central depot, collecting all the eggs there first? What if we divided the labor—some of the workers collecting while others delivered?

After about two weeks, […] it became clear that each method had its advantages and disadvantages, but none of them really made much difference. We were still carrying eggs in the same way that people had been carrying eggs for decades, centuries, maybe even millennia. […]

On my last day of work that summer, I had a revelation about that job. I realized that tinkering with the process of egg carrying or just trying harder would never change the fundamental nature of the work or the operation of the poultry farm. We were stuck in an archaic structure, and until that changed, nothing else would or could change.

The same was true of our experiments at HCLT […] We had tinkered with the process and put ourselves in the mood for change, but we were still carrying our eggs in pretty much the same way we always had.

[Vineet goes on to describe how, by looking at four trends in information technology—IT becoming more central to business strategy; IT was more valued when it developed technologies to improve processes; increased complexity in customers’ businesses meant customers had to focus on implementation and execution; and system integrators were under increased pressure to perform better—HCLT restructured itself.]

This segment is part 3 in the series : Employees First, Customers Second
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