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Passion, People and Principles

The Mutidimensional Organization

post # 145 — July 30, 2006 — a Managing, Strategy post

I keep hearing from large, complex firms something like this:

“We have several overall departments in our firm, each with a number of product/service/discipline teams. We also have industry groups dedicated to developing a better knowledge of (and marketing to) specific industries. Recently, we added ‘client teams’ targeted at increasing the level of service we provide to our best clients. And all of these groupings exist in (most, not all) of our many geographic locations.

With all this complexity (discipline, industry, key account, local office or region) a key player could (and does) spend an inordinate amount of time in meetings around here. There has got to be a better way to organize our firm!”

I don’t have all the answers to this complex problem, but here are some rules I would apply in trying to solve it:

Rule 1: Use different levels of organization for different things: lots of little teams for client-level relationships, one large central group for administrative services; it doesn’t all have to be (in fact, can’t be) one clean organization. As long as everybody at any given time (say in a year) knows which team they are on and what their obligations to the team are, you can have teams of many different types and sizes.

Rule 2: Some forms of organization are better than others: Most successful global firms are now organized with the following levels of importance. Most important is the target client industry (or ‘vertical’ as people seem to insist we call it nowadays). Before anything else, most people’s primary affiliation is with an industry team (or two).

Next comes, any specifically targeted client team. Third (now a lot less important) is to organize by produce / service or discipline (i.e. your specific technical specialty.) Firms need to have highly focused an skilled technical people, but few, in most professions and industries, are still organized that way.

Finally, (and this is a huge revolution from the past) geography is the least important band powerful dimension of the complex matrix. Organize (and market) by client or client sector, not by discipline or geography

Rule 3: It’s always better to get people feeling like they are (a) volunteers -self-selected to (b) small (c) mission-oriented teams. Rather than being “assigned to large departments.” (see my blog post from last Wednesday on this

Rule 4. Don’t consume the scarce time of valuable people by assuming that ‘key players’ should manage or be involved in everything – ask where their highest and best use really is. Get key players willing to let other people decide some things even when they’re not there. (This is easier of the firm members share an ideology, impossible if they don’t actually trust each other!)

Rule 5:. Apply all the well-known lessons of meeting management. For example, never have a meeting without a goal, not just an agenda.

Rule 6: Shut down all committees – assign responsibility for a task to an individual, charged with the responsibility of consulting, coaching and getting it done.

Rule 7: Adopt modern meeting techniques (everybody has to stand – no seats)

Rule 8: Use as much use as possible of modern technology tools: internal blogs, wikis and ‘jams’ to get collaboration and participation around issue, without having to meet

Rule 9: Make sure every team leaders’ mandate, objective and accountability is agreed to up-front, and that team leaders receive training in how to be effective coaches.

Rule 10: Pete Friedes’ Rule. (Pete Friedes was CEO of Hewitt associates.)

One practice I had was to remind all those who reported to me that part of their role was to have my role in relation to their group. One way was to say that they should wear a CEO hat in managing their group. That change in perspective is significant. They were not to just be an advocate for their group or their people. They had to have a “whole entity” view. If one or two managers didn’t exhibit that approach and tried to gain advantages by doing things that didn’t serve the whole, I could gently remind them that part of their job was to have a CEO view of their part of the business.

(Peter’s a gentleman, but implicit in his remarks are the implication that if the various group leaders didn’t take that view, they might be asked to play a different role in the firm.)

Rule: 11: Remember, even if you have an ideal structure, there will always be problems with cross-boundary, coordinated behaviors. Beyond structure, you need to examine whether you have the right processes in place, not only better structures. You don’t get people to collaborate better by changes the boxes they’re in

And, finally,

Rule 12: Never forget that it’s always about personalities: getting the right individual people in key managerial roles is the essential lubricant in all of this.


Patrick J. McKenna said:


I believe you’ve identified a critically important issue for large professional service firms which is profoundly complex! I think that this is partially a structural (align the boxes) dilemma, but agree that it is also at its core, a management and firm values issue.

The structural dilemma arises in a large law firm when as a trial lawyer I’m first and foremost a member of the Litigation Department. It is at the Department level that I endeavor to stay current with new developments in Litigation and also participate in continuing education (CLE) activities. Because most of my litigation experience is with employment matters, I am a member of the Labor and Employment Practice Group. My employment practice has a particular focus on retail establishments so I am in the Retail Industry Group. And as I have a good amount of my work with WalMart and McDonalds I am also active on those two Client Teams. Now because McDonalds is essentially a franchise operation, I have a keen interest in the activities of our Franchising Industry Group. And because there is increasingly a trend toward bringing class action suits against large retail establishments . . .

Just last week I was in a meeting with the members of a firm Executive Committee where this subject came up and all of them were bemoaning the number of different groups they each belonged to and subsequent meetings they had to attend each month. In this instance they were counting off their individual commitments and most were in excess of ten group gatherings a month . . . which may be fine if these groups are all producing some kind of results, but we both know (and wrote about in First Among Equals) how often meetings are nothing more than a convenient excuse to have the firm buy you lunch.

This then becomes a management issue and gets further complicated by allowing professionals to be members of any and every different group and team they wish, usually because individual professionals are paranoid of potentially being locked out of some kind of client work that might arise. Implied in my smart-ass remark is the fact that this issue requires one to get some sense of the degree to which partners will embrace change. (Again as we wrote about) would each professional be prepared to limit their involvement, where they devote their discretionary and limited non-billable time, to just one core group?

From a behavioral perspective the virtual (geographically dispersed operations) element should not to be ignored. How do you build trust and collaboration across teams that are divided into three or more geographic locations with professionals who may not really know each other (and especially if they have come together recently as a result of some merger)? My experience is that thinking that technology (videoconferencing) will solve this separation is folly.

At a recent Globalization Conference (at the Indiana Law School) that I spoke at, I was joined by my friend Dr. Karen Sobel Lojeski, who has conducted some fascinating research on the role of virtual distance in global firm success. Karen’s empirical research clearly shows that when virtual distance is high, innovative behavior decreases by 93%, trust among group members is lowered by 83%, job satisfaction, client satisfaction and leadership effectiveness also diminishes dramatically.

This virtual issue manifests itself in a professional firm’s inability to really deliver seamless service across offices. Yes, most professional service firms will hype their ability to provide the same level of service whether you are using their office in Los Angeles or Atlanta; London or Shanghai. Unfortunately, the experience of clients is not congruent with the puffery. All too often what our surveys reveal is clients saying: “We’ve used several of their offices and found the quality to be hit-or-miss. These professionals need to be far better at coordinating their work.”

I do think that all of this suggests that firm management needs to seriously consider conducting an ‘Organizational Review’ to assess their complex organizational structures, but also their management systems and internal processes, and explore better ways to operate effectively across groups and geographies.

posted on July 30, 2006

Bruce Lewin said:

This looks like an intriguing juxtaposition between classic organisational theories and the day to day realities of working in and managing modern organisations

posted on July 30, 2006

David (Maister) said:

Patrick, you and I both know that a great deal of the confusion and problems you describe comes from the ill-defined nature of what, in some of these firms, it means to be part of a “team.”

Firms can successfully have many teams of different kinds, but there needs to be a clear understanding what team membership – implies.

The notion that people (even powerful partners or senior executives) can elect which team to be on, or the level of their particpation, will not work. Ther also needs to be a limit on the number of teams (and the nuber of roles) one person can play.

Part of the solution may lie in thinking of (and formalizing) different levels of team membership.

For example, levels of “Team membership” might include (i) full decision rights – called Team Leadership, or (ii) right to be consulted – called Team Membership or (iii) right to be kept informed – called Team Affiliation. (These are examples only.)

The Litigation partner you talk about might attend every meeting of the WalMart team, but only rceieve information updates on the MacDonalds or Franchising Industry group. He or she could (through negotiation) commit to contributing a certain amount of marketing effort to the Labor Practice Group, but (with agreement) have no marketing obligations (this year) to the Retail Industry Group.

The key would be that each person knows which team(s) they are on this year, and what their rights and obligations (this year) for each team.

As I have written many times, you’ll succeed most by designing your organization from the bottom up – through the voluntary enthusiasms of individuals. My line is: “You’ll be better off with a messy set of teams filled with enthusiasts, than you will with a logically correct set of groups, filled with good citizens.”

posted on July 31, 2006

Mark Baker said:

David, this post is spot on. Having worked in several professional service firms, I have witnessed far too many structural tinkering exercises, instead of focusing on what will make any type of structure successful. Namely, core capabilities that transcend formal structure. Thanks for highlighting these positive practices.

posted on August 1, 2006