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TRAINING 1
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that is fundamentally flawed. Theysee the business through a crackedlens.There is a better way to look at anorganization and to run one. It’scalled process management. Com-panies including IBM, Ford, Boe-ing, GTE, Motorola, McDonnellDouglas and AT&T are using it toimprove the way they do all sorts of things.Before we can judge the virtuesof this new set of lenses, however,we have to see what the world lookslike through the glasses we’re wear-ing now.
The Vertical View
Ask managers to draw the pic-tures of their companies. You’ll al-most always get something thatlooks like the traditional organiza-tion chart depicted in Figure 1. Thedrawing may have more tiers, moreboxes and different labels, but whatit will show is the fact that each de-partment or business unit has itsown management hierarchy.As a picture of a business, what’smissing in Figure 1? Well, it doesn’t
MANAGINGTHE WHITE SPACE
 By Geary A. Rummler and Alan P. Brache
What is‘process management’and what’sso revolutionaryabout it?
That sounds like a line of boiler-plate from a screed on “getting closeto your customer,” doesn’t it? Butwe’re talking about something else.The sermon on knowing thy cus-tomer as thyself is a good and wor-thy one. And it has been deliveredso loudly and so often for the pastseveral years that many companieshave taken it to heart. A lot of man-agers—the good ones—now knowquite a bit about their customers.Spurred by the simultaneous pound-ing on the themes of “back to ba-sics” and “stick to the knitting,”many also understand their ownproducts or services. Some evenknow the competition pretty well.Yet here we are announcing thatmangers don’t understand theirbusiness. What we mean is this:They don’t understand, at a suffi-cient level of detail, how their com-panies get products developed,made, sold and distributed.We believe the main reason forthis is that most managers view theirorganizations from a perspectiven awful lot of managers don’tunderstand their business.
A
 
2 TRAINING 
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an “optimized” function. But infact, one unit’s stellar performanceat making its numbers can hinderthe organization’s overall perform-ance.For example, the sales and mar-keting unit can achieve its goals andbecome a corporate hero by sellinglots of products. If those productscan’t be designed or delivered onschedule or at a profit—well, that'sa problem for R&D or manufactur-ing or distribution; sales did its job.R&D can look good by designingtechnically sophisticated products.They can’t be sold? That’s market-ing’s headache. Can’t be made at aprofit? That’s manufacturing’sproblem. And so it goes.Enter the senior manager whooversees these units. This executivegoes to the manager of manufactur-ing and demands to know whymanufacturing failed to producesomething on time or up to specifi-cations. The predictable response:“It’s not our fault, its those so-and-so’s in R&D.This phenomenon was describedwonderfully in a 1987
Forbes
magazine interview with GeneralMotors’ CEO Roger Smith. In re-gard to a reorganization plan Smithis explaining,
Forbes
asks.“Couldn’t you just call in the boss of 
R&D (Product Development) Manufacturing Marketing & Sales
side and everyone else’s affairs out.These silos prevent interdepart-mental issues from being resolvedbetween peers at low and middlelevels. Cross-functional concerns(matters of scheduling or accuracy,for instance, that involve two ormore departments) are pushed to thehighest level. The manager at thetop of one silo discusses the issuewith a counterpart at the top of an-other. Then both bosses pass theirdecision back down to the levels atwhich the work gets done. The siloculture thus forces managers to re-solve every mundane issue thatarises, taking their time away fromhigher-priority concerns involvingcustomers or competitors. Lower-level people, who could be handlingthese issues, take less responsibilityfor results. They come to think of themselves as mere drones.And that’s not the worst-casescenario. Sometimes departmentheads are so at odds that cross-func-tional issues don’t get resolved atall. Then you start to hear of things“falling through the cracks” or dis-appearing into a black hole.”As each unit tries to achieve itsindividual goals, it gets better andbetter at “making it numbers.”When it gets very good at this, it ishailed as a start, a peak performer,show the products or services weprovide. It leaves out the customerswe serve. And it gives us no sense of the work flow through which wedevelop, produce and deliver ourproducts. In short, the familiar or-ganization chart doesn’t show whatwe do, for whom we do it or how wedo it. Other than that, it’s a greatpicture of a business.Hold on, you say. An organiza-tion chart isn’t supposed to showthose things.Fine. So where’s the picture of the business that
does
show thosethings? And why does no one everdraw it?The organization chart is a valu-able administrative convenience fortwo reason: It shows which peoplehave been grouped together for op-erating efficiency and it shows re-porting relationships. But it mustnot be confused with the “what, whyand how” of the business. Unfortu-nately, the two are confused all thetime. And when that happens, it isthe organization chart, not the busi-ness, that gets managed.The trouble is, when managerssee their organizations as a collec-tion of vertical functions (marketinghere, production there, accountingdown the hall), they manager ac-cordingly. More often than not, asenior manager who oversees sev-eral functions will manage them onan individual basis. Goals are set foreach unit separately. Meetings be-tween units are limited to activityreports: Unit A learns only that UnitB processed 603 invoices lastmonth, which was eight more thanduring the same month last year, andso on.In this environment, managers of individual departments tend to per-ceive other functions as enemies,rather than as partners in the battleagainst competition. “Silos” arebuilt around departments: tall,thick, windowless structures thatkeep each department’s affairs in-
FIGURE 1Traditional (Vertical) View of an Organization
 
TRAINING 3 
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that cut across functional bound-aries. Finally, it shows the inter-nal customer-supplier relation-ships through which products andservices are produced; that is, itshows us that function B is a cus-tomer of function A and a sup-plier of function C.
Critical interfaces, which occur in the ‘white space’ on an organization chart, become visiblein the horizontal view.
Fisher Body and say ‘If I get onemore complaint about your divi-sion, you and the top three guys arefinished?’”Smith’s answer sheds light onwhy GM and other corporate behe-moths ran into so much trouble dur-ing the past decade against competi-tors such as the Japanese: “OK, wecould do that, and it’s the way weused to do it. But he [the Fisher man]says, ‘Wait a minute. I did my job.My job was to fabricate a steel door,and I made a steel door, and Ishipped it to GMAD. And it’sGMAD’s fault.’ So you go over tothe GMAD guy and say: ‘Listen,one more lousy door and you’refired.’ He says, ‘Wait a minute, Itook what Fisher gave me and thecar division’s specs and I put themtogether, so it’s not my fault.’“So, you get the Chevrolet guy,and you say, ‘One more lousy doorand…’ ‘Wait a minute,’ he says.‘All I got is what GMAD made.’ Sopretty soon you’re back to the Fisherguy, and all you are doing is runningaround in great big circles.”What Smith just described is asilo culture. In the good old daysof sellers' markets, it didn’t mattermuch. A company could introduceproducts at its own pace, meet onlyits internal quality goals, and setprices that guaranteed adequatemargins. There were no seriousconsequences to the evolution of functional silos. Those days areover. Most companies today haveto compete in a buyer’s market.We need a different way to look at, think about and manage organi-zations.
The Horizontal View
Figure 2 illustrates a horizontalview—a “systems” view—of acompany. It has some marked ad-vantages over the traditional orga-nization chart. For starters, it in-cludes those three missing ingredi-ents: the customer, the product andthe flow of work.As for that flow of work, no-tice that the horizontal view helpsus to see how work actually getsdone, which is through processesThis brings us to the premise be-hind process management. Thegreatest opportunities for perform-ance improvement often lie in thefunctional interfaces—those pointsat which a baton is being passedfrom one department to another.For example: the passing of newproduct ideas from marketing to re-search and development; the hand-off of a new product from R&D to
ReceivingSystem/ MarketResearchMfg.PlantMfg.PlantMfg.PlantMarketing
R&D (Product Development) Manufacturing Marketing & SalesSales
ProductSpecsNew Product IdeasOrdersProductsOrdersCallsPromotionNeedsProductDevelop-mentProductionSpecs
FIGURE 2Systems (Horizontal) View of an Organization
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