Organization Chart

Organization Chart
DOES show: reporting relationships
DOES NOW show:
products/services provided
customers served
work flows
ways in which products/services are delivered
In short, such a char doesn’t show what an
organization does, for whom they do it, or how they
do it.
A group of logically related tasks (decisions and
activities) that when performed, utilize the resources
of the business to produce definitive results.
Processes are independent of organization and have
the following characteristics:
measurable inputs
value added
measurable outputs
repeatable activity
Limitations of Hierarchical
• Artificial goal establishment
• huge coordinating activity to reconcile goals of
different units
• managers tend to perceive other functions as
• many issues fall through the cracks
• top level manager is often the only person with
authority over low-level stuff
Fast-cycle capability
• If you can do it faster, you’ll do it better: not by working
faster, but by squeezing the delays out of the process
• JIT inventory
• meeting changing customer needs more effectively
• fewer opportunities for mistakes
• less work to self-manage
• less status reporting
• less chance for Murphy’s Law
As companies grow, however, the system-like nature of the
organization often gets hidden. Distances increase as
functions focus on their own needs, support activities
multiply, specialists are hired, reports replace face-to-face
conversations. Before long the clear visibility of the product
and the essential elements of the delivery process are lost.
Instead of operating as a smoothly linked system, the
company becomes a tangle of conflicting constituencies
whose own demands and disagreements frustrate the
customer. “I don’t care what your job is,” the over-whelmed
customer finally complains. “When can I get my order?”
(Bower and Hout, 1988, p. 111)
Hierarchical vs. Process
• Focus: reporting
relationships and flow of
• isolated budget requests
• measures are actual vs.
• authority and responsibility
are divided into functional
units or profit-centers
• high-level intervention in
low-level stuff
• only top manager has big
• Focus: converting inputs into
• collective budget requests
• measures begin with the
output and track back
• joint authority and
responsibility for output of a
• working level solves lowlevel stuff
• picture expanded throughout