Las Vegas 2022

Organizing for Outcomes

Every organisation is perfectly optimised to get the results it gets. Is your organisation and are all of the people who devote their time, energy and investment in return for financial tokens and social bonds, universally happy with the results they get?

If yes, then I look forward to attending your talk! If no, I’ll be sharing antipatterns and patterns on the topic of organising for outcomes (across the whole org, not IT only), from first hand experience and from a range of large organisations. Do you want to rearrange the deck chairs (#AsYouWere) or do you want better outcomes?It seems that every company on the planet is getting more tribal. That is, adopting long-lived multidisciplinary teams, 'our business' in scope, aligned to the consumer and the flow of value (aka Value Streams or 'Tribes').

There is an emerging new normal across organisations. Whether Darwinian or by design.

What an exciting time to be working! A once in 10 generations pivot (the previous major pivot being 251 years ago (1771), the introduction of the first factory system at scale, with division of labour, a way of working which is still prevalent today).


Jon Smart

Founder, Business Agility Coach and Leader, Sooner Safer Happier



The next speaker is John Smart, who I met in 2016 when he headed the ways of working at Barclays, uh, which is an organization that was founded in the year 1690, which actually predates the invention of paper cash in the west. Uh, John corrects me. So in his role, John had an amazing reputation of doing things that were very different than the traditional norms inside of an organization that had one of the most highly evolved bureaucracies on the planet, having had centuries to perfect itself. I mentioned in my opening remarks that his definition of DevOps, of better value, sooner, safer, happier is one of my favorites. And I'm so delighted by how that many times that those phrases and those words have been used on this stage and within this community. So this is why I am so happy that he's on the programming committee for this conference. I've learned so much from him, and I love that, uh, he put his learnings into his book sooner, safer and happier. And like so many of us in this community, uh, he's working on thinking, he's thinking about how we can create organizational structures that are conducive to, as opposed to corrosive to the outcomes that we want. Here's John.


Good morning.


It's a pleasure to be here. Pleasure to be back in person. Uh, so I'm gonna talk about organizing for outcomes. Uh, it seems that every organization on the planet is currently on this journey around organizing from role-based silos to multidisciplinary teams and tribes, uh, and not just in it, but across the whole organization. So, um, I'm gonna share some lessons learned, um, mistakes that I've made, and also learnings from a whole bunch of organizations across industry sectors. Um, a health warning, rigid, one size fits all. Forced org design seriously harms you and others around you.




There is no playbook or blueprint. So if you get handed a PowerPoint deck where the logo has been changed, beware, uh, and, uh, it's organizational evolution in context. So even the term org design doesn't quite sound right. Design is not a phase. Design is continuous. So it's about evolution. So the question to ask is, what are you optimizing for today in your organization? Uh, are you consciously optimizing for anything in particular, or is it kind of accidental? Um, to quote Arthur W. Jones, uh, who spent his career in org design, every organization is perfectly designed to get the results it gets. So if you are happy with the results you are getting and everybody is happy, congratulations. Let me know when you're speaking. I'd like to come along and listen. Uh, and if you are not, I've got some patterns and antipas to share, which hopefully will be helpful. So the question to ask is, what do you want to optimize for? Do you know in your organization what outcomes you want to optimize for? Or is it cost? Which is what it tends to be quite often, and are they being measured? So it's one thing to know them, but are they being measured usually? So, you know, I'm working across industry sector with multiple large organizations. Usually the answers to those three questions are, uh, we don't know no and no,


Nine times outta 10. Uh, so the pattern here is to focus on outcomes. Um, no surprise. The outcomes that I would recommend focusing on are number one better, which is quality. Number two, value, which is unique. It's unique in your organization. Good to measure it through OKRs. The KR is the definition of value sooner, which is time to learning and time to value safer, which is minimal viable compliance, right sizing the control environment. Agile, not fragile, and happier, which is happier customers, colleagues, citizens, and climate. Because improving ways of working is not at any cost to the planet or to society. And for me, it's about, uh, humane ways of working. And that's what gives me purpose, is creating more humane ways of working. So the anti-patterns are rigid, one size fits all, forced playbook with no alignment to measurable outcomes at all. Number two, org design equals transformation. We've rolled out the, so-called Spotify model, and we declare success number three, a cost cutting lead org design, also known as spans and layers, two point n if any of you have had the pleasure of going through spans and layers exercises in the past.


Um, so how did we get here? How did we get to this point? 1.9 million years ago, we were in multidisciplinary teams, also known as tribes. It seems we have about 2 million years of experience of working this way. Um, this is how we've evolved as hunter gatherers in multidisciplinary teams. Uh, fast forward to 252 years ago, 1770, and we're still operating as full stack teams, domestic cotton ops. You weave it, you wear it. Uh, and you know, we have a multidisciplinary team. It's a craft. There are skills. We're working together, it's domestic, and then everything changes. And it's no coincidence that this video begins with a waterfall




Uh, so this is 1771, and this is the beginning of the first industrial revolution. And this is the actual factory where you can trace your current ways of working at your company Back to this factory. This factory is in Darbyshire, uh, these four dodgy looking chaps. Did a site visit, uh, this was March of this year. Uh, we did a site visit to, uh, Crompton Mills. This is the first factory system at scale. And this was the beginning of division of labor. So previously it was at home multidisciplinary team. For the last 2 million years, this was the beginning of division of labor. For the first time, we had 1000 people working together in a factory with 15 rolled specialties to the point where it went from unskilled, sorry, from skilled labor. You, you know, you needed to know what you're doing to turn raw cotton into cloth.


Now it was, it was so specialized that it was now unskilled, that labor, and it actually destroyed the domestic market for producing cloth in this factory. This is the origins of our ways of working today. Um, and this is the person, uh, who was the father of the factory system. This is Sir Richard Arkwright. And it was so unskilled that children could do this work. Um, 75% of the thousand people working in this factory were children. Um, and the reason for that is they were small so they could fit under the machines, and also they were cheap. So we had a guided tour. You know, we had, you know, someone telling us all about the history. So thank goodness that doesn't still happen today. Um, so that's kind of where we've come from. This was the big tectonic shift. Uh, fast forward to 1905, this is one of the earliest org charts.


Um, and, uh, Clinton, Edgar Woods wrote a book called Organizing a Factory. And in that book, he describes the brains being at the top. So the reason the leadership team are at the top is because they're the brains. And, you know, basically implying that there's, you know, there's no brains at the bottom. Workers are nothing better than dumb draft animals, uh, according to Frederick Winslow Taylor. So this was the prevailing mindset, and to quote from the book, charter authorities simply and graphically so that every workman knows to whom he is responsible, there is then no loophole through which a neglectful workman foreman or executive can crawl. No longer does he have the excuse that he thought somebody else was going to do it. So this, this is the mindset. So this is the prevalent mindset of the time for the org chart. Um, and then division of labor continued, and then division of labor continued, and then division of labor continued <laugh>.


And here we see a chicken farm, sorry, I mean a cube farm. Um, do any of you, do any of you have the misfortune of still working in a cube farm when you are in the office? Oh, I'm, oh, that's, I'm sorry for you. I'm really sorry. Um, I have empathy for you. I see some, I see some hands going up. Um, I've had the, the displeasure of working in a cube farm twice in my career. Uh, one was in midtown, New York. All of the offices for the senior leaders were around the outside with the windows. And anyone who wasn't a senior leader was in the cube farm in the middle with no natural daylight. Again, you can trace the DNA back to that factory in Darbyshire. You can trace it back. And that's today. Um, so the current state for many organizations is you have the business in quotes. On the left, uh, uh, there's a, there's a, there's a, an inside Demming joke in there, there head of planning, the head of doing the head of checking, and the head of acting




Um, and then you have, uh, if you are an old fashioned company, you then have something called business relationship management just to make sure you are keeping it away from the business. If you're a trendy company, you call it product. Um, and then we have it. If you're an old fashioned company, if you're a trendy company, you call it engineering.


Um, and you know, guess what? There are brick walls between these, uh, between these job roles. Um, and I, I see this prevalent today, even when the term product and engineering is being used, products are still a silo and products are acting as they go between, between engineering and in quotes, the business. Uh, bit of advice. Don't say the business, say our business. Um, so we still have role-based silos. Um, this does not optimize for outcomes in the context of unique change. This is feast to famine. The pig in the python, it's work waiting. The incentive is I've done my bit, the holes on their side of the boat and it's inhumane. Workers are cogs, still cogs in a machine, and this is not optimizing for better value sooner, safer, and happier. And you know what, we've come full circle back to the future. We're back to tribes. It seems that what we were doing for, uh, 1,899,750 years, um, actually was quite a good idea. So we're back to multidisciplinary teams in tribes. Um, so what patterns might help, uh, um, uh, there is a quote here, uh, often attributed to Drucker, which is culture eats strategy for breakfast. Turns out that Drucker never actually said it. Um, my corollary to that quote is incentives, eat everything continuously.


The topic of ways of working the topic of DevOps, the topic of transformation in my experience comes down to one word, which is incentives. You can boil it down to incentives. And when I say incentives, I mean both incentives and threat. The two sides of incentive. Um, so it requires a lot of intentional thought about incentives in your organization. Neuroscience work has changed, but our brains haven't. Our brains are wired for survival, for not being eaten by a tiger on the savanna. We seek incentive and we avoid threat. Uh, that drives our behavior. Threat is double the strength of incentive. We have loss aversion. So it is more painful to lose a hundred dollars than it is to win a hundred dollars. The pattern here is to be intentional about increasing incentive and minimizing threat. The anti-pattern. And what usually happens in organizations, especially in the topic of org design, is accidentally significantly increasing the threat and misaligning the incentives because we are doing a top down big bang org design rollout of squads, tribes, chapters, and guilds.


So a closer look at this, incentives are both implicit and explicit. Implicit incentives are the, the group social norms, um, and also for example, western cultural typologies. And it's amazing that Ron is here to speak. I dunno if Ron is here. Uh, so western cultural typologies, um, generative, bureaucratic pathological, you fit in with the leadership style of the team that you are in. Um, explicit will be the reward system, pay and promotion. Um, your incentives drive your behaviors. Tell me how I'm incentivized. I'll tell you how I behave. And I believe that incentives and behavior drive structure, structure will also either accidentally or intentionally have a, have a feedback loop onto the incentives. There are three forms of structure operating in parallel all of the time. Number one, the formal reporting lines. Number two, the actual team structure. So if you're in multidisciplinary teams, uh, that, that those multidisciplinary teams don't represent the reporting lines that are in your HR system typically.


And then the social graph, which is how you get stuff done. You know who you know, you know who you know to speak to in this department, in this area over here to actually get stuff done. So those three are operating in parallel all of the time. If number one is dysfunctional, number three will come to the fore. So the informal network will be more important if the formal network is dysfunctional. Now, there may or may not. Um, I've seen a scenario in an organization where there was a reorganization into value streams into multidisciplinary teams and teams of teams. The incentive model was not changed and it didn't work. People were still incentivized in their role-based silos, and I'm seeing some knowing nods in the audience, um, were still incentivized in their role-based silos. So the, the pivot to value streams failed because people were not incentivized to team-based OKRs, you know, team-based outcomes. They were still incentivized in their role-based silos. So here's an example of how culture drives structure. This is a company you might be able to imagine which company this might be. There's one person in the middle making all the decisions. This is company A updated,


This is company B. Again, you might, you might have seen this before. You might imagine what organization this might be, uh, which has since evolved. But actually, interestingly, the way this company has evolved has actually been, I believe, through culture influencing the, the structure rather than structure driving the culture. Um, here's another example. A very large legal department. Obviously the culture here is to sue your customers. Um, and then here's your organization,




Uh, and the anti-pattern is org design or evolution. Without being intentional about the incentives or the threats,


That's the anti-pattern. Every single time I see org design inflicted, it's without due consideration to the incentives, aligning incentives, uh, or a minimizing threat. Usually threat goes off the chart. Um, so organizing by value and flow. So here's a pattern. Organizing by value stream, tribe, crew, fleet, banana, uh, whatever language you want to use. This is a simplified version. So we are trying to optimize for the soonest time to value and learning. There are three things. You need to have a value stream. You need something of value. Um, IEA product. And it's both business and tech products. Not just tech products. You have value consumers, you have different personas in your value consumers, and you have value producers, long-lived multidisciplinary teams. If you have those three things, you have a value stream, something of value, someone consuming the thing of value and somebody producing the thing of value. With a value exchange. The value exchange could be bartering, uh, or it could be, I'm going to give you some dollars. Um, so, uh, for example, the amazing audio visual team, good company here. Um, the thing of value here is the lights and the sound. Now, if, if good company were not here providing this value right now, you'd be sitting in darkness and you couldn't hear what I'm saying.


So it's a good job. They're here. Uh, the values consumers are all of us, and the value producers are the amazing team sitting front of house and back of house. And, uh, a value stream will have outcomes. Um, unless you are not changing, which is very unlikely, you'll have OKRs on your value stream. Um, so dear AV team, perhaps give me a, a signal if maybe one of your OKRs is to, uh, grow the company post pandemic




Awesome, thank you. AV team. There we go. So there's an example of a value stream.


Thank you to good company. Uh, and value streams are nested. So for example, the Cosmopolitan Hotel, this hotel we're sitting in is a value stream within it. We have a nested value stream of residential and events within residential. We have stay. We might also have purchase, you know, we might actually be able to buy an apartment here, timeshare or, or permanent. Um, within events, we have concerts and we have conferences. So for example, on this stage in three weeks time is Billy Idol. So there's a, there's an example, uh, not on the DevOps enterprise Summit stage, but um, so, uh, that's an example of a value stream here at the Cosmopolitan. And then you have a shared service value stream. So typically this is 80 20 rule, 80% of the value streams in your organization are external consumer facing. Your shared service value streams support our internal and they support your external consumer facing value streams.


But you still treat the thing you are, you are providing as a product. You still have product thinking, you still have the voice of the customer. It's not, it should not be a case of build this. And they will come, you know, cloud platform being a good example of this, where we'll build it and they will come maybe. So you need the voice of the customer. I have deliberately used the word product in the value stream. I have deliberately not used the word platform. So quite often you might hear the word platform. Um, but there was a, is Charlie here, Charlie? So there's a good conversation a few days ago on Twitter where platform is a subtype of product, which I agree with. So you still need that product thinking. Um, then you have your centers of excellence. Uh, so this is your old role based silos.


Uh, so this is the, the your craft. And this typically is still your reporting line, but work doesn't flow through the COE if this is now about pastoral care. This is now about development for the individual. Um, and, and the guild and the craft, uh, not the guild, sorry, the craft. The community of practice is voluntary law of two feet. We might have a cop on ways of working. We might have a cop on no sequel on big data, on architecture, on, uh, sales, entirely voluntary, entirely law of two feet. Anyone's invited. It's shared learning. And then we have the enabler teams, which are specialist secondary teams. For example, uh, a safety team, which is written about in the book sooner, safer, happier InfoSec, cyber data privacy, for example, a ways of working enablement team, for example, SRE, those might be examples of specialist secondary enablement teams.


And then you have channels which serve up the value streams in your organization. So these are the candles on the birthday cake, for example, web, mobile, store branch, phone streaming, um, whatever it is, a omnichannel interface. So you can hop between the channels and then programmatically you can, uh, you can serve up the value streams. Um, so the patterns are number one, customer journeys span. Value streams don't fall into the trap of thinking that customer journeys are only within a value stream, which is something I come across quite often. You have to be able to span value streams 'cause I don't want to have to enter my name and address and credit card details four times to do four transactions with your company. I want to go online once and I want to, I wanna do four things in one transaction. It's a value stream network. It's not quite as clean as this picture looks. It's a call graph, it's a network. Ideally your, your value streams, which include people are API enabled. So for example, the open banking API standard in financial services, you API enable your value streams, uh, which is your business value and your people. And the nirvana, the nirvana state to get to is your business architecture equals your people architecture equals your technical architecture. If you get those three things in line, magic can happen. So how you get there, A tale of two orgs. This is Acme Corporation,


Fictitious company, and uh, Acme Corporation. This is an example of what not to do. 12 months in isolation, designing the perfect org, a further six months of job insecurity, a big bang rollout combined with cost cutting and redundancies. A top down I position org design rollout equals declare success, accidental incentives and threat. A gold rush for the tribal leader role because power 'cause it equals power, which equals status, which equals pay. A lack of consideration of the flow of value. In technical architecture, it's water value stream fall. The system of work is still big batch. So we're in value streams, but we're still doing a sequential big batch process. And there's a lack of measurable outcomes on the why for the reorg in the first place. But maybe it was just about cost cutting.


Um, and then the very big corporation of America. So this is an example of good, um, uh, credit to Monty Python for this organization. Um, so the why for change is clearly articulated. There's balanced and measurable outcomes, better value soon and safer, happier. There is incentive across the entire company, uh, from the executive committee. So everyone is in line in terms of incentive. There's an intentional approach around incentives and threat guiding principles are articulated to guide daily decision making. Participation is invited. It's a case of start small with s-curve, s-curve adoption. There's business and technical architecture taken into account. It's a case of working out loud with transparency and communication and storytelling. The support functions are involved. Finance, internal audit, compliance, et cetera. And ongoing, ongoing ways of working support is provided with a recognition that changing how you're organized is just the beginning of the journey, not the end of the journey. So here's the help I'm looking for. I would love to hear your learnings on this journey. I'd love to hear what antipas and patterns you're experiencing. Thank you very much.