Management

Shared Value Propositions Increase Alignment and Reduce Conflict

Achieve more with less effort and fewer conflicts by replacing interdepartmental silos with a shared value proposition.

Every organization I’m working with is too, TOO busy rushing to meet project deadlines and tamping down the crisis de jour; teams racing against the last minute don’t have time to align with initiatives occurring in other departments – even when the success of their project depends on others.  Departments work with minimal cross-connection and coordination.  When they need something, they fire off a hurried email expecting the recipient to drop everything to accommodate their rushed request without considering that they probably have a laundry list of pressing deadlines of their own.  These organizations operate with a “Silo Mentality”.

You can’t optimize an organization operating in silos.  Even if every independent department is operating efficiently, invariably there will be redundant activities and inefficient utilization of resources.  In addition to being suboptimal, siloed organizations are incubators for conflict.  Interdepartmental strife smolders and flares as each manager covets the limited resources needed for their department.

Silo mentality is driven entirely from the top by senior leaders that don’t align goals and performance metrics towards a common outcome and rewarding individuals for results that were often obtained through self-serving behaviors.  Consider, the HR department pushing for a new competency-based performance appraisal program no one asked for while IT is phasing out legacy software that operations depend upon daily; each manager is accountable for achieving their goals and has little incentive to share resources for someone else’s priorities. In fact, someone else’s priorities are often seen as a distraction.  One client measured maintenance success by a reduction in year-over-year costs – easily achieved by simply doing less maintenance; the maintenance manager achieved his goals despite operations struggling to meet production due to poor equipment reliability.  The operations manager had to practically beg to get things fixed and only after “justifying” the cost to the maintenance department; true story!

To optimize your organization and minimize internal conflicts, clearly define the common goal towards which every department’s activities are aligned and measured; they need a single organizational value proposition.  Unlike mission statements that are too often only aspirational words on a page, a value proposition is a term that justifies the total cost of the products, services, or even the mere existence of an entity.  Every activity consumes resources; the right question to ask is, “Does the resultant outcome of the activity have greater value than the resources consumed?”  If yes, the value is added, if no, the value is lost and an alternative solution should be sought.

Think clearly about your organization’s/department’s value proposition by describing how the products or services of your team add value to its customers and stakeholders.  To help you determine your organization’s or area’s value proposition, consider why someone would pay to utilize your services – even if the services you offer are free of charge, they are not free of costs.  How many “FREE OFFERS” have you ignored in the past month?

If your team is not adding sufficient perceived value, its often easier to go around, go elsewhere, or go without.  Apply economic principles; when you struggle to get others to utilize your services or respond to your requests it’s because they don’t consider it as valuable as other activities competing for their scarce resources.

In very general terms, value proposition falls into one of three categories:

  • Makes money
  • Saves money
  • Solves problems

If your product or service will allow me to make more money than it costs me, it is value added.  If your product or service is one I’d use and it’s cheaper, easier, or saves me time compared to alternatives, it too is value added.  And finally, if your product or service solves my problems than it is value added – you never call a plumber just because they need the work.

Sometimes convenience is seen as value added, “The gas on the corner is a little more expensive, but, it’s really close and on the way.”  I consider that under the category of solving problems.  It could also be considered to be Lower Cost in terms of time and effort.

Think about your department’s services – is the ultimate customer willing to pay for it?  If you’re an IT department for a product or services company, the answer is no.  They are are buying the product, not IT services.  IT is a cost center – this puts your department at risk to outsourcing.  To define your organization’s or area’s value proposition take a few minutes to consider your organization’s products or services in terms of the customer’s or stakeholders perspective.  To facilitate the definition process, complete this Value Proposition Worksheet:

Value Proposition Worksheet

Product or Service Why would anyone use it? Alternatives to your products or services?
(including going without)
Do you deliver the greatest comparative value?

Be very honest, do the activities, products, and/or services of your area add value customers and stakeholders are willing to pay for?  Can you prove it?

Don’t fall into the trap of limiting your thoughts to whether the activities benefit the organization – though that is certainly a consideration.  Limiting your thoughts to internal users won’t act as a catalyst to focus and align the entire organization’s activities.  Some organizations are so internally focussed they are comparable to “self-licking ice cream cones” – existing for their own gratification, satisfying nobody else.  Upton Sinclair put it best when he said, “It is difficult to get a man to understand a problem when his paycheck depends upon his not understanding it.

Once you have defined your Value Proposition, how are you going to prove it?  Determine metrics that demonstrate how your team adds to the overall health and sustainability of the organization.  Here are a few ideas:

HR: SOLVES STAFFING PROBLEMS:

VALUE PROPOSITION: Most convenient, reliable, and cost-effective at attracting and retaining top talent – delivers the people operations need with minimal effort.

METRIC: Measured in total time to hire qualified candidates compared to outsourced staffing firms.

ORGANIZATIONAL STRUCTURE: Consider having an HR report through the financial office.

IT: SOLVES INFORMATION PROBLEMS:

VALUE PROPOSITION: Provides reliable, easy to understand reports that help operations manage the business.

METRIC: Total IT Costs/Unit of Productivity.

ORGANIZATIONAL STRUCTURE: Have IT report to operations so they are accountable to the overall bottom line

MAINTENANCE: SAVES MONEY:

VALUE PROPOSITION: Increased machine uptime and production output tracked year-over-year:

METRIC: Total Maintenance Spend/Production Hours.

ORGANIZATIONAL STRUCTURE: Have maintenance report to operations and share this goal to ensure maintenance and operations work together.

Defining how each team adds value aligns the organization towards its core mission and reduces interdepartmental conflicts.  Departments pull together towards common goals.

Interdepartmental conflicts and silos will result in mutual failure – shared metrics and incentives incents cooperation that drives mutual success.

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