Corporations have historically developed according to the logic of their products. Today, however, they are increasingly having to operate according to the logic of their customers, which is quite different. This upheaval impacts the entire corporate social dynamics, ways of working and value creation processes. Organisations have to develop radically new internal cooperation patterns. In learning to develop such cooperation patterns, companies discover an untapped field of growth energy.
Customer First and Corporate Tensions. When the problem was to manage mass production, it was logical for companies to organise themselves around production constraints, i.e. around the sequencing of the various stages needed to work a product out. Thus, if car manufacturers' organisation charts featured design departments, engineering departments, assembly lines and sales departments, it was because one has to design products before engineering, assembling and selling them. If airline companies had ground operations departments on the one hand, and flight operations on the other, it is because planes are first on the ground, and then in the sky. The organisational structuring was nothing more than a carbon-copy of the succession of specific constraints met by the producer. However, the more a system organises itself around its own constraints, the more it is up to others - in this instance, the customers - to adapt and make do with it. It is up to the passenger to supply the “seam” between ground and flight services by queuing for the shuttle bus after check-in. It is up to the car owner to make do with months of waiting before getting his new car, and to accept the defects which arise from disjointed work amongst designers, engineers and manufacturers.
Unless, of course, the customer has a choice to turn towards less demanding competing alternatives.
And, indeed, today's customer has more and more choices. The whole problem has changed. It is no longer the availability of the product that is problematic, it is the availability of the customer. The dominant uncertainty has shifted. However, if the solution to the problem has changed hands, it follows that power balances are being reversed in the exchange relationship: the one in a position to have their own constraints prevail becomes the customer. This situation does not eliminate the operating constraints which still pervade a company. What is removed, however, is the company's freedom to take a direct leap from its constraints to its organisation principle, thereby enjoying a comfort that customers would bear the cost of. This is where resides the decisive upheaval for the whole social fabric of organisations. A human system functions in a radically different way, depending on whether it can organise itself around, and give prevalence to, its own constraints, or whether it has to start from others'.
In concrete terms, the change boils down to this: the more an organisation attempts to take into account its customers' constraints, the more it undergoes new internal tensions. On the one hand, the organisation experience a greater need for joint decisions between functions. The customer's logic is not sliceable. The more compelling the customer's logic, the more the various internal segments must act in a coordinated fashion. But, simultaneously, the human system at work experiences an increase in goals differences among participants. Demanding customer requirements result in cost pressures and increased internal competition for resources. The more resources within a system are rationed, the more the solutions of one participant may result in problems for another: in the allocation of staff, of investments and of lead times. Poorly managed, smothered with superficial “customer is king” slogans and abstract debates on structures (horizontal, flat, etc.), these tensions weaken an organisation instead of stimulating it.
The Cooperation Imperative. The only way to manage such tensions is to go beyond the apparent contradiction they pose: by learning to cooperate, which means, precisely, to act together even though spontaneous agreement is unlikely. A constant observation is that every time people fail to cooperate, it results in additional resources requirements. However, nothing has prepared organisations to such learning. The very historic principle of organising people around a succession of tasks says the contrary: if everyone, in his or her place, does what he or she has to do, there is no need for cooperation. Accordingly, it is not unusual for organizations to react to such tensions along the classical approach: instead of learning how to cooperate, with more face-to-face situations and less interfaces, management strive to refine jobs descriptions; tasks definitions are being reinforced by new norms which consecrate the necessary and sufficient content of each “silo”. The organisation produces regulation, “client-supplier” internal contracts, but it does not improve integration. At the same time, due to cost pressures, resources are being cut down in each “silo”. However, if the functioning mode remains constant and the level of cooperation is unchanged, any reduction of resources can only degrade the results achieved. And, the more the results deteriorate, the more the resources are being trimmed back. So on and so forth, until a crisis point is reached.
Learning how to Cooperate. An organisation's ability to produce cooperation among its members, its functions and its expertise domains, has become a critical competence. How can a human system learn how to cooperate? Firstly, by recognising that cooperation cannot be decreed. Secondly, by observing that cooperation is not, on the other hand, just a matter of people's psychology and getting on well. A human system's aptitude to function in a more integrated way does not boil down to good interpersonal relationships. Cooperation is about reconciling conflicting constraints, not personalities. In fact, to learn cooperation,it is more efficient to consider that people act rationally, i.e. that their behaviours are adaptive, “strategic”, responses to the concrete problems they are confronted to, given the resources and constraints they face. Resources and constraints include competencies, operating procedures, rules, performance criteria, structures, etc. And it is only if cooperating turns out to be a rational strategy for each player, i.e. a solution to his or her problems, that people will cooperate. If, in spite of incantations and heartfelt appeals to team spirit to overcome “shared challenges”, playing in a more collective way never pays off, the functioning will remain compartmentalised.
Which Levers to Improve Cooperation? Responses are specific to each company. However, sociological analysis of organisations helps identify a constant factor: cooperations are all the stronger as there are room for manoeuvre and possibilities of influence between players. In that sense, power distribution is a key variable of action for more integrative processes to emerge in an organisation. Indeed, airlines really started to work in a more transversal mode when power stopped being concentrated on technical functions. Other strong players stood up (that were in charge of marketing, yield management, etc.) with enough weight not only to become unavoidable, but also to take the risk of moving out of insulation. Only those players which can act on a problem critical for others, i.e. which control a pertinent uncertainty (thanks to their competencies, information, possible initiative taking, etc.) will find room in the exchange relationship which underlies cooperation. And it is not because a function, or any other category of people, have always been looked down to and kept aside that it will necessarily want to engage in the new “hand-in-hand company project” and jump in the cooperation bandwagon: it takes a minimum of good cards to take the risk of playing in a more open way.
Growth and success suppose to identify ambitious targets and to mobilise every individual energy to achieve them. Cooperation is at the heart of such mobilisation. Senior executives have a fundamental role to play in organising the “good games”, i.e. those which lead to efficient cooperations. Sociological analysis, if totally integrated into the corporation's overall strategic approach, can help them formulate the appropriate choices, both in day-to-day operations and in large scale change programs. It allows for identifying and understanding factors of resistance to change and, at the same time, to discover solutions to overcome these obstacles in order to mobilise energies towards corporate objectives.
Copyright: Yves Morieux, 2009