Process-centered organization (PCO) structures have come into fashion over the past few years. PCO structures realign organization building blocks with the value-adding processes in the business. Instead of functional hierarchies being the dominant structure, people are organized into multidisciplinary teams whose goals are focused on managing the end-to-end activities that deliver value to their customer. Team size can extend to many tens of members.
This concept has become best practice in many industries where lean, fast material and information flows are crucial for survival. Removal of cross-functional boundaries and an element of self-management and empowerment are fundamental. When it works, the value stream can be run with fewer layers of management; headcount efficiencies are increased; and decision-making can be delegated more effectively. Most importantly, communication routes can be short-circuited and the black holes found at organization interfaces are often eliminated.EXAMPLES OF PROCESS-CENTERED ORGANIZATION
Several pharmaceutical companies have successfully made the transition from a traditional organization structure to a new progressive model. The result, in some cases, has been the difference between survival and eventual plant closure. In other cases, the change has been a failure, and a reversal in direction has ultimately been necessary.
In one groundbreaking example, an inbound materials logistics process team was formed out of separate functions from materials scheduling, warehousing operations, quality assurance, and quality control. The teams were co-located in an office adjacent to the inbound material flow and given authority to work together to meet common objectives. A period of value stream mapping, analysis, and improvement led to redesign of the way of working, adjustments to the allocation of responsibilities, and cross training to enhance the range of skills in the team. Prior to the change, receipt to release could take anywhere from 7 to more than 40 days. Material safety stocks reflected the length and variability of these cycle times. After the change, cycle times were consistently achieved in the one-to-three day range. The team eagerly took up the challenge of empowerment and a culture of "self-direction" emerged from the scheme. Support was given to ensure the interpersonal and team-working skills were in place for the individuals. The project became the starting point for a more demanding redesign in manufacturing areas where a bottom-up approach was taken to transform the wider operational organization. In this case, structure followed strategy in a way that supported irreversible cultural change.
Another equally informative case study showed how the organization structure in a facility was redesigned in a radical way with less emphasis on improving performance, ways of working, enlarging breadth of skills, and more emphasis on managers becoming process flow owners within a self-directed team arrangement. The lines on the organization chart were the center of attention. In due course, the change was found to be too radical with insufficient focus on business performance improvement. Structure didn't follow strategy, and the organization was changed back to a classic line structure. After a period of reflection, the lessons learned led to adopting a more effective approach.
A common stepping-stone to PCO is to use more of the matrix-type structure where discipline teams are linked to production process teams by single contact points. These dotted lines build commitment and ownership to the goals of the process team without weakening membership of the functional team.
THE ROLE OF SENIOR MANAGEMENT
When it comes to making a difference, senior managers actually have few levers they can pull. If they want to make change quickly, the options reduce further. The one change that always remains open is organization change. Many senior managers choose to pull this lever as a first option, particularly if they are under pressure to improve performance, reduce cost, or simply to be seen to be doing something. Nothing gets attention more than an organization review that potentially disrupts the status quo. The problem is that organization change can be tricky and may not always lead to the desired result.
So should the new organization models and theories being talked about be taken on board? How relevant are they to a closely regulated environment like pharmaceutical manufacturing, and, if adopted, how should they be implemented?
The dilemma is that from a cultural perspective, the pharmaceutical industry is rooted in the "command-and-control" mindset where strong oversight, clear policies, and meticulously defined procedures drive behavior. The requirement is on the employee to learn how a task is to be done and to consistently execute that task again and again (and not necessarily to ask questions why). Managers and supervisors are there to define the task, to ensure it is done right every time by suitably trained people, and to solve problems when they occur. Compliance is key. Experts such as engineers, quality professionals, and support staff are also (highly) trained to focus on their own specialist areas.
There is no doubt that changes where production operators are given more responsibility for simple maintenance routines, quality control, and batch scheduling, for example, confront existing paradigms. This reality can be seen to be controversial. However, the professionalism and capability of the people that oversee the industries manufacturing sites are more than adequate to ensure these changes evolve in a way that maintains product quality and patient safety.
For senior managers looking to make an impact, it often makes sense to leave the organization change lever to last position on the list. It then becomes an effective tool with which to make business improvement and cultural change permanent.
Understanding the difference between success and failure lies not in organization theory, even though it is important to take change management factors into account. It lies in a "back-to-basics" philosophy where material paths are simplified and shortened, knowledge flows to where it is needed, people are given a wider variety of skills training, and wasteful non-value adding activity is eliminated.
Simon Chalk is director of the BioPhorum Operations Group, [email protected]