The Leadership Challenge of Decentralized Control

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1 The Leadership Challenge of Decentralized Control SAFe Summit 2017 San Antonio, TX October 5, 2017 No part of this presentation may be reproduced without the written permission of the author. Donald G. Reinertsen Reinertsen & Associates 600 Via Monte D Oro Redondo Beach, CA U.S.A. (310) Internet: Don@ReinertsenAssociates.com

7 Managed Adaptation Is Vital Complexity is rising more degrees of freedom. Uncertainty is rising higher velocity of change. Forecasting is getting exponentially harder. We can t front load decisions. We must continuously make important decisions correctly and quickly. Copyright 2017, Reinertsen & Associates 7

8 Scrum A great technology with many of the ingredients of success. Is its management approach enough? At small scale, local optimization is system optimization. At large scale, cost, benefits, and resources are distributed in time and space. Teams can be unaware of distributed effects and may either lack authority or not use it. Copyright 2017, Reinertsen & Associates 8

9 Hybrid/Matrix Organization General Manager Team Leader VP of Marketing VP of Manufacturing VP of Engineering VP of Finance Marketing Representative Manufacturing Engineer Design Engineers Financial Analyst Project Participants Copyright 2017, Reinertsen & Associates 9

10 Key Decision Areas Select product features Modify product features Prepare project budget Modify project budget Prepare project schedule Modify project schedule Prepare manning plan Modify manning plan Select team members Hire team members Remove team members Evaluate team member performance Determine team member compensation Determine team member bonuses Authorize travel Cancel project Select development location Set layout of team work area Select key business partners Manage key business partners Select key technology partners Manage key technology partners Select outside contractors Manage outside contractors Select vendors Manage vendor contracts Select manufacturing site Determine required level of quality for introduction Pay for manufacturing variances Select product processes Select engineering tools Select development methods Modify development methods Determine test procedures Determine test criteria Set reuse objectives Determine reporting requirements Set manufacturing yield targets Set documentation standards Copyright 2017, Reinertsen & Associates 10

11 There Is No Decentralization Dial Different decisions should be optimized within different frames of reference: local, product line, sector, or enterprise. Copyright 2017, Reinertsen & Associates 11

12 Centralized Decentralized Scale Economies Limited Bandwidth Reduced Duplication System Optimization Omniscience Omnipotence Slow Decisions Distorted Information vs No Scale Economies Higher Bandwidth Duplication Local Optimization Knowledge of Context Limited Resources Fast Decisions Less Distortion Copyright 2017, Reinertsen & Associates 12

13 Decentralizing Control with Decision Rules Boeing 777 Weight Reduction Decision Authority Dollars per Pound $300 $600 $2,500 Engineer Supervisor Program Manager Copyright 2017, Reinertsen & Associates 13

14 What We Need To thrive in an environment of high uncertainty we need to create initiative and alignment. Initiative is acting without instructions, taking charge. Alignment requires staying focused on the mission and subordinating local goals. Copyright 2017, Reinertsen & Associates 14

18 Develop Judgment People must be trained to act on incomplete information. The 80 percent rule. Risk-taking is a learned skill. Judgment comes from study, experience, practice, and coaching. Copyright 2017, Reinertsen & Associates 18

19 Boldness and Initiative Cultivate ability to take calculated risks. Errors of over-boldness are dealt with leniently. Initiative, the willingness to act on one s own judgment, is a prerequisite for boldness.. there must be no zero defects mentality. Abolishing zero defects means that we do not stifle boldness or initiative through threat of punishment. MCDP 1 Copyright 2017, Reinertsen & Associates 19

20 A High Trust Organization Marines place great emphasis on trusting superiors, subordinates, and peers. Dependability: The certainty of proper performance of duty. Integrity: Nothing less than complete honesty in all dealing with subordinates, peers, and superiors is acceptable. Unselfishness: Looking out for the needs of subordinates before your own is the essence of leadership. Loyalty: Faithfulness to country, Corps, unit, seniors, subordinates, and peers. Semper Fidelis. Copyright 2017, Reinertsen & Associates 20

23 Auftragstaktik - Mission Orders Tell people WHY they are doing things, not what to do and how to do it. What end state is trying to be achieved? What goal, larger than the battle itself, are we trying to achieve? Understand the Commander s Intent at least two levels up in the organization. If you know WHY you are doing things, you can adapt to changing conditions. Copyright 2017, Reinertsen & Associates 23

24 Marine Corps Doctrine Fundamental and enduring beliefs. It reduces the need for coordination. It is different from rules and policies. Doctrine establishes a particular way of thinking about war and a way of fighting. It also provides a philosophy for leading Marines in combat, a mandate for professionalism, and a common language. In short, it establishes the way we practice our profession. In this manner, doctrine provides the basis for harmonious actions and mutual understanding. MCDP 1 Copyright 2017, Reinertsen & Associates 24

25 Wildland Firefighting Small problems quickly become big ones. Planning reduces but does not eliminate uncertainty. You can t afford to size static resources for the worst case. Dynamic responses are very effective. But, response time is critical. Copyright 2017, Reinertsen & Associates 25

26 Firefighting Doctrine Doctrine guides HOW we think. Rules and checklists focus on restricting actions that are considered to be risky. Doctrine teaches us how to take risk successfully. The 10 Standard Fire Orders The 18 Watch Out Situations Copyright 2017, Reinertsen & Associates 26

27 Doctrine vs. Policies and Rules Rules What to Do Principles What to do and Why to do it Mindless Rules Mindfulness Mindless Behavior Mindful Behavior Doctrine communicates beliefs about what is important and about key causal relationships. Copyright 2017, Reinertsen & Associates 27

29 Marine Corps Leadership Principles 1. Be technically and tactically proficient. 2. Know yourself and seek self-improvement. 3. Know your Marines and look out for their welfare. 4. Keep your Marines informed. 5. Set the example. 6. Ensure the task is understood, supervised, and accomplished. 7. Train your Marines as a team. 8. Make sound and timely decisions. 9. Develop a sense of responsibility among your subordinates. 10. Employ your command in accordance with its capabilities. 11. Seek responsibility, and take responsibility for your actions. Copyright 2017, Reinertsen & Associates 29

30 Strong Local Leadership Put the talent near the front lines. Promote from within. A centralized system theoretically needs only one competent person, the senior commander, who is the sole authority. A decentralized system requires leaders at all levels to demonstrate sound and timely judgment. Initiative becomes an essential condition of competence among commanders. All commanders should consider professional development of their subordinates a principal responsibility of command. MCDP 1 Copyright 2017, Reinertsen & Associates 30

31 Marine Corps 14 Leadership Traits Justice Judgment Dependability Initiative Decisiveness Tact Integrity Enthusiasm Bearing Unselfishness Courage Knowledge Loyalty Endurance Copyright 2017, Reinertsen & Associates 31

Motto of Marine Corps OCS Lead by Example

33 Leading by Example Take care of your Marines and they will take care of the mission. Priorities: Mission, Marines, Self. Leadership derives its effectiveness from actions not words. Seniors take responsibilities for stumbles and pass on credit for successes. The lowest ranks eat first. Rank is a privilege that is earned every day. Copyright 2017, Reinertsen & Associates 33

34 Summary The goal of aligned decentralization is to produce good decisions quickly. To achieve this we must shift much more initiative to lower in the organization. This is far more complex than simply delegating authority. As we shift power we need specific systems that make people safe and successful when they exercise initiative. Reducing batch size is a perfect way to enable this. If you look for role models you can find them. Copyright 2017, Reinertsen & Associates 34