Oct 082008

I had just gotten off the phone with a Merrill Lynch advisor who I know well. She surmised that maybe there is even more capitulation ahead. Maybe we will soon see the Dow at 8,000? Jokingly, I said I would start buying at 6,000. The fear, however, is real and the effect of a big downturn in consumer spending will be significant, not just here in the U.S., but globally. In today’s economy which is driven by consumption, that means tough times for many firms are ahead.

From a business strategy standpoint, I see unique opportunities for well-placed firms. I would bet that 95% of all business are now engaging in identical and synchronous maneuvers: cut costs, shed headcount, seek low-cost labor sources, divest and hunker down. The competitor in me wonders if a differentiated business strategy might be in order right about now.

What if a firm did the opposite right now?

The problem is that in good times many firms get a bit lax. They do not consistently pursue productivity enhancements on the upside to be ready for down times. Subsequently, these firms are pressured to cut costs quickly. One place they usually look at is IT to downsize or outsource. Since human costs are often the most significant place to start cutting, I will offer an alternative strategy to outsourcing or downsizing. I call it rightplacing.

Rightplacing? What is that?

It is putting each employee in exactly the right place. It means thinking very differently about employees, roles and job descriptions. It requires IT managers who can understand people even better than they understand technology.
I was talking to a financial services CIO this week and we discussed how to alter organizational structures to deal with downturns. Typically this means find ways of reducing layers or shedding redundant parts. I suggested something much more radical. CIOs should do the following:

  1. Gather a passion inventory for each employee. This is a basic understanding of what each individual employee is passionate about. Not just technology-related, but anything in their life. If the IT employee is most passionate about playing in the jazz band, that needs to be on the passion inventory
  2. Gather a strengths inventory. The Gallup Strengths Finder approach is a good one, but others exist. Help employees and their managers more accurately identify their true strengths. BTW, a strength is found in something someone does exceedingly well — nearly flawlessly.
  3. For each employee, define an ideal role that aligns their passions and strengths with activities within the IT shop.
  4. Aggregate these “custom” roles into units, departments, teams, groups or whatever you want to call them. Each unit should have well defined passion, a clear set of skills and strengths and a coherent mission. It needs to be obvious to the team members why they are part of the team.
  5. Don’t bother aggregating these units too much further. Avoid creating larger functional silos. Instead, let the relationships between these units be defined by the immediate needs ahead of the IT shop. In other words, avoid permanent hierarchies and let a structure “emerge” bottom-up from the passions and strengths of the employees. This structure will be more adaptable to change, letting the IT shop quickly reconfigure when market conditions change.

This approach subverts the dominant paradigm. Instead of finding people to fill positions, find custom positions to attach to people. Instead of designing an organizational structure top-down, let it evolve bottom up. Instead of putting employees into boxes, let them construct their own boundaries. Truly engage the even idiosyncratic passions of the people rather than pouring cold water on their passions.

I bet that if CIOs did well with this approach, they would get a three- to five-fold productivity improvement from their teams. If so, I bet this would be a much better way to manage an IT shop in the face of budget cuts.

I was struck by what Dewitt Jones, photographer turned public speaker, had to say about his approach to photography: “I use my intellect to put me in the place of most promise.”

For me, rightplacing us an intellectual tool to help put each employee in the place of most promise. For me, this is a much better approach for managing a downturn than having to put together RIF lists and engage in yet another hasty reorg. For the IT employee, rightplacing would be far more motivating than either downsizing out outsourcing. For shareholders, the benefits would be greater.

What’s stopping firms from rightplacing today? I have my own ideas, but I’d love to hear what you have to say.


  2 Responses to “Don’t Downsize. Rightplace Instead.”

  1. avatar

    Bottoms up drive organization building can certainly tap a lot of creativity across the organization, provide the ability for all to contribute and innovate, give leaders a chance to shine from places you might not have looked for them and inject a sense of opportunity and empowerment into a staid organization. It can also be a really slow model and rife with relationship peril in cultures not used to or ready for sharing power if strategic clarity, common objectives and groundrules, governance rights and process is not understood, and rewards and recognition systems aren’t aligned. Enter at your own risk if you are only experimenting and not ready for ‘rightplacing.’

  2. Unfortunately,the way this is written, it doesn’t start by making it sound like the employee(s) is/are involved in this process. The bottom-up organization idea certainly does, but everything up to there sounds like people take personality-type tests and someone else determines where they should be “put”.

    Indeed, the phrase “putting each employee in exactly the right place” is the phrsae used. Not sure how this early description squares with letting people form their organization from the bottom up. If they are to find their own place this way, what does all the early part of this article mean?

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