I came across this in a letter by Jim Womack, author of Lean Thinking and, to hear him tell it, one of the developers of the Toyota Way. The graphics are mine – which is why I’m not a graphic designer.
All value created in any organization is the end result of a lengthy sequence of steps – a value stream.
These steps must be conducted properly in the proper sequence at the proper time.
The flow of value toward the customer is horizontal, across the organization.
All organizations … are organized vertically by department … because this is the best way to create and store knowledge and the most practical way to channel careers.
He goes on to say that managers are judged by metrics that apply within their departments. But no one is actually responsible for the horizontal flow of value [toward the customer]. This is the problem big companies face.
So why are small companies better than big ones?
Because you have your hand in everything. YOU (the owner/founder/entrepreneur) are responsible for the horizontal flow of value.
So why are small companies worse than big ones?
Because you have your hand in everything. When the company grows to the point where some organization by department is useful, the owner/founder/entrepreneur is better at building the product than building the company. So emergencies, inefficiencies, and other stuff happens which takes you away from managing the value flow. So you end up with the worst of both worlds. No departmental support and a poorly managed value flow.
Takeaway:
- As your company grows, either learn to become a manager/CEO or hire one.
- Lean Thinking by James P. Womack and Daniel T. Jones is a good read. More of their stuff is here
[tags]Lean Thinking, Small Business, Entrepreneur, Management, CEO Skills[/tags]