The Confusion Tax | Stefan Norrvall

Strategy often fails for a boring reason: nobody knows who can decide what, and everything slows to a crawl. We sit down with Stefan Norrvall, joining us from Australia, to unpack organisational coherence and why it beats the usual push for “alignment” when dealing with real-world complexity. If your organisation feels busy but stuck, this conversation gives you language for what is happening and a model for what to fix first.

We dig into Stefan’s run serve change heuristic and how each layer carries a different type of work, a different time horizon, and a different kind of complexity. Run creates value at the frontline. Serve as a coordinating hub across multiple run units to ensure they do not clash on resources, standards, platforms, or handovers. Change sets intent and enterprise constraints by reading the external environment, defining risk appetite, and making the big calls that shape the system. When serve is missing, leaders get dragged into operational conflict and lose the capacity to do real strategy work.

From there, we name the “confusion tax”: the financial and human cost of unclear decision rights, endless escalation, and slow governance. We talk scenario-based tests that reveal where decision latency is baked in, why PMOs and change teams often report without authority, and why copying frameworks cannot compensate for poor operating model design. We also challenge strategy theatre, forced cascades, and agile rituals that do not improve decisions. If you want strategy execution that actually meets reality, listen, subscribe, share the episode, and leave us a review with the biggest confusion tax you see in your organisation.

Find Stefan's Work: 
LinkedIn: https://www.linkedin.com/in/stefannorrvall/
Substack: https://substack.com/@synexia
​The Organisational Confusion Tax Scorecard: https://scorecard.synexia.au/confusion-tax

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Transcript

Welcome And Guest Context

Mike Jones 0:00

Most people do think of strategy that way.

SPEAKER_02 0:02

Developing a new strategy. Strategic blind spots.

Mike Jones 0:05

When strategy meets reality. Strategy and innovation.

SPEAKER_02 0:08

In the strategy world.

Mike Jones 0:09

Drive their strategic goals. And welcome back to Strategy Meets Reality Podcast. And welcome back to the Strategy Meets Reality Podcast. I'm delighted to have Stefan Navell to join us all the way from Australia today. Great to have you on the show, Stefan. I've been looking forward to you appearing for quite some time.

SPEAKER_02 0:28

Well, thank you. Thanks for inviting me.

Mike Jones 0:29

Cool. Just for our listeners, do you mind giving a bit of background and a bit of context of what you've been up to lately?

SPEAKER_02 0:35

Lately has been a lot of work on trying to come up with a different way of thinking about organizational design. Having been in this space for many, many years, I wrote an article in, I think it was November last year that got a lot of traction, which spoke about complexity and that the different types of complexity in an organization won't go away just because you just because you have fewer managers or uh you know agile teams and and and that kind of stuff. And so from that, myself and Richard Clayton have developed a new model for looking at organizational coherence, which by all accounts is very well connected into the work of strategy. If we're looking at those two as two things that have to go together. So that's been a lot of my focus in the last couple of months. And I'm also applying that right now in a large-scale org design project here in uh here in the world.

Alignment Versus Coherence

Mike Jones 1:39

Nice. Yeah, that's exactly what I wanted to get you on for. We briefly met Ada a long time ago, but who stuck I think that article sort of reignited us, and I'll I'll put your substack in the link for this episode to to urge people to read the article because it's really good. Um and it really and you bring up a really good point um about coherence. And often people say to me, Mike, what what's the difference between alignment and coherence? And that's and there's a lot of people get upset with me because I say I talk about coherence, not alignment. But I think there's a real important distinction, and you draw that out really clearly in your article.

SPEAKER_02 2:14

Yeah, I'm glad I'm glad it resonated. And I think the alignment to me seems to have a bit of linear causation behind it, and and I think coherence is it's a better, more systemic lens, I think, on on how we think about this. Organizations I think you and I would agree that they're not machines, they're not you know, the cause and effect aren't always uh linear, so we need different language and and different models for for thinking about it.

Run Serve Change Explained

Mike Jones 2:41

Yeah, because I got a no there's a book by Jonathan Trevor that talks about alignment, and I challenged him on on that very much point. It's very with alignment, you've got that risk always of centralizing something and make thinking that every part of the organization has to be the same, and and often they aren't because they've got different tasks, different parts of the external environment, different elements and complexity they're trying to deal with. Um so yeah, coherence, I think that that bit that enables your uh parts of your organization um to be self-organizing, adapting, but without fracturing the whole, I think is really important.

SPEAKER_02 3:25

Yeah, we the first article that I wrote really sort of tried to grapple with the idea of work, like the concept of work, because it's it's it's a term that's used so often and and it's always it's almost like seen as as one homogenous thing, work. When I think we we try to talk about, you know, try to make it easy and not get too stuck into the the theory that sits behind it. But we use a simple heuristic of run, serve, change. If we think about three core buckets of work, that's all important and all needs to happen in an organization, just to get a bit more of a grapple of like what is this part of the organization dealing with? What what's the what's the type of complexity that it needs to grapple with? Is it operational complexity? Is it coordination or integration or environmental complexity? And we think about this as a recursive model, which means run serve change happens at every layer, but where the emphasis sits is is different. So if you're close to the like value creation side of things, the core focus should be in in operations with less in sort of the the serve, which is the coordination integration stuff. And when you talk about change from an environment point of view, it's with that local environment that that that operations is serving. And when we then go up to the first higher up recursion levels, then change is is about the enterprise as a as a whole. Um and to your point before, they operate at different tempos as well, which is an important factor to to to consider in this.

Mike Jones 5:05

Yeah, I think that that fractal level always gets confused. Um, and I think it's getting even more confused at the moment because you've got um I'm trying to think of a kind way of putting them, but the these people that talk around this new race thing of completely flat organizations, the new one I've heard recently is polymorphorous or something organization. Okay, yeah, it's just this thing that they just expect that the an organization being it at least they get the fact that organizations aren't a machine anymore, but um they think that it's just gonna sort of self-evolve um and emerge to something without any sort of um sort of constraints put in place, really. Is it I think it's a bit um and wavery to my to my point.

SPEAKER_02 5:51

Yeah, yeah. And I think I think that's uh that's a key, the key concept, the constraint side of things, because I think that's that is the work of of change, what the what we call change at the at the sort of the enterprise level, is really around setting the higher level constraints of the business in terms of the you know, what are the markets that we operate in, who are the customers we're targeting, what's our risk appetite, and and and those type of things, and really sensing the much broader environment and trying to then either shape or be shaped by that and how that how that's evolving, which is you know right in the strategy space. But when it then goes back into the organization, it's about how does it then how does the server take some of those constraints and and make them real, so to speak, in you know, in terms of how do we almost codify them in terms of systems or platforms or whatever we might have that would then enable the run side of the business to just focus on run. So the boundaries are clear, this is how we need to operate, and and they could just get on with that work without having to also then carry the integration and coordination load at the same time.

Mike Jones 7:08

Yeah, yeah. Yeah, I agree, agree. And I I feel I've just been guilty of something that I always do because I get so excited because I want to jump in and talk about stuff. Just just for just clarity for our listeners, you wouldn't mind just giving a quick little um thing around what you know how how are you defining run, serve, change um in an organization.

SPEAKER_02 7:26

Yeah, so run is whatever the organization does, like it's it's basically it's it's core purpose. So if it's uh you know, if it's a bakery, it would be you know baking baking the goods and and and selling them, you know, the frontline type stuff. And serve is about the it's you only really need a like a serve layer if you have multiple runs. So if you have multiple operating units, because that's where the coordination and in and integration comes into place, because you don't want the various operating units to cannibalize on each other or to compete for resources in in a way that then obviously negatively impacts the operation of the business. So the server is there to sort of, and we spoke about coherence before, so it's about making the operating units coherent with what the intent is from the whole of the business, which might be you know branding, its identity, making sure that the same cybersecurity uh approaches are implemented across the business, customer data management, if it's a big organization that got those type of things that has to deal with, all of those type of things. And it's about sort of providing that almost as a service, so that yeah, when we design the work in in those things are just taken taken into account, but they're managed by by someone else in the business.

unknown 8:50

Yes.

Why Leaders Get Pulled Into Run

SPEAKER_02 8:51

Um and then change is the uh is is the the layer above, which is usually what we would probably call like the executive layer if you if you if you want to, if you uh but it's really about longer time horizons and it's about thinking about how how are we fitting in with the external environment in terms of what what are the signals from the external environment that we need to either respond to, because there are things in the market, you know, customer sentiment has shifted and and what we're selling is is no longer appropriate, or we need to evolve the product mix that we have or the markets that we operate in, uh, those type of decisions that are much longer term. Uh and also then the identity of the organization itself. Like, how does that, like, who do we want to be in the in the market and with what we're doing? And how does that then translate via serve into the way that we design work in in our operating run units? And we we run a really simple um sort of tests, like with executive teams, once we've introduced the basic heuristic of run, serve, change, and then just ask them to think about what where is your where is your time spent? Do you spend more time in in run actions or serve actions or or change actions? And and more often than not, they spend way too much time doing or responding to, you know, operational. We we call it structural load because we don't want to get caught in the in the whole complexity science sort of debate. So we talk about structural load instead of complexity, but it that's what they're dealing with. They're dealing with operational load instead of focusing more on the change. So they have a the allocation of their time is usually a bit skewed compared to what we would suggest that they it should be.

The Confusion Tax And Decision Latency

Mike Jones 10:43

Yeah, you really highlight that key problem because you know when I deal with clients and we're talking about strategy, there's normally really two big elements that are happening. One is that they are dealing with, as you call it, the run of the organization because they haven't got that serve element in. There's no coordination, so they are getting pulled into all the conflict, um, all the the um arguments about whose decisions who, and etc. Which then completely takes all their time. So they have no capacity, spare capacity to meaningfully then look to the external environment to go, well, what's changing? And what do we need to start adapting uh or or changing so that we maintain that fit in the external environment? Um, I I see that quite often. It always surprises me, and I think I commented on one of your posts the this weekend or or something, I can't remember now, my days just disappear. But I said it's it's really does surprise me when I review org changes or I review a current um organization, how very little that you what you call that surveyer is even considered.

SPEAKER_02 11:53

We uh we're we're running uh some work now, large org structure change, thousands and thousands of role descriptions and functional accountabilities have been drawn, and value streams and racy charts, and you name it, every every operating model artifact under the sun. And we still find that there is a tremendous amount of confusion when it comes to who makes the decision on this, especially at like boundary interfaces where more than one division or you know, part of the business have to come together for something and they just don't know. And this is the idea that you know, the concept that I call the confusion tax is just like that that hidden cost that an organization pays because it can't provide the clarity uh of how it's supposed to work. And that cost is, you know, there's a financial cost to it because of decision latency, because of how long it takes to get decisions done. And then it's the the human cost, which, you know, not to be underestimated in terms of all of the pressures that it's putting on people in sort of unauthorized or unscoped out roles that have to carry this structural load because it's not designed anywhere. But people carry it anyway because they're there that they want to do a good job and they can see that it needs to be needs to get done, but it's not officially designed to your point. But someone still carries it and it then comes at a at a quite a quite a high cost. So it's it's an expensive way to it's an expensive way to run the business. And there is a couple of simple things that you can do to try and highlight it. And the way we're doing it right now is to get a whole range of different people in in a room and and run them through a couple of really pointed scenarios. So this is uh this is an asset, an infrastructure organization, so a lot of heavy assets or you know, big assets that they build and and and run. Um so asset handover, when you have uh in this case, they've got a functional design. So there's a delivery function and then there's an operator maintain function. And we go, well, when there when there's a conflict between an asset being handed over from delivery to to um the operator maintainer, and and things have changed. Like could these things could take years to build. So it could take like three, four, five years to build the asset. And then things have shifted, you know, the the standards have shifted, or the regulatory landscape has shifted. So the way that it was when you started, you know, when you wrote the business case and you or you got the money to build the asset, the environment has shifted. And now there's a conflict about, well, this doesn't meet standards anymore. And then you go, well, okay, so when you have this conflict, which happens all the time, who makes what calls? And they can't answer it because it then all that happens is it gets escalated, and God knows how many different forums have to be involved, but they just cannot clearly say up to this level, it's this person who makes the decision, or this role has got the authority to make this decision on, you know, whatever the different thresholds are: risk, delays, cut costs, and benefit, impact on all these different things. So it just forces out. So there's a simple exercise you can do in terms of like getting people to really think about some of these really key boundary interface and have a really crisp scenario, and then test out how much clarity you have. And then you should be able to point to an operating model artifact that that explains it. And more often than not, you can't because you have it, you have a razi chart that's got you know one or two roles that are accountable, three roles that are responsible, and then you go, well, what what about when they disagree? What happens then? Yeah. So it's a huge cost to any organization, which is also why why strategy so often doesn't work, because we haven't done that loop around decision making to actually enable the strategy to get legs.

Mike Jones 15:53

No, they don't know where to point it to. And this is the thing that confuses me a lot in organizations, is because you know, we're we're talking quite a thoughtful way to design um an organization so that it can actually do what it's meant to do. When you go into some organization, it hasn't been thought through that way, it's been designed because you know, um you know I've got so many execs and they need so many uh direct reports, or we've now got this extra team because Dave wasn't capable of doing the job. So instead of investigating to understand what it is, we've just split it apart. Now we've created a boundary which is going to increase conflict and complexity. And then so when when we're trying to make a strategic decision and we're gonna give direction, we don't know who to give that direction to, or who's actually responsible to to enact that decision, yeah, and that's where it just turns into chaos, and then our only way to try and square that away is to create another PMO to just manage things, and we start then delivering it like a project program management style approach, which just is just not going to work.

SPEAKER_02 17:09

No, and and also then with uh with the PMO, um, are you actually giving the PMO like what I would call like the requisite authorities to actually do what they would need to do to be successful in in their role? What are the outcomes that that PMO are actually accountable for? A lot of PMOs that I've seen, all that they're accountable for is providing, you know, like ratings on on where projects or programs are up to. They don't have the authority to reallocate, reallocate resources from a portfolio perspective because you know one's delayed or there's a you know, there's a scarce resource somewhere that's better applied over at this program over here because it's the priorities have shifted and actually it's more valuable over here, and we can accept a bit of delay over there. They don't have any authority to do any of that. So all they can do is is report. And that's it. Yeah. And you go, well, okay. And it's the same with what's the real value of that?

Mike Jones 18:08

Yeah, yeah. And it's the same with change teams, you get Matt of C and change teams that are um technically accountable for the success of the change, but they've got no decision right or authority to uh do anything with the change. They've just got to um hope that they can get you know someone on board within that uh function or team that they're trying to enact the change on to help lead it. Yeah.

SPEAKER_02 18:36

And I'd say all of that it that's like poor design.

Mike Jones 18:40

Yeah, yeah, yeah, yeah. Huge. And and I I often talk about uh that there in an organization, there's a strategy being enacted. It just may not be the one that's stated.

SPEAKER_02 18:53

And probably more often the case, more often the case than not, I would say.

Mike Jones 18:57

Yeah, yeah. And I and you know, I can go on a massive ramp for like why that is, you know, there's there's the part we can agree that sometimes the strategy that they do is just uh aspirational nonsense, not actually anything strategy. But the other part is that because we've got that like I love the term confusion tax, because there's confusion about who should be doing what and and and where and what it means, is that the and you said it earlier about being shaped or shaped um or shaping. So the organization is going to react to pressures, be it from the external environment, be regulation changes, be it other actors, the competition, they're gonna react to those, and they will do, especially if you've got no constraints in place, no guidance, no direction that's clear, other than we're gonna be the best in the world at something, as well. Most strategies, your organization is gonna do stuff. It's and the leaders then up in the change space, you call it, they they convince themselves that the organization is enacting the strategy that they they that they've set out, and it becomes this almost mental gymnastics of trying to confirm that everything is going as planned.

SPEAKER_02 20:11

Yeah, and I think more often than not, as we know, that is not the reality of of the situation. And what what tends to happen is that we we just get an organization that pulls in multiple different directions at the same time. And the worst part of that is is that it's probably for really good reasons, and like everyone's acting, I would imagine, quite rationally from their own perspective of where they're where they're sitting in the in the bigger system. But because you're lacking that sort of lens of the what is coherence for this organization, there is nothing to anchor back to. So we're all pursuing, and I'm I'm sure you've you've spoken to to others about this probably to death, but the whole local optimization side of things, because everyone's pursuing what's best for them within their tiny little environment without thinking about actually what's what's what's better for the whole. But if no one can speak to what what the whole is supposed to be doing anyway, then the rational thing is probably to pursue what's best for me and and my team right now.

Constraints That Create Freedom

Mike Jones 21:16

Yeah. And and I and I don't blame them because one in part you sort of want them to do that, because that's what you want them to do. It becomes they start to fracture when there's no clarity around what it is. And when you see, and I I talk about this a lot, people are gonna get roll their eyes and go on about it, but when you see purpose statements, vision statements that are just a load of nonsense, no wonder people can't then think about what's the hole actually doing when you see purpose statements like uh Lloyd's Banking Group, I like using. Um I hope they didn't try and get me done for a libel. But they say that they're here to their purpose is to make Britain prosper. That's not that's not what the hole is doing. I'm very surprised. Yeah, yeah, yeah, yeah. And so and you've got like Thames Water who have just been fined a hundred or million, maybe more, for sewage pollution. But their um their purpose statement of what they're saying they're there for to do is to make communities thrive. I'm like, well, that's not that's not what you do. That's not what you're there for. You're there to provide clean, fresh uh water.

SPEAKER_02 22:30

Yeah, yeah. That'd be the simple that'd be the simpler what simp simplified way of just getting to the to the core of what they're what they're there to do.

Mike Jones 22:39

Yeah, yeah. Obviously there is more, but that's the point. When you get to the once you understand, and I use posse with staff of beer, the purpose of the system is what it does, once you understand what it should do as the whole, then you can break down well well what the subsequent parts that enable us to do that. And then you can start getting into yeah, how how do we split lump design the organization? But when it's just nonsense, it's hard to do that.

SPEAKER_02 23:07

This is where this is where the the sort of the surveyer also comes into its own because it's it is that layer that helps coordinate between the operating units. So if that's done well, so if if the change work has been done well in terms of clearly articulating to the sort of the server layer in terms of what are the the non-negotiables and and and you know what is it that we're what is it that we're here to do, then you can design the servo layer in such a way that the various run units don't run off in their own directions at the expense of each other. Because there is there is the bigger picture to to to sort of anchor back to. But I think it still sort of sounds that uh I'm worried that some of the wording comes across as as everything is designed into into minutiae, but it really isn't. It's it's really about trying to do the minimum thing, the minimum design sort of constraints that you can. And usually at the change level, that's much higher. It's it's like writing, you know, drawing out the box to sort of inside this box, you know, these are the customers, these are the market segments that we're that we're targeting. We want to be this type of organization. We will accept risk up to this point and you know, don't spend more than X. There you go. Those are the parameters. And then some of the constraining things that you know that can't be tinkered with would be enabled by the surbler, but then run is by all accounts, they can they can colour in that box in in you know whatever colour and whatever pencil they like. Uh that they should have that freedom. So it's not about sort of you know getting in into the weeds and and trying to think that intentful design is is down at the minutiae because it ideally it's the other it's the other way around. You know, you want to do as as little as possible to get to the max maximum amount of freedom within the agreed constraints.

Mike Jones 25:04

Yeah, because you've got once you've got that, you know, clear articulation of what the whole's trying to do and what they're trying to do, like you said earlier, people want to do a good job and and they will do a good job. But also a lot of the I have to remind people, a lot of the constraints are already governed. So, you know, if you work for um uh the rail industry, there's a lot of um regulations that are already there, you know, so you you don't have to go into a lot of these things. And I think that sometimes people miss that when they they're thinking about the constraints of the organization.

SPEAKER_02 25:37

But I think yeah I think constraints, I mean sorry, but constraints is probably at times a very misunderstood word. My view is that you know, clarity of of constraints or boundaries or whatever you want to call it is very liberating because it it it allows you a very good understanding of you know, within this space, I'm I'm free to move. And it it's my job to to work out the various pathways to achieve whatever it is I'm I'm I'm trying to achieve. And I don't have to sort of bother anyone as long as I stay within those boundaries, it's fine. Yes, you need to have a mechanism for for challenging the boundaries if if needed, that's fine. But that's that's a different conversation than the the general sort of getting on with the work that you that you're supposed to be doing. That that way of thinking it goes down even to the like, you know, it's the same for a team, for a division, for an enterprise, or down to the role. It's just that obviously the the boundaries for for discretion might shift and the resources that you've got available to you would be would be different as well.

Mike Jones 26:42

Yeah, and that's the thing is I always say, you know, understand your constraints, challenge them where where needed, but exploit your freedoms. And that's what you know, if exploit your freedoms, I I'll be in a happy place, I've always been in a happy place when I've understood what my constraints are and I've understood what resources I have and what they want what people want to achieve. Once I've got that, I'm I'm happy because I can understand that and I can look at what's changing, what's happening, and I can respond intelligently towards those changes because I I have that that freedom, the clarity of freedom.

SPEAKER_02 27:19

Yeah, and I and I think it's just gonna I think we're just gonna see more and more need for that to happen because a lot of the simpler work which you know only has one sort of pathway to to execution, it's been happening for a long time, but all of that stuff is getting automated because it's it's a very simple if this then do that. Like there is only one path to get it done. So there's like by all accounts, there's no judgment, and there is there's no decision making really, because there is only one path to to follow. And and and why would you why would you get a human to do to do something like that? You know, you're not tapping into the the capability of that human being by by getting them to do that kind of stuff.

Mike Jones 28:04

But that's what we try and that's what we end up because um I see it when when people we were talking about you don't have to find it too too narrowly or or too much in detail because it's a new requirement. But people do, definitely when something goes unexpected to what they wanted, then they start then um, you know, they completely remove the um the serve layer and they just try to manage that serve layer by adding more more policies or more rules, more processes, and it means then what you've got is your run layer, have got no lateral movement, they've got nothing. They just have to blindly do what's been said, even though they can see that that's not going to match the complexity or the the ask that's that's required for an ex-end environment.

SPEAKER_02 28:54

That's right, which which then becomes a you know a requisite variety issue in terms of you you don't have the capacity to to deal with with the multitudes of of sort of you know demand or requests that that are that are being asked of you because you've been forced into a situation where you can only respond in one in one or two ways to anything that that that comes your way. So we're we're stupefying the system, if you want, by by not allowing that that freedom.

SPEAKER_03 29:21

Yeah.

Designing For Trust Not Control

SPEAKER_02 29:22

And what what tends to happen in many organizations is the run what I call an escalation grammar when it comes to dealing with variants or disturbance, you know, things that are out of the norm. So anytime something like that hits, you have to go to the supervisor to to um to get approval to fix it. And that again just adds another layer and it adds latency. The time taken to get an outcome for a decision increases every time. But sometimes it's it's it's the only way it's the only way that's safe to operate because people have been have people have seen shot on the public square for not following that process, so it doesn't feel safe to to exercise common sense really. But it that's it's not a safe way of of of operating. So and the organization is just baking in the confusion tax and institutionalizing it, just and then it happens on multiple different parts of the organization, and and now we're we're just one confused, you know, organism.

Mike Jones 30:28

Yeah, and I was uh in an organization end of last year, and there was an employment lawyer there, and she told all these leaders that there was no such thing as common sense, and I kind of get uh what she was coming at at the point, but that sort of approach, thinking, well, there is common sense, but common sense needs to be bounded by all the good things we're talking about, constraints, clarity of intent, you know. Then, you know, they've got the right knowledge, skills, and ability because we've trained them to do that role.

SPEAKER_02 30:57

But I think we we just assume stupidity and we build from that point, and then we make it so difficult for people to actually do the job that they'll just written about this and I've spoken about this for uh a very, very long time, and we tend to design we we design systems in in organizations for you know the the 1% that will do the wrong thing. And we we're trying to protect ourselves at all costs for for that anomaly to to to not happen. And then you go, so now you've just made life so much harder for 99% of employees that have to follow this this this process or this system. And you go, is it really worth it? And wouldn't it be smarter to just assume that most people will will do a good job if if they've got a good job to do, or they will do the right thing. Uh and if someone does the wrong thing, just deal with it as an exception. Just don't make life harder for everyone else. We're very, very good at you know own goals, so to speak, or just setting up like every obstacle we can to make it harder for people to just get on with the work. And we do it, you know, big feet because we we think it's saving the organization something when you go, like surely the the the cost of running such high confusion uh or such a punitive design would be outweighed by uh a simpler, more straightforward way of thinking about things. You know it's installed, you know, McGregor Theory Y Theory X sort of assumption, you know. We're designing it on the assumption that everyone is a Theory X person when in reality no such person existed, but we're we've created them by the way we've designed our systems of work.

Mike Jones 32:50

Yeah, yeah, yeah, yeah. We we and and that's the thing when that when when you get that odd person that does something, um, we don't deal with that person, we we punish everybody else. Um because we we've set it up in that way. And I and I think another thing where I think distract people a lot in um design, and it comes back to that survey and the fact that you know you mentioned it earlier that we we create these, you've got these multiple run functions or teams that are all doing jobs, and we want them to have the autonomy to do what they need to do, to be self-organizing, but then we need that survey to ensure that we minimize the conflict, um, we're not fighting over resources and stuff like that. But that we don't think about that. So what happens is that you get these teams and they start having these conflicts, or they make decisions that are not good for them and not best for the whole, or they fight over resources, and we automatically go it to a silo problem and we go, oh, it's a silo problem. So then um I will jump in and we'll start doing stuff like empathy mapping or working better together days and we get them together to try and do it when you think, well no, you just have no you have no survey, as you put it, there's no coordination. We haven't thought about how do we hand over things that need to be, we've not thought about what what information or inputs does this team need and where does it come from that enable them to do what they need to do, where does their outputs go and who needs it? We haven't thought about this this this actual design, so then of course it's going to appear like a silo, but if you sort those out, then there's no such thing as well not not that it's not such a thing, but you know, you'll minimize the idea of silos.

Closing The Strategy Execution Gap

SPEAKER_02 34:38

A hundred percent. Uh and I mean I I I think that there's uh there's a concept that we I mean I was that I talk about around responsibility domains, which is like the first part of the model that I'm that I'm working with, which is around having really clear, good boundary design for the outcomes that you're that you're seeking. So you try and not fragment uh you you really want a team uh or you know, whatever the unit is that you're that you're sort of looking at to be as autonomous as they possibly can in terms of achieving whatever the outcomes are. You know, rely as little as possible on on other teams. At some points, it, you know, or some some things that won't necessarily be where it's possible, but a lot of the times you can probably have one team accountable for some you know customer outcome where they are contained fully in that so that from start to finish they can get the job done, which then that's a what I would call that's a that's a coherent design if if you have that. Uh and then you think about ideally there's a normative normative statement there, but the the most the most cost-effective way of running that is to have what I call like local correction grammar, which means any variance, disturbance that happens inside that in terms of delivering on that outcome can be resolved by the people within within that responsibility to name. They can just deal with it, you know. That that's just half of the course, something weird happens, they just deal with it. And that it's seen as a that whole arrangement is is seen as a as a legitimate way of operating, which is sort of the third axis of of um of our model that we that we think about, which is is an important important part of uh of coherence because a lot of the time in in a fractured organization we will we see a lot of I guess professional injury. We see people feeling that they can't do what they think is the right thing because that will be penalized by the you know, penalized by the organization. You know, you have you know nurses who feel that they like almost breaching like nursing ethics because the organization is forcing them to do something that they go, I really don't want to be doing this, but if I don't do it, I'll get punished for it. Engineers, you know, feeling that you know there are people signing off on things that they shouldn't be signing off on because for a whole bunch of different reasons. And we see this all over. So you could have you know, you could have a good responsibility domain, you could have the right grammar in place, like the regulatory grammar in place. But if that's if that arrangement's not seen as a as a fair, you know, respectful way of operating, you still have a fraction because you've you've got a bit of a clash in terms of the the moral side of the org design, which is again costly because that's that's also the stuff that burns people out and makes them feel like why am I doing this? Like, why am I stuck in a system that that operates in this way?

Mike Jones 37:51

Yeah, you you you're exactly right. And that it all all this is is perfect because if you have these um um different domains, the roles are clear, um decision rights are clear, it helps them with the uh execution of strategy. There's always this this gap that they talk about, the gap between strategy and execution. Um, and there always is going to be a gap because we we as a sense of hypothesis that we're gonna test through action and when we then um hit reality it will uh change in different ways. Hopefully it it it enacts how we expect, but we've got uh different actors that respond in ways that we didn't expect, you know, it may hit um some other challenges in the contextual environment, but but it gets easier to manage that gap because we understand who's responsible for that, they understand who's responsible for it, and we're giving them the the the responsibility to see how it's landing, see the gap, and then take ownership of of adapting it. So they're still meeting the intent, they're just changing how how we're getting to that point, and it makes the execution a lot quicker, a lot easier to understand and easier to to implement.

SPEAKER_02 39:08

So I think a lot of transformation programs, etc., get it get it wrong because it's it's very a lot of the time, it's it's whole of organization change, like all the time, which is sort of change that coming coming from the the top, so to speak, and it's it's enterprise-wide all the time, when really they should probably be operating at different tempos. Whereas the you set out the intent, put some boundaries in place in the SURB layer, but then the the operations that are closest to the to reality in terms of the well, what is actually happening in the market, how are these things landing, the the changes, whatever they might be, how are they actually landing in the market? What are we learning like right at the cold face with with what's happening? And you go take that learning and you can iterate really quickly, and you can be really agile in the in the in the operational layer of the of the business. Again, provided that you've got clarity of what the constraints are that you're operating under. So go off, make those changes, but you're still true to what the overall intent was. So you're still coherent, even if you do A or B, it doesn't matter. But they should then have the freedom to do that. If if every time they want to make a little change, like the decision making has to go all the way up to the top to get a decision. Well, opportunity lost because it's gonna take two weeks before you get a response. So you've now lost the opportunity to do something quickly, maybe learn something really valuable and actively bad off.

Mike Jones 40:45

Yeah, yeah, yeah. Well, really, the only times you want is if they're going to go beyond some constraint, but you know, apart from that, they should just be free to do what they need to do to achieve your intent. And you're right about this. So I heard someone talk about it and they go, well, one of their disqualifiers for if it's strategy or not was that if it doesn't involve the whole organization, it's not strategy. And I'm like, Well, that's not true, because uh I I will I could have a strategy, which is a sense of like and it definitely when I I I term you know why we have strategy is because our pursuit for viability and advantage. Well, we're responding to changes in the external environment, which means that actually to enact this strategy to do that, I only need to involve that function, that function, and and that's it. The rest, I just need to carry on doing what exactly what they're doing now. So they're still involved, but they're just not changing or anything. But they're still agreeing as well. 100% agree. Yeah, yeah. It seems an obsession with change, especially with change that has to involve the whole organization. You think you yeah, are you ludicrous? You're gonna destabilize the whole organization for that reason.

SPEAKER_02 41:59

Yeah, and then and then that it translate into that it's supposed to translate somehow, cascade into every every part of the organization. So all of a sudden you now have to, and this is where a lot of this, you know, the the theatrics come in because you now have to massage something to fit something. You have to you have to you know, the finance department now have to prove or show how they're aligned to strategy. And you go, well, I'm accounts payable. What what how does my work like we've what difference does that make to my work that we're launching a new set of products or we're going into a different market? No difference, no difference at all. And that's not where the battle is going to be won or lost, if if accounts payable is is working or not, unless that's the service that you're actually providing, but you know, it's a very small subset of businesses.

Mike Jones 42:50

Yeah, yeah, yeah. There's all this there all the time. Um, especially because most orthodoxy is a strategy. Um they can't just have a strategy, they have to have new values as well for some reason. I don't know why. Um they seem to have lumped them all in the same thing. So not only are they trying to then sort of post-rationalise, justify what they're doing to the strategy, which we we know what happens. They just they look at it and just go, well, what am I currently doing? How can I then how can I then write it into my objectives that I'm doing that and it's aligned to the things also they need to do that with values as well. Justify how you've shown integrity.

SPEAKER_02 43:28

Yeah, which you know, a lot, a lot of values. Again, of I think values is just a that's just a red herring in it in its in its own right, because it's not usually it's not about the values themselves, it's about the behaviors that we that we associate with that value. We we can we can have two different groups and we can both value honesty. But what honesty looks like to group one and what honesty looks like to group two could be widely different. But it's the same value. It's the same that you have the same values is sort of like a meaningful meaning, it's it's meaningless. Yeah, it doesn't actually add anything to it. And I think I've seen so many times your point around, you know, we're we're still doing a pet project. We know that it is not aligned to anything. It it probably, if we were really hard nosed about it, it probably wouldn't be a priority at all.

SPEAKER_03 44:16

Yeah, yeah.

SPEAKER_02 44:17

But we've now we've now massaged the the we've now massaged it well enough so it it aligns to an OKR or something, and that we can show some sort of tenuous link to the strategies. So now we still get the funding and we we can go on and and and doing it. Very few organizations that I've seen that are really, really, really sharp on the prioritization side of things and doing the we are gonna say no to this because that is not the strategy that we're pursuing. So this doesn't fit yet. So we're gonna say no to that, especially if they've already started spending money on it, because then it's the whole sunk cost sort of idea. And you go, well, might as well continue it. And you go, no, you'd be much better off taking whatever's left of that program, just cut this and put it somewhere else. But it just doesn't happen. I don't know if it's a courage thing or whatever it is, or self-preservation, or whatever, but it very it very rarely happens in my experience.

Mike Jones 45:16

I I've I've been trying to explore why this happens as well. I haven't really come to a definitive answer, but that there is there is different parts, you know. I've looked at this whole aversion to power and you know say no. Um, because apparently all power is bad, according to coaches. And then uh and and I think there's a lot of what you articulate in your confusion tax because we don't actually know what the thing should do, so we can't really then work out uh what is a pet project and what it isn't. And I think this whole this whole idea that you know strategy is that everything, so everyone should be doing something towards it, even though they don't necessarily need to. That's where I think it it sort of creates this lovely ground for it to to to grow and to to cause a disease on the organization.

SPEAKER_02 46:06

Which is funny because I would have thought strategy would be the one thing that would tell you or should help tell you where should we be. We've we've got scarce resources. Where should we put them? And strategy, in my view, ought to be the thing that provides some clarity around we need to invest here, here, and here. That's it. They're the three, they're the three parts of the organization that really need to run well if we're gonna have any chance of of being successful in in achieving that. Everything else, that's you know, you you just keep doing what you're doing, uh and and you know, good do a good job at that. But we don't need to be world-leading experts in in again, I'll use accounts payable. We don't have to be world-leading experts. As long as we've got something that works and not too draining, fine, just keep doing that. Yeah, don't invest in anything in financial transformation and and and whatever. When did you last see like an ERP investment in like in finance actually provide a return on investment like that was related to strategy?

Strategy Theatre And Framework Fatigue

Mike Jones 47:05

Yeah, I've never seen that. No, yeah, never have I. And you're exactly right, and it's it's it's all down calls a lot. I talk about is that this strategy theatre where there is no direction, it's just aspirational words that that mean nothing. Yeah. So it doesn't provide that clarity you're talking about.

SPEAKER_02 47:27

A lot of that, a lot of that. Uh there's a lot of theatrics going around, governance, agile, we've we've you name it. We've got every every framework under the sun, but what we haven't done is, I mean, one of the questions you get people to think about is like we've done all these changes, transformations, and we've got framework, every framework under the sun. Are decisions made any faster now than they were before? And you go, probably not. They're probably the same as they were were before because we've done nothing, nothing to make any changes to that. We're still not clear around what role makes what decisions, under what circumstances, what's okay and what's not okay. Still don't know. But now we're agile. Now we have data stand-ups. So now we now we're confused. Every morning we're confused because we still don't know.

Mike Jones 48:17

We just play in it. Yeah. I've seen that before. I've seen that before with people who done stand-up and like, well, so what why are you doing these stand-ups? What's that giving you? And I just get like blank looks. It's just we've been told to do them, so we just do them. I'm like, oh, that's that's always a good way to go.

SPEAKER_02 48:33

Yeah. Yeah. And what what changed? What changed as a result of of the meeting that you had today? Like what what decisions did this inform? You go, nothing. But now now we can now someone, some, you know, someone can tick a box and say we're doing agile because we're we're doing stand-ups and everyone actually stood up. So fantastic. Job done. And we've got a we've got a camp cam bar, it was like a scrum chart or a scrum board or whatever, and every everything has to be done following like scrum or lean or six sigma or whatever it might be, whatever flavor it is. It's it's rare to go, actually, what is the nature of the problem that we're trying to solve or grapple with here? And then what's the suitable method for addressing that? Oh, I can't do that because it has to be the the corporate prescribed method for problem solving. So it has to fit the template because otherwise the PMO would not know what to do with it. And you know, confusion and just wasted effort.

unknown 49:34

Yeah.

Mike Jones 49:35

Gull all. I totally agree. We have fun all day, like we just pull it all apart. And I've noticed um a lot of agile people now, because agile is sort of dying off, they're just sort of permeating into the structural world, which I don't think is probably the best one. Um but um love to you on. Before you go, what would you like to leave listeners to think about from this episode?

SPEAKER_02 50:00

What do we think about? Probably something around where you are paying the the confusion attacks. You've got to think about there's so many, there's so many different roles in the organization that are carrying structural loads that they shouldn't be carrying. Uh, you know, they're the the glue people that, you know, they're the ones that navigate, navigate the the complexities of the organization, and they're really valuable because it is so fractured. So you need someone that can do this, but they they're doing it at a at a very high cost to themselves. And and it's a it's a very high risk as well because they leave. That's when you're gonna find where the where the holes are in the in the organization. But unfortunately, someone else is probably gonna come and plug them because people do want to do a good job. They don't want to see customers not getting what they want or and what they need, etc. So I think there's probably something there around the confusion tax and decision latency. Um, like how long does it take to get a decision done? Like the simple test of how many layers of the organization does the does a decision have to go to actually get to get to an outcome. All of that stuff is they're just signals of of a confusion tax that you're that you're paying.

Final Takeaways And Closing

Mike Jones 51:17

I think that's great. And uh for people who want to look at you know org design in a more thoughtful way, uh, beyond just boxes, and that's what I keep seeing all the time. We've done an org change, we've just moved boxes, actually thinking about the the architecture behind it, the decision rights, the flows, all that good stuff. That I thank you for so much for coming along um today. I've enjoyed this is this is is these types of conversations where I wish I could get away with what Joe Rogan does, and we go for like three hours, because I think we could we could do that.

SPEAKER_01 51:52

We could probably talk for three hours, that's that's for sure. I can talk for Australia on this stuff, so yeah.

Mike Jones 51:56

Yeah, yeah. I've loved it. And um, for the listeners, if you loved it, please um subscribe, share it so that other people can get value from this this conversation and from Stefan's work. Um, and I look forward to seeing you all next week. But Stefan, thank you so much. Thank you for joining me.

SPEAKER_01 52:12

No worries, thank you.