The effect of People versus Positions

When an organisation gets created through an organic process, there is an idea, and that idea gets supported by other people, who join in, and a company gets established.

The small number of people divvy up a set of responsibilities, and they go to work!.

The core product and/or service gets most attention, and the rest is split based on natural selection and experience. For example, someone with some financial background picks up financial management and takes on some HR responsibilities, because they manage the bank transactions and payroll process. The Operational lead coordinates the overall supply chain, because the required goods and services need to be there on time to perform operational activities.

As a result each of those individuals will create their own way of working, supported by their preferences and experience and apply their technology to help them. In this situation the occasional spreadsheet begins as a supportive piece of technology until it becomes critical to operate key business processes.

The inception of the startup

Organic growth of the startup

Over time, additional people are hired and the ways of working are transferred. In most scenarios this is driven by the fact someone has too many responsibilities, and tasks need to move to someone else. In this context there isn’t a conscious decision to build a specific organisation structure, it is merely because the amount of work needs to be shared.

When fast forwarding a number of years, the organisation has grown in size (customers, products, people, footprint, etc etc). And a lot of the original processes have spun off to new people. At this stage there is a lot of trust and common understanding of the ambitions of the company amongst all the employees

Fast forward the company growth with more employees and split responsibilities

Scale through technology

At a certain point the management team realizes this isn’t scalable and considers the need for technology to scale. The need increases to replace home grown processes and technology with something that provides more insights and more control. Management decides to purchase and implement enterprise grade software, and considers this to be the enabling factor to support the demand to grow and scale. But during this transition, things start to crack. People feel uncomfortable with the proposed changes, the impact of the new way of working is difficult to oversee, the impact to your stakeholders (customers, suppliers, investors, etc) is unclear. And all of this is causing a significant level of discomfort.

‘Was this the right thing to do?'

People versus Positions

One of the key components in this situation is to understand the difference between people and positions.

In the run up to this moment, people managed their own processes, used their own preferred technology, and worked in the way they believe was right. And nothing wrong that… but it is not scalable.

When considering to implement an Enterprise Grade business application with the intention to scale, such as an ERP, CRM, HRM, MRP, those business applications are reliant on a defined organisation structured with segregation of duties. And that's because the people who designed those Enterprise Grade business applications, are assuming your organisation is operating in this style.

So when your organisational chaos hits structure, you get a very dangerous situation.

Unstructured Organisation + Enterprise Grade Software = Enterprise Grade Chaos

Lets use an example: processing vendor invoices

In the early days of the company there is someone you trust to record and process vendor invoices. That person talks to the owner of the order, gets approval on the phone, writes it down and processes the invoice for payment. Together with the Finance leader the invoices are reviewed and processed for payment. This process relies a lot on trust and not much on clear segregation of responsibilities.

When you consider implementing an enterprise grade software to manage your vendor invoices, that enterprise grade software will enforce segregation of duties because an enterprise application does not operate on trust. Users will be required to record more steps in a system, and they need to make sure there is a digital record of approvals and any side-effects from the process.

The approval phone-call and handwritten notes on the invoice aren’t meeting the acceptance criteria anymore. And these new ways of working could cause resistance from people who don't understand the reason nor effect of the new way of working

In various cases the resistance of people will result in an impact to the technology, think of customizations, work arounds, even considering a re-evaluation of the selected technology.

There goes your principle to stick with standard out of the box software….

What to do

We recommend to prepare during your during your growth process, to consider future your organisation structure and how this crosses over into responsibilities of a position. And then consider empowering people working in service of that position. This requires a bit of forward thinking, which isn't always easy when running an operation with a lean crew and a high focus on selling and delivering your products. But it good to plan time during your growth journey to identify where you want to go with your organisation.

There is often time to strategize and plan for your growth of your products and your market and your customers, but good to consider the same thing for your organisation.

Industry models

If your organisation is operating in a common industry, where many other companies operate, and you select a technology proven to work in that industry, there is a decent chance your operating model is developing towards a match for the technology. Try to gauge your maturity level within that industry and try to find suitable technology.

If you work in a specific industry, which does not have a common benchmark for technology, it is a bit more difficult. But even there, your organisation is highly likely performing a large number of processes which occur in every organisation. Consider Finance, HR, Sales, Marketing, Brand Management, Inventory and Stock Management, Production, Assembly, etc.

Those specific differences could mean you have to invest your skills and knowledge to create suitable technology, or it warrants a deviation from standard tech offering. In this situation find the right partner to decide how far you want to deviate and at what point that deviation is impacting areas that it shouldn't.

Timing

So the key question is actually around timing.

Is your organisation at the right maturity level to operate an enterprise grade business application. And a big part of that readiness is based on the maturity level of your organisation structure and positional structure. Which is directly in conjunction with your defined business processes.

And nothing wrong with trying to opt in for a system which is a bit further ahead of your own maturity, just don't try to retrofit backwards.

You don't buy a luxurious sportscar for someone without a drivers license, which you are very aware of and will cause disappointment when they can't operate it properly.