New Article: Every Department Tries to Win – and the Business Loses
In many organizations, every department works hard and most status reports are green, yet the overall result falls short. People act rationally from where they stand: they pursue their department’s goals, protect its budget and headcount and compete for priority and capacity. The system rewards this – and those who play it best rise and set the incentives for the next generation.
I wrote this article because I have seen this pattern with many clients over the years, and I still see it today. In my experience, it is one of the biggest problems in transformations. Most development organizations are designed for functional departments, while value creation runs across them. Combined with departmental incentives, this structure implies failure before the work begins.
Leaders often do not take on governance across the departments and leave each of them its autonomy – frequently so that responsibility stays entirely with the departments. That is exactly where the problem lies: a system does not steer itself. As W. Edwards Deming put it in The New Economics: “Left to themselves […], components become selfish, competitive, independent profit centers, and thus destroy the system.” The usual responses – more coordination, more reporting, more pressure – tend to reinforce the pattern.
The article starts from Donella Meadows’ observation that everyone in a system can act dutifully and rationally, and the result can still be terrible. It describes five starting conditions under which acting in one’s own interest also serves the whole, and shows how Value Stream Thinking builds them step by step from the existing structure – including why funding, goals and recognition have to change together with the structure, and why AI amplifies whichever structure it meets. It closes with questions leaders can use to test their own organization.
Alongside the new article, I have updated Organizing Around Value, The Team as the Smallest Unit of Value Delivery and Designing Organizations Around Value, so that the thread runs consistently through the related articles.
Read the full article: Every Department Tries to Win – and the Business Loses