The Many Costs Of Fragmentation

The Many Costs Of Fragmentation
3 minute read
Takeaway: Locating boundaries at the appropriate places assists in identifying and fixing problems rapidly.

Fragmented thinking is common in business today. It has become ingrained into all aspects of organizations. It is a hangover from the Taylorist view of breaking work down into small, (supposedly) easier to manage and measure chunks. This ends up being formalized into organizational ways of working, structure, measurement and even rewards. Individuals and teams try to maximize performance in their small fragment - often at the expense of performance upstream and downstream – losing sight of the bigger picture.

The problem with ‘chunking’ work up in this way is that the people doing and managing the work lose sight of the end-to-end picture as it is cut up by artificial boundaries. This slows down decision-making. Power and the ability to make decisions tends to be vertical (e.g. up and down silos created by the management in each division). It also means that variances – problems or quality issues – pass across boundaries, making it harder to identify and fix them. Indeed, it becomes almost impossible to identify and fix root causes of these types of issues.

The consequence of all of this is that leaders and teams spend their time constantly putting out fires. Dealing with these symptoms of fragmentation adds waste to the organization in the form of time, efficiency and quality penalties. Leaders, falling back on their traditional thinking, diagnose the problem as “insufficient focus” and lean towards further fragmentation.

Once this happens, the organization is caught in a vicious spiral. Leaders get bogged down, having insufficient bandwidth and time to step back from dealing with the consequences of over-fragmentation to fix the root causes of problems.

The answer is to understand the end-to-end value stream and organize boundaries around whole pieces of work. Locating boundaries at the appropriate places assists in identifying and fixing problems rapidly. This is the path to greater quality and efficiency while freeing leaders to think and manage their organization strategically.

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OTM is the leading global boutique organization design consultancy with offices in the USA and UK. With over 450 successful redesigns and operating model modernizations completed, OTM is owner of the industry’s most integrated, comprehensive and holistic organization design solution. OTM enables its clients to realize their future ambitions.

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