At the beginning of each year our Scout Troop puts the newly elected boy leaders through JLT, Junior Leader Training, in order to prepare them for the roles they will assume within the troop. About mid-way through the day-long training session, after we have covered the duties of all the roles, from the Senior Patrol Leader (SPL) at the top through to the Quartermaster and Scribe, and on to the Patrol Leaders and their assistants, I ask the question, “When the troop is run properly, who has the most difficult job?” Even with my give-away qualifier, most boys will answer with, “the SPL”, the boy-leader of the troop, the CEO if you will. Sadly, yes, that is often true. In a poorly run troop, the top guy does tend to end up doing all the work, but if it’s run properly the hardest workers should in fact be the Patrol Leaders, the department heads, the platoon leaders, which I can usually quickly demonstrate by role playing a few typical troop and patrol meetings. The PL’s need to know all of their patrol members, their current ranks, their needs for advancement, and they should be structuring events like campouts, hikes and bike rides so as to help their patrol members advance and grow in skills and rank.

Likewise, it is no different in a well run corporate or non-profit organization - the weight of the expectation of results rests on the shoulders of the mid-management team. It is at this level where the resources of the company meet the needs of the customer. It is at this level where resources are allocated for consumption, process are developed and deployed, the potential for value creation is shaped, and problems are solved. The manager is the first level at which we pay not just, and not even primarily, for technical skills and knowledge, but for RESPONSBILITY. Unlike the front-line employee, the manager cannot just leave his/her work behind them when the shift ends at 5:00pm. At the same time, they exercise this responsibility and leadership just about as far away from centers of power and strategy as you can get. They are often ill equipped and poorly supported and trained for this role, coming as they typically do, straight from the ranks of the customer-facing front-line employees and supervisors they now manage, where, unless properly trained and guided, they often mistakenly try to apply their front-line customer value-creation skills to their new role in process design and management.

With those high expectations in mind, tell me, what are we doing at the level of Senior Management to support them, besides giving them annual objectives and stretch targets? What appropriate and effective tools and training are we arming them with in order to give them a realistic chance of meeting those objectives? It’s not as easy of an answer as you might first expect. At the executive level we understand our own needs and have largely supplied ourselves with the appropriate ‘tools’ to make those strategic and investment decisions, and we can readily envision the tools required by the people on the front lines, be it machinery, scientific equipment, repair tools, computers, telecommunications, or information. But as for middle management, if we give them any thought at all, it’s probably that whatever’s good enough for us at the top is good enough for them. Is that really good enough? Good enough for them to deliver those results? Good enough for the long-term health and survival of the organization?

As a simple representation of the difference in the roles, consider the 3-Gear diagram to the left, with Executive Management at the top, Customer Facing employees and supervisors on the front-lines at the bottom, and between the two, Middle Management. Investment funds, represented by the narrow, light green arrows, and an overall strategic business direction flow into the organization from above; from the capital markets through the Board. The top gear, Executive Management, sets the strategy, creates the long range plan, develops the budget and allocates the investment funds in accordance with those plans. The bottom gear is where the rubber meets the road, the front lines, where the bulk of the organization is engaged in creating CUSTOMER VALUE. If all goes according to plan, Customer Value equates to Organizational Value, with more cash being returned to the investors than was consumed, the difference representing the value added by the organization as a whole.

Bridging the gap between the allocation of resources in accordance with strategy, and the creation of customer value, are our business processes, the key to sustained, repeatable value creation. Without process, value creation becomes ad-hoc, uncertain, likely to deviate from the strategic direction of the firm, and pretty much guaranteed to degrade from value creation into value destruction. Without process in place to take advantage of critical mass, economies of scale, and organizational learning and communication, value creation, if it occurs at all, becomes merely a craft, dependent upon individual skill and initiative, a relic of the mercantilist age. Consider the difference between a corporation of 60,000 employees and 60,000 fans packed into a football stadium. Without a force present and engaged to organize those 60,000 fans around process in accordance with strategy, no matter how much fun they may be having rooting for the home team, they are as unlikely to create value as are 60,000 monkeys typing away hoping for perhaps a single true sentence from ‘War and Peace’.

With that said, I’d like to welcome you to Value Alley. Today’s step onto the pathway is just the first of many as we periodically tackle in more detail the relationships between the three gears, with special emphasis on the Middle Management / Process role, to better understand how strategy, executed through business processes, creates and continues to create value, and what specific tools and support middle management needs in order to successfully produce long-term, value-creation results.