Using Causal Relationships to Prioritize Actions

In The Fifth Discipline, Peter Senge (1990) describes the five disciplines necessary to create “learning organizations.” To successfully apply a systematic approach for strategic planning, it is important to recognize that you can be simultaneously creating a learning organization. A learning organization responds to outside stimuli/changed conditions without being “told” what to do. The collective consciousness of the organic entity creates a highly productive and effective organization that will adapt quickly to changes in the marketplace, understand customers, and focus the necessary internal corporate resources to respond. Another way of thinking of it is that a learning organization is an organization wherein activities freely produce the desired outcomes without being stymied by roadblocks. However, if a roadblock is encountered it is recognized as such through learning, and the organization adapts to eliminate, or resolve, the roadblock. The five disciplines necessary to create a learning organization are: (1) shared vision, (2) systems thinking, (3) mental models, (4) personal mastery, and (5) team learning. We will touch on aspects of all five disciplines.

In this article we present a simple organizational planning process that was used in the telecommunications industry. It represents a systematic approach to strategic planning, including a shared vision of success and a mental model of the cause/effect relationships inherent in the shared vision. Examination of this process reveals the systems thinking necessary to prioritize activities to maximize progress. The model also reveals the fundamental truth that organizations must cultivate personal mastery in every employee to maximize productivity. The importance of team learning as a primary input to success derives from the ability of teams to amplify individual contributions on behalf of the organization. Finally, we propose that capturing parametric measurements in the causal aspects of success is the key to a predictive measurement process.

There are a number of different strategic planning approaches that progress from the “big picture” to the details of activities and resources required to produce desired results. One typical model that represents the structure of how plans are developed is the network schedule for project management as shown in the “tree diagram” structure of Fig. 1.

In this model the definitions of terms are important. A mission is defined as “performance of a special duty” and identifies the core purpose of the business. Objectives are “big picture targets,” and goals describe how to meet the objective. A goal has criteria that must be met: (1) it must be a specific attainable outcome with a deadline, (2) responsibility for the goal is assigned to someone, (3) progress toward the goal must be measurable, and (4) properly developed goals should have a reasonable level of risk, or “stretch.” Activities are specific actions required to achieve the goals, and they become inputs to a network diagram for critical path method scheduling. Finally, resources are the required elements necessary to accomplish each activity, such as manpower, equipment, materials, etc. Each objective has a set of goals; each goal has a set of activities; and each activity has a set of resources. This type of structure is commonly populated to the appropriate level of detail. It provides a clear and powerful model that can guide organizations through development of comprehensive action plans. The remainder of this article presumes some structured process is used as the basis for strategic planning.

What we will now show is how shared vision is related to this model, specifically to the mission and objectives of our planning tree. Vision has to do with imagery—people have to be able to “see” what an objective looks like and how they can contribute. Cultivating a “shared” vision goes beyond telling people what the business is “going to do.” We want to create a common understanding, or organizational norm, of what success looks like to everyone. Then each person can “see” his/her specific role in creating this vision, and every individual is working in the same direction. When people have different or unclear images of how things are to be, their collective focus is not aligned and progress is challenged by confusion and conflict.

Using the planning tree model in Fig. 1 and group participation, managers can “paint a picture” of success by developing a mission statement and a clear set of objectives. One exercise the authors have found particularly effective for this is to gather people from throughout the organization for a consultation session. When people are engaged in the process, they have direct personal knowledge of the elements of the vision because they were engaged and observed the creative process first hand. This cultivates a sense of ownership and sharing in the vision, so the ideal approach is to involve as many people as practical to achieve buy-in. The consultation begins with the question: “In a perfect world, what does success look like for our company?” People will offer qualities and attributes that describe a highly successful business in the marketplace. Each comment is captured and posted on chart paper. Many elements will be recorded before the creative flow slows to a trickle, producing a comprehensive, but disorderly “picture.” The picture must be sorted and grouped so similar elements will be more understandable. Eventually order emerges, leaving a comprehensive, understandable, descriptive statement, or vision.

An example of an actual vision statement created for a business unit operating in the telecommunications industry is shown in Fig. 2. Organizing the most powerful words into a single statement of action creates the mission statement. Each of the eight objectives in Fig. 2 is the heading of a group of qualities and attributes, and each has a number of “bullets” under it that are not shown. (In this particular example, there were fifty-four.) These bullets are the specific detailed descriptions of how the global objectives directly relate to the business. They are also the basis for developing a comprehensive set of goals in our planning tree structure. Goals represent the “hues,” “textures,” and “shading” of our specific business vision, where the objectives are the major “object” elements of the picture.

The shared vision can be easily lost in daily pressures of business operations unless it is communicated and routinely reinforced throughout the organization. As part of the example telecommunications industry initiative to cultivate a shared vision, the information shown in Fig. 2 was distributed among five different operational sites. Each site manager shared the document with his/her staff members in an “all-hands” meeting. Further ownership was cultivated during training sessions, and the vision statement was used to establish annual site (team) and individual staff objectives. When site employees were engaged in leadership workshops, they were led through a similar visioning exercise to describe success as they saw it. Then, the employees’ results were overlain on the shared vision to demonstrate similarities and alignment.

All of the objectives are related to each other and to the mission statement. In the context of this article, what we want to determine is the cause/effect nature of the objectives presented in this vision. In other words, now that we have a comprehensive “picture,” we need to understand how activities flow through the business to create success and how one objective can impact the outcome of others.

We will now share a process for discovering the three primary causal elements of success articulated in our example vision. Revisiting Senge’s five disciplines (1990), we see we have identified and defined a shared vision, and have certainly employed a mental model for our planning process. Now we can call upon systems thinking to understand that our business is a system comprised of many subsystems.

The next step in analyzing activity flow is to conduct a logical exercise among our eight objectives identified in Fig. 2. This exercise is an interrelationship diagraph, one of the seven Hoshin planning tools described in The Memory Jogger Plus, from Goal QPC (1996). The exercise is very simple. We systematically compare each objective to all the others and determine: (1) Are these two objectives related to one another? and (2) Which objective drives the other? The results from this exercise (which was conducted on our example vision in Fig. 2) are presented in Fig. 3. We see that each objective has arrows coming in and/or going out. The in arrows are counted and can be thought of as representing activity flowing into an objective. Similarly, the out arrows represent activity flowing out of that objective. Objectives with the most out arrows are predominantly causal objectives, while those with the most in arrows are effectual objectives.

Note that conventional business measures such as profitability, customer satisfaction, and growth are parameters of effectual objectives. In other words, they produce historical data. They are measurements capturing performance that is driven by other aspects of successful operations. By observing the out arrow count for each objective in Fig. 3, it is apparent that the three primary causal objectives of success, in order, are: (1) leadership and management excellence, (2) empowered (self-aware, confident, well trained, and informed) and energized people (secure, supported, and motivated), and (3) teamwork and cooperation through and across organizations.

Now we can construct an “hour glass” model as illustrated in Fig 4. This model rearranges the vision objectives according to their cause/effect relationships. Driving objectives (causal) are at the top, and driven objectives (effectual) are at the bottom. Fig. 4 represents this arrangement and is a simple global “picture” of the activity flow through the organization. This is a clear image of what it takes to consciously create success in any organization. Another way of thinking of these relationships is to see the causal objectives as the “activity source” that radiates and becomes focused through the “lens” of systems/quality to shine brightly on the “effects of success.” Whatever analogy is used, the exercise clearly demonstrates how progress flows through the rationally organized structure of the vision objectives.

Described by Senge (1990): “[A learning organization is] an organization that is continually expanding its capacity to create its future. For such an organization, it is not enough merely to survive…survival learning or what is more often termed adaptive learning is important—indeed it is necessary…but for a learning organization, adaptive learning must be joined by generative learning, learning that enhances our capacity to CREATE.” Effective pursuit of the causal objectives in our vision is what cultivates a learning organization culture, which affects the production of more power in its people. In this application, the word “power” is defined as ability to do/capacity to act. Thus, empowerment is simply helping people recognize what they are capable of doing or what activities they can produce.

This concept is further supported by Hendricks and Ludeman (1996) in The Corporate Mystic: “[I]nside each of us there are two strong pulls. One is toward complete independence—becoming our own person through and through. But there is also a strong pull to commit ourselves to something larger: communion with other people, a company or family, the universe itself. Both pulls must be honored, acknowledged, and developed fully.” This brings us to the importance of our second example objective: teamwork and cooperation throughout. Belonging to a community of like-minded individuals cooperating to achieve meaningful outcomes enhances people’s personal power.

Now we can see how objectives one, two, and three are so important in their causal capacity. They are, collectively, the stimuli that focus the power in the business system to produce success. This brings us to the last two of Senge’s five disciplines: personal mastery and team learning. Here we are truly in the personal domain of business. Personal mastery in each individual is the path to full empowerment. Team learning is the ultimate manifestation of “teamwork and cooperation throughout.”

We will share simple examples of how these two learning organization disciplines relate to our causal objectives and were recognized and harnessed in our telecommunications application. First was a case of the power of personal mastery to support the organization. Telecommunications services have become highly competitive since deregulation in 1996. As a result, customers are demanding more for less. To achieve this, telecommunications providers must demonstrate organizational capability and optimum staffing. This can be done with a competence matrix.

Within each operational site’s scope of performance, the minimum staff structure was identified and modeled. Each position’s technical performance requirements were recorded as skill sets with qualifications, experience, and equipment certifications necessary. Then, a comparable matrix was developed for available staff showing training, experience, and certifications for each member. Overlaying these matrices allowed the service supplier to clearly demonstrate how they could meet the customer’s needs with fewer people, and consequently lower costs. The differences were used to develop a cross-training matrix and to analyze the costs of reaching 100 percent compliance.

Now, we need to emphasize that this competence matrix focused on functional/technical skills, which is not a complete assessment of personal mastery. Other elements of the individual’s total capabilities include personal, interpersonal, organizational, and business skills. However, while this competence matrix was limited, it was a quantum leap forward in understanding the collective power of the organization and communicating that to the customer.

Our second example was simpler, yet no less significant. A teamwork survey was conducted to assess existing team functions. Indications in the data revealed common concerns around communication, flowing downward through the ranks and laterally between work groups. A communication team was formed to study the challenges and make recommendations for improvement. As simple as this step was, the results were quite impressive. The group came together, felt their ability to do/capacity to act and made simple and practical recommendations for improving the flow of information throughout the organization. Two months later the difference was obvious. This was an example of team learning at work.

A simple yet profound concept has been revealed from this approach: the primary causal aspects of success have to do with taking care of the people. In the telecommunications services industry, people contribute the creative energy that must flow through the business system to produce the end product or service. People are the source for new ideas. People must learn and solve problems as they emerge. In other words, a learning organization is comprised of teams of learning people.

Referring back to our hour glass model in Fig. 4, causal objectives must be the highest priority. These objectives address leadership and management excellence, empowered and energized employees, and teamwork and cooperation throughout. In essence, if the stewards of any business focus their attention on taking care of their people and cultivating a close-knit, cooperative culture, the people will take care of the business system.

In “Structuring Change in Providing Telecommunications Services” (DeVilbiss and Gilbert 2005), we provided a description of a change-management process employed to manage a niche group in the telecommunications services industry. The principles of leadership, empowerment, and cooperation were successfully employed as part of a change initiative that began in March 2004. Positive results were measured and exceeded the most optimistic expectations. All of this resulted from focusing attention and taking action in the three primary causal objectives presented in this article. What is particularly interesting about the results of our study is that we have recognized the systemic nature of this undertaking. Systems thinking requires us to acknowledge the systemic nature of every aspect of any organization: leadership is a system; an empowered, highly competent work force is a system; a cooperative organizational culture is a system. Further, any system can be modeled, parameters can be developed and measured, and action can be taken to improve the system’s performance. The crux of our observations is that priority actions should be focused on the causal systems within the overall business.

Managing a business by the application of systems theory is not a straightforward proposition because there are large numbers of inputs, interactions, and observations to consider. Incumbent in this approach is the notion of system controls. If an optimum set of control parameters is identified and periodically measured, system performance can be monitored. When variation, or divergence from “balanced” performance, is observed, corrective action can be taken to bring the system back into balance and desired performance. In particular, these parameters need to be both predictive and historical. When predictive elements are confirmed by historical data, our system model accurately reflects the actual business. This logically leads us to conclude that we must focus our control efforts on the causal aspects of business performance and our outcome observations on the effectual aspects.

So, the challenge becomes how to measure performance in enhanced leadership, empowered people, and cooperation. There are many survey instruments available to poll an organization’s members to assess teamwork. Earlier, we shared a competence matrix—a process for partial assessment of employees’ competence—that can be extended to include the personal, interpersonal, organizational, and business skills appropriate for a particular business. Further, books abound that present different models of leadership, with emphasis on character, behavior, and processes. What is important to recognize is that each of these three causal aspects is a subsystem that can be modeled for your particular business. Then the models can be analyzed to produce a canonical set of causal parameters that, when monitored, predict the behavior of the overall business system.

By tracking these causal (predictive) parameters a business can forecast performance. Then, when results accrue, conventional effectual (historical) parameters can be measured to record actual performance. Variance in the measurements is an inverse indicator of the business model’s accuracy. Based on this data, adjustments can be made in the causal parameter measurement process to achieve convergence between the business model and actual results. This is an approach to using system control theory to improve business performance.

As an example, let us look at the causal objective of teamwork and cooperation throughout. The article “Partnering is the Foundation of a Learning Organization” (DeVilbiss and Leonard 2000) shares the four key dimensions of partnering effectiveness: dependability (consistent, predictable behavior/performance), responsiveness (proactively seeking to understand and meet your partner’s needs), ability to resolve conflict (acknowledge it, and engage in it productively to accomplish resolution), and faith (in oneself, in others, and in the partnering process). Periodically collecting data around people’s perceptions of how these key dimensions are working will indicate the “health” of the organization’s cooperation. Weaknesses or unproductive behaviors/performance can be identified and corrected before the lessened productivity shows up in the end product.

This is the ultimate approach to measuring productivity. When the causal aspects of productivity are recognized and understood, they can be measured in a predictive manner. Thus the conduits of activity flow that result in productivity are measured and kept open, rather than waiting for declining results to indicate a problem that must then be identified and corrected while further results are accruing at the lessened effectiveness.

Business operations can be effectively analyzed as system processes during strategic planning and organizational reengineering. The relationship between the business mission and the supporting objectives can be expressed as a set of causal relationships. The relationships can be charted to demonstrate the flow of activities required to execute the business plan. Successful execution first requires a clear statement of mission and supporting objectives that are thoroughly communicated and adopted throughout the organization, followed by a detailed plan of activities and application of resources required to complete the mission. Each individual in the organization should have a clear understanding and acceptance of personal activities directly related to the associated objective and mission. In this light, the importance of cultivating effective communications cannot be overstated.

The real key to optimizing the development and execution of the business plan is to focus the activities and resource utilization in the ideal chronological sequence. This will avoid conflict and delay due to poor coordination. We have presented a systems approach to evaluating the causal relationships among the objectives. Using this approach results in properly scheduled activities to ensure unblocked flow of actions directed toward successful completion of the mission.

Finally, a set of metrics should be developed to measure progress and to provide implications for midcourse corrections along the way. These metrics are most helpful when formulated as a set of predictive and historical measures, established from causal objectives and effectual objectives, respectively. These two sets of measures can then be compared to validate the business model and to identify variances between expected outcomes and actual outcomes. Variance data provides the ideal inputs for systems analysis and executive decision making.

This is an optimized approach to improving productivity in any business organization. It is optimized because it emphasizes alignment and coordination of mission, objectives, plans, and activities in chronological combinations that capitalize on known causal relationships.

Carl DeVilbiss is president of Aegis Building Concepts, Inc., in Nashville, Tenn. He can be reached by phone at (615) 604-0929 and via e-mail at [email protected]. Douglas C. Gilbert is director of the Department of Energy Operations at a Fortune 100 telecommunications company, and can be reached by phone at (413) 262-1557.