More and more, my clients are moving to more sophisticated, matrix organizations, where ownership for final products (or services) is held jointly by various experts rather than by a single individual.
What’s interesting about this to me is how it’s diminishing opportunities for individuals to assume full responsibility for their actions. More and more, their successes are continent upon others also pulling their weight; it’s getting more and more difficult in some of these organizations to draw a direct line between an individual’s efforts and the impact that individual has on the organization’s (or even the team’s) overall health. This has become particularly apparent to me as I’ve head general managers and others bemoaning their lack of clarity into their own P&Ls (profit & loss statements)… one manager needed four minutes and a pen and paper to explain to me how revenues and costs are recorded, “rolled up,” and then re-allocated back to his line of business.
This is neither an anti-establishment rant nor a wistful longing for some old days. It’s merely an announcement that change is underway—so step lively. And by the way, for the uninitiated, a P&L, or Income Statement, is a financial document that reads like this:
Gross revenues (receipts)
-Cost of goods sold (direct costs that can be specifically attributed to each item)
=Net revenues (wait… we’re not done with costs…)
-SG&A (sales, general, and administrative expenses… stuff you need the cost of which gets spread over all sales; that ream of paper you swiped from the storeroom? That’s an SG&A expense. So is the laptop your company gave you and, if you’re in HR, Finance, or anywhere at corporate, so is your salary.)
=Income (wait… we’re still not done with costs…)
-Depreciation/Amortization (a 2 yr old car is worth less than a new one… the IRS has a specific document that tells you by how much. Depreciation is how a company removes a little more “value” from its books every year as its equipment gets older)
-Interest Expense (from all those bank loans)
-Taxes
=Net Income
The whole document is usually done in a spreadsheet, with 5 or 13 columns, each column showing either quarterly or monthly results, and the last one showing an annualized aggregate.
In a world where people can aspire to “own” a P&L (profit & loss), the good (clear responsibility) comes with the bad (parochial, short-term thinking). Companies driven by local P&L centers often struggle to unify those centers much the same way geopolitical blocs struggle to bring sovereign nations together for the common good. This seems to be the problem many organizations are now solving by consolidating expertise across all P&L centers at a single, headquartered location. But while this solves the unification problem, it creates a void of clear ownership, which can create execution challenges that don’t exist in a P&L world.
Doh!
The upshot? I’d say that if you sense this shift occurring within your organization, pay more attention to your political skills. Now more than ever, your going to have to convince multiple stakeholders to go along with your ideas to see them implemented… people who each have their own ideas, by the way! If you don’t hone these skills, then you might achieve temporary agreement with your peers, but you’ll struggle to hold the group together through implementation.
Your first move in thriving in this type of political environment is to recalibrate the way you view the political process: it’s not a necessary evil; it’s the mechanism by which a group of people who all want to lead determine who the real leader will be. Until you make this mental shift and ditch your pre-judgment of politics, your attempts to engage politically will go over about as well as a lead balloon.
And of course, if you’re the type of bull-headed freight train that fixates on what you want to do and refuses to work with other people, then I’m not sure I want you with P&L responsibility, either… why reward small-mindedness?
