CASCADING

There’s a great visual metaphor for business related to the concept of cascading. The idea is that you can conceive of your company as a waterfall in which the decisions made at each level affect the choices made further down the waterfall all the way to the pool. You can imagine that the decisions made at the top of the waterfall are quite strategic. They revolve around: what business are we going to be in, what’s our mission, our vision, what are our values, our strategies? The choices made further down the waterfall are bound by the choices made above.

Let’s say a CEO decides to create a candy company. Given that decision, the president of the company might ask the question, “how will we win in the candy business?” The president’s choice is still broad and fairly abstract but it must be made within the confines of the choice made upstream. Suppose the president decides that they will win by manufacturing organic chocolate with superior new product development capabilities. These choices will impact the decisions made throughout the organization: hiring, marketing talent, strategic purchasing, well-trained sales and customer service teams and so on. The employees at these various levels make decisions within the confines of the upstream decisions.

At each level of our expanding waterfall more people are involved in the decisions and the choices become more tactical and operational in nature. One of the tools used at the top of the waterfall should be a leadership scoreboard. The leadership team should meet formally and regularly to communicate progress, identify issues and forecast results on both financial and high-level operational issues. Deeper into the organization, scoreboards should be used as well, but the key performance indicators (KPIs) on these scoreboards should focus on operational KPIs and issues the staff in these departments can impact. For example, # of new product introductions, # qualified prospects, overtime, downtime, waste, quality, on time delivery, cases shipped, order accuracy, etc.

At the base of our waterfall I suggest companies design rapid improvement plans (RIPs). RIPs are high involvement formalized plans to improve performance on a particular key performance indicator in a short period of time. RIPs involve everyone in an organization. They support the notion of a high engagement culture. RIPs are potentially the most impactful component of doing Ownership Thinking because they help employees at all levels of a company (the waterfall’s ‘pool’) stay financially focused, and they do so in a fun, high involvement, empowered way.

The leaders at the top of the waterfall must work hard to create an environment where those below them understand their rationale for making certain decisions. They must signal that information flows upstream as well and they need to be open to engaging in mature discussions. This is important because the results from their downstream decisions affect not only themselves, but also the upstream decisions that compelled their choices.