High Performers to the Rescue
Four hours after the
towers
' collapse, the board had met and
formed
a crisis team made up of the organization's functional heads. The team identified the internal constraints to replenishing inventories and quickly developed a plan to
overcome
each. The first step was to establish communication with the key players in operations, the field, and the competition.
Members
of the team contacted their counterparts at Abbott Labs to explore ways in which the two companies might be able to save precious resources by coordinating their efforts and providing assistance to one another. At the same time, OCD's field organization was pressed into twenty-four-
hour
service, making calls to determine exactly how much inventory blood centers had at their disposal. Other members of the team
began
working with the FDA to streamline the process by which product is inspected and released.
Simultaneously, the manufacturing department inventoried the raw materials it had in stock and identified which additional materials, and how much of each, were needed. Non-blood-testing product lines were shut down; their finished products were shipped or stored to make room for blood-testing products; and the lines began churning out blood-testing products.
The biggest challenge
facing
OCD was distribution. Blood-testing products carry an expiration date and are, therefore, always shipped by air. But all commercial
flights
remained grounded in the days following the attack. A call was made to Johnson & Johnson's executive committee, which immediately approved the use of the company's corporate
fleet
to deliver the much-needed testing
supplies
. The plan was presented to the Federal Aviation Association (FAA), which immediately obtained clearance for the fleet to fly with "lifeguard status" throughout the country. Within twenty-four hours, Johnson & Johnson
jets
were shipping product to locations that had the greatest need for the testing materials. OCD
employees
remained on duty twenty-four hours a day, seven days a week, and product
flowed
continuously to the blood centers, until the crisis was over.
As this example
demonstrates
, Johnson & Johnson has empowered its employees to solve problems and make decisions without having to go back up the chain of command for approval at every step. Johnson & Johnson's long-standing decentralized management system stands in stark contrast to the hierarchical structure that until recently characterized most businesses.
The Way We Were
The traditional business organization evolved over many
years
.
German sociologist Max Weber
observed
that the Industrial
Revolution put a premium on the specialization of labor.
Organization form and structure followed the need. What emerged
were hierarchically structured entities in which workers at the
lowest
level
reported
to first-line supervisors who, in
turn
,
reported to middle managers in their function.
Middle management, which typically consisted of several
layers
within a function, was organized the same way, with each ensuing
level possessing more decision-making responsibility and authority
than the one
beneath
it.
The highest level of middle management reported to the top
manager of the functionusually a senior vice
presidentwho, in turn, reported to the
president or CEO. This individual, with or without the input of his
vice
presidents
, made strategic decisions and sent them back down
through the hierarchy to be implemented.
In this model, the various functions that made up the
organization remained separateor kept in
silos
all the way to the top. Key operational
decisions
related
to each function were made by the senior vice
president of that function, who, mirroring the CEO, made the
decisions and relied on his underlings to implement them. As in the
military, to which it bore more than a passing resemblance,
"command and control" was the paradigm of the hierarchical
organization.
For most of the century and a half following the Industrial
Revolution, the hierarchical organization flourished, in large
part, because of the high degree of control its
leaders
were able
to exercise. Henry Ford, Alfred Sloan, Andrew Carnegie, Thomas
Watson, John D. Rockefeller, William Randolph Hearst, and other
giants of modern-day business built empires by running a tight
shipthat is, retaining near-absolute power
over the vast hierarchical organizations they had created.
In the last half of the twentieth century, however, the
traditional business organization fell under attack by the four
horseman of the revolution around us: globalization, the growth of
information technology, new forms and intensity of competition, and
pressure for rapid innovation.
