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Best Practices

Stovepipe Organization Charts

Quality Network Marketing Companies will provide a great education, free of charge, for those who are teachable.

Some people would like a great education in direct sales, marketing, and leadership.  Network Marketing companies are continual personal growth companies because their business model demands it to be successful.  Training is a huge part of the business model.  Also, your ability to rise in the company is not normally capped by gamesmanship and politics because of the organization structure.  We all start with the same Distributor Kit.

Stovepipe organizations are common in the corporate world or any organization with the typical pyramid organization chart.  This type of organization allows up and down the organization chart communication but discourages or entirely restricts (CIA, FBI, Defense, etc.) information flow across the organization or outside of the organization.  Do you have a “need to know?”

Once you get to the VP or Director level the competition between groups in many companies becomes fierce because the very survival of the department depends upon protecting turf and fighting hard for limited resources.  Your job may depend on having closed lips and an uncooperative spirit.  If you don’t understand this concept you may not get too high up the corporate ladder.

The Russians launched Sputnik in 1957 and was beating us out in the race to space.  Dwight Eisenhower wanted to know how Russia could be ahead of us when we were spending billions on R&D.  It wasn’t the spending but the organization chart.  When DARPA (Defense Advanced Research Projects Agency) was created things changed overnight.  Many people don’t know what a huge impact DARPA has provided in leading technology (GPS, Internet, fiber-optic and wireless communication, advanced aircraft, etc.).  Eisenhower made them independent from the military reporting directly to the Secretary of Defense.

As we said previously, if you haven’t been high enough in the organization you may not understand how important the reporting structure is and that politics takes precedence over advanced technology, R&D, and improvement or results.  That’s why many of us were amused by the idea of spending the big IT bucks to improve FBI and CIA communication after 9/11.  Many of us are too familiar with the large cost overruns and low bang for the buck improvements in many IT projects.  How do we get people to buy-in?

As a new Comptroller of a midsized company, I recall requesting a simple gross profit report from IT (matching period sales and cost by product) that would provide profit information by product for a large manufacturing company.  This report should have approximated (standard cost) the gross profit on the income statement.  This was a very simple request.  Instead, three weeks later I got this report that matched sales and cost based on production (not cost of goods sold).  When I told them this wasn’t what I wanted and it didn’t conform with GAAP reporting.  The first question I got was:  What is GAAP reporting?  And the “final answer” was that the IT VP wanted it based on production.  I never could figure out if they were just morons or that various high level executives didn’t want that kind of income statement visibility (I greatly suspected the latter and was going through the backdoor to get information).  I jumped through hoops to get the information I wanted and made an enemy of the VP of Marketing for obvious reasons (his pricing was too low on many products).  This is just one example in a million when it comes to a stovepipe organization chart.  Don’t expect great results and the bigger the organization the worse it gets.

Impediments to success are hardly ever education and technology.  Becoming street smart and recognizing quality organization design becomes the name of the game.

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