Bureaucracy: An Example at an Aircraft Manufacturer

I learned the concept of optimizing sub-functions from an executive at a large aircraft manufacturer. This example is a lesson that took place 33 years ago, and it has played an important part in my thinking ever since. I’ll tell you what I remember of the example he used, and I hope those more familiar with the story will forgive me if I don’t recount the story exactly. Anyway, it’s the idea that counts.

Evidently, this aircraft manufacturer had a number of plants all around the area, each making parts for airplanes that were then assembled into whole airplanes. Each plant had its own fleet of trucks that they used to pick up what they needed from other plants and from suppliers, and to deliver their sub-assemblies to the assembly plants.

One day, somebody had the idea of centralizing the control of all the trucks into one motor pool. (This is the kind of "efficiency" argument that always seems to make good sense.) The idea was simple. At that time there were a large number of trucks, let’s say 100. If, however, they were centralized, and dispatched by somebody who had the entire picture, the whole job could be done with fewer vehicles, let’s say 60 trucks. Wow! The potential savings were tremendous. So, they centralized them. Now, instead of a truck going from plant A to plant B and coming back empty, the truck could pick up stuff from plant B and deliver it to plant D. Get the idea?

Well, what happened was that pretty quickly the plants noticed that when they needed an emergency pick up of parts to continue assembly, they didn’t have a truck available. And, first once, then twice, then again and again, they found they had to stop work in their plants because they didn’t have the parts they needed, and they didn’t have the flexibility to dispatch "inefficient" emergency pickups to get their plants back to work. As my friend characterized it, "It almost brought us to our knees."

The story ended well, because the top executives realized that their goal was really to optimize building airplanes (their mission), rather than to optimize fleet dispatching (a process).

So, they gave the plants back their trucks, folded up the centralized motor pool and went back to being (happily and knowledgeably) "inefficient." Their plants hummed once again, and they had learned a valuable lesson about optimizing sub-functions.

In the last thirty-some years, I have been involved with hundreds of companies that have never learned about optimizing sub-functions, and I’ve seen the pain and misery that optimizing sub-functions causes.

Here is another way of stating the message:

• It is de-bureaucratizing to take sub-optimized functional departments and disband them, re-deploying the people into the line units where they will be mission driven, not function driven. Here are some units to consider: purchasing, personnel, fleet, copying, MIS, training, strategic planning, budgeting, and research and development.

In a bureaucracy, departments or sub-units are formed and are allowed to, or even directed to, focus on a sub-optimal mission. "Your mission, in the copying department, is to handle all of the organization’s copying needs at the lowest possible cost."

"Your mission, in the fleet department, is to optimize vehicle efficiency, and minimize the costs of trucking between all the plants and our suppliers."

Either of these sub-optimal missions could allow these support departments to bring the organization’s mission to a standstill if the organization’s mission interferes with the department’s mission. It needs to be the other way around. Departments must support the organization’s mission.

• It is de-bureaucratizing to assign individuals or sub-groups missions that are "nested" within the larger mission.

It isn’t true that decentralizing is always better. Centralizing functions for "efficiency" isn’t a great idea, but centralizing for "better support to mission achievers" may be acceptable. The key test is who decides whether they stay or go? If it’s the internal customers, then centralizing can sometimes actually support mission achievement.

"The fleet department’s mission is to support our plants in achieving quality to standard and extraordinary customer satisfaction, and ensure that the plants–your customers–always have whatever vehicle they need to move parts and materials so that the plants always keep running."

Again, this mission statement must be understood to mean that if the fleet department doesn’t give the plants better and more responsive access to trucks than they had with their own fleet, the unit will be disbanded and trucking will be decentralized.

In addition, the future of the fleet department, and its budget allocations, will depend on customer satisfaction feedback from the plants it serves.

To read more examples of bureaucracy, see "Busting Bureaucracy."