The Truth about Performance


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In an enlightening podcast, Show me the Money – The Truth about Performance, N. Dean Meyer discussed his new book, Internal Market Economics. Don Tapscott said it was “essential reading for executives interested in maximizing shareholder value or in running effective shared-services organizations.” Dean offers a fresh vision of empowered, entrepreneurial organizations, and practical solutions to a host of pressing financial and management challenges. This is a transcription of the podcast.

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The Truth about Performance

  1. 1. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Show Me the Money –The Truth about PerformanceGuest was Norm MeyerSponsored byRelated Podcast:Show me the Money – The Truth about Performance
  2. 2. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Dean Meyer is one of the originalproponents of running shared-servicesorganizations within companies asbusinesses within a business, whereevery managerial group is anentrepreneurship funded to produceproducts and services for customers.He has implemented this philosophy incorporate, government, and non-profitorganizations through the carefuldesign of culture, organizationalstructure, and internal market economics.Dean is the author of seven books, numerous monographs,countless articles, as well as the Full-cost Maturity Model. Heinvented FullCost, a business and budget planning process basedon an internal product/service costing solution. He researched thescience of organizational structure, captured in his StructuralCybernetics framework and reorganization process. He developedan approach to corporate culture that leads to meaningful changein less than a year. Dean coaches executives on organizationaland political issues, and personally facilitates transformationprocesses.From a small office in the New England village of Ridgefield,Connecticut, Dean Meyer writes, invents, coaches leaders, andimplements organizational transformation -- all based on 30years of devotion to the business-within-a-business paradigm.
  3. 3. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Transcription of PodcastJoe Dager: Welcome everyone! This is Joe Dager, the host ofthe Business901 podcast. With me, today is Dean Meyer. He isone of the original proponents of running shared servicesorganizations within companies as business within a business,where every managerial group is entrepreneurship funded toproduce products and services for customers. Dean is the authorof seven books. He invented “Full Cost”, a business and budgetplanning process based on internal product service costingsolutions, and he’s researched the science of organizationalstructure captured in his structural cybernetics framework andreorganization processes. His latest book is “Internal MarketEconomics”, which is one of those books that raise as manyquestions in my mind as it did answers, and that is meant as acompliment. Dean, I would like to welcome you, and could youstart by giving the elevator speech about you and your company,NDMA?Dean Meyer: Thanks for having me on your podcast! Theelevator speech, well as you pointed out I am a long-timeproponent, one of the earliest proponents of fundingorganizations as a business within a business. What I mean bythat is not just that the IT as a whole is a business, but everymanagerial group, every manager should think like anentrepreneur running a little business within a business. What Ido for a living is help executives -- CIOs and their leadershipteams, for example, implement that vision systemically. That isthrough changing the organizational ecosystem, or theorganizational environment that we all live in. So I work on threethings. I work on culture, which is contrary to popular opinion,the easiest thing to fix. Structure, which is a very mature science,I get myself into trouble on airplanes sometimes, I’ll be sitting
  4. 4. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901next to a guy, and they find out I’m a student of structure, theysay oh let me show you my organization chart! I’ll say well, thisguy’s fighting with this guy, this guy’s not making objectives, thatguy has ulcers. It is that predictable! So it is also a dangerousscience because the guy gets all upset, I deny all of that, “Whohave you been talking to?” and then they do not talk to me forthe rest of the flight, so I guess that’s okay. Structure is mylongest standing area of research. Then most recently, just thelast 15 years or so ago, I’ve been studying the application ofmarket economics inside of companies that sort out the resourcegovernance and financial processes. That is what I do for a living:culture, structure, and the internal economy.Joe: Well your new book, “Internal Market Economics”; I guessI’d like to start out there. Can you tell me your target audiencefor the book?Dean: I’ve targeted not just to my traditional audience whichwould be CIOs and their leadership teams but to any sharedservice organization and to CFOs who are considering how thewhole company works. The internal economy includes things likebudgeting, catalogue with rates, governance processes, charge-backs or show-backs if any, all of those financial mechanisms.The way it looks to me in a lot of companies is we’ve designed allthose processes around a central Soviet approach; some sort ofcommittee handing out money and telling you what to do with it.What I’ve been trying to teach through that book and through mywork over the last 15 years is market economics, wherecustomers decide what they buy within the limits of a finitecheckbook, and suppliers like IT or any shared serviceorganization strive to be the vendor of choice offering best valueand great customer relationships. So that’s what internal marketeconomics is about.Joe: On my first pass through it and I don’t think it’s one that
  5. 5. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901you’re going to make one pass through if you read the book, Ithink you’re going to make a couple -- it seems to be a budgetaryway of determining structure. Is that way out of focus?Dean: I think you’re right, that’s very insightful. When we fixthe internal economy, there are two pieces to it: there is aplanning piece and then there’s the actual side. Once a yearduring the planning piece, we lock down or revise the catalogue.We forecast what we’re going to sell, not only to clients outsidethe shared service organization but to one another, and then wefigure out how we’re going to fulfill those sales which is wherecost comes into the equation. Driving that through a veryadvanced cost model, well beyond ABC, we come out with twothings. we come out with what I call investment-based budget, abudget for what you want to sell, not what you want to spend.Not a budget for compensation, travel, training, you’re justbegging for micromanagement that way -- but a budget for theproducts and services.In IT, for example, you want help testing 24/7 multilingual.Happy to do it, here’s the price. Oh gee, can’t afford that? Whatdo you want to do? Sixteen hours a week, English only, whateveryou’d like. So, it totally changes the budget negotiation, itchanges the dialogue with the business, budget decisions aremade on the investment opportunities at hand and the of thebusiness rather than last year plus or minus a percentage, andwe come out of the budget with a very clear understanding ofwhat is expected of you for a given level of funding. Oh, and wealso come out with rates that go back on the catalogue, that isthe unit cost. But in order to do all that, Joe, just as you intuit it,we’ve got to understand every manager’s group as a businesswithin a business to figure out their catalogue and what they sellto one another as well as to clients. So while, the full cost process-- that’s what I call it, and you can check this out on the full cost process doesn’t itself change the structure, it uses
  6. 6. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901the structural cybernetics framework, the building blocks ofstructure, to decipher what business everybody’s in as a basis forbusiness planning.Joe: I come from the Lean world -- when we look at innovation,when we look at a business and how we’re going to grow abusiness, we think about people, processes, and products.Everybody looks at the budget and the finance side as therestrictive side. But, come back from your book, and it’s the wayyou go about it!Dean: It’s the enabler, it’s not the restriction.Joe: Yeah! Do a lot of people look at it the same way I do?Dean: I think a lot of people are used to the traditionalapproach to budgeting and resource governance. The traditionalapproach goes something like this: Joe, you submit your budget,and it’s for compensation, travel, training, etc. Of course, CFOand executive, they’ve got to talk about something, so they say,Joe you don’t need all that travel, do you? So there they aretrying to micromanage you, trying to make decisions they’re notqualified to make, you’re having totally the wrong discussion withyour peers. It’s a discussion defending your costs, rather thantreating IT as an investment opportunity. And then at the end ofthe day, we give you less than you ask for, but it’s still a lot ofmoney to us, and in trade for that, we clients get to scream atyou for anything we can dream of all year long, and it’s your faultif you can’t provide infinite service on a fixed budget. Is that asetup or what, man? It’s crazy! And it’s not the way the realworld works, right? The way the real world works is, you go tothe store, it’s not like you pay the manager for your share of therent and the checkout clerk and then you get to help yourself towhatever the cart will hold. No, the products and services haveprices, you know how much is in your wallet, you know what you
  7. 7. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901can afford, and you optimize your family’s well-being by buyingwhat you most need and leaving behind the rest.That’s how it should work in budgeting. And then throughout theyear, in the resource governance process, what we’re looking atis a process where the executive team has to decide how much tofund -- let’s use IT as an example for today -- how much to fundIT based on what they want to buy from IT. Then we leave thebudget discussion with a very clear understanding of what’sfunded, and those processes, those services and products thattheyve chosen are fully funded. It is not as we’ve got to make uptime and money out of thin air or rob Peter to pay Paul. The fewthings we do, we do well, and the rest aren’t expected. So I thinkit’s going to improve our processes and improve effectiveness,improve quality, improve our sanity, by fully funding the fewthings we want to do well. Does that make sense?Joe: One of the things that jump out at me when you say that isthe old saying that people act; by the way, they are measured.But what you’re saying is people really act the way the money isbudgeted.Dean: Remember Deep Throat? Follow the money! Exactlyright, exactly right. I think if we want to align IT with strategy,we fund those deliverables that have a direct impact on strategy,and we don’t fund the boring stuff. Now, 70 or 80% of the budgetgoes to keeping the lights on, that’s true, but maybe our businessclients are willing to turn some lights off in order to free upfunding for more strategic things. So it’s a win-win. We serve thebusiness better, and we’re more important to the business, andour lives are saner. We’re not expected to deliver a Rolls Roycefor the price of a Chevrolet.Joe: One of the things I probably struggled a little bit in yourbooks is defining some of the nomenclature in the book. You use
  8. 8. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901“customers” and “clients” in a little different way. Can you explainhow you use those words?Dean: I’m glad you asked, not only because we need to haveour terms straight to understand one another because there is asubtlety here that’s important. I’m going to use the word “client”to mean people outside your organization. If we’re talking aboutIT, it’s a new word for user. Anybody outside of IT is a client. Iuse “customer” and “supplier” to speak of a relationship. So thoseclients may be customers to you, but there are also clients thatmay be suppliers to you. And here’s the key: one manager withinIT may look at another manager within IT as a customer or as asupplier. So, customer and supplier work within the context ofrelationship, whether we’re talking about two people within IT orIT and clients out there in the business.That concept is powerful in its implications for teamwork. Let’ssay a client comes along and buys something, well based on aclear structure we know exactly who in our organization sells thatproduct or service to the client. When I say sell I don’tnecessarily mean that money changes hands, I’m not advocatingcharge-backs. I’m talking figuratively as a business within abusiness, okay? So when one manager sells something to aclient, let’s call that the prime contractor, and the first thing theprime does is a subcontract with peers within IT, other groupswithin IT, for help. If, it’s an application project, they may needto subcontract, for some data analysts, to do a logical data modelor some DBMS experts to do the physical data model. They maysubcontract with the project management team.Then one applications engineer may subcontract with another fora data feed. We may subcontract with operations for installationinto production. Of course, each of those subs may in turnsubcontract for help from others and so on, and so through thisprocess and through the concept of entrepreneurship within the
  9. 9. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901organization, teams form automatically, laterally. We’resubcontracting for deliverables not just warm bodies. We haveclear individual accountability, and a clear chain of command. Andin that way we can assemble processes fluidly and dynamically.It’s not like an assembly line where you define the process, andwe do the same thing day after day. Each project’s a littledifferent, and yet we get just the right people at just the righttime.Joe: In your book you talk about systems and tools and a fewother things, but your example I believe on what may be the planor the org structure is not your typical org structure, it looks likemore of a cluster diagram where you have different peopleresponsible, all these different people and different roles, or avalue network type drawing.Dean: Well I don’t by any means mean to say that we’regetting rid of hierarchy. I always draw org charts as a hierarchy;you’ve got to know who your boss is. But I may have portrayedthe building blocks of structure as a sort of clustered concepts,but the process of restructuring takes that language, thatframework of the building blocks of structure and assembles thatin to a traditional organization chart.Joe: Is this model counter-intuitive? Is this something that youhave to struggle with, or is it something that once youunderstand it it flows?Dean: I think there’s a little struggle at first, but you knowthey say “Common sense is what you learned yesterday?” Once itclicks, it’s going to be so obvious, it’s just what we observe in thereal world. Shall I give you an example?Joe: Sure.
  10. 10. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Dean: Do you know the difference, Joe, between Boeing andAmerican Airlines? Of course, you do. Boeing makes planes;American buys planes, runs them, and sells the transportationservice, right? You see that same sort of relationship; look atFord vs. Hertz Rent a Car. Look at Hewlett Packard vs. AOL. Lookat Cisco vs. Telco. If you look at any technology, you’ll see somebusinesses that are essentially engineering businesses that arethere to design, build, repair, and support solutions. Whether thatsolution is a piece of infrastructure, or an application, there areother businesses that may buy that solution, own it, and run it,and sell use thereof to others. We have a group of infrastructureengineers who sell boxes to another entrepreneur, infrastructureoperations that in turn uses those boxes to sell cycles or sellstorage or sell telecommunications services. Pretty obvious in thereal world; you understand the difference, right Joe?Joe: Yeah, that’s an excellent description, because you’re sayingthe same thing happens internally.Dean: Exactly! And, by the way, you know there is a huge,huge difference between an engineering company and a servicescompany. They’re both entrepreneurships, they’re both vibrantand interesting and creative, but they’re real different in theirbusiness models and their cultures and their competencies and soon. Within IT, what happens if you mix up infrastructureengineering and infrastructure operations? I was talking to onegroup out in Californian, and we were going around the roomidentifying our lines of business, and this guy said, well I dodatabase. And I said, you probably mean DBMS. He said, yeahDBMS. So I said okay, are you Boeing or American? Are you Ciscoor Telco? And he said, yes. Both, right? He was the DBMSengineer, and DBMS operations. And you might guess what thatlooked like! First of all, operations had none of the discipline thatwe expect in the glass house. Essentially, he was running it underhis desk.
  11. 11. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Meanwhile, he was using very expensive engineers to do stuffthat $20/hr. operators should be doing. It dragged thoseengineers down into the day-to-day detail, when they shouldhave been out there being creative about the next generation,searching big data and so on. In doing so, it made thoseengineers since theyre responsible for keeping things runningsmoothly, a little reluctant to innovate, because innovationdisrupts smooth operations. So by mixing up under the categoryof infrastructure of DBMS or whatever, by mixing up Boeing andAmerican, the engineers and the operators, we’ve created allkinds of problems. That’s bad structure.Joe: I’m sitting here and the reason I’m quiet is because I’mtaking in all this. It’s great.Dean: Well, you know why people do it -- I mean it sounds soobvious, but you know why people do it? If the engineers don’trespect the operators as a customer if HP doesn’t look at AOL asa customer, if instead Hewlett Packard says, I’m going to be theone that decides what goes on the floor of AOL’s data center, andI get to play with all this new tech stuff, so I’m going to put allkinds of crazy wild stuff in there, then there’s absolutely nochance AOL can run operations reliably. So if, you don’t have thatinternal customer-supplier relationship and respect that goes withit, then things fall apart. Teamwork falls apart. So then we say,well, put them all under the same person, and that way we’ll atleast get something done. So the lesson there is that you can’tspecialize -- and specialization’s key, specialization allows you tobe good at something -- you can’t specialize if you can’t team.You’re going to have to mix up these different lines of business ifyou can’t team well across boundaries.Joe: That measure of trust is what we might call financialtransparency. It is realizing the cost that exists between eachother.
  12. 12. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Dean: It is that. And you just mentioned trust, which is anoutcome of culture, the way we behave around here. If webehave in ways that inspire trust, then people learn to trust oneanother. For example, we never make a commitment that wecan’t keep, and we keep every commitment. That’s a culturalprinciple. We respect internal customers just as much as clientsas customers, again, a culture principle. Culture’s part of it, themoney’s part of it, what if my highest priority is your lowest; theyare all part of it. Well, we may be good buddies and quite willingto work together, but if my highest priority is your lowest, I’m notgoing to get any work out of you, am I? That would be an internaleconomy problem. Or, the problem could have its root problem inthe structure. It could be that we’ve designed groups that don’teven know that their customers are peers within theorganization; they’re strictly focused on selling outside. All threeof those things work in concert to create that business within abusiness environment.Joe: Is there a way to do something like this incrementally, or doyou just have to change?Dean: Well in the area of structure, I hate to ruin yourmorning, Joe, but doing incremental change in structure is likepicking at a scab. How’s that for a graphic metaphor? It justkeeps the wound open: when is the next change going to hit me,what’s going to happen, it keeps the whole organizationdestabilized, and the other thing it does is it keeps everybodydefending their little territories, you’re not taking that away fromme, that’s mine! Whereas, a clean sheet of paper approaches tostructure, while it sounds scary, is actually less painful. It goes alittle more quickly, and it is far more effective. So you can usethe structural cybernetics framework, it’s all outlined in that littleblue book I sent you, “The Building Blocks Approach toOrganization Charts”, you can use that to tweak your current
  13. 13. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901structure, a little bit here, a little bit there if that’s all it needs.But if you’re planning year after year of tweaks, you’d be farbetter off to stop, engage a leadership team in a participativeclean sheet of paper process, and be done with it once and for all.Joe: So you’re saying you need to go all-in.Dean: I think that’s by far the most effective. It is oddlyenough, least painful. See when you’re going clean sheet ofpaper, you don’t have a rice bowl to defend, right? Everybody’sout of a job, everybody’s going to get a job at the end of theprocess, but now we’re all sitting with the CIO trying to figure outwhat the future will look like on a clean sheet. Whereas if you’redoing horse trading with your peers, I’ll give you this, you giveme that, its constant defensiveness and sub-optimization.Joe: When I start thinking business within a business and aboutthe different things you say, the first thing it sounds like is I’mcreating more structure and more -- that terrible word, maybe --paperwork, to implement all this because of budgeting andunderstanding the cost associated with everything. Is that true?Dean: I don’t think it’s entirely true, but there’s someadditional work involved. It’s like if look at our marketingeconomy, people do have to issue invoices and write checks. Iguess that’s not quite as simple as a central soviet that justdetermines what every factory produces and gives them themoney to do it. But obviously we all believe in market economics,at least outside the office, and that paperwork and invoicing andpaying bills and such doesn’t seem like a big obstacle. I think wecan make those administrative processes of market economicsvery streamline, very efficient, and the benefits are just so, sooutstanding. By the way, you need charge-backs to implementmarket economics. As I point out in that new book, “InternalMarket Economics”, we can create most of the benefits of market
  14. 14. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901economics without charge-backs. It doesn’t need to entail awhole lot of bureaucracy. It’s the opposite of bureaucracy; itshould be much more fluid, customer-driven, andentrepreneurial.Joe: Now, you wrote like I said earlier, seven books, and most ofthem were more the handbook style of the book. Why did youchange the format and publish what I would call a moretraditional book with “Internal Market Economics”?Dean: Interesting. “Internal Market Economics” is thecapstone of the last 15 years of not just study but practicalexperience out there implementing it. I found that I had to, likethe little books that you mentioned, I had to teach a concept toan executive in one airplane ride, but I also had to explain a lot ofdetailed mechanics for the people who are out there actuallybuilding those processes; designing the budget process,designing the governance process, and so on. So the book is twoin one; the front part is meant to explain the vision of marketeconomics inside of companies, and the implications of thatvision. Implications for things like metrics and sourcing andshared services and cost management and so on. So that’s kindof the executive portion of the book. And then the back half ofthe book is how you actually go about implementing it, right ondown to the gory detail of the systems; there’s whole systemsarchitecture in there and the processes that you need to design tomake it happen. So it’s a full size book, this one. It’s more thanone airplane ride.Joe: Right. I enjoyed the fact that you actually changed the typeof page when you shifted from one to the other, and the twoparts, because it automatically frames you in what you’re actuallylooking at and thinking about at the time. “Oh, I’m on a yellowpage now, so I understand”, or it’s a beige, or whatever.
  15. 15. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Joe: I see Lean companies discussing value streams, where theorganizations are designed around a particular value stream, amore decentralized approach. Does internal market economicsconflict with that model?Dean: Absolutely not, in fact, it prices out that value streamand points out where we are the best value and where perhapswe should consider sourcing alternatives, where the process getsexpensive, is an area where perhaps Lean should be applied.Lean works best, in my understanding, when you have a prettywell-structured process, a value chain from raw materials to thefinal product that happens day after day, fairly routine and wellstructured. When you get into a white collar setting like IT,you’ve got a variety of skills that mix and match in uniquecombinations on every project. Sure there are some methods thatthey have in common, but it’s not an assembly line.So the challenge is far more difficult, it’s getting just the righttalent on every team at just the right time, and engaging them injust the right accountabilities for each unique project. On theservices side of IT, even there while it’s more routine, thediversity of services is such that we’re taking the same basiccapabilities, infrastructure, and talents, and mixing and matchingthem to produce a whole variety of services. Whether it’s a virtualdata center, or Windows instances, or Linux instances, or storage,all of these things are often sharing talent and sharinginfrastructure. Getting all those combinations to work right is nota matter of a simple assembly line. So the beauty of marketeconomics -- well, the whole business within a business paradigm-- is that it allows you to recombine the same set of skills in avariety of ways for different projects and services. That waypeople can really specialize in their particular competency andserve multiple processes and not be embedded in a singleprocess.
  16. 16. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Joe: Dean, would you explain how you perceive Lean and yourmodel fitting together?Dean: Once we have done enough of these walkthroughs sothat we know who’s prime and whose sub on all these differentkinds of projects and services, you’re going to start to see somesubroutines, as it were. You’re going to see some “prime goes tosub goes to another sub” happening again and again. As soon asyou see those patterns, then it would be worthwhile to come inand with the more traditional Lean toolset, look at how that flowsand see if that can be optimized. Then you can come in and withthe traditional toolset optimize those processes. I think awonderful example of that is the DevOps movement, which is notmaking a recommendation about structure.I think the spirit of Lean is right on. It’s exactly what we need.The tools that the Lean community began with came from, Ithink, a manufacturing world of routine, well-structuredprocesses. I hope what I’m offering here is another toolset thatpursues that same spirit of entrepreneurship and best value andproper treatment of people. A toolset that applies, in cases whereyou have complex processes that are different each time andwhere we’ve got to re-combine skills, the same set of skills inmany different processes at once, essentially, the white collarworld.Dean: Yes, the white pages are the executive concepts, andthe back buff colored pages, those are the details for theimplementers.Joe: When you look at this type of process, who needs to be thedriver of it? Does it need to be the CFO, or the CIO? Who’s thedriver of this, who needs to take hold of it?
  17. 17. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Dean: Ah, well, if you’re going to attempt a significantrestructuring, obviously this is got to be an executive decision. Soa CIO or a C-level, whatever your function and the leadershipteam at the next level, really has to want to do this. I don’t thinka C-level can force this on a leadership team that isn’t prepared.It just won’t work right. Everything I do is done in a participativeway. So we’ve got to engage the leadership team because theyknow how things really work and they’ve got to buy in to make itwork. So it becomes a significant transformation project at thatlevel to get it right. But with that said, I think everybody, evenentry level if they start thinking of their jobs as entrepreneurialand understanding what their products and services are and whotheir customers and suppliers are, if you just start thinking thatway, and start behaving that way, you’re going to succeed better.It’s going to help you. I would say the concepts apply to everyoneall the time at every level. The transformation requires leadershipteam commitment.Joe: Is there a certain type of company that benefits from thismodel, and maybe another type of company that shouldn’t trythis model?Dean: I haven’t seen that, to be honest. I’ve implemented thebusiness within a business paradigm through all of thosedimensions -- culture, structure, and internal economy -- I’veimplemented that in the federal government, state government,local government, not for profit, charity, as well as a bunch ofcorporations around the United States, Canada, and Guatemala.People are people, and human nature is what it is. The principleswe’re talking about are the way we treat people and the way weset up an environment in which people work with one anotherand prosper. And I don’t think that varies by industry. Certainlythe content of their work is going to change, but theorganizational issues seem to be pretty much the same whereverI go.
  18. 18. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Joe: I found the books, and your books, even the ones written inthe 90’s are very interesting because they’re people books. Youfirst pick them up thinking you’re going to get more of thisstructure, this elaborate structure, and all this other stuff, butthey’re about people and interactions between people.Dean: Absolutely right. I think of organizations as machinesthat send signals to people that guide their behavior day by day.Not that, people are machines, not by any means, but theorganizational ecosystem we all live in is a fairly predictableenvironment. And it sends signals that either guide people to dogood stuff or bad stuff. Let me give you an example. Let’s say Itell you we’ve got to run lean and mean, we’ve got to savemoney, I need you to conserve head count, I need you to focuson value and keep your budget down. But, let me explain in thisfictitious company, your title, your political clout, your ability toget things done, in fact, your salary and benefits, all depend onhow big of an empire you run.Well, what would a rational person do? You wave your armsabout saving money, and you build empires! That’s what we’repaying you to do. That’s an example of a perverse signal builtinto that ecosystem that would cause great people to do thewrong thing. So we say well, let’s get this guy Joe out of here,he’s not a team player, he’s building his empire instead ofteaming, bring in a more capable person. What’s the morecapable person going to do? Build empires faster. It’s systemic.My focus, throughout the 30 years of my career, has been onidentifying where those signals come from, and I believe the firstand foremost job of a great leader is designing an organization inwhich everyone can succeed with or without her, bysystematically programing those organizational systems. And thebig three -- culture, structure, and internal economy -- are the
  19. 19. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901transformational ones. They determine the character, the shape,the feel of an organization. There are two minor dimensions --methods and tools – IT, for example, would be, the bestpractices, and last, metrics and rewards, the dashboards. Youknow the people who say, you want to fix it, measure it? Thoseare the people who are doing minor change. Change on themargin, not transformation. Because in fact, those are used tolock down the new paradigm and to fine tune it over time. So thebig three, culture, structure, and internal economy, create theshape of the organization. Methods and tools, metrics andrewards, come later for institutionalizing and fine tuning.Joe: What is upcoming for you? Do you offer some webinars orsome different structure for people to learn more?Dean: I love teaching, and I love implementing, so I’m alwayshappy to meet someone on the phone, I do executive coaching, Isometimes come in and do a workshop, typically within anorganization or a webinar for an organization, and ultimately forthe great leaders who are out to build a legacy of a greatorganization, I work side by side with them on implementing allof these concepts. I’m involved in implementing Full Cost, that’sthe planning part of internal market economics, in a couple oforganizations right now. I’m working on the structure in anotherorganization for the CEO. There’s always a new challenge outthere.Joe: What’s the best way for someone to contact you?Dean: I love hearing from people! Email us or give us a call.Joe: And your website is. . .Dean: The website is If you are interested ininternal market economics go to In both cases,
  20. 20. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901you’ll see a navigation bar on how to contact us. Let me hearfrom you! I love talking about this stuff, I love hearing whatyou’re grappling with and helping you figure out what your nextsteps might be.Joe: I do have to recommend your “Building Blocks Approach forOrganization Charts”. The deeper dive, “The Internal MarketEconomics” book is excellent, and I went through it thinking, I’mgoing to browse through this and do an interview and stuff, and Ifound myself caught up in it, there’s a lot to digest in it! I thinkthis is a book that I’m going to have around for a couple monthson the side of my desk.Dean: Thank you for saying that Joe, I’m honored! Behindthese things is what I call studies. So for a leader who’s actuallyready to implement it, you know that little blue book, what is it110 pages? That gives you the basics of structural cybernetics;the lines of business within organizations, those questions on howto combine the building blocks into a great organization chart,how to build the processes, it gives you an overview. Behind thatis an 800 page study that we use for actually implementing theprocess. “Internal Economics”, what does that come out to, 370pages, behind that are studies, multiple studies for variousmodules within that framework for implementation.When we actually implement transformations, it is a fine process;here’s a workshop, here’s a homework assignment, here’sanother workshop; and here’s all the documentation to go withevery step of the process. These are tested processes.Joe: I do appreciate it. The podcast will be available on theBusiness901 blog site, and the Business901 iTunes store. Thanksagain, Dean.Dean: Thank you Joe, it’s been fun talking to you.
  21. 21. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsShow me the Money – The Truth about PerformanceCopyright Business901Joseph T. DagerBusiness901Phone: 260-918-0438Skype: Biz901Fax: 260-818-2022Email: jtdager@business901.comWebsite: http://www.business901.comTwitter: @business901Joe Dager is president of Business901, a firm specializing inbringing the continuous improvement process to the sales andmarketing arena. He takes his process thinking of over thirtyyears in marketing within a wide variety of industries and appliesit through Lean Marketing and Lean Service Design.Visit the Lean Marketing Lab: Being part of this community willallow you to interact with like-minded individuals andorganizations, purchase related tools, use some free ones andreceive feedback from your peers.