Observation #31
One of things that we find paralyzes some managers and prevents them from fixing operating problems is something one of our healthcare clients termed the “X- Factor.” The X-Factor means problems that were initiated externally (i.e., outside the department) and were therefore difficult, if not impossible, to fix because local managers had no authority.
It’s not surprising that external factors can, and do, routinely affect performance simply because organizations are made up of processes that run horizontally through vertically organized functions. And functions within organizations are often in conflict with one another. For example, a company’s procurement department wants to purchase supplies in large quantities so it can negotiate the best price, but the people managing inventories want it to buy in small lot sizes to keep inventory levels down. Organizations are a complex web of compromises and trade-offs.
The X-Factor is alive and well in most companies — and it impacts the performance of one department over another. However, we find that it is rarely as significant as managers think. Often there is not enough effort spent separating the myth from the reality. One of the first things we do when we encounter a problem that is deemed “unfixable,” due to X-Factor conditions, is simply quantify the source causes. What we are trying to determine is how much of the problem is caused by external factors versus those factors that are within the control of local management. Often we will find that there is plenty of scope to incrementally improve a process quite independent of the X-Factor issues.
Then we also look more closely at the underlying external factors and further break them down into specific issues. Here we often find that there is more ability to influence external departments than local managers realize. Sometimes just educating external groups about the specific issues and quantifying the impact can influence what they do, when they do it and/or how often they do it — whatever it is that’s actually creating the problem.
