Matt Black Systems had some excellent coverage in this key CIPD report

Title: HR: Getting smart about agile working
Publisher: CIPD in assocaition with The Agile Future Forum
Type: Research report
Published: November 2014

Matt Black Systems is a major independent specialist in the design and manufacture of man–machine interfaces for land, sea and air applications. Since its founding in 1971, the company has developed an extensive range of integrated products across a multitude of industries, including aerospace, defence, and security and simulation for both the military and commercial sectors.

To ensure client-centric delivery of services and empower its staff, Matt Black Systems started operating a networked organisation model in 2004.

Organisational principles

Julian Wilson, one of the current investors, had previously owned the business with a partner. Employing just under 30 staff, the organisation was facing the traditional legacy challenges of a manufacturing SME. Weakening defence manufacturing market, unchallenged operating models and already emerging silos resulted in low productivity and lack of cash flow for the company, which had started to reflect on the bottom line. Some of the immediate challenges to productivity were the low rates of delivery on time (circa 17%) and a strong reliance on paid overtime (taken up by almost all staff).

When Andrew Holm joined the management team, the owners recognised that low productivity trends were at least in part associated with the organisational culture, and therefore opted for a people-centric direction for change, focusing on addressing disengagement and disempowerment in the workforce. In search for a new model of working, Andrew and Julian identified lack of intrinsic motivation and control over the entire process as core systemic problems in the current organisational set-up.

The management team took a genuinely people-centric approach. They outlined core targets for the business as quality, delivery, profit, innovation, growth and relationship with clients. By focusing on nurturing employee motivation to deliver those targets, they designed the organisation in such a way that they believed would support the three prime motivational elements established by Dan Pink’s research: autonomy, mastery and purpose. Because Matt Black Systems’ people are rewarded against their own personal results, they realise that their success, the success of the business as a whole and the success of the clients are firmly linked together.

Unlike most traditional business models, the business acts as the supplier to the employees (for example, providing the investment, the workspace, the brand and the business management software). Such a model puts pressure on the business to deliver more efficient and effective tools, so that the employees can deliver more efficiently and effectively to their customers.

Crafting the organisational environment – a systemic approach

The owners saw the solution in allowing individuals to exercise control over how they work – within the parameters that ensure sustainability of the business (including compliance with the regulatory and health and safety standards). However, rather than setting up arbitrary boundaries, the organisational design
has been developed as a holistic system that replicates the complexity of the external environment, but allows the individual employee to act on that complexity rather than constraining them to a certain way of working. For example, the workloads are controlled by individuals being able to oversee all the functions and, therefore, only making such delivery commitments to the customer that they feel are achievable.

To quote Andrew Holm:

‘The design of our business is as a fractal of [the industry] as a whole. It is a bit like a Russian doll, where one doll opens up to reveal another doll, which opens up to reveal another doll and so on. It is this holistic approach which is key.

‘Treating business as a system means overcoming the artificial split into individual function (for example sales, purchasing, design, manufacture, quality, human resources). Instead, the individual has to understand all the complexities of the system as a whole and in particular how all the individual components interact. In a traditional operating model; failure often occurs at these critical points of interaction, at the boundaries of functional departments.’

Matt Black Systems currently employs 12 engineering designers, all of whom are fully trained to cover all operations, from processing customer orders and purchasing material, through manufacturing capabilities and assembly techniques and into test, inspection and despatch. This approach removes the issue of silos, but most crucially allows staff to take control of (and responsibility for) every project from start to finish. Effectively each designer operates as an entrepreneur.

Their work is supported by bespoke software that allows operators to take projects seamlessly from conception to execution to sales. It has in-built tools that provide the overall framework for dealing with any aspect of the project, but also allow a degree of flexibility to adjust each template to the nature of task at hand. The software also contains information and training material that is used by the newcomers to develop their knowledge and skills within the real-time working environment.

The journey to a networked organisation

However, at the beginning of the journey, Julian and Andrew were mindful that a gradual approach rather than an overnight change in the ways of working was necessary to engage people with the need to change. For example, when tackling the first issue of employees’ reliance on paid overtime, they decided to remove overtime policy, while giving the employees a compensation on top of their regular salary which was equivalent to the overtime pay they were previously getting. The second step was adding a bonus

for delivery on time. Both of these tactics – introduced in consultation with staff – dramatically improved productivity levels, but more importantly contributed to a gradual mindset shift, where operators were becoming increasingly in control of the value they were adding and consequently their income.

Eventually, the level of responsibility that each operator assumed for their work allowed them to develop relevant skills and take ownership of complete projects, from start to finish. Within the business they operate an internal marketplace, where all 12 are individual entrepreneurs, designing, manufacturing and marketing their own products. They are all working to common KPIs and can trade between themselves
to achieve the target performance. For example, if one operator wins a large contract, they can ‘employ’ other colleagues to help them deliver the project for a fee (expressed in internal currency) that they agree. Equally, operators decide themselves when and where they work, as long as they’ve agreed with their colleagues how they are contributing to the overall performance target. Individual pay is determined as a percentage of the individual profit.

Andrew and Julian act as investors for the Matt Black Systems staff, but from a leadership point of view they act as stewards, designing and looking after the organisational system where employees can flourish. They believe that the systemic approach principle (rather than specific practice) of Matt Black Systems can be adopted by other organisations.

Julian Wilson says, ‘It is not so much how we do things but the fact that all people and processes are arranged as a system. We champion organisational design, not a specific model, the same way we would champion bicycle design rather than a single model of bicycle. Most organisations are assembled rather thoughtlessly from a bag of popular organisational “bits”, then patched to overcome the worst and most immediate problems. This is not a good way to design bicycles, nor is it a good way of designing organisations.’

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