The Exception-Tolerant Organization

Everyone by now knows of the Pareto 80/20 rule and where it applies to conducting business on a daily basis: people spend 80% of their effort on 20% of the issues. Many of these issues are exceptions to the normal course of business, and do warrant greater attention and effort. But the 80% of the effort spent begins to take away attention and resources from handling the “normal” 80% of the issues a business faces on a daily basis, the very issues that keep the business alive. This can manifest itself in an organization slowly at first, like an insidious virus that attacks from the inside out.

By the time an organization realizes that its ability to handle the “normal” issue has been compromised, the gross margins have declined and the organization has lost its competitive edge. But an Exception-Tolerant Organization has learned to rise above this, to make 100% of their effort effective on 100% of their issues while keeping pace with changing conditions. This post introduces the Exception-Tolerant Organization (ETO), and subsequent posts will cover the major principles in greater detail.

First, what does it mean to be Exception-Tolerant? Today’s management consultants and management thought leaders preach the mantras of embracing change and embracing uncertainty. Being able to embrace change and embrace uncertainty are indeed important. But being Exception-Tolerant is about taking these embracements and bringing them into the practicality of day-to-day business. Being Exception-Tolerant is not about solely reacting to business events and then making on-thy-fly adjustments into your workflows and systems just to keep above the water level.

Being Exception-Tolerant is about anticipating these business events and proactively building workflows that allow both people and systems to adapt and adjust smoothly, sometimes within minutes or hours of the exception occurring. In current-generation software development tools, there are language constructs that allow you to anticipate the exceptions that may occur during processing, and build a framework to handle them. Since we can do this with software, why can we not create these types of constructs in our own business processes, and with our own people?

We can, but only if we have the facilities and communication channels to do so. An Exception-Tolerant Organization (ETO) has the Exception-Tolerant people, the Exception-Tolerant business processes, and the Exception-Tolerant technology to proactively execute during times of change, uncertainty, and exception.

Exception-Tolerant Organizations:

- embrace change and uncertainty while systematically executing their business

- build the communication pathways, business processes, and technology features to handle exceptions systematically

- emphasize their strengths and compensate for weaknesses by working together and communicating openly

- practice daily Risk Management

- do not tolerate waste, stifling of innovation, or inflexibility

And when ETO’s practice the above effectively, they turn out to be exception-al organizations, not exception-less. For if you are exception-less then you don’t stand out and cannot be exception-al in business.

Can your people, your processes, and your technologies tolerate the physical, logical, internal and external events and forces that cause exceptions to your business to occur? Can your people, your processes, and your technologies adapt within minutes and hours to update, and perhaps even create new necessary business processes?

In other words, are they proactively built to execute during times of change, uncertainty, and exception? Or do they solely react?

Do you want your organization to be an Exception-Tolerant Organization?