Some organizations are buried in committees, many lacking clear charters. To get anything done, you have to get past many hurdles, and everybody had to agree on everything. That slows organizations down, blunts staff's entrepreneurial spirit, and creates obstacles to innovation.

The Market Organization explains how to avoid unnecessary bureaucracy (steps with little added value) which are costly and reduces your agility.

The Market Organization is based on two pillars:

• Business-within-a-business paradigm: Every group on the organization chart is defined as a business, there to serve customer inside and outside the company.

• The Golden Rule of empowerment: Authorities and accountabilities must match.

These two pillars are the key to defining the appropriate uses of committees.

Rules on the Use of Committees

Why do we need so many committees? One oft-cited reason is to provide a forum to keep leaders informed. But, of course, you don't need committees (or even meetings) to disseminate information. It's far more efficient to simply send information out to affected parties whenever appropriate.

That suggests rule #1: Meetings should only be used for two-way communications, such as sharing and discussing information, or collaborating on shared decisions. And regularly scheduled meetings (as with committees) should only be used for two-way exchanges that must happen regularly.

Rule #2 is founded on the Golden Rule: Committees must not be given authorities without matching accountabilities.

Members of a committee may pool their respective authorities over shared decisions. But vesting any authorities in a committee (other than the sum of its members' authorities) inevitably disempowers those who are accountable for results.

In that vein, committees should never make decisions that are within the authorities of individual leaders.

Conversely, committees should never be given accountabilities which are within others domains. This would relieve individuals of their accountabilities. And when everyone is accountable, no one is accountable.

Rule #3 is closely related: Committees should not have "oversight" responsibilities. If a committee has oversight authority over a group, it disempowers that manager's manager.

Controls should be exercised via the legitimate authority of the management reporting hierarchy, not via a committee of peers usurping the authorities of a boss or acting as a second boss. (See Stakeholders below for a different definition of oversight.)

Rule #4 is the most obvious and yet it's often ignored: Every committee should have a specific, well-defined and documented purpose. There should be no "steering committees" with vague charters that let them meddle in leaders' operational decisions.

When the same executives participate in multiple committees, it's all the more critical to precisely define the purpose of each. Conflicts of interests can arise. For example, for an internal service provider, an Advisory Board is supposed to help the organization succeed, while a Purser is a demanding customer. Even if the same people are on both committees, the committees' purposes (and their agendas) should never be mixed.

Types of Committees

In a Market Organization, there are a limited number of appropriate purposes for committees. (Some are only relevant to internal service providers, marked "[Internal]".)

• Advisory Board: An internal "board of directors" that helps a business within a business succeed, with advice at the strategic (not operational) level.

• Stakeholders: A set of people who are impacted by a class of decisions, and hence share authority over those decisions.

• Purser: A committee that owns a "checkbook," represents internal customers, and decides priorities for an internal service provider.

• Consortium: A specific set of internal customers who together purchase and share a specific product or service.

• User Group: An association of people who share with one another their experiences using a specific product or service.

• Focus Group: People representing customers who share with the organization their values, opinions, decisions, and ideas.

• Professional Community: If a function is decentralized, the members of a common profession (regardless of where in the enterprise they report) who share experiences and advance the profession.

Following is more detail on each type of committee.

Advisory Board [Internal]

An internal "board of directors" helps a business within a business succeed.

Like any good corporate Board, they do not micro-manage the executive or engage in discussions of operational issues. Instead, they add value by coaching the executive on key strategic and leadership issues.

Unlike a corporate Board, this type of committee must not usurp the authority of the organization's supervisor (one up from the organization's executive). In an empowered organization, bosses (and no one else) have the job of managing subordinate leaders. Nobody needs two bosses! This type of committee has no "oversight" authorities over the organization it serves.

Similarly, an Advisory Board has no decision authorities.

An internal Advisory Board should include people who can add value to the executive's thinking. It may include outside parties such as major customers, vendors, and trusted consultants. It does not need to represent all the internal service provider's customers.

Again unlike a corporate Board, it's there to serve (not manage) the executive. So, its composition and agenda should be controlled by the executive.

Stakeholders

The set of people who are impacted by a class of decisions, and hence share authority over those decisions (per the Golden Rule).

For example, a policy or standard may impinge on many people's work. That policy should be designed by the stakeholders; or at a minimum, they should have the authority to approve any such a policy. This ensures that one group cannot unilaterally issue edicts that constrain others' ability to do their jobs.

"We had a committee that decided policies, and variances from policies, in product pricing. We didn't want one product manager tipping the market and forcing price reductions in other product lines."

Sergio Paiz, CEO, PDC

Another example of shared interests is where decisions about one product impact other products in a brand. Examples include product designs (where a "family resemblance" helps build the brand), pricing, marketing strategy, and advertising messages. In these situations, a product manager should be required to gain the consensus of all affected product managers before making such decisions.

In operational functions, another example is "change control." Before anything new is introduced into a production environment, all those who could potentially be harmed by the change should share the authority to approve it.

When the organization sells a system of interconnected solutions, another example is interoperability. One business unit may wish to buy a solution (or make a change to an existing solution) that will harm others -- in IT, for example, by fragmenting data or business processes, precluding others' access to needed data, costing others more (e.g., the increased costs of integrations due to standards variances), or actually causing other systems to fail (the "ripple" effect). Those other affected business units should have a say in that decision.

In each of these examples, one person's decision can have unintended consequences for others. Where such interdependencies are recurring, a Stakeholder committee represents those who might be affected; it gives them authorities over a specific class of decisions to protect themselves.

Stakeholder committees may not need to meet regularly. They may be convened on an as-needed basis.

When the selection of people varies based on the specific decision being discussed, a committee should not be formed. Instead, a Coordinator should be identified who then brings together the right people as needed. Product design standards are an example of this.

Purser [Internal]

In a Market Organization, an internal support function's budget is treated as prepaid revenues -- a "checkbook" to buy the department's products and services in the year ahead.

A Purser committee owns all or part of that checkbook, and decides what checks to write. In other words, it sets priorities among the many competing requests coming from the customers it represents, and decides what to "buy" from the organization within the bounds of its checkbook.

A Purser committee's only job is to manage a specific checkbook. It does not have the power to control other "sales," e.g., when a business unit uses its own budget to buy additional things from the internal support department.

Any committees which do not own a checkbook may advise the Purser, and may filter requests before they're submitted to the Purser for approval, i.e., they can say no to projects. But lacking a checkbook, these other committees cannot approve projects (they cannot say yes). They are Stakeholders, not Pursers.

A Purser committee should fairly represent the people who benefit from its checkbook. The highest-level Purser should represent the enterprise as a whole -- all the business units. If they divide the checkbook into sub-checkbooks (Figure 15), each checkbook needs its own Purser committee representing specific subsets of the client community.

The internal supplier itself should not be a voting member because, in the spirit of building great relations with its customers, it should not judge customers' requests or become an obstacle to them.

Consortium [Internal]

Sometimes, multiple business units share an asset or service by forming a Consortium that acts as a single customer to an internal service provider. (In IT, for example, a number of business units share ownership of the ERP system.)

Since the members of a Consortium share a single thing (an asset or a service), they must speak with one voice as a single customer. They share decision making, costs, and ownership of the results.

A Consortium is distinct from the market as a whole. "Off-the-shelf" products and services are made available to any and all who wish to buy them. They're not customized to satisfy requirements defined by specific customers or Consortia. Instead, they're designed to satisfy the bulk of the market as a whole. The market as a whole is not a Consortium; each customer buys independently.

Again using IT as a familiar example, the entire company buys the email service; but they don't all have to agree on what they buy. IT decides what to offer (hopefully with input from customers); then, customers independently subscribe to the service. This is not a consortium situation.

A Consortium is a customer to an internal service provider. That supplier is not a member of the Consortium committee (although it may facilitate it).

User Group

User Groups comprise people who use specific products or services.

A User Group is distinct from a Consortium in that each member of the user group can (or, more likely, did) purchase the products or services independently. They do not share a single contract with the supplier organization (as does a Consortium).

User Groups meet to exchange information that will help them get value from the organization's products or services. Membership is generally voluntary and open to all who are interested.

The internal supplier organization is not a member of its User Group; it just facilitates it (a marketing service).

User Groups have no authority over the supplier.

User Groups may also serve as Focus Groups (below), giving the organization feedback.

Focus Group

A Focus Group (a.k.a., advisory panel) represents an internal service provider's market (current and potential customers), and shares with the organization its values, opinions, decisions, and ideas, for example, to guide research and product-development activities.

Focus Groups meet at the request of the organization, not necessarily regularly, and answer questions provided by the organization. They do not make decisions, and have no authority over the organization.

Technically, a Focus Group is not a committee since it should be constituted only when needed, and just the right people should be invited based on the questions at hand. It's mentioned here because some organizations use committees in this way.

Facilitation of Focus Groups is a market research service.

Professional Community

A Professional Community includes the members of a common profession, regardless of where in the enterprise they report. They meet regularly to exchange their experiences, share research findings, agree on standards and policies, and further the interests of their profession.

If a function is decentralized, connecting the members of a Professional Community is particularly important since their opportunities for collaboration may otherwise be limited. This is a weak patch for one of the many costs of decentralization.

Membership is generally voluntary and open to all who are interested.

Conclusion

There's no need to saddle yourself with bureaucracy in the form of unnecessary or poorly chartered committees.

As long as you are deliberate about their purpose, charter them properly, and include the right people in each, committees can be a useful catalyst of collaboration.

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