Service levels decline, waste replaces value, operational costs increase, and productivity is suboptimal when organisations lacks adaptive leadership, performance improvement or operational-level agreements. Workforces dissolve into loose, shapeless divisions without the glue that forms colleagues and teams into effective, lean value-adding streams.

Agreements are often necessary because organisations disregard performance improvement or adaptive leadership, despite the three approaches complementing each other. Nonadaptive leadership also prefers agreements’ implicit control. Whichever approaches an organisation chooses, its success reflects an ethos.

Agreements

Service-level agreements (SLA) are commonplace. They define customer-supplier relationships, clarifying small-print vagueness and stating what everybody can expect from commercial transactions — availability, response targets, processing timescales, maintenance schedules, for instance. And who offers what compensation for breaching the agreement.

Customers are not always consumers, but organisations apply SLAs to different relationships. Commercial transactions can exist between suppliers and a delivery chain’s next-step customers, or between product or service providers and their end-user consumers.

Problems occur when customers are teams in the same organisation; teams fail to interact effectively or cooperate efficiently to support mutual business processes and objectives — the silo mentality.

Mature organisations underpin SLAs and counteract a silo mentality with operational-level agreements: mandating internal processes, dependencies, communication and best-practices. Since stagnant dysfunction emerges from overlooking inner practices, OLAs allows dissimilar work units with diverse skills to develop into cohesive, successful entities.

Improvements

Performance improvement focuses on internal processes and Value Streams — the chronological activity chains creating products or services. Since teamwork and collaboration are inherent in fully-embedded performance improvement, OLAs become unnecessary for organisations embracing Lean, Six Sigma or Lean Six Sigma methods, for instance.

Leadership

Adaptive leadership and Agile methods promote engagement, empowerment and harmonious teamwork— autonomy, mastery and purpose — without OLAs or dedicated improvement. These successful methods recognise it is motivated, engaged and enabled colleagues, rather than processes and tools, who deliver customer value.

Image by Jarkko Mänty from Pixabay