Executives must often manage nonroutine projects, such as integrating company mergers, filling market gaps that fall between current business units, rolling out large-scale IT systems and developing innovative solutions to new customer needs. For such pioneering work, a company’s installed business processes are frequently ineffective because they’ve been designed and optimized to execute routine activities. As such, organizations often experience much difficulty handling novel initiatives, particularly when important work needs to be coordinated across different business units, functional groups or geographic locations.

Problems with horizontal coordination are not necessarily a sign of bad management. Instead, they are nearly inevitable in any complex organization with multiple, specialized divisions. Business subunits adapt and fine-tune their metrics, language and incentives to excel at their required tasks. This very specialization, however, increases the difficulty of integrating activity across units.1 Salespeople talk past manufacturing engineers, and neither understands the scientists in research and development. The standardized work and information flows that cut horizontally across an organization can help coordinate action, but such flows work best when executing routine activities. In fact, their very reliability and efficiency limit their flexibility in doing new things.2 How then should companies perform nonroutine activities that require cross-unit coordination?

From our research, including case work at more than 100 organizations, we have found that managers can better execute novel initiatives across units by viewing the organization as a nexus of commitments — or personal promises that employees make to each other (see “About the Research,” p. 74). Using that perspective, they can take practical steps to identify critical commitments within the organization, locate and diagnose breakdowns and intervene to fix them. Managing by commitment increases organizational flexibility because managers and employees can exercise discretion in selecting the best people to work with and negotiate terms tailored to the task at hand. Commitments also increase the effectiveness of execution. Before employees personally commit, they can demand a deeper understanding of what is required and the consequences of failing to deliver. To the extent that they see a promise as a personal pledge, they work harder to honor that commitment.

The Power of Commitments

As we define it, a commitment is a promise made by a performer to satisfy the concerns of a customer within the organization.3 Customer and performer refer simply to roles: An individual acts as a customer when making a request; a performer fulfills that request.