PART ONE
REDESIGNING THE WAY
ORGANIZATIONS CHANGE CHAPTER 1
WHY COMMON APPROACHES TO ORGANIZATIONAL CHANGE FALL SHORT
Most people consider fundamental, far-reaching and fast-paced organizational change to be a contradiction in terms, and basically impossible to make happen. Their past experience in a variety of change efforts reinforces this belief. Yet fundamental, far-reaching and fast-paced change is something that most organizations would benefit from and many need to achieve.
The factors driving this need are changing market forces, increasing customer demands for quality and service, the introduction of new technologies, and peopleās desire for a greater say in shaping their own and their organizationās daily operations and future direction. āBusiness as usualā is no longer a viable response. Large multinational corporations and small local volunteer organizations alike are being forced to rethink basic assumptions governing their strategies, the way they organize themselves, their work processes and support systems, workforce composition and competencies, and their culture. Said another way, an organizationās capacity to change is a key factor in its short and longer term success. The most successful organizations of the future will be those that are capable of rapidly and effectively bringing about fundamental, lasting, system-wide changes.
Despite the best efforts of boards of directors, leaders, managers, and workers, organizations are failing to effectively respond to these clarion calls for change. Why, with such clear demands, do most organizations and the people in themāfrom leaders to front line workers and everybody in betweenāfind themselves frustrated, still searching for concepts to guide and practices to implement really effective change? The problem is that most troublesome issues plaguing organizational change initiatives are inherent in their design. They occur because of the way in which these initiatives are commonly planned and implemented.
A look at how a typical change effort occurs sheds light on why these issues are largely unavoidable, even when the best plans are implemented flawlessly. The following scenario could occur in a wide variety of organizations raising diverse sets of issues and located anywhere around the world.
A small, select group of people regularly meet for a period of several weeks or even months, carefully crafting plans for a new and better future for their organization. They may be a strategy development or planning and policy unit, a top leadership group, a steering committee or task force. Informed by surveys, studies, and analyses, plus additional data collected from others both inside and outside of their organization, this team of highly committed and respected people forges new ground. Others, especially senior managers and maybe the board of directors, get periodic progress reports from this group and offer comments regarding the focus and direction of their work. However, in large part, the initial journey into the future is their own.
After documenting the strategy or plan, including recommendations for change that need to be made and securing senior management approval, the implementation phase begins. The plan and recommended changes are rolled out to the entire organization. The case for change is clearly communicated, necessary actions spelled out, questions asked and answered and buy-in, agreement, or compliance sought. Numerous informational meetings may be held to allay peopleās concerns about the impending changes and to inform them of the new ways in which they will need to do business in the future. For some in the audience, resistance to the plan remains high; others agree with the recommendations and begin implementing them back on the job. Overall, enthusiasm for the plan exists, at best, in pockets. The organization moves into the future with some needed changes being made and others, unfortunately, being left on the drawing board. After an initial flurry of activity, eventually things pretty much return to business as usual.
The exercises illustrated in this scenario may have been a moderate success in many peopleās eyes. But the result was not nearly enough considering the depth and breadth of change required for the organization to thrive in the future, let alone recouping the investment in the change effort itself. Rather than proposing minor modifications to this existing paradigm of organization change, such as adding a few more key people to one of these working groups or including a little more time to really hammer home and clarify expectations in the rollout phase, I am advocating a fundamental redesign of the way organizations change. The result of this fundamental redesign is real time strategic change, an approach that involves an entire organization in fundamental, far-reaching and fast-paced change. Letās visit our scenario once again, but this time letās explore it as if it were a real time strategic change effort.
Hundreds of people come together at the same place and time to address substantive organizational issues and to create their collective future. Creativity and synergy are unleashed as system-wide strategies and decisions are set in motion. These strategies and decisions are informed and considered, based on a shared view of the challenges and opportunities facing the organization, its customersā expectations, and internal capabilities. Planning and implementation merge together as collaborative working agreements are established across levels and functions resulting in common purpose, shared goals, and renewed commitment to their organizationās future, which they themselves are creating.
People practice new ways of doing business in real time in this and in other similar large group gatherings. They leave these interactive, organization-wide events behaving differently, making different choices about how they work together and where they focus their time and energy. Change happens faster because the total organization is the āin groupā that decides which changes are needed and how they can best be made. Over the long term, using this approach increases the individualsā capacity for strategic thinking so that each person is better able to respond on a daily basisāno matter where he or she works in the organizationāto other changes as they continue to emerge over time. An entire organization moves together into its future, aligned in a common strategic direction. Each person commits to how he or she can and will contribute to doing business in new ways, both during the large group meetings, immediately afterward, and on into the future.
This sounds like a tall order, and it is. But not impossible. In fact, the better part of the rest of this book outlines this innovative approach to change that my colleagues and I have developed, refined, and extended during the past decade. The result of these efforts is a set of principle-based processes and practices that are constantly being renewed and applied in different contexts. This concept of real time strategic change has been put into practice and successfully applied in diverse settings ranging from businesses, to industry, service, health care, education, government, other non-profits, and in community development. It has proven equally useful within the United States and in joint ventures between U.S. and Pacific Rim companies, as well as in Eastern and Western Europe, the Middle East, and the Far East. In addition, this way of thinking has been used to significantly accelerate the implementation of major system change efforts involving organization strategy, total quality management, work design, reengineering, cultural diversity, and community-based initiatives focused on social, political, and economic issues. Because these initiatives rarely occur in isolation from each other, we have achieved powerful synergies in many organizations through their appropriate combinations.
The two scenarios of organizational change described represent entirely different mindsets and yield substantially different results. Most organizations have tried for years to implement organization-wide changes through numerous variations on the first scenario. These small scale methods take longer, cost moreāin opportunities lost, as well as in money spentāand are ultimately less effective than the large scale approach described in this book. I also believe that the design of the change effort described in the first scenario inherently contributes to why many improvement initiatives produce less than they promise and result in more ābusiness as usualā instead of delivering whatās really neededāfast and far-reaching, system-wide change.
Life cycles of products, technology, services and processes continue to get shorter. Despite peopleās best efforts, it is clear that many organizations are falling behind the power curve of change that exists worldwide. We may feel capable of supporting, managing, and leading change efforts in small teams of ten or even twenty people; however, many organizations are comprised of hundreds or even hundreds of thousands of people. This sheer size and the scope of the changes required leave those committed to leading positive, directed change efforts quietly resigned to the limitations of approaches they currently possess. The need to build clarity, commitment, and collaboration across an entire organization is a critical component of any change effort. However, most peopleās experiences suggest that meeting this need is more wishful thinking than a deliverable result. Unfortunately, many change efforts confirm this suspicion by falling out as too little too late, being too limited or incremental in scope, or by categorically being referred to as outright failures by their architects, implementers, and those ultimately affected by the proposed changes.
Four Common Approaches to Organization Change
Over the years I have listened to people from all levels and in all kinds of organizations vent their frustrations about how āthe systemā normally operates and how difficult (or even impossible) it has proven to bring about change in the status quo. In reflecting on what Iāve seen in many different organizations, I categorize these less than satisfying experiences into four common approaches.
Top-Down Strategies
The first of these generic approaches is what could be referred to as a top-down strategy in which an organizationās leadership team decides which changes need to be made. In most organizations using this approach, brief large group meetings are held in which leaders explain why new ways of doing business are needed and what will be required from people in the organization to successfully bring about this particular set of changes. Other less participation minded organizations following a top-down philosophy issue substantive business changes through the publication and distribution of strategic plans, task force reports and executive memos. In top-down organizations, the desired changes are rarely crystal clear to everyone, even those prepared to listen; the commitment and collaboration required for effective implementation are also often missing. Likewise, a key to putting those changes into practiceāpeople feeling personal ownership for making them successfulāis lacking because most of the people who need to do things differently have neither been consulted nor involved in the process of deciding which changes need to be made.
Bottom-Up Strategies
Bottom-up strategies are another avenue for organizations to follow in bringing about change. In these scenarios, individual teams of front-line workers are accountable for making changes in the way they themselves do business. Borne out of the empowerment movement of the 1980s, teams using this approach largely end up working independently of each other, crafting innovative solutions to their own most pressing problems. This approach usually results in a satisfying, short-run experience with major improvements being made and good results achieved by many of the individual teams; however, the gains for one team are often at the expense of another and the long-term headaches for the entire enterprise usually remain. In most cases, either a lack of overall strategic direction and/or adequate system-wide coordination between these internally-focused teams overshadows any incremental progress that is achieved. Commitment is much higher with this approach than a top-down strategy. However, lacking an overall context and without collaboration across the entire system, success is limited to good solutions to only those problems which exist exclusively within separate functions, areas, or levelsāa small part of the universe of issues confronting most organizations.
Representative Cross-Section Strategies
A third generic approach to change involves recruiting representative cross-sections of the actual people ultimately affected by proposed changes to help decide which changes are necessary and how they can most effectively be implemented. This collection of people is often convened by consultants and has become known by names such as task forces, working groups, diagonal slice groups, subcommittees, parallel organizations, and by other special names in different organizations with different cultures. These groups gain an extensive understanding of the overall context of the change effort, develop a deep and genuine commitment to their cause, and provide a model of collaboration with representatives from other parts of the organization that they have long held in disdain. Coordination issues for the entire enterprise get worked through in these cross-section groups as members are encouraged to keep a big picture perspective throughout the process. However, these results are likely enjoyed by only the few people most directly involved in the task forceās work. The problem with this approach is that many other people throughout the rest of the organization are never meaningfully involved in the process, donāt understand the changes themselves or why they are needed. Furthermore, they donāt view the cross-section group as representative since itās been so long since they have been around the real work that theyāve lost touch with reality. Because of these dynamics, most peopleās ownership of and commitment to their organizationās change efforts are understandably lacking.
Pilot Strategies
A fourth common method is to identify a specific part of the total organization as the flagship or leader for change. Sometimes referred to as pilots, these change efforts benefit from having a well-defined task, the attention and support of organization leaders, and the allocation of resources required to ensure success. The people within the part of the organization selected to participate in the pilot project are involved closely in the planning and implementation of change. The results of their efforts are often showcased throughout the entire organization. However, even when measurable improvements have been achieved and communicated, it proves difficult to transfer these new ways of doing business to other parts of the organization. The ānot invented hereā syndrome gets in the way of other groups adopting what appear to be reasonable recommendations and suggestions for improvement. Some so-called āresistersā may believe they have even better ideas than those developed by the pilot group, whereas others may resent not being chosen to participate; still others maintain that their circumstances are unique, they are nothing like the pilot groupās, and that none of the solutions are applicable to them. As people in the pilot area continue to make progress toward a future they find exciting and rewarding (sometimes even accompanied by a potentially more lucrative pay scale than other groups enjoy), the gulf separating them from the rest of the organization continues to expand. Infighting, coordination issues at hand-off points between the old and new parts of the organization, and sometimes even sabotage lead to a less effective change effort overall.
Typical Results From Common Approaches to Change Efforts
One or more of the following results typically occurs when applying these above approaches to major organizational change efforts. When taken together, they conspire to render even the best-laid plans and initiatives ineffective.
Less Informed and Ultimately, Less Effective Change Efforts
Each person has a unique view of their organizationās realityāwhatās working, whatās not working, what are the pressing external issues, and what changes they believe need to be made to ensure its future success. A small group of people working together, even when combining their individual perspectives, never sees a complete picture of an organizationās reality. Leadership teams are distanced from day-to-day issues on the front lines. Workers do not have access to broad-based strategic information. People in different functions, departments, sections, and work groups suffer from gaps in knowledge regarding each otherās challenges and opportunities. Small groups face three potential traps in the methods they most commonly employ to support organizational change initiatives. The first and potentially most dangerous option is for the group to ignore the fact that their views represent only a partial window on the world of their organization. Less information in many endeavors leads to greater risk. This maxim holds true for organizational change efforts as well. Not involving more people in planning changes reinforces peopleās beliefs that their narrow, fragmented views of reality are accurate and completeāa potentially costly and disastrous assumption.
A second option is to make assumptions regarding the thoughts and ideas of those not able to participate. This choice reflects a more considered path than the first, because people realize they need more information than they themselves possess. However, as more and more of these assumptions are made, each based on the previous set of assumptions, errors in judgment grow exponentially and the collective view of reality becomes less reliable.
A third path is for the team to expand its information base through interviews, surveys, or by actually having other members of the organization, content experts, or representatives from benchmarked organizations join them for certain parts of the process. Although including additional information as part of their thinking makes for stronger recommendations, this reaching out is often a one-time affair in an ongoing process. The small group is still charged with the ultimate interpretation of these learnings and how they apply to their organizationās unique challenges and opportunities. This leaves many potential responses not considered simply because less people exploring possibilities and their subsequent implications leads to less informed decisions.
Issues arising from having only a narrow or fragmented information base are not confined to the planning phase of a change effortāthey also show up during implementation as well. Though real consensus is not a common phenomenon in most organizations, I have discovered that there is one issue on which every organization agrees. Poor communication is always mentioned near the top of the āhit listā of organization problems. However, a more substantive issue underlies the lack of communication. Without good information, people canāt make informed decisions. Another repeating cycle emerges ā¦
Some leaders donāt trust their people to make wise decisions regarding implementation efforts so they keep these decisions to themselves. Other more progressive leaders give their people a chance to make these decisions, but donāt have the means or systems to provide them with the information and understanding required to make informed decisions on an ongoing basis. Pushing decisions down to lower levels in an organization while keeping strategic information privy to only the top levels is a sure-fire way to cripple any change effort. There are enlightened leaders who realize that not only are their people ill-equipped to make strategic decisions regarding implementation, but that they themselves do not have all the information they need to make the right decisions at their level. In all these cases, leaders, workers, and ultimately customers lose. Let me be quick to point out, however, that this is not a new dilemma for organizations, as illustrated by the follow...