06 Nov 09 Chickens, Eggs and Change

There is an interesting debate going on amongst those who have little else to debate these days. The question is this. For effective change to take place, does one first change the organizational structure and systems and then adapt a strategy (and human strategy as well) to fit the new structure and system, or does one start with the strategy and mindset changes and then adapt the systems and structure to fit it?

This is one of those interesting leadership questions because, if you have an answer, you probably believe it is the only logical answer to have. Of course my answer is one of those amazingly frustrating answers for many people. I believe it depends on the change being instituted and the context of the specific leadership and organizational challenge.

In my opinion, it is possible for a full scale and successful change initiative to be instigated by the recognition that current systems, hierarchies and processes are either producing less than desirable results or, more likely, are not creating results quickly enough. This is a carry over from the industrial age that we haven’t quite settled yet. Systems that create efficiency and run at the lowest cost are not necessarily the same systems that create the greatest speed or quality. As I’ve written here before, the obsession with cost reduction has created many organizations that now find themselves able to do things inexpensively, but without innovation or speed to market.

On the other hand, organizations that have flat structures, few complex processes and an innovative mindset are not immune to dealing with change. The current economy for example has hit everybody. Many of these innovative companies (Google, 3M, Apple) have come to recognize that their cowboy mindset worked well in good times, but did not prepare them for the more team-oriented approach that may be necessary today. Yes, these companies have had teams forever, but the kind of collaboration that is necessary now is so entirely cross functional and focused that few organizations are accustomed to it. These aren’t organizational design issues…these are internal issues. In these cases, the mindset has to change first, and the design will follow.

I believe what is most important is the manner in which the change process is approached. First of all, we should quit acting as if the “change process” is a unique and perhaps frequent stand alone event. In the current environment, change is not separate from leadership…it IS leadership. Second, for either design driven or internal driven change to work, stakeholders have to be enlisted early in the game. We have become a complex environment and diverse perspectives will provide the framework for understanding what and how change will enable the new corporate.

Finally, we have to get away from believing that there is one way to either make change happen or even to describe the phenomenon that occurs during change within an organization. We have become comfortable with approaches and theories that date back to a much more stable and industrial age. For change to work, leaders have to have open minds and hearts and be willing to understand that they don’t understand.

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Tags: accountability, change, communication, culture, Global Leadership, innovation, Leadership characteristics, trust, vision

03 Sep 09 Efficiency as an antidote to creativity

In the last few weeks I’ve had the opportunity to talk to several leaders who find themselves stuck because of a paradigm that has been established in the last few years. This mental model goes something like this…”A leaders job is to drive efficiency because the most efficient organization will be the most successful.” The assumptions around this statement imply that the purpose of an organization is to be as efficient as possible, e.g. to operate with the greatest return on the least investment. This then turns into a focus on eliminating cost at every possible juncture.

It is true that the last decade brought about a symptom of excess for many organizations as profits soared. In my own company, the difference in what is seen as a necessary investment or expense this year is dramatically different than it was in the past. Not only are many purchases or expenses simply foregone this year, but some of the items or services that seemed like a great idea in the past are seen in the current light as either extravagant or at the least unnecessary. So these services and purchases are cancelled to provide a greater cash flow or access to resources.

The problem is, as leaders, we seem to be inevitably searching for that “one right answer” that will drive success in our organizations. With the advent of Six Sigma, Lean Operations and the like (if you don’t know, it’s o.k.), more and more activity has been spawned to “drive inefficiency out of the organization.” This can be a great effort because it lowers cost and often speeds production, but there is a dark side to efficiency of which leaders need to be aware as well. In fact, I would propose at least three areas that take a hit from this focus on efficiency and, as a result, may create problems that are greater than the ones being solved by the efficiency initiatives.

Customer Service. One of the easiest examples of the conflict between efficiency and customer service can be seen in the hotel business. I used to do a great deal of business with the Royal Park Hotel in Rochester, Michigan (the fact that I haven’t lately is no reflection on the hotel by the way!). When you pull up to this very nice and professional hotel you will always find one or two bellmen standing in the doorway and possibly a valet or two. Even if business is slow, there are probably five people on the clock serving these roles. From a cost perspective it is quite clear that at least two of these people could probably be eliminated from the payroll and the consequence of eliminating another one would likely be that wait time would go from zero minutes to perhaps 3 or 4 minutes to have your car parked or bags taken.

On the other hand, people come to the Royal Park because from the moment they pull into the hotel, they no longer have to worry about things like parking, luggage, or logistics. It is part of the customer service philosophy that sets this hotel apart from many others in the area. If they were to follow the advice of a cost-cutting expert, they would lower their cost-per-employee but they would also impact their reputation for high customer service. The result would directly impact their competitive position.

Innovation. One of the greatest consequences of overly focusing on efficiency is the loss of innovative capacity. This occurs for two reasons. First, innovation comes from the “gray area.” For employees to be innovative they have to have time to be creative and the organization has to be willing to accept a certain number (sometimes high) of failures. If a new product or service idea is a guaranteed success, it is probably not so new. Yet companies that say they have not reduced their R&D budgets still often create an atmosphere of risk aversion by cutting everything else. Fewer people, less time and less willingness to experiment are killers of creativity.

Second, leaders with a mindset of cost-cutting or process efficiency find it very hard to also have a mindset of experimentation and exploration. Followers look to their leaders to see what is true and what is not. If I talk innovation, but act always with obsessive frugality, my employees have to decide which is more important to me. Since cost-cutting by definition requires elimination, followers will find it almost impossible to be both innovative and cost averse.

Employee Morale. When efficiency rules, a mechanization of the organization tends to follow. By that I mean simply that people and their work lives begin being treated as secondary to the cost reduction needs of the company. Even if it is a fact that the elimination of positions is necessary to keep the company alive, it comes with the consequence of reduced employee morale. Innovation requires optimism and a pessimistic organizational environment can not produce strong, creative and exciting ideas very easily. While true innovation usually comes from sense of urgency, it does not come from a sense of panic. And aggressive cost cutting creates despair amongst the troops.

What is a leader to do when the organization needs both cost-cutting and innovation? For one thing, remember that the term “efficiency” is only seen as a good thing from a managerial perspective. Employees do not get jazzed by “efficiency initiatives” since this term has become corporate-speak for cost cutting. On the other hand, employees do become engaged when they feel they are working on something significant to the success of the organization. Leaders need to work on both sides of the balance sheet. Where excess is clearly the problem, then processes and resources should be cut. But leaders also need to ask themselves, “what is the ultimate consequence?” The calculation of savings has to include a factor of lost opportunity, engagement or involvement by the employees. Reducing the fat makes sense. Reducing the muscle of an organization has long term negative effects. And reducing the brain and heart will ultimately lead to a shell of the dynamic organization that you once were or could be.

Tags: accountability, consistency, efficiency, innovation, morale

07 Aug 09 The Ecology of Renewal

As Rachel van Rossum and I had the opportunity this week to spend with clients and prospective clients, we listened to the stories of struggle that the various leaders had within their organizations. In our business at IMPACT Consulting and Development, we offer consultation, coaching and development for leaders trying to successfully navigate the twists and turns of change and one of the most common situations we find ourselves in is the one where we are telling our client that what they are experiencing is neither entirely unique nor insurmountable.

While you might think this is an example of a consulting firm of hammers finding every problem to be a nail, I believe it is more than that. As we have spoken with leaders from around the world and at every level, we find that there is a certain predictability when it comes to the chaos of change.

Why is it that a large organization has an enormously difficult time reinventing itself, even when the obvious changes in economy require it? Why would it be that small business have a struggle to get beyond the DNA of the founder and into a working organizational culture that is adaptable to the necessities of the times?

In his book Crisis & Renewal: Meeting the Challenge of Organizational Change
, David Hurst presents a fairly interesting (although somewhat heavy) argument that the growth of successful organizations is counterproductive to the ability of those organizations to change. As he puts it, organizations use the logic of management to move from a system of “trust” to a system of “power.” Power comes from permanence and structure, e.g. repeatable processes, production systems, organizational hierarchies, etc.

While every entrepreneur knows that these system developments are necessary to eventually move away from a one-person show to a stand-alone, functioning business, these same systems are counterproductive to the adaptability of the organization. And as we’ve seen over and over, once these “power” systems are in place, the organization fights vigorously to keep them. In ecological theory, it is known as the survival instinct of the organism. First you have to mature, then you have to protect yourself in maturity.

If you look at the time period between the agricultural age and the industrial “age,” it is likely that you would feel the changes were inevitable. And for the most part a good thing since it was our development into a focus on industry that led to the innovations necessary to move into the information “age.” All of this is easy to say, but painful to practice. For the people who suffered through the transition from agriculture to industry, the perspective was anything but comfortable. Having grown up in rural Kentucky I can tell you that there are many yet who have not figured out how to be successful in a non-agriculture-focused society.
It may be that at this moment we are moving from the information age to yet another era. And, in my opinion, if anybody tells you what that era actually is, they are making a guess at best. You can’t see the frame when you’re in the picture. And to be honest, it doesn’t actually matter. What is important is for leaders to make the conscious effort to find the balance between total anarchy (the entrepreneurial danger of creating idea after idea with nothing permanent in between) and total monarchy (the established organization danger of refusing to revisit the primary success factors of the business).

Nature loves renewal. It is built into the ecology around us. Many forests are considered only sustainable when fire cleans out the overgrowth to allow for regeneration. Land managers of course have discovered that this fire, while somewhat inevitable, does not have to be unpredictable. Through frequent, yet much smaller, “controlled burns,” foresters are able to renew the forest on a pre-directed timetable rather than waiting for a catastrophic event and hoping for the best. Leaders should consider the same in their organizations. Through a continued commitment to re-examining and re-inventing old and well established norms—whether historically successful or not—a culture of smaller but consistent change will have a greater adaptability in especially challenging times such as these.

Tags: change, change management, Energy, Global Leadership, innovation, leadership and change, organizational development

05 Jun 09 Be proud of your box!

There’s an overused saying by Albert Einstein that goes, “The definition of insanity is doing the same thing over and over again and expecting different results.” Sometimes, doing the same thing over and over again is often the only thing we know how to do. Sometimes we may do it less, or we may do it more loudly, but in the end, unless we learn from our experiences, we can easily be frustrated that actions that appeared to work the first time begin to be less and less effective.

There is another great quote attributed to Albert Einstein although quoted in quite a variety of ways. In essence, Einstein said that we can’t solve problems with the same kind of thinking we used when we created the problem in the first place. In other words, the only way to improve our activities, and to address the challenges of the day, is to be constantly questioning our own mental models and reflecting on what we have learned in the process of what we have done. For leaders, this is a very important point. Without the willingness to reflect on our own activities, we will continue to repeat the same problems (and some of the same successes) until the context has changed so much that our approach is no longer relevant.

But how do we do this? I only know what I know. And I am a total skeptic when it comes to the idea of “thinking outside of the box.” First, my box is my box.

It is my experience, intelligence, education and knowledge and it represents my own reality. To ask me to think outside the box is to ask me to do something I quite literally don’t know how to do. My recommendation is not to try to think outside the box, but to explore new ideas and models and then take them back into your box and apply them.

Here’s an example: Suppose I’m in one of these profound creativity workshops (probably called an “ideation” workshop for cryin out loud). In it the facilitator says, “Todd, I would like you to approach this problem as if you are the Master Chef of a five-star restaurant.” Now, I have no idea what a five-star Master Chef is or does. So it is likely in this exercise I will do what I THINK a Master Chef does which might be that the Master Chef operates his or her kitchen like an automation machine, calling out orders to the various staff members and by controlling the process creates the outstanding dishes that make the restaurant five-star.

That might get me points with the facilitator, but it does nothing from a creativity standpoint. The idea that comes to me is based on my own box and the application of my experience to the question at hand. While this might not be entirely useless, it is unlikely to create a true breakthrough. On the other hand, what I might do is say, “Facilitator, I have no idea how a Master Chef thinks. However, I know the general manager of a five-star hotel and I bet she could create an opportunity for me to watch and study a Master Chef.” And of course, to my amazement, by doing this research I discover that Master Chef’s do not call out orders. In fact at times they are the most quiet and focused person in the kitchen. In fact, in this case, the Master Chef has many others who do the prep work, ensure the quality of the ingredients, provide the measurement and the order within the kitchen. As they provide these pieces to the Chef, he in turn creates the dish based on the output of all of the professionals around him.

Now I’ve learned something outside of my box that I can bring back in. If I want to apply this lesson to my own problem, perhaps I delegate pieces of the problem to people on my team with the right skill and experience to handle it and then get out of their way. I define my role as the integrator and allow my team to do the prep work, using their contacts and their skills so that when we create the final solution, my job is bringing things together in a pre-defined manner.

I’m not suggesting you should approach your work as a Master Chef. What I AM suggesting is that you take the time to truly explore other approaches before simply jumping to conclusions about what a creative idea might look like. Don’t disparage your own box, but value what you can learn from others. Then look for the underlying lessons or processes and see if these can be applied to your own situation. Innovation is not as easy as we think and at the same time does not have to be complex. It does have to be intentional. And intentional innovation is one of the keys to successful leadership.

Tags: creativity, delegation, exploring leadership, innovation

15 Jan 09 “Success” versus “Best” Practices

For a long time I have been bothered by the idea that leaders, especially global leaders, should be obsessed on identifying and replicating Best Practices. This has been more of an intuitive issue than a practical one as I have not really been able to articulate why I find this bothersome. This morning, while reading Seth Godin’s outstanding book “Tribes,” it occured to me whay “Best Practice Sharing” can be a hidden problem.

When leaders start focusing on identifying best practices, they are by definition identifying what has worked in the past. Too often, they examine the process…the manner in which something was done…and then try to determine if they can replicate that process in their own context. One client I’m working with now is determined, for example, to bring case studies into a leadership training in order to see if there are ways to apply “learnings” from other companies to their own.

Here’s my problem. Amost every leader that has tried, for example, to take Jack Welch’s approach at GE and replicate it in their own company has found it difficult if not impossible. This is because Welch’s approach was not just about a process, it was about a mindset and a change in thinking. As soon as we start to institutionalize the outcome of a change process, we start creating a new status quo.

I suggest that leaders need to go a step or two further. We should study more thoroughly the Success Practice that went into making the process work rather than the Best Practice of the process itself. We should see what it took for Welch or any other leader to bring about the necessary change and worry less about the step-by-step instructions for imitation. True leaders are always surveying the landscape for new ideas and approaches. A good historian can document a process, but a leader has to understand the forces behind the process. THAT’s where the true success lies.

Tags: Best practices, Global Leadership, innovation, process