Thursday, 17 June 2010

4 of 5. How organisations change

Leadership does not always wear the harness of compromise.

Perhaps the most asked but least answered question in business today is “What can we do to make our business survive and grow?” Or a more interesting question, “How do we engage our people more so that they create the impetus for growth and transformation?” The world is rapidly changing into something too hard to easily predict, with a hundred opportunities and pitfalls passing by every moment. To add to this confusion, there are hundreds, if not thousands of techniques, solutions and methods that claim to help businesses improve productivity, quality and customer satisfaction. A company President, CEO or business owner has so many choices in these buzzwords, whether they be called Total Quality Management, Customer Satisfaction, Re-engineering, Culture Change or Teambuilding. They are like new shoppers in a giant grocery store: they are hungry, but there are so many brands, sizes and varieties you don’t know what to buy. In response to this confusion, many do nothing, often afraid of making the wrong choices. Others change the techniques they use every few months, using the “programme de jour” method of organisational change, otherwise known as MBS (Management by Best Seller). Neither of these responses help the organisation in the long run.

Over 70% of change programmes fail. However if we always do what we have always done, we will always get what we have always got. Implementing a different buzzword (Total Quality, Just in Time, Re-engineering, etc.) every few months often creates a “whipsaw” effect that causes mass confusion among your people. These buzzwords are often a hammer in search of a nail, techniques applied with no clear focus as to the why, expected results or return on investment.

Perhaps the most difficult decision to make is at what "level" to start: Organisations normally go through four main changes throughout their growth:

1. Formative Period - This is when a new organisation is just getting started. Although there is a founding vision (the purpose of the organisation), there are no formal definitions. This is just as well because normally there are a lot of experimentation and innovation taking place. These changes of creativity and discovery are needed to overcome obstacles and accomplish breakthroughs.

2. Rapid Growth Period - Direction and coordination are added to the organisation to sustain growth and solidify gains. Change is focused on defining the purpose of the organisation and on the mainstream business.

3. Mature Period - The strong growth curve levels off to the overall pace of the economy. Changes are needed to maintain established markets and assuring maximum gains are achieved.

4. Declining Period - This is the rough ride. For many organisations it means down-sizing and reorganisation. To survive, changes include tough objectives and compassionate implementation. The goal is to get out of the old and into something new. Success in this period means that the four periods start over again.

For some organisations the four periods of growth come and go very rapidly, for others, it may take decades. Failure to follow through with the needed changes in any of the four growth periods means the death of the organisation. Some, such as IBM, do it successfully, others, like ATT, do it quite poorly.

Throughout periods of change, which is just about all the time for a good organisation, leaders need to concentrate on having their people go from change avoidance to change acceptance. There are five steps accompanying change (Conner, 1993)

  • Denial - cannot foresee any major change
  • Anger at others for what they're putting me through
  • Bargaining - work out solutions, keep everyone happy
  • Depression - is it worth it? doubt, need support
  • Acceptance - the reality

This is why a worker's first reaction to change is often to resist it. People get comfortable performing tasks and processes in a particular manner. This comfort provides them with the security that they are the masters of their environment. Some of the things that cause them to fear change include a dislike of a disruption in their lives, looking like a fool by not being able to adapt and learn, their jobs might become harder, and a loss of control.

Of course it was not the change in itself that caused the higher output, but rather an intervening variable. This variable was diagnosed as the employee's attitudes. That is, when you introduce change, each employee's personal history and social situation at work will produce a different attitude towards that change. You cannot see or measure attitudes, but what you can see and measure is the response towards that change: Change + Personal history (nurture) + Social situation (environment) = Attitude + Response

Wednesday, 9 June 2010

3 of 5. Organisations do change

It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than the creation of a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who would gain by the new ones.
Machiavelli's, "The Prince" written in 1513

Organisational change is always difficult because behavioural patterns must be completely rearranged. This aspect will result in a tendency to resist change. The question is: how and when do organisations change? Humans can also change in time, but humans also have an 'inner resistance' to change. Like people, organisations cannot constantly change their jobs, divorce and remarry etc, because this would result in an absurd situation or a completely passive attitude. So organisations are actually great supporters of stability. Unfortunately the world around organisations is changing. These changes can sometimes happen slowly, but also very quickly and dramatically. In order to survive, organisations cannot afford to change incrementally because the environment is changing. A situation will then be created of a revolutionary nature. In a short time, organisations will have to change their old habits, activities, norms and values. These organisations are trying to find a new position where they can again reach stability. What has happened is actually a cultural revolution.

Many years ago, I was introduced to the idea of the Sigmoid Curve and forgot its power until I was re-introduced to it by my good friend Bill McAneny. I have since found it very useful in managing various programmes and projects that I have been involved in. The Sigmoid Curve is a mathematical concept which has been widely used to model the natural life cycle of many things, from biological organisms, businesses and companies, marriages and careers. Simplistically it describes the change patterns within many activities that we get involved in, in business and in life. Many businesses, careers and other ventures fail in this first phase because it is so hard to keep going with no tangible reward. We tend to be impatient and if we don’t get some immediate reward for our efforts, we can move on to something else. But the only way to success is to push through this initial phase, to keep going and to know that this persistence will eventually and inevitably move on to phase two of the Sigmoid Curve.

The second section is a sharply rising line in the elongated S shape. During this phase, business and careers move ahead quickly. Revenues increase, relationships mature, promotions occur easily, and organisations become much larger. This is where the crop which was sown is growing and coming to maturity, and every day brings perceptible growth and maturation.

The third phase of the curve is a decline, as the S shape starts to fall. The harvest has grown to maturity and starts to die. Morale and energy dip, revenues decline, the empire starts to crumble. On a personal level, your marriage might start to become jaded or you might wonder if you have chosen the right career or question how you are spending your time.

Successful individuals and organisations are self-reflective and constantly monitor their own position on the Sigmoid Curve. However, to be truly successful is to go even further – it is to jump off the current curve when it is nearing its peak and start on the bottom of another curve. This can be very hard to do, because just as you are reaping the rewards of your work and application, you find yourself at the bottom of another learning curve. This entails more pain, since growth always involves pain to some degree. It doesn’t appear to make sense to change just as you are doing so well, reaping the rewards of your efforts. There is even, perhaps, a sense of loss – why throw away something which is mature and bringing a reward for something untested and new?

Monday, 7 June 2010

SixSigma Kills; Lean Kills Absolutely

Lean and 6Sigma are the polar opposites of innovation. They kill it.

The rest of the world is learning to innovate faster and faster, while Lean and 6Sigma organisations find themselves with world-class revels of waste and variation reduction on products and services that the customer doesn’t want anymore.

The world, accelerated by the recent recession, is entering a phase of continuous innovation. A phase that means non-linear, discontinuous, common-sense-shifting change is beginning to happen on a continual basis. Adopt or stick with Lean/6Sigma in such circumstances and don’t expect to get too many plaudits from your shareholders for too long. They see it too. Both were perfect tools for a continuous improvement world; both kill in a continuous innovation world.  As 3M found out a few years ago when they introduced 6Sigma across the company.

If this weren’t bad enough, both Lean and 6Sigma carry with them a virus that makes recovery almost impossible. Both demand cultures in which massive quantities of data are collected. Gathering data is hard work and one of the strongest traits of doing hard work is we don’t like throwing it away. Or thinking it might be the ‘crackpot rigour’ work of ‘busy fools’. So when someone comes along and defies the common sense and says ‘there is no data’ in the non-linear world of innovation the tendency is to not believe them. In this way, the middle management in your organisation lies at the heart of your forthcoming death. They manage (you told them!) by the numbers.

This is not to say that numbers aren’t important. It is to say that numbers are great for optimization, terrible for innovation. And as a result, because we’re in a period of innovation, there is a need to trust the numbers less and be prepared to challenge common-sense more. There was no data to prove the digital camera would be a success. Or the Dyson vacuum cleaner. They succeeded because they were better solutions to the customer’s real problems and there were no figures to worry about. You were busy stripping out the waste in your filter-bag manufacture line and didn’t want to be distracted. Until eventually, dodo-like, you’d stripped out so much ‘waste’ you were unable to even think about whether you were still doing the right thing.

The heart of the problem is this: Common sense changes. The world operates under the universal rules of the S-curve.

The most important characteristic of the curve is the top portion. What’s happening here is organisations are conducting their ‘continuous improvement’ activities and finding themselves subject to ever decreasing returns. More and more effort goes in; less and less improvement comes out. Do Lean or 6Sigma for anything longer than a year, and you’re already feeling the effect.

The phenomenon wouldn’t be so bad if all your competitors were subject to the same rules. Well, fortunately, most of them are because they’re busy playing the same game you are. Unfortunately, one day along will come a competitor (most likely from outside your industry) and play using a different common-sense. They’re the company who, instead of getting themselves stuck optimizing the current way of doing things, innovated and found a new way. Pretty difficult to sell 35mm film in these days of digital SLR cameras, right?

Neither Lean nor 6Sigma allow for these kinds of common-sense breaking s-curve shifts. In actual fact they positively discourage it.

Imagine the equivalent of the digital camera or Dyson vacuum cleaner happening in your industry. How would you respond? Imagine another, different jump happening again the year after. And the year after that. Will you still be praising your Lean/6Sigma teams? Or will you be thinking to yourself, ‘if only we’d recognised that jumps demand different rules and behaviours?

There’s a final, enormous, problem here, of course. Data rules because data allows us to justify our actions. It’s a brave leader indeed who stands up to their masters and says ‘ the data says we should zig, but we’re going to zag’. In some organisations it is nigh on career suicide. If only there was some data to prove that data kills.

To even suggest that either Lean or 6Sigma are anything other than good things is little short of heresy in most organisations. Pioneers like GE, Motorola and Toyota have been deploying them for many years now with apparent great success. They are far from dead, so how can we justify a claim that says that either methodology kills?

The underlying philosophy of both is that waste and variation are bad things. Who could argue with that common sense? What CEO or COO is going to argue for more waste? Especially having learned that Jack Welch’s GE, for example, ‘saved $9B’ with 6Sigma.

It’s data that says the data is inherently flawed, and it’s called the Halo Effect. Let’s think about Jack Welch’s $9B worth of 6Sigma benefits. Or rather to a Black Belt working in one of Jack’s improvement teams. Jack’s told you that you’re going to do 6Sigma and, the boss always being right, it is absolutely in your interests to prove him right. So you do the project and go back with the numbers to show how much money you just saved. Fantastic. And amazing what a threat to dismiss the bottom 10% performers can do. But you never did any experiment to compare what you just did with any other way of improving things. Frankly speaking a dozen different tools or methods could have delivered exactly the same results. Or better. The point being that dictating use of any tool or method inherently carries with it a Halo Effect that dictates success, irrespective of whether there was any or not. Let’s take that thought one step futher; put yourself in Jack Welch’s shoes for a final moment now. You’ve just invested in training tens of thousands of people inside your organisation and you think you’ve created an enormous competitive advantage. Would you now stand up and tell your competitors how you did it? Or, turning the scenario around the other way, would you realise how much time and money you wasted and think to yourself, gee, wouldn’t it be great if I made my competitors waste the same. Or more. Maybe, in fact, I could hype the benefits to such an extent that I could get them to kill themselves before they see the Halo.

Makes you think doesn’t it?

Thursday, 3 June 2010

2 of 5. How people change

Go to the people. Learn from them. Live with them. Start with what they know. Build with what they have. The best of leaders when the job is done, when the task is accomplished, the people will say we have done it ourselves.
Lao Tzu

Many organisations develop programmes for change and then start about implementing these programmes. Usually they have snazzy titles and, of course, CEO and top management endorsement. Like good conscripts we salute the flag and implement the change programme very successfully. Wrong; 70% of programmes fail because we forget again and again that people don't resist change, they resist being told they have to or must change. The idea is getting people to choose change rather than solely resist it.

Martin Luther King did not say, "I have a very good plan," he shouted, "I have a dream!" You must provide passion and a strong sense of purpose of the change. Remember there are different ways that change comes about.

• Pain-motivated change
• Change created by being pulled toward new behaviour or ideal
• Response to information and inspiration
• Change forced by a push from someone else or by circumstances
• Change through communication, engagement and understanding

Studies show that people's ability to make a new habit permanent is based on their readiness to change. In fact, people naturally go through several different stages before a new behaviour becomes a habit. These include:

• I have seen these programmes before and they do not work.
• I have not been involved and the change will mean more work without benefit
• I do not trust the change and I will resist
• Let me see it in action and maybe I might join up
• Some people I admire are doing it
• I will test it, but if the words do not match the action I will stop
• I am engaged, trust the change, understand the change and where it is helping me

Feelings are contagious. When someone around you is feeling blue, it can bring you down. Likewise, when someone is passionate about something, it can have an inspiring effect. Build the change so that others want to be part of it. When you give them part of it, also give them the authority and control to act upon it. Share the power so that they do not feel powerless. You want them to feel useful and enthusiastic. Make them feel needed, that the change could not happen without them!

Quick tips from our change programme. In order for people to even contemplate change, they must have the following key elements:

• Those affected must be very aware of the need for the change, its impact on them and its benefit for them.
• The desire for change must be nurtured so that it comes from the inside out, not the outside in!
• Everyone must know the ideal future state and the roadmap journey, whilst having the appropriate skill, knowledge and coaching to make sure they are well equipped for the journey.
• The environment must be one of trust together with risk acceptance so that people can test the change and its impact on them in order to understand the benefits
• There must be constant role model behaviour with a supportive structure to sustain and innovate the change

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