Organizational Effectiveness | Graziadio Business Review | Graziadio School of Business and Management

Self-Organizing Conversation as an Invitation to Serendipity

So many accomplishments throughout human history began with people talking together. In a relentlessly changing world, self-organizing conversation can enable learning, adaptation, influence, and co-evolution for the firm.

[powerpress: http://gsbm-med.pepperdine.edu/gbr/audio/winter2011/Axley-serendipity.mp3]

PODCAST: Click here to listen to a podcast interview with Stephen R. Axley on his self-organizing conversation research.

A late 1980′s song by R.E.M. declared apocalyptically, “It‘s the end of the world as we know it.”[1] We could just as well say that for every year, extending indefinitely into the future. That’s because change is a constant of modern existence. This truth plays out most consequentially in the organizational world. Both the pace and volatility of change have been accelerating, with no sign of relief.[2] Thus, it’s pretty much always the end of the world as we know it.

The trick for organizations and people, then, is to be resourceful enough to handle relentless change. This article introduces a versatile and effective tool to help meet this need and provides guidelines for its use. The tool? It’s natural and it’s readily available: Self-organizing conversation.

“Change happens when you connect with, rather than oppose, the fundamental forces of human nature.” -Fast Company magazine, “A Letter from the Founding Editors”

The Big Shift

According to the timely book, The Power of Pull, today’s organizational world is experiencing a shift of rationale for the firm—it’s moving away from scalable efficiency and toward scalable learning.[3] Scalable efficiency describes the traditional business idea of seeking lower costs by getting bigger, while scalable learning seeks enhanced learning and performance by effectively integrating more people across institutional boundaries.[4] This is a challenging transition, since the conventional efficiency model is historically embedded in the world of “push”—the familiar, mechanistic ideal of assuming hierarchy, centralized decision making and control, predictability in forecasting, malleability of employees and consumers, the notion of “bigger is better,” standardization, and insufficiency of resources, necessitating optimum efficiency.[5] “Push” has long been the blueprint for modern organizations and institutions.

From Knowledge Stocks to Knowledge Flows

With the pace and amount of change creating almost continuous upheaval,personal and organizational success will come to rely less on static knowledge stocks and more on dynamic knowledge flows. Stocks consist of what’s known at a given time, whereas flows are interactive, ever-evolving streams of knowledge transferred among people, enabling them and their organizations to improve rapidly via collaboration.[6] In other words, transitioning from static knowledge stocks to dynamic flows will amplify a system’s opportunities to constantly learn and change, potentially improving its versatility and adaptiveness to changing conditions.

This requires “pull,” or “the ability to draw out people and resources as needed,”[7] especially toward those connected with important knowledge flows. The authors advise us to “think here of serendipity rather than search.” Information search is not good enough in such a dynamic world, because we often do not even know what to look for. This is where serendipity can facilitate unexpected encounters with people, ideas, connections, even those we do not know of or know we need, but which can add to our own opportunities and knowledge. And among the people and ideas, we most need to pull those who are at the “edge” closer in to us.[8]

Why people and ideas at the edge? Mainly because they are different from people and ideas dominating the so-called “core” of organizations and institutions. Differences are what stimulate innovation and system robustness.[9] The investment of people and resources is usually concentrated at the core. Incumbents, ideas, and practices there—particularly those at the top—have been associated with whatever success a firm might have experienced, and consequently, incentives exist for them to keep doing whatever has been working. By contrast, edges are where the knowledge, thinking, exploration, risk-taking, and people are different. They’re crucial incubators of innovation and learning. So if we want to explore “serendipitous environments,” The Power of Pull urges us to find ways to attract “edge players.”[10]

Shaping Serendipity

Although the authors of The Power of Pull expand on “environments, practices, and preparedness” as ways of “increasing not just the number, but the relevance of our serendipitous encounters,”[11]they don’t identify a particular serendipity-inviting tool. It’s one that is both readily accessible and almost endlessly versatile: self-organizing conversation. In her book, Engaging Emergence: Turning Upheaval into Opportunity, Peggy Holman also endorses the effectiveness of this tool, noting: “The practices for engaging emergence [i.e., serendipity] are rooted in skills of everyday conversation.”[12]

“The most important work in the new economy is creating conversations.” – Alan Webber, former editor, Harvard Business Review

Self-Organizing Conversation

“Founders of major change initiatives often say, ‘Well, it all began when some friends and I started talking.’”[13] Conversation like that may be quite spontaneous and informal, self-organizing, and emergent, like the garden variety conversations we all have. However, conversation can also be intentionally and explicitly designed for participants to flexibly self-organize according to their interests, much like everyday conversation, but within a framework of general, simple rules that are made explicit. It goes something like this: “Let’s try to observe these few principles in our conversation [examples below]; and with those in mind, see where our talk takes us.” The design elements themselves create conditions that will catalyze emergence and serendipity. This is what distinguishes the self-organizing conversation of interest here, versus everyday conversation.

A number of conversational change methods involve this kind of self-organization, but two of the most widely used to invite serendipity are The World Café and Open Space Technology. Each has an impressive track record and supporting body of published work. Each enables thinking collectively to create practical ideas and new knowledge. Such conversation has been called “nature’s strategic planning process,”[14] because it’s as ancient as human community. That’s why people embrace conversational change methods—they’re natural to the human experience. It also explains their efficacy: unlike many traditional—or “push”—change methods, they align (pull) with human nature instead of against it. It’s impossible to predict the learning a self-organizing conversation like this will yield. And that’s the point. Let’s compare the two methods.

The World Café*

Juanita Brown and David Isaacs pioneered The World Café, a conversational process used by facilitators worldwide.[15],[16],[17] It’s extremely versatile and suitable for groups from about 12 to 1,200.[18] The definitive resource is The World Café: Shaping Our Futures Through Conversations That Matter,[19] a book that is also complemented by a vibrant online community located at http://www.theworldcafe.com.

The book profiles countless cases on topics ranging from international to domestic, large to small business, government, nonprofit, community, civics, etc. Based on tenets of living systems—including self-organization—seven integrative design principles frame the World Café approach. Together, they create favorable conditions for self-organizing conversation to emerge. The design principles include: [20]

Set the context: Establish purpose, parameters, and participants, emphasizing diversity to maximize learning (and serendipity).
Create a hospitable space: Use café décor with natural lighting, small round tables with a small vase, flowers, colorful tablecloth, multi-colored markers, and large flip-chart paper on tabletops for drawing and doodling. The hosts should review Café etiquette, which encourages participants to contribute, listen, connect ideas, and draw/doodle to capture ideas. The hosts should explain the café’s agenda, usually 3 to 4 rounds of 20-30 minutes each, with participants switching tables and table-mates each round. (Variations abound to implement this principle.)
Explore questions that matter: Crafting questions is crucially important, right down to single words. Example: How can Hewlett-Packard (HP) be the best lab in the world? How can HP be the best lab for the world? One word completely changes the question. Questions matter. Powerful ones—there are published guidelines to enhance questions’ power—open thinking and conversation; weak ones close both.[21]
Encourage everyone’s contribution: Follow the belief that, “When people feel they belong, they show up, bringing their gifts.”[22]
Cross-pollinate and connect diverse perspectives: Participants switch tables and table-mates each round. Usually a table “steward” stays behind to re-cap highlights of earlier rounds for newcomers. People traveling to new tables convey highlights of earlier conversations to “seed” the next round’s conversation. This principle promotes serendipity and learning by connecting diverse people and ideas across rounds.
Listen together for patterns, insights, and deeper questions. Participants listen for patterns and themes across conversations. The drawings on each table’s flip-chart paper reflect these insights, preserving conversational highlights.
Harvest and share collective discoveries. The entire group conducts a “conversation of the whole,” coalescing themes, insights, and questions emerging from all rounds. A graphic recorder often creates a mural of this conversation in real time, depicting the essence of the “harvest” symbolically in creative, colorful, and vivid forms.[23] A “what’s next?” question may come up at this point, leading to action planning.

As mentioned earlier, the World Café method has been used successfully worldwide. A few notable examples include the Mexico National Fund for Social Enterprise, which used the method for social and economic development; Saudi-Aramco (oil multinational), which successfully aligned people’s aspirations with company strategic direction, and the Financial Planning Association, which developed a culture of contribution. These World Cafés ranged in size from 16 to more than 700 participants. Many organizations have hosted several cafés of various sizes and purposes over time.[24]

When in action, the World Café’s design principles (inclusiveness, diversity, authentic communication and listening, movement of people and ideas throughout a living network, visual preservation of ideas, insights, etc.) harness the intellectual, creative, and emotional energies of diverse people around questions they care about. It’s a design for engagement, emergence, and learning, and is a compelling invitation to serendipity.

Open Space Technology*

Harrison Owen created Open Space Technology (OST), the second conversational method.[25], [26], [27] Used worldwide, OST works with 5 to more than 2,000 people. OST relies on self-selection, self-organization, and people’s passion and responsibility toward the focal topic(s). It’s appropriate for addressing major issues with high degrees of complexity, diversity, conflict, and very short timelines for resolution.[28]

OST’s major design elements are amazingly simple—maybe frighteningly so, to the uninitiated:

A pressing question or urgent theme sets the focus for the event.
People gather in a circle or concentric circles.
A host explains the four principles and one law of OST, applicable throughout the event:

(1) “Whoever comes are the right people.”

(2) “Whatever happens is the only thing that could have.”

(3) “Whenever it starts is the right time.”

(4) “When it’s over, it’s over.”

And the Law of Two Feet: “Take responsibility for what you love … by standing up for what you believe. If you feel you are neither contributing nor learning where you are, use your two feet and go somewhere else.”[29]

Participants volunteer relevant issues they’re passionate about and willing to take personal responsibility for. They write issues on paper and post them on the wall, creating a marketplace of issues. Everyone else visits this marketplace and signs up to work on issues that interest them. Everything from the beginning to this point takes about an hour or so. The rest is completely self-organized.
Self-organizing subgroups get to work, eventually composing reports. Total time can be one to three days.
At the event’s end, issues are prioritized, with the most important ones targeted for actions.[30], [31]

Sample OST successes include: Designing an Olympic pavilion two months prior to the games; facilitating strategic planning in a government-funded art organization; handling high conflict between Israelis and Palestinians; job search strategies for drug rehab kids, and creating a layoffs and restructuring strategy for an avionics firm.[32] As Harrison Owen claims, OST has been run over 100,000 times, in 136 countries, for more than 21 years.[33] The sheer number of uses says something about its efficacy.

Owen challenges the push-derived criticism that OST lacks structure and control, stating “…totally wrong; there is no pre-imposed structure and control. Such structure and control as is present (and it turns out to be a lot) is all emergent from the people involved, the task they perform, and the environment in which they are operating. In short, it is appropriate structure and control—appropriate to the people, task, and environment.”[34]

From diversity, self-organization, passion, connectedness, comes a design for emergence. Owen notes, “In OST it is a common experience that previously unthought-of, and perhaps unthinkable ideas show up with regularity, allowing impossible situations to find resolution.”[35] It’s a small wonder that from such an invitation, serendipity emerges.

Although the World Café and OST certainly aren’t the only self-organizing conversational methods in use, they’re unquestionably two of the most versatile, accessible, and effective. They both can address an extremely broad array of issues, questions, and contexts, and their limitations are relatively minor and few.[36] Regarding the appeal of such methods, Holman accurately observes that they “engage the diverse people of a system in focused yet open interactions that lead to unexpected and lasting shifts in perspective and behavior.”[37] In short, self-organizing conversation invites and facilitates serendipity.

“In the logic of emergence, 2 + 2 = apples.” – Kevin Kelly, Out of Control; founder/former editor, Wired magazine

Conclusion

So what? How can we apply these concepts to develop knowledge and self-organizing conversations more specifically in our own organizations? Most immediately, the value of learning must be both “talked” and “walked” organization-wide. Happily, the practitioner preparation required to host both World Café and Open Space activities is accessible through “self-directed study.” According to The Change Handbook, “Given a background in group work, with the aid of a book, a video, support from a community of practice (perhaps via the Internet) or some in-person coaching, a new practitioner can take his or her first steps independently … Start with straightforward applications!”[38]

Straightforward describes these approaches, and abundant “how-to” resources accompany each. The first step is to explore some resources, and/or enlist the help of a more experienced host, either internal (check HR) or external (see websites for facilitators, workshops, events, etc.). Then pilot a World Café or Open Space conversation in your organization around questions/issues of interest, such as: 1) How can [the organization] help us advance our job-relevant knowledge? (How can we help ourselves?) 2) How can [the organization] help us develop knowledge/skills of personal importance? 3) How can [the organization] provide opportunities for us to advance or cross-train? 4) What should we be doing as an organization to develop our knowledge here? 5) What questions would energize (or focus) our efforts in developing knowledge? These are just jumping off questions, but the point is to take a deep breath and step into the unknown. Self-organizing conversation is not a spectator sport; the methods are amazingly robust and resilient. With self-directed study, sufficient trust to “let the design and processes work,” and some tolerance of uncertainty, there’s no better way to “think collectively” and experience emergent learning and serendipity than by participating in—and hosting—self-organizing conversations. Let the World Café and/or Open Space Technology help.

So many accomplishments throughout human history began, one way or another, with people talking together. Our special ability to manipulate language and to converse with others energizes our minds and spirits, enabling learning, adaptation, influence, and co-evolution with the world. Lucky for us, it is the end of the world as we know it. The ride only promises to get wilder and faster from here. Adapting and learning under these conditions will be key, assisted by serendipity. That most natural of human tools—conversation—will materially determine how we fare, as individuals, organizations, and even as a species.

[1]Berry, Bill, Peter Buck, Mike Mills, and Michael Stipe. R.E.M., “It’s the End of the World as We Know It (and I Feel Fine),” (I.R.S. Records, 1987).

[2]Meyer, Christopher, and Stanley M. Davis. It‘s Alive: the Coming Convergence of Information, Biology, and Business. New York: Crown Business, 2003.

[3]Hagel III, John, John Seely Brown, and Lang Davison. The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion. New York: Basic, 2010: 47.

[4]Ibid, 39, 47.

[5]Ibid, 34-37.

[6]Ibid, 93, 11.

[7]Ibid, 2.

[8]Ibid, 9, 93-94.

[9]Page, Scott E. The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies. New ed. Princeton: Princeton University Press, 2008.

[10]Hagel et.al., The Power of Pull: 18, 93, 16.

[11]Ibid, 98-99.

[12]Holman, Peggy. Engaging Emergence: Turning Upheaval into Opportunity. San Francisco: Berrett-Koehler, 2010: 44. Holman defines emergence: “Higher order complexity arising out of chaos in which novel, coherent structures coalesce through interactions among the diverse entities of a system,” 18. Unpredictability and novelty seem to link serendipity with emergence.

[13]Brown, Juanita, and David Isaacs. The World Café: Shaping Our Futures Through Conversations That Matter. San Francisco: Berrett-Koehler, 2005: 17.

[14]Brown and Isaacs. The World Café: 17.

[15]Ibid.

[16]Brown, Juanita, and Thomas Hurley. “Conversational Leadership: Thinking Together for a Change.” The Systems Thinker 20.9 (2009): 1-17.

[17]Brown, Juanita, Ken Homer, and David Isaacs. “The World Café,” in The Change Handbook: The Definitive Resource on Today‘s Best Methods for Engaging Whole Systems (2nd ed.), eds. Peggy Holman, Tom Devane, and Steven Cady. San Francisco: Berrett-Koehler, 2007: 179-194.

[18]Ibid, 183.

[19]Brown and Isaacs. The World Café.

[20]Ibid. Page 40 is the first mention of the seven principles in the book. Each design principle, respectively, is then the subject of chapters three through nine, pages 42-153. Further, chapter 10 incorporates a detailed “hosting guide” organized around all seven design principles.

[21]Vogt, Eric, Juanita Brown, and David Isaacs. “The Art of Powerful Questions: Catalyzing Insight, Innovation, and Action,” Whole Systems Associates, September 2003, http://www.theworldcafe.com/articles/aopq.pdf.

[22]Holman. Engaging Emergence: 112.

[23]Margulies, Nancy and David Sibbet. “Visual Recording and Graphic Facilitation,” in The Change Handbook: The Definitive Resource on Today‘s Best Methods for Engaging Whole Systems (2nd ed.), eds. Peggy Holman, Tom Devane, and Steven Cady. San Francisco: Berrett-Koehler, 2007: 573-587.

[24]Brown and Isaacs. The World Café.

[25]Owen, Harrison. Open Space Technology: A User‘s Guide (2nd ed.), San Francisco: Berrett-Koehler, 1997.

[26]Owen, Harrison. “Open Space Technology,” in The Change Handbook: The Definitive Resource on Today‘s Best Methods for Engaging Whole Systems (2nd ed.), eds. Peggy Holman, Tom Devane, and Steven Cady. San Francisco: Berrett-Koehler, 2007: 135-148.

[27]Owen, Harrison. Wave Rider: Leadership for High Performance in a Self-organizing World. San Francisco: Berrett-Koehler, 2008.

[28]Owen. “Open Space Technology,” 2007: 139.

[29]Ibid, 139-141.

[30]Ibid, 139.

[31]Owen. Wave Rider: 71-73.

[32]Owen. “Open Space Technology,” 2007: 141-142

[33]Owen. Wave Rider: 13.

[34]Owen. “Open Space Technology,” 2007: 147, emphasis in original.

[35]Owen. Wave Rider: 74.

[36]Brown and Isaacs. The World Café, 162-163; Owen, “Open Space Technology,” 2007: 144-145.

[37]Holman. Engaging Emergence: 201.

[38]Holman, Peggy, Tom Devane, and Steven Cady. “The Big Picture: Making Sense of More Than Sixty Methods,” in The Change Handbook, eds. Holman et.al.: 19, 22.

*Reprinted with permission of the publisher. From Open Space Technology: A User‘s Guide (2nd ed.), copyright© 1997 by Harrison Owen, Berrett-Koehler Publishers, Inc., San Francisco, CA. All rights reserved. www.bkconnection.com

*Reprinted with permission of the publisher. From The World Café: Shaping Our Futures Through Conversations That Matte , copyright© 2005 by Juanita Brown and David Isaacs, Berrett-Koehler Publishers, Inc., San Francisco, CA. All rights reserved. www.bkconnection.com

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Transforming Toxic Leaders by Alan Goldman

Transforming Toxic Leaders
By Alan Goldman,
Stanford Business Books, 2009

[powerpress: http://gsbm-med.pepperdine.edu/gbr/audio/fall2010/bookcorner/toxic_leaders.mp3]

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4 stars: Thought-provoking and intellectually stimulating material

You may feel that your organization or certain of its key leaders are toxic. Somehow, things that are potentially healthy and productive have a way of turning unproductive or even corrosive. In his book, Transforming Toxic Leaders, Alan Goldman takes a detailed look at such situations and how they can best be improved.

Goldman advocates a comprehensive and diagnostic look at such organizations. He illustrates his findings and recommendations through seven carefully developed case studies of situations in which he has been instrumental as a consultant and executive coach. He points out how these cases show that labels of “toxicity” are often misapplied and misunderstood. Such accusations, for instance, can easily mask more specific psychological and cultural dysfunctions. Toxicity often grows subtly and imperceptibly over a period of time. Yet, when top management finally wakes up to its impact and pervasiveness, it often appears, erroneously, like it happened over night and they rush frantically to fix it quickly. Further, it’s all too easy to blame one person as the sole cause when the matter is often far more complex and permeates large parts of the company.

The book’s theme is the necessity to closely examine what is actually going on in an organization. The goal is to seek out possibilities rather than perpetuating or even inadvertently increasing toxicity. Goldman suggests finding opportunities to move from deficit management to an “abundance” approach to leadership. He also critiques all too common coaching and consulting practices and offers an approach that he considers to be most healthy and productive.

Personally, I find the use of the term “toxicity” as the constituting metaphor tends to misdirect the reader’s attention toward labeling rather than inquiry into what is really being addressed. However, it does capture the way that many people see things. To his credit, despite the metaphor, Goldman clearly advocates inquiry. His notion is that toxicity frequently represents “environments caused by demagogic leadership, downsizing, feuding between employees, post-traumatic stress and burnout and emotional trauma.” His prescription for detoxification involves bringing in a consultant who is trained in both psychological and cultural assessments to formulate a differential diagnosis and foster a collaborative transformation.

Though not an easy read, the book will be of intense interest to Human Resource professionals and others, either internal or external, acting as or aspiring to be coaches and consultants. Key executives with a strategic role will also find it worthwhile reading and highly enlightening if they are willing to consider the selection and best use of coaches and consultants to deal with organizational issues.

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The Speed of Trust by Stephen M.R. Covey with Rebecca R. Merrill

The Speed of Trust

By Stephen M.R. Covey with Rebecca R. Merrill
Free Press, 2006

[powerpress: http://gsbm-med.pepperdine.edu/gbr/audio/summer2010/Book Corner/Speed.mp3]

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5 stars: Stop what you're doing and read this book! Ordinarily I am not a fan of the offspring of famous people writing a book, but Covey has forged his own way in the business world and has written a book that covers the most important thing anyone or any organization can possess— trust. If you don’t have this as a foundation, you have nothing, as many of our “leading” companies and governments have discovered. Lose trust and you can lose all. The good element of the book lies with Covey’s optimism that you can recover trust.

This is not a “feel good” book or a manuscript on morals (although that is covered), but mainly an exploration of the things that make us who we are in others’ eyes, which ultimately helps us look into our own beings. While a lot of this book is about business, it also covers personal relationships. I found myself reflecting on my own as I read through. Covey talks to two main characteristics about people—character and competence. He likens these to a tree with four core characteristics: the roots, which you can’t see, represent integrity; more visible is the trunk—intent—that emerges from the roots; the branches are capability, which you develop over time; and the leaves are results. It is easy to understand these and Covey takes a long time to develop them. While there are many books on each of these subjects, this book puts them together.

The actions that impact trust are covered in the section “Thirteen Behaviors.” These seem pretty basic but, once again, Covey covers them comprehensively and in context. Such behaviors as “Talk Straight,” “Right Wrongs,” and “Practice Accountability” ring true. He cites examples of people who demonstrate these behaviors as well as giving examples of what a bad behavior might look like.

Around these behaviors are what Covey describes as “waves of trust”—meaning the effect of what you do can ripple from a personal to a societal level. So, through some “simple” concepts, Covey weaves a book that can help you assess both yourself and your organization, and offers some concrete how-to’s on becoming the trusted person or organization you want to be.

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Editorial: Systems Thinking

Much of what has worked in the past no longer works in today’s competitive environment forcing firms to abolish the comfortable ways of doing business and to work harder to find new ways of creating and delivering value to their customers.

[powerpress: http://gsbm-med.pepperdine.edu/gbr/audio/summer2010/Chun-editorial.mp3]

Mark Chun, PhD

The global recession that we have experienced in the last several years has caused businesses to rethink their operations. Even the industry leaders that have been able to gain a substantial advantage in the marketplace have not been immune to the struggle. Most of their competitive advantages—be it pricing power, control of supply-chain and distribution channels, name brand recognition, or a dedicated customer base—are short-lived, as the conditions are ever-changing. Much of what has worked in the past no longer works in today’s competitive environment. The change has forced firms to abolish the comfortable ways of doing business and to work harder to find new ways of creating and delivering value to their customers. As a result, many businesses are breaking down divisional barriers and conducting business in a more agile, flexible, innovative, and creative manner. To stay ahead of the curve, if not just afloat, businesses must understand how to create new value from multiple divisions and perspectives, drawing on a diverse skill set including information systems, law, entrepreneurship, organizational design, strategy, decision sciences, market, accounting, and finance.

This new perspective on orchestrating all of the organization’s functions and divisions can be described as a “systems thinking” approach to doing business. Systems thinking views the entities of the organization (i.e., departments or functions) and their associated processes from a holistic viewpoint and looks at them over time. It requires an understanding of the interactions and the cause-and-effect relationships between organizational functions and divisions. Think of it like a fishbowl—the fish, plants, water, oxygen, and food work together to create a systemic environment in which each entity relies on the other to survive and to be productive. Removing or damaging one part of the system can be catastrophic for the system as a whole. Many successful firms have been able to apply the notion of systems thinking to their organizations and have skillfully synchronized their firm’s initiatives so that the customer can experience and recognize their full value.

Initiatives that are enacted within the organization before they are fully developed can often have adverse effect on other parts of the firm. Typical questions that you should ask yourself before engaging in any strategic initiative are: What are the effects that the changes will have on other parts of the organization? Which functions may gain and which may lose as a result of this initiative? Would this initiative lead to any short- and long-term gains?

Systems Thinking In this issue of the Graziadio Business Review, our contributing authors have shared articles that address how firms can systemically create value throughout the organization—whether it be through improvisation when dealing with ambiguity and complexity (Leybourne), by properly managing human resource capital during economic recovery (Leo and Schieberl), through corporate negotiation factors (Rainey) or by expanding globally through exports (Coscarello). All of these are important considerations for corporations that aim to be more competitive. In addition, interviews on green technology and leadership (Kass), the future of financial management (Iritani), and servanthood leadership (Bowman) are included in this issue to add an additional perspective for what is expected from firms as they attempt to conduct business and to provide value in today’s challenged economic environment. Interestingly, what remains consistent when creating new value to the customer across all business functions is the necessity to conduct business honestly and ethically.

There are numerous other ways to creatively deliver new value in corporations, especially after this down economy. We would like to hear your thoughts on other innovative and creative ways that you’ve added value to your firm. Check out a blog post on “systems thinking” at the GBR blog. Your comments are appreciated. We also encourage you to attend the Center For Applied Research 2010 Symposium, entitled “Creating Value After A Down Economy,” which will be held on August 31, 2010. Learn more about the conference at http://bschool.pepperdine.edu/events/applied-research/.

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Improvisation as a Way of Dealing with Ambiguity and Complexity

As “process” becomes less relevant in today’s flexible organizations, can organizational improvisation produce “emerging best practice?”

[powerpress: http://gsbm-med.pepperdine.edu/gbr/audio/summer2010/improvisation.mp3]

saxophonist

“The Times, They Are A-Changin,”[1] Bob Dylan said, or rather, sang in 1963, but as an anthem for the 2000s, he was right on the button. Organizations are changing, and changing quickly, and managers who do not recognize—and more importantly—react, to this emerging truth, will struggle to compete as markets become more demanding and competition intensifies.

Change is driven by a number of inter-related phenomena, notably:

the turbulence of environments;
the need for organizations to respond quickly to changing environments;
increasingly sophisticated, demanding, knowledgeable, and discerning customers; and
the shortening of product and service life-cycles.

Put simply, we as consumers want more choices, better quality, faster and more convenient delivery, and all at a lower price!

This requires significant change on the part of traditional organizations, and we have seen a shift away from hierarchical, “command and control,” micro-managed operational styles toward an organizational model based on “flattened” hierarchies, increased flexibility and local autonomy, the increased importance of inter and intra-organizational networks, of and self-directed, self-designed work. However, such a radical shift in organizational “style” also requires major changes in the way in which culture, motivation, commitment, and trust are addressed. Essentially, work is becoming less “formalized,” more “complex,”[2] and more “improvisational.”

This leads to a view that improvisation, which developed from Karl Weick’s early work on “sensemaking,”[3] and which has evolved through comparison to jazz,[4] and theatrical[5] improvisation, can assist in this shift. Improvisation has been accepted both conceptually[6] and empirically,[7] and has a genuine contribution to make in resolving the issues of complexity[8] and ambiguity that organizations are grappling with in these turbulent times.

Indeed, employees are arguably becoming more like entrepreneurs, or maybe “intrapreneurs,” in that they are often expected to innovate in “real time” within their organizations to resolve issues as they arise. This is the essence of improvisation, and it is also linked to an emerging area known as effectuation,[9] which involves problem solving through human actions in environments that are essentially unpredictable.

Components of Improvisation

So, what is improvised work about, and more importantly, what are the “components” of improvisation?

In 1998, academics at the University of Wisconsin[10] identified and documented three elements of improvisation: creativity, intuition, and bricolage.[11]

In other words, improvisation involves using an element of creative thought, combined with an intuitive feel for what will assist in the resolution of a particular problem. Bricolage, which essentially means “utilizing the resources at hand,” indicates that the improviser has only limited resources to apply. Bricolage comes into play because it is unlikely that the improviser in a given circumstance will have time to mobilize additional resources. This is a significant limitation at times when organizations are trying to achieve increased performance with reduced means.

Improvisation is also closely linked with time, and in particular the pressure to achieve a demanding or compressed timetable. Improvisation in this context is defined as: “…the degree to which composition and execution converge in time.”[12] It follows from this that the less the time between the design and implementation, the more that activity is improvisational. This temporal link between two activities is important in judging the degree of improvisation required in the activity.

Arguably, there are other constructs that link with the concept of improvisation, including “socialization,” given that group-based activity arguably produces more “robust” improvisational interventions, and “prototyping,” in that there are strong parallels between improvisation and new product development.[13]

In 2001, four additional elements or “constructs of improvisation” emerged from the literature[14]: adaptation, innovation, compression, and learning. Adaptation refers to the “adapting” of one of a personal store of previously successful interventions or improvised routines to assist in resolving emerging requirements. Adept and experienced improvisers innovate at the personal level in order to leverage previous practice and existing routines to solve organizational problems. Compression shortens intended timescales in order to deliver or resolve problems in less time. Learning is the outcome from successful, and indeed from unsuccessful, improvisation, in that effective interventions can join the personal library of successful improvised applications of the experienced improviser. Learning from less effective improvised activity is equally important.

Improvisation Ecology

It is evident that experienced and adept improvisers can circumvent routine and process, and deliver resolutions to problems quickly and effectively. In organizations where the culture and working styles are supportive of improvised work practices, employees can quickly develop a store of effective interventions that can be adapted and re-used. Often, this skill is linked with “experience” i.e. “this is an experienced manager.” This can however require a degree of risk tolerance that some organizations find difficult to engage with.

The next step is to capture successful improvisational activity and “codify” it—and in doing so, make the shift from “tacit” to “explicit” knowledge, that can be shared within the organization for wider benefit. This requires that the organization supports and encourages improvisational activity, and has a culture that does not denounce or worse, punish “failure.”

This is essential, as one of the outcomes of research in this area is that in many organizations, “failed” or ineffective improvisation is stigmatized, leading many employees to improvise “surreptitiously.” Moving away from “planned” activity involves discarding the shared responsibility that comes from consensus-based planning, and it exposes improvised activity to intense scrutiny. Lack of organizational support can therefore drive effective and adept improvising managers “underground.”

A Taxonomy of Improvisation

Given the importance and likely influences documented in this section, it is useful to develop a taxonomy of improvisational competence to assist with the management of complex and challenging work.

Figure 1: Improvisation Characteristics – Creativity -v- Analytical Adaptability

In Figure 1 a simple matrix is proposed that classifies activity along two axes: “creativity” and “analytical adaptability.” The intention is to assist organizations to identify situations where improvisation could reasonably be beneficial. The matrix can also help to understand what practices and procedures are relevant to organizations in similar regions of the diagram.

Creativity

The creativity axis is characterized as high and low. High creativity is associated with dramatic change, numerous risk events, and situations with many unknowns. These changes should be fundamental and more than simple incremental variation and cost escalation.

Analytical Adaptability

This axis recognizes the fact that improvisational work needs to be based on and linked with traditional analytical tools and techniques, such as the production and analysis of decision-making data (e.g. to estimate costs and scheduling). However, particularly early in the planning cycle, much creativity may be required in data collection and analysis. Questions to be answered include: Is the data typical, or did special conditions hold? Is the design facing major revisions? Are the underlying assumptions no longer valid?

If the answer to these types of questions is “yes,” then we ask the fundamental question, “Can improvised activity assist?”

In Figure 1 the vertical axis describes the level of creative challenge, which can be high or low. The horizontal axis describes the level of analytical adaptability, which again can be high or low.

For the purposes of this matrix, creativity can be considered as an “assumption breaking process,” in that it defies the acknowledged and accepted paradigm in a specific area or for a specific process.

On the other axis, analytical adaptability is considered as a “tool breaking process,” in that it defies the acknowledged and accepted paradigm for the tools and techniques. Analytical adaptability is required when the processes or the cost and schedule data are unpredictable—that is, significantly outside of their expected bounds—and the tools and techniques generally associated with activity planning appear to be predicting results well beyond a simple cost or schedule overrun. It is now appropriate to move to an explanation of the matrix.

An example from the IT sector will be given for each quadrant in the matrix, in order to contextualize the concept.

Box One: High Creativity, Low Analytical Adaptability

Smaller non-profit organizations tend to fall in this category. Non-profits often encompass creative arts organizations conducting fund-raising projects or putting on performances. They typically require considerable creative energy, but the activity often resembles previous efforts: previous fund raisers or previous performances. Therefore, while this requires considerable creativity, the analytical aspect is often similar to previous efforts and is therefore low on the analytical adaptability scale. Web page development for new markets would fall into this quadrant.

Box Two: Low Creativity, Low Analytical Adaptability

Here we have work such as incremental software maintenance and Information Technology (IT) activity, which requires relatively low creativity. Maintenance work typically inherits characteristics from the already existing parent system, which presumably has existed for a while. Therefore, relatively low creativity is also required, since maintenance changes are unlikely to require a redesign of the underlying system.

In box two, we do not expect the activity to require much in the way of new or innovative tools to analyze the project. Maintenance activity typically exists in a regime where the processes and tools are already rigorously defined, and the team is expected to follow existing protocols.

Box Three: High Creativity, High Analytical Adaptability

The pharmaceutical and drug industries characterize activity with both very high creativity and highly adaptable analytical requirements. New drugs require research and development, which is unpredictable, and calls for high degrees of creativity. Drug development is both highly regulated and expensive, so there is a great deal of analytical work to plan the development, and closely monitor the cost and schedule during the trials and acceptance. A high degree of analytical adaptability is also required to manage the project through the lengthy process with its many changes in direction. Strategic IT systems would fall within this quadrant.

Box Four: Low Creativity, High Analytical Adaptability

Here we have activity with very high analytical requirements but low creativity. Many types of Department of Defense and other large public sector projects fall in this category. The government imposes many and varied standards and procedures. While data reporting and analysis requirements in this category of activity are significant, the work is developed to a very specific and pre-existing scope statement, on which compromise and the use of immature process is rarely possible. Backroom accounting systems would also fall within this quadrant.

Summary

The logical outcome from this matrix is that creative improvisation is likely to be more evident, and indeed more effective, in certain environments. In some domains, considerable analytical creativity can be brought to bear to evolve new and innovative ways to allow adept and motivated employees to develop new ways of achieving required activity. An example of this is the development of the Grameen Bank, where bricolage and significant creative leeway is required to circumvent and adapt traditional banking models to operate effectively in a “third world” environment.

The skill in improvisation is in knowing when to relax the framework that surrounds proscribed activity in organizations, and when to impose a greater degree of rigor and structure. Realistically, this will depend on two factors:

That is, employing creativity will depend on the degree of trust and confidence that strategic managers have in the ability of employees to improvise effectively. As this trust and confidence increases, the degree of rigor and structure can be relaxed.

Managing the tension between improvisation and control is a challenge for modern organizations, but is one that needs to be addressed. Evidence suggests that traditional routines for “micro-managing” organizational activity will not deliver the flexibility and agility required in modern organizations, and will not resolve the ambiguity and complexity that are inherent in modern organizational work.

This tension is real, and complicates the relationship between proscribed activity and improvised creativity. It is apparent that those organizations that successfully manage the tension between process and improvisation effectively will benefit in the turbulent organizational environments that make up tomorrow’s challenging business landscape. As an example of this, innovative organizations like Grameen Bank are demonstrating that rethinking traditional business sectors can generate dramatic change from very small beginnings.

[1] Dylan, Bob, “The Times They Are a-Changin” (Columbia Records, 1963).

[2] For an interesting exposition of complexity in organizations, Ralph Stacey’s work on organizations as “complex adaptive systems” is highly recommended reading.

[3] Weick, Karl E., The Social Psychology of Organizing [2nd edition], (Addison-Wesley, 1979).

[4] Hatch, M.J., “Exploring the Empty Pages of Organizing: How Improvisational Jazz Helps Redescribe Organizational Structure” Organization Studies, 20, no. 1 (1999): 75-100.

[5] Vera, D. and M. Crossan, “Theatrical Improvisation: Lessons for Organizations” Organization Studies, 25, No. 5 (2004): 727-749.

[6] e Cunha M.P., J.V. da Cunha, and K. Kamoche, “Organizational Improvisation: what, when, how and why?” International Journal of Management Reviews, 1, No. 3 (1999): 299-341.

[7] Miner, A.S., P. Bassoff, and C. Moorman, “Organizational Improvisation and Learning: A Field Study,” Administrative Science Quarterly, 46, (2001): 304-337.

[8] Lewin, R., Complexity: Life at the Edge of Chaos, (New York: Macmillon, 1992).

[9] Effectuation is outside the scope of this paper, being an interesting subject in itself. However, for more information on effectuation, see Sarasvathy, S.D., Effectuation: Elements of Entrepreneurial Expertise (Cheltenham, Glos: Edward Elgar, 2008).

[10] Moorman C. and A.S. Miner, “The Convergence of Planning and Execution: Improvisation in New Product Development,” Journal of Marketing, 62, No. 3, (1998/July): 1-20.

[11] Bricolage can be literally translated from the French or Spanish to mean “do-it-yourself,” and in this context, it means doing the best job you can with the human, physical, and financial resources that you have at your disposal at that time.

[12] Moorman, C. and A.S. Miner, “Organizational Improvisation and Organizational Memory,” Academy of Management Review, 23 No. 4 (1998): 698.

[13] See note 10 above.

[14] Miner, A.S., P. Bassoff, and C. Moorman, “Organizational Improvisation and Learning: A Field Study,” Administrative Science Quarterly 46 (2001) 304-337.

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Designing Care: Aligning the Nature and Management of Health Care By Richard M. J. Bohmer

Designing Care: Aligning the Nature and Management of Health Care

By Richard M. J. Bohmer
Harvard Business School Press, 2009

[powerpress http://gsbm-med.pepperdine.edu/gbr/audio/winter2010/review-farry.mp3]

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5 stars: Stop what you're doing and read this book! The United States is currently under pressure to drastically reduce the costs of healthcare and at the same time improve quality. Organizations that have responded to this pressure have often been tempted to apply elements of production models such as the highly successful Toyota Production System. But people are not automobiles.

In this carefully researched and clearly presented book, Dr. Richard Bohmer argues that healthcare organizations must be thoughtfully designed and properly aligned as an integrated system, not just thrown together as a pastiche of traditional practices and borrowed parts. He spells out the six capabilities required for such a design: operating capability, performance measurement, production control, anomaly detection, analysis and adjustment and redesign.

Designing Care succeeds in formulating a useful framework for inquiry and a guide for designing an organization that successfully manages healthcare delivery. Although it is written for administrators, physicians, and others interested in managing the delivery of healthcare, the processes of organization design it uses have broader applicability, especially in situations where rapidly changing knowledge is central.

Designing Care is about cooperatively managing the care itself, not just “managed care,” a term that has come to mean keeping a tight grip on finances and resources and reigning in the excesses of doctors and patients. Traditionally, care has been in the hands of physicians with the support of nurses and others. Today, medical knowledge and technology have expanded sufficiently to require teams and even whole organizations for proper delivery. The patient experience must be coherently linked with low-cost, high-quality patient relief and with the associated clinical behaviors. Components of practical redesigns are illustrated with examples from institutions such as Beth Israel Deaconess Medical Center, Intermountain Healthcare’s LDS Hospital, The Mayo Clinic, Children’s Hospital and Clinics of Minnesota, Massachusetts General Hospital, and Instituto Clinico Humanitas.

According to Bohmer, a healthcare delivery system must integrate four core elements: medical knowledge, care processes, practitioners, and healthcare delivery organizations. A design must build on a comprehensive understanding of the underlying nature, characteristics, and requirements of the processes of healthcare. Bohmer examines two such characteristics in detail.

First, if major groupings of procedures are differentiated, what is the most efficient and effective organizational design for each? Patient conditions that are well understood can be usefully separated from those that are not. Some, relatively few, are so thoroughly understood, as in the case of diabetes, that a detailed protocol can be prepared for the steps in prevention and treatment so that even the patients themselves can carry out some procedures.

By contrast, many other conditions are relatively poorly understood and the treatments more exploratory and iterative. The design potential here is that all of an organization’s elements can be tightly designed to accommodate each of these divergent processes separately, yet make it possible for them to interact appropriately and seamlessly, depending on the organization’s specific goals and mission.

Second, given the potential for new medical knowledge, how can a cycle of learning for the continued improvement of the state of medical practice be built in? The possibilities are enhanced by available technology that can be used to analyze healthcare experiences and capture them in databases for future research and treatment protocols. In this case, the design potential is that the process of learning for poorly understood conditions and patient differences can be converted into the knowledge essential to evidence-based medicine.

As healthcare funding has become such a political issue, it is refreshing to encounter a combined physician and professor of management who advocates a fundamental understanding and a comprehensive approach.

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Recognizing Organizational Culture in Managing Change

The dramatic increase in products, markets, enhanced technology, and robust competition has led to a dynamic global business environment. Companies that have flourished in the 21st century are those that have learned to respond to turbulence by managing change effectively.[1] Most organizations are aware of the need for change; however, the challenge lies in implementing strategies that stick. For a number of reasons, including a lack of understanding of deeper organizational issues or a failure to recognize the cross-functional implications of change,[2] system-wide change often goes awry.

Photo: Pinopic

The purpose of this article is to examine how organizational culture influences the likelihood of success for change strategies, and to provide tools for the reader to apply within his or her organization. Evidence suggests that organization members are more inclined to embrace change when the organization’s culture is aligned with the mission and goals of the company.[3] Although senior management may espouse a set of values that they assume defines the organizational culture, the reality is that the way members perceive what is rewardedand what they believe to be the underlying messagewill constitute the “real,” in-use culture of how things are accomplished.[4] Therefore, we suggest that a cultural analysis be undertaken to facilitate the planning and implementation of organizational change.

Understanding culture can be useful in two ways. First, cultural insight provides awareness of the extent to which organization members are willing to accept change; and second, a cultural assessment is likely to determine the root cause of the problems that impede stronger performance.[5]

Measurement of Organizational Culture

By investigating two disparate organizationsa family-owned business and a global manufacturing companythis article describes ways that management can utilize cultural assessments to increase the likelihood of success in managing change. The Goodwin Company, an organization specializing in contract packaging of household and automotive cleaning products, and Patagonia, a global brand supplying high-quality outdoor clothing and equipment, provide examples of this phenomenon. In both cases, the instrument used to assess culture was the Integrated Cultural Framework (ICF), which was adapted by the authors from the work of Hofstede [6] and Kluckhohn and Strodtbeck.[7] The ICF has been used to analyze culture across a number of companies and industries and stands up to reliability and validity testing.[8] The dimensions of measurement include:

Ability to Influence: The extent to which organization members have an opportunity to influence decision making.
Comfort with Ambiguity: The extent to which members are comfortable with uncertainty and risk taking.
Achievement Orientation: The extent to which members are assertive, goal-directed, and achievement-oriented.
Individualism versus Collectivism: The extent to which individual versus group loyalty exists.
Egalitarianism: The extent to which equal opportunity exists for advancement.
Time Orientation: The extent to which the organizational goal/mission is focused on values from the past, present, or future.
Space Orientation: The extent to which the physical layout of the organization is public, private, or a mix of both.

The 35-item ICF survey was initially used to collect responses from organization members. Following the collection of survey data, an extensive number of interviews were carried out to provide more substantive information concerning organizational culture.

Goodwin Company

For several years, Goodwin Company, founded in 1922 by Thomas A. Goodwin, manufactured and sold its own line of household cleaning products. However, due to the competitiveness of the retail market, its focus shifted to contract packaging and distribution in the household, industrial, and automotive cleaning markets. Only the original product, Goodwin’s Ammonia, maintains the Goodwin label. Still a family enterprise, Goodwin Company currently has approximately 300 employees and manufacturing and distribution facilities in Los Angeles, California, and Atlanta, Georgia.

In response to concerns about increased labor costs and stagnant revenues, an organizational culture study was launched to determine the appropriate change strategy. Forty-three members of the organization, including managerial and clerical staff, completed the ICF survey and 13 one-on-one interviews were conducted.

The results revealed the following key findings:

Ability to Influence: The data indicated that the ability of employees to propose and implement change in the company was low. The interviews suggested that marginal regard for input had caused the staff to become discouraged and had reduced motivation for process improvements.
Individualism/Collectivism: Although Goodwin Company espoused teamwork as a core value, feedback from the management teams in California and Georgia indicated a low level of trust among management, which resulted in a lack of collaboration among the managers.
Time Orientation: The data showed that employees viewed the company as focused on the past and present while lacking a strategic plan for the future.

Proposed Structural Changes

Given the results of the study, three recommendations were presented to the management team:

Establish a strategic management group that meets weekly to address business challenges, coordinate travel between facilities, and find common ground to build trust.
Give employees, customers, and suppliers a voice and increase their ability to influence policy and procedures. Initiate an electronic comment box for employees, and implement surveys on customer service and supplier satisfaction.
Establish a company vision and mission statement to encourage a sense of ownership, and incorporate management teams from Atlanta and Los Angeles to spearhead this effort. Relocate artifacts, such as company photos from the early years and bottles from the product lines of the 1930s and 1940s, to both facilities in order to acknowledge the company’s history and longevity and encourage teamwork between members of the two offices.

Outcomes

The establishment of the strategic management team proved to be very beneficial. By having the management team travel between facilities, the group developed a better understanding of the challenges at both locations, and they began to build a baseline of trust. The resulting collaborative effort of the team yielded two new contracts. In addition, Goodwin Company was certified by a major chemical manufacturer as a top facility in the nation, which resulted in requests for manufacturing proposals that would not have been possible without improvements in cooperation among regional managers.

Challenges

Goodwin Company was able to correlate changes that emerged in response to the organizational culture study; however, not all of the recommendations produced the desired results. For example, the customer service surveys did not yield the expected outcomes due to a lack of customer response. Additional customer contact will likely be necessary for future surveys to be effective. And although the recommendation to create a vision, mission, and values statement was originally well received, the management team eventually backed off the project, deciding that the company vision should come from its CEO.

Patagonia

Patagonia’s corporate headquarters are located in southern California and the company has overseas offices in Japan and France. Revenues in 2007 totaled $275 million and the firm currently has 1,300 employees worldwide, with 382 located in the corporate office. In 1966, founder Yvon Chouinard was dissatisfied with the conventional equipment used in adventure climbing and so he redesigned and manufactured almost every climbing tool to make each stronger, simpler, more functional, and environmentally friendly. From that operational base, Chouinard Equipment, which later became Patagonia, expanded to include outdoor and casual clothing and a line of underwear. The unique mission and focus of the organization was to make the best products, cause no unnecessary harm, and rely on the business model to inspire and implement solutions to the environmental crisis. Chouinard’s management principles were captured in a self-published book, Let My People Go Surfing: The Education of a Reluctant Businessman.[9]

Although the essence of Patagonia’s initial philosophy has survived, increased growth and operational complexity have created challenges for the organization in its quest to remain committed to the mission. To better understand the underlying issues and develop a strategic direction, an organizational culture study was initiated. Using the ICF, 27 surveys were completed at the corporate office along with 15 one-on-one interviews with 4 senior managers and 11 mid-level managers from 8 departments.

Key Findings

Ability to influence: The data showed that organization members felt they had a moderately high degree of opportunity to influence, but the inclusion of their input also led to a prolonged decision-making process.
Comfort with ambiguity: Although the climate seemed to foster innovation and encourage risk taking, the lack of a systematic feedback process minimized the flow of ideas. In addition, the dilemma of attending to what appear to be dichotomous goalsattaining a profitable return while maintaining a commitment to environmentally safe productscreated a challenge.
Individualism/Collectivism: Patagonia attempted to build community by establishing an on-site childcare center, comprehensive health insurance, and a family setting. However, the company employs a large number of unique and creative independent-minded people, and in supporting innovation, it created a sense of individualism, as well as a limited incentive for teamwork.

Although Patagonia has been successful, the study indicated that to remain competitive, the organization needed to address the duality of encouraging individual creativity and promoting a collaborative work environment, particularly as this duality related to the corporate mission. In addition, it appeared that information flow and decision-making efficiency needed to be addressed.

Outcomes

The organizational culture study was presented to the Board of Directors, who recognized the need to enhance productivity by reinforcing the organization’s mission and emphasizing the importance of a collaborative environment. The following structural changes emerged:

The human resources director was appointed to the senior management steering team to assist in the development of a strategic training initiative. Training courses were developed to provide skills directed toward facilitating performance management feedback, improving communication skills, and enhancing negotiation capability in dealing with suppliers.
A new employee training manual was created to better educate new hires regarding the organizational structure and the flow of product lines from development to sales. The purpose was to build teamwork and collaboration and to emphasize the company’s core values related to quality, integrity, environmentalism, and the desire to not be bound by convention. In addition, Yvon Chouinard’s book [10] was presented to each hire with the hope of inculcating new members to the principles associated with the organization’s mission.
All employees are now encouraged to participate in the Patagonia National Park protection program in Chile and Argentina to reinforce the importance of the mission statement and its meaning in their work. Employees receive a salary and all related expenses are paid by the organization during the three-week program.
The selection process for hiring new members was reviewed with a focus on measuring candidates’ knowledge and skills, particularly their ability to work in a team.

Challenges

Shifting a culture that has to some extent moved away from the values established by its founder is always a challenge. A number of Patagonia’s high performers have been successful because of their innovative talents. However, unless these individuals are also able to recognize the importance of collaboration, in the long term, the organization may not be able to respond in a timely manner to competitive pressure.

Image: Andrew Johnson

Lessons Learned

The article examined two distinct organizations, a family-owned operation and a global manufacturer, which utilized a cultural framework to determine underlying organizational issues. In both cases, the plans of action were system-wide and strategic. Although each company experienced favorable outcomes, considerable follow-up strategies must still be implemented before significant change is realized.

Cameron and Quinn [11] claim that organizational improvements are unlikely without culture change as an initial step in the process. But culture change is illusive, requires lengthy interventions, and, for many organizations, is either too costly or too time-consuming, making successful transformation problematic. This study offers another perspective. Although culture change is necessary in creating and reinforcing organizational transformation, our position is that making necessary structural changes may serve as the initial intervention for shifting culture. At Patagonia, changes in how new members are socialized may bring about a commitment to organizational values and encourage a team-oriented mindset. The impact of these initiatives is likely to result in norms that reflect organizational objectives. Goodwin Company’s focus on enhancing collaboration, particularly among the management team, may result in continued dialogue between members, which will hopefully become embedded in their working relationships. In conclusion, the creation of structural initiatives that incentivize the desired ways of accomplishing goals may be more effective in responding to inefficiencies than a commitment to changing culture, which, over time, may naturally occur as shifts in behavior emerge.

[1] John Kotter, The Heart of Change: Real Life Stories of How People Change Their Organizations, (Harvard Business School Press, 2002).

[2] Janet Parish, Susan Cadwallader, and Paul Busch, “Want to, Need to, Ought to: Employee Commitment to Organizational Change,” Journal of Organizational Change Management, 21, no. 1 (2008).

[3] Edgar Schein, The Corporate Culture Survival Guide, (California: Jossey-Bass, 1999); Sally Riad, “Of Mergers and Cultures: What Happened to Shared Values and Joint Assumptions,” Journal of Organizational Change Management, 20, no. 1 (2007).

[4] Chris Argyris, “Teaching Smart People How to Learn,” Harvard Business Review, 14 (1991).

[5] Celeste Wilderom, Ursula Glunk, and Ralf Maslowski, “Organizational Culture as a Predictor of Organizational Performance,” in the Handbook of Organizational Culture and Climate, Eds. Neal Ashkanasy, Celeste Wilderom, and Mark Peterson, (California: Sage Publications, 2000).

[6] Geret Hofstede, Culture’s Consequences: International Differences in Work-Related Values, (London: Sage Publications, 2001).

[7] F. Kluchhohn and F.Strodtbeck, Variations in Value Orientation, (Illinois: Row, Peterson, 1961).

[8] Mark Mallinger and Gerard Rossy, “Film as a Lens for Studying Culture and its Implications for Management,” lecture, presented at the Western Academy of Management, (Redondo Beach, CA: 1999); Mark Mallinger and Gerard Rossy, “The Trader Joe’s Experience: The Impact of Corporate Culture on Business Strategy,” Graziadio Business Report, 10, no. 2 (2007); Mark Mallinger and Lindsley Boiney, “An Interdisciplinary Approach to Teaching Organizational Culture,” presented at the Western Academy of Management, (2002).

[9] Yvon Chouinard, Let My People Go Surfing: The Education of a Reluctant Businessman, (Penguin Press HC, 2005).

[10] Ibid.

[11] Kim Cameron and Robert Quinn, Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework, (California: Jossey-Bass, 2006).

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Discovering Leadership Potential

A Call to Action!

A crisis of leadership is brewing. Given the recent global economic meltdown of financial markets, the need for effective leadership has never been more evident than it is today. This crisis has led to a call for organizations to evaluate the leadership potential of current employees and new hires.

The rules of the business game are changing, unexpected competition is coming from many places, and “current leaders represent what…business needed in the past, not in the present or the future.”[1] The most important priority for organizations is to discover new leadership potential, develop it, and find the best way to grow it. In this article the authors argue that firms need to develop “Authentic Visionary Leaders” by using the Leadership Style Inventory (LSI) and matching the results with specific job requirements.

To be effective and successful in any leadership position, an individual must fit the demands of a particular position, as well as its leadership requirements. Organizations and individuals can use the LSI to identify leadership styles and match employees to key positions that drive organizational and individual performance.[2] Employees with strong potential can then be enrolled in leadership development programs that enhance their potential, hone their leadership skills, and place them in appropriate positions of authority. By using the LSI to gauge not only the leadership style but the dominant leadership pattern with the organizational position, organizations can develop Authentic Visionary Leaders at every level.

Photo: alexsl

What is an Authentic Visionary Leader?

Developing Authentic Visionary Leaders—leaders whose styles match the organization’s needs and available positions—helps ensure that organizations can succeed in a turbulent global marketplace.[3] To be an Authentic Visionary Leader, a leader must comprehend more than just his or her dominant leadership style. An individual’s authentic leadership style usually consists of two or three styles that are strong and include the dominant style. These patterns can be used to identify the right position for that person and develop a program to improve the effectiveness of his or her Authentic Visionary Leadership.

Author and founding chairman of the Leadership Institute at the University of Southern California Warren Bennis believes true leaders are made, not born.[4] In his book, Why Leaders Can’t Lead, he points out that many leadership development programs do not produce better results because leadership potential is not evaluated before training begins.

Using the LSI at the beginning of the training period enhances the leadership development program by first identifying a person’s style pattern, then matching it to his position, and, finally, developing a program to enhance his effectiveness.

An Overview of LSI Styles Research

The LSI, which is relatively new,[5] is comprised of four basic styles that encompass two dimensions and are assigned to four quadrants.

Style	Description	Characteristics	Examples
Commander	When goals are narrow and short-run, and performance and specific results are required.	Intuitive, takes charge, demands loyalty, insists on compliance, expects results, and finds workable solutions.[6]	Jack Welch Walter Wriston of Taking First National City Bank of New York.[7]
Logical	When goals are broad and future-oriented, and performance is important.	Uses analysis and reasoning, is good at structured problem solving, is systems-oriented, looks for new directions and innovative improvements, and expects commitment.[8]	Bill Gates Warren Buffet Steve Jobs [9]
Imaginative	When goals are broad and future-oriented, and are of a world-changing nature.	Envisions new opportunities, creates future visions, is very creative, empowers others, engenders trust, uses heuristic solutions, and tends to have charisma.[10]	John F. Kennedy Pierre Wack of Shell, who pioneered the creation and application of strategic planning methodologies, such as “Future Histories,” and changed course after the Organization of the Petroleum Exporting Countries (OPEC) crises (1974, 1980)[11]
Supportive	When goals are narrow and short-ranged-specific, and are of an organization-behavioral and transformational nature.	Relates well with others in a cooperative environment, is considerate, gives approbation to peers, and always tries for mutual agreement (does not like conflict).[12]	Pope John Paul XXIII.[13] (No business leader has been identified as possessing this Basic style by itself, but this style is very important as part of a style pattern)

Figure 2: Basic Leadership Styles, 2005

Goals	Focus On
Broad and Future-Oriented	Logical	Imaginative
	Uses reasoning Expects commitment Systems-oriented Looks for new directions Innovative improvements Structured problem solving	Engenders trust Has charisma Creates future visions Envisions new opportunities Empowers others Very creative Heuristic solutions
Narrow and Short-Range Specific	Commander	Supportive
	Intuitive Demands loyalty Expects results Takes charge Insists on compliance Finds workable solutions	Is considerate Peer approbation Cooperative environment Relates well with others Tries for mutual agreement
	Performance	Transformational

Basic Style Comparisons

In 1996, executives in the University of Southern California’s (USC’s) Executive Master of Business Administration (EMBA) program were compared to executives in a similar EMBA program at Bond University in Australia. The averages for each style were as follows:[14]

Table 1: An Example of Dominant Styles

Program	Commander	Logical	Imaginative	Supportive
USC	75	87	78	59
Bond	77	90	77	56
Norms*	80	85	80	55

*Previously established norms by Rowe, Reardon, and Bennis, 1995.

Here is an example of how to use the four basic styles in hiring: A New Zealand advertising company executive scored 66, 94, 92, and 48 in each of the four categories, commander, logical, imaginative, and supportive.[15] He exhibited dominant logical and imaginative styles, which is typical of a senior executive. This finding helped underline the need to appoint employees with combined styles to many different positions.

Research indicated that most situations require leaders presenting style patterns as opposed to exhibiting just one dominant leadership style. However, testing can only be conducted by using the basic styles to assess patterns as well as dominance of one or more style.

Combined Leadership Patterns and Areas of Effectiveness

Very few leaders have only one dominant style with no backup style. Most leaders utilize a combination of two styles, while some adhere to three styles, or a balance of all four. An interesting example of a balance of the four basic styles was found in a study [16] of The Young President’s Organization (YPO), a global leadership network. The YPO average was a nearly perfect score of the established norms (a balance of all four norm scores).

Figure 2 diagrams the patterns of combined dominant leadership styles and highlights the relationship of style patterns to job positions, as extrapolated from previous research by Mann (2008) for an upcoming book on how style patterns can be used to improve leadership development.[17]

Many leaders have more than one dominant style, but previous LSI findings only emphasized the most dominant style. When leaders have several strong styles, they often combine these styles into patterns that can be very effective, depending on the needs of the organization. The six Authentic Visionary Leadership patterns are based on studies of hundreds of managers and student leadership style patterns.

Figure 3: Authentic Visionary Leadership Patterns, 2008

Focus	Areas of Effectiveness for Six Style Patterns
Broad, Future-Oriented Vision
Focused and Limited, Specific Range
	Performance	Transformational

The most common pattern is one dominant style with one or more backup styles. One very dominant style may be obvious to a trained observer, but the only way to ascertain one’s style pattern with certainty is to complete the LSI questionnaire.[18]

In every situation, several leadership styles may be required. If a leader is not dominant in the key style for a particular situation, he or she can use a backup style or adapt a less-used style according to his or her degree of flexibility. A higher level of flexibility is usually the result of experience.

Summary of Leadership Style Patterns

Pattern 1: Ideation. Ideation is a combination of the logical and imaginative basic styles. This pattern hinges on visualizing or imagining a future that is both achievable and practical and is helpful in planning an organization’s strategic future. Ideation is the hallmark of successful CEOs, top executives, and those who are determined to achieve a new vision for their organization. Leaders in this category use logic and detailed analysis as well as vision and imagery to direct the organization.[19]

Example: Steve Jobs is the consummate example of an ideation leader whose focus is broadly based on both performance and transforming organizations. As one of the top ideation leaders in the field of computers and entertainment, Jobs seems to be on a mission of global change. He focuses on revolutionary product ideas and envisioning the future while driving change with simplicity and ergonomic detail.[20]

Pattern 2: Stewardship: A combination of the logical and the commander basic styles, it is necessary in areas of financial or risk management within organizations. Leaders who utilize this style focus on resources—conserving them, allocating them wisely, and acquiring sufficient amounts to carry out the mission of the organization. Effective executives with this pattern are financial planners, managerial accounting analysts, and managers of detail and logistics.[21]

Example: John Bogle, the founder of Vanguard, is one of the best-known stewardship leaders. Named one of Time’s “100 Most Powerful People” in 2004, he advocates for strong governance and fiscal responsibility.[22] He practices what he preaches by using a logical style based on sound financial and economic principles as well as a commander style to take action quickly.

Pattern 3: Coordination. A combination of the logical, commander, and imaginative basic styles, this triangular pattern is more common in smaller firms and in the second- and third-tier levels of larger organizations. The logical/commander components of this style tend to be almost equal, with an imaginative backup. In small entrepreneurial firms, the imaginative style may be the most dominant, with the commander style a strong second and the logical style a weak backup. This coordination leadership pattern represents the popular, “traditional” upper-management pattern from the study of 294 male managers that established the “norm” for Decision Systems Analysis (DSI)[23] and has held constant for the LSI as well.[24]

Example: Mark Shapiro, CEO of Six Flags and a former ESPN executive, is known for being an innovative yet commanding/logical leader.[25] Shapiro has implemented several “imaginative” programs, including new shows at ESPN and real estate sales at Six Flags, while using his logical style to gain buy-in and his commander style to cut through red tape. He also has a reputation for being hard-nosed and practical while adding cable channels and local content programs at ESPN.

Pattern 4: Exploration. This combination of imaginative and commander styles is typical of leaders in entrepreneurial start-ups, especially female entrepreneurs. The imaginative style tends to dominate and the “follow-the-star” method of reaching a desired goal trumps everything.[26]

Examples: Indra Nooyi, chairperson and CEO of PepsiCo, is an example of a leader who utilizes an imaginative and commander style. She transformed PepsiCo’s global strategy by diversifying into more health-conscious products, such as juices and waters and is considered a brilliant corporate strategist.[27] Similarly, a former PepsiCo vice-president, Maigread Eichten, is currently transforming FRS Healthy Energy, which produces a healthy alternative to highly caffeinated beverages and energy snacks, based on a product developed to provide energy to cancer survivors and women who have recently given birth.[28]

Pattern 5: Customer-Centric. This pattern represents a combination of the supportive and commander basic styles and is dominant in strong marketing- and sales-oriented organizations. Supportive behavior comes first because empathy for customer needs is more important than the drive to convince or persuade. Empathy means understanding and wanting what is best for the customer because satisfying the customer is also in the best interests of the firm.[29] Nonetheless, leaders must also utilize the commander style to drive results.

Example: Meg Whitman, former CEO of eBay, is a strong Pattern 5 leader who is supportive and a commander. As a former marketing executive at Disney and Hasbro, she was able to quickly grasp eBay’s core competencies and focus on community while expanding eBay into a global brand.[30] She increased efficiency at eBay and implemented new standards, such as not selling guns, by being both inspirational and commanding. Brad Anderson, CEO of Best Buy, has also used a customer-centric approach while commanding the troops in Best Buy’s transition from a product-centric company.[31]

Pattern 6: Employee-Centric: A combination of the supportive and imaginative basic styles, this pattern is necessary for understanding and supporting the needs of employees, associates, and customers, as well as having the imagination to inspire through external and internal public relations, advertising, promotion, and employee empowerment programs. It is essential for human resource leaders.[32]

Example: Anne Mulcahy, Xerox’s Chair of the Board and CEO, is both a supportive and imaginative leader, who is also not afraid to make the tough calls.[33] One difference that this former sales representative and human resource executive exhibits is that she listens to her employees. Former Kohl CEO Larry Montgomery is another example of an employee-centric leader. In a change of fortune, he recently stepped down as CEO and was appointed to run the company’s human resources area.[34] By combining Montgomery’s strengths with an area of critical need, Kohl’s has been able to maintain its reputation as a talent management leader.

Where do Authentic Leaders Come From?

Developing Authentic Visionary Leaders at every level creates a potential paradox—after all, not everyone will become a CEO.[35] Nonetheless, scholars have long been calling for authentic leadership development programs at every level to increase organizational effectiveness.[36] Authentic Visionary Leadership development is at the heart of making the nation stronger. According to Bennis, “A nation cannot survive without virtue, and it cannot progress without a common vision and high expectations.”[37]

While using LSI to build Authentic Visionary Leaders is not a panacea for the current global economic crisis, it is an important step in strengthening the national economy. By utilizing the LSI, individuals can determine where they are likely to be most effective given their strengths and then position themselves in jobs that can best utilize their talents. At the same time, organizations can allocate scarce resources to more effective leadership development programs that will build on the skills required of a given position and match an individual to the appropriate job. Individuals will gain insights about their authentic leadership abilities and may be able to avoid jobs that do not utilize their skills. Organizations will be able to develop more effective leaders that have the potential to solve not just the problems of today, but to anticipate the problems of tomorrow.

Determining the Authentic Visionary Leadership Patterns in Your Organization

Take the LSI [38] to determine scores for each of the four leadership styles shown in Figure 1.

Compare each score to typical ranges.[39] Authentic Visionary Patterns reflect all scores that fall in the “dominant” or “very dominant” range.[40]

Finally, compare these results to the six Authentic Visionary Leadership patterns in Figure 2.

See Appendix A

See Appendix B

[1] Robert M. Fulmer and Jared L. Bleak, “Strategic Leadership, Part 1: Applying Lessons Learned from Research about Strategic Leadership Development,” Graziadio Business Report, 11, no. 2 (2007).

[2] Alan J. Rowe and James D. Boulgarides, Managerial Decision Making, (New York: Macmillan, 1992).

[3] Bill George, Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value, (San Francisco: Jossey-Bass, 2003); Bill George, David Gergen, and Peter Sims, True North, (San Francisco: Jossey-Bass, 2007).

[4] Warren Bennis, Why Leaders Can’t Lead: The Unconscious Conspiracy Continues, (San Francisco: Jossey-Bass, 1989).

[5] Alan Rowe, Kathleen Reardon, and Warren Bennis, Leadership Style Inventory, Rvsd. November 11, 1993, (testing instrument). See Appendix A.

[6] Ibid.

[7] Steven I. Davis, “Walter Wriston: Building a Global Financial Services Business through Communications and Meritocracy,” Leadership in Financial Services: Lessons for the Future, (London: Macmillan, 1997): 69–73.

[8] Op.cit. [4].

[9] Brent Schlender, “The Power of Steve Jobs,” Fortune, (November 22, 2007).

[10] Op. cit. [4].

[11] Philip Van Notten, Writing on the Wall: Scenario Development in Times of Discontinuity (Boca Raton: Universal Publishers, 2005).

[12] Op. cit. [4].

[13] George R. Goethals. “Theories of Presidential Leadership,” Annual Review of Psychology, 56 (February 2005): 545–570.

[14] Kathleen Reardon, J. Reardon, and Alan Rowe, “Leadership Styles for the Five Stages of Radical Change,” Acquisition Review Quarterly, (1996).

[15] Ibid.

[16] Op. cit. [4].

[17] Richard Mann. In-Know-vation: To be in the Know about Strategic Innovation, (Malibu: Manuscript-in-progress, 2008).

[18] Ibid.

[19] Op. cit. [12].

[20] Apple.com, Steve Jobs: CEO, Apple, http://www.apple.com/pr/bios/jobs.html.

[21] Op. cit. [12].

[22] Forbes.com, Bio:John Bogle, http://www.forbes.com/2008/06/10/bogle-invest-fund-oped-cx_hra_0610bio.html.

[23] The Decision Style Inventory (DSI) was an outgrowth of Richard Mann’s research as first conceived in Alan Rowe’s Decision Style Analysis class in 1975, but the Authentic Visionary Leadership Patterns were generated as a result of analyzing data and subsequent interviews by Mann in 2005. They were included in a manuscript-in-progress (see Op cit. [16]).

[24] Op. cit. [12].

[25] About.com, Flagging Down Mark Shapiro, http://themeparks.about.com/od/sixflagsarticles/a/shapiro2006.htm.

[26] Op. cit. [12].

[27] CNNMoney.com, PepsiCo Names First Woman CEO, http://money.cnn.com/2006/08/14/news/companies/pepsico_ceo/.

[28] Personal interview with Maigread Eichten, (San Francisco: September 13, 2008).

[29] Op. cit. [12].

[30] TechCrunch.com, Meg Whitman’s Exit Interview, http://www.techcrunch.com/2008/01/24/meg-whitmans-exit-interview/. (no longer accessible).

[31] HarvardBusinessPublishing.com, Customer-Centricity order form, http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?referral=1145&id=506055.

[32] Op. cit. [12].

[33] Xerox.com, Group Led by Xerox Chosen by the Department for Work and Pensions in the UK, http://www.xerox.com/go/xrx/template/inv_rel_newsroom.jsp?app=Newsroom&format=biography&view=. (no longer accessible).

[34] Just-Style.com, US: Mansell to Replace Montgomery as Kohl’s CEO, http://www.just-style.com/article.aspx?id=101784.

[35] Warren Bennis and Burt Nanus, Leadership: The Strategies for Taking Charge, (New York: Harper and Row, 1985).

[36] Noel Tichy and Warren Bennis, Judgment: How Winning Leaders Make Great Calls, (New York: Penguin Books, 2007).

[37] Op. cit. [3].

[38] See Appendix A for the LSI instrument that corresponds to the dominant styles in this article.

[39] Op. cit. [13]. Also see Appendix B for dominant scores and ranges.

[40] For additional assistance wit

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Organizational Design and Implementation

After many years of working with managers to “redesign,” “restructure,” or “reengineer” their departments and organizations, the authors have decided to share a procedure that frequently maximizes the effectiveness of this type of change effort, which ultimately leads to a better organizational design. Our intention is to help both managers and practitioners benefit from our experience.

Why is this different from the other articles you have read this week on organizational design?

First, although we will offer some insight on organizational models, we are clearly focused on communicating a process for creating any new or different organization. Therefore, we will be emphasizing how you get there, not what it looks like when the process is done.

Second, this process is flexible and can be used in large or small organizations.

Third, we have integrated the thinking of both those who emphasize process improvement (working from the bottom up) and those who operate from a more strategic perspective (working from the top down).

Start at the beginning-Take the “Pop Quiz” below and find out if you need to redesign your organization.

Do any of the following apply to your organization?	Yes	No
You have been part of a merger and/or acquisition.
Your structure interferes with your customers’ needs.
You are experiencing a business downturn.
Your company has expanded into the global marketplace.
External forces such as regulatory agencies and/or accreditation review bodies require you to reexamine your structure.
You have outgrown your organizational structure.
Your new leadership wants to improve your structure.
Your company has “downsized” employees during the last year.
Your employees tell you that your organizational structure interferes with their effectiveness.
You have undertaken a process improvement and/or Six Sigma initiative.

If you answered yes to one or more of these questions then read on!

The “How”-Creating the New and Improved Organization

Historical Perspective

The authors’ perspective is that most organizational designs are blends of two or three models. It is rare when an entire organization follows purely one model. Click here for an overview of “Organizational Design History from the 1920s to 2000s.” This chart may answer some questions about the “what” of organizational design before discussing the “how.”

Getting Started

After taking the pop quiz, several areas to consider in organizational redesign probably come to mind. No matter how good the process is, any change will disrupt employees’ lives and impact company productivity. Therefore, before beginning a change, you need to be clear as to why you are undertaking this task.[1]

Three major areas to consider and assess as you move forward are:

The Business Itself-What are your customer’s needs and wants? What is the competition doing? What are the industry trends? What are marketplace changes? What are your organization’s overall strengths and weaknesses?
Company Values-What does your company stand for? What are your values? What is your vision? What organizational culture do you want to cultivate? How congruent are you with your stated values and your informal cultural norms and behaviors?
Major Processes-What are your most critical processes? How would you rate the effectiveness of these processes? Are your standards what they need to be?

The importance of data cannot be over-emphasized-both on your current organizational effectiveness and the future organization you want to become. To get to this first level of “assessment,” be thoughtful, uncompromising, and thorough. Your answers to these questions need to drive both your ultimate design and the process you use to get there. If your methods do not reflect your stated values, you will have difficulty gaining the commitment needed to successfully implement any organizational changes.

The authors’ experience suggests that the most successful organizational design processes have three things in common:

Focus on “Excellence”-start with a clean slate. Draw the organization that will respond to customer needs today and in the near future; that will create a competitive advantage and will both reflect and encourage the values and culture you desire. Even if cost-cutting is part of what is driving your change, do not start with cost-cutting as an objective. Start with organizational effectiveness as your objective and begin with a blank page.
The People in the Organization Drive the Process, not the Organizational Design Consultant-clarifying roles at the beginning of the process is essential. Now is the time to apply what we stated in our introduction-organizational design needs to be created by the human beings responsible for the organization’s success. Consultants need to create a partnership where expertise is shared freely, but where those who know their own business drive the process.
Involve and Communicate-we have found that the more people become involved in the process, the more effective the outcome. Involve as many people at as many levels as early in the process as possible. Take a multiple team approach. The authors are not blind to the sensitivities involved in any redesign effort, such as potential layoffs, etc. These issues seem to emerge in stages. They need to be addressed as you work through the organizational design process so that you can continue to include those who know the work the best.

The following “Organizational Design Model” not only addresses the above issues but it also provides an overview of the major steps in the design process.

Setting the Stage

If you have done a thorough job in the “Getting Started” phase, setting the stage for the process to officially begin-in the eyes of the organization-becomes much easier. Here you need to communicate where the organization is headed long-term to all employees.

Communicate widely and prolifically the vision, long-term strategies, competitive climate, and customer needs.
Communicate the values and culture you desire and do so in a way that demonstrates those values.
Design the data-gathering process and declare to all that you will be looking at the organization and how it needs to change.
Discuss the benefits and difficulties involved in the change process.
Establish the initial design and data-gathering teams.
Determine the information you need, who possesses that information, and how the information will be used.
Determine who needs to be involved in analyzing the information. Initial teams are usually at the senior management level. Let people know your intention to involve as many people as possible and share with them the membership and purpose of the design teams and the initial data gathering.
Establish expectations for ongoing communication, and communicate the philosophy for staffing the organization.

Gathering the Data-Internal Assessment-Using a combination of survey and group interview techniques, gather information on the effectiveness of the current organization. Solidify the scope of the data-gathering process-will you gather information from all employees? Data required usually includes but is not limited to the following: core processes and their effectiveness, additional customer data, critical tasks or key activities, work load, roles and responsibilities, decision-making authority, qualitative data on management practices, and internal issues and suggestions for improvement.

Utilize the team in the analysis of the data and assess the gap between what you know and your vision of the future. At this time, our assumption is that there will be a design change so that all elements of broader effective change management processes need to be incorporated. Consider the current culture, how change has been implemented in the past, and how it has been received by employees at all levels. Based on your gap analysis, determine if additional process improvement teams need to be established to change core processes. If so, identify and launch necessary teams.

Designing the Organizational Transformation-Based on your gap analysis, determine the criteria for success for your design goals. Explore the pros and cons of various models or approaches. (It is at this stage that the consultant’s design expertise is especially beneficial). The organizational model you choose to drive your organization begins to influence the steps in the design process. You may be designing “units” that may be replicated throughout the organization or you may be designing the senior management structure, including roles and skills required. Regardless, the team is usually building the overall management structure of the new organization including decision-making level, scope, high level skills, knowledge required, roles, and leadership approach that will reflect the values and envisioned culture of the new organization.

Several decision points emerge-how far down the management hierarchy should the team “draft” the structure? Should staffing selections at the strategy level be made prior to going any further in the design process? Our experience suggests that filling the senior positions in the new structure and including any new leaders in the remaining design effort is a more effective process. This requires that senior positions be developed more fully prior to moving forward.

After selections are made, providing support for those who may no longer hold a position at the senior level is also essential. (Assessing any potential “fall-out,” new resources/people required, or overall impact of the proposed change now becomes a regular part of the process). Remember to communicate where you are in the organizational design process to all employees. Based on the organizational design model chosen, continue to build an organizational chart that describes, in general, the overall structure. The organizational chart reflects reporting relationships, broad job responsibilities, and the job skills/knowledge/experience required. You now have an overall picture of the organization and staffing decisions made at the senior level. Incorporate updated information from core process improvement teams into the organizational design. Continue communicating to a broader group by testing out the model and proposed process changes in staff meetings or dedicated organizational design meetings.

Implement and Evaluate-Job design and talent choices are the most critical part of this stage. How have the jobs in the new organization changed? To what degree have they changed? Are there incumbents who would see the jobs in the new organization as “the same” as the old ones? Critical to effective selection is an accurate assessment of the degree to which positions have changed. More often than not, the current practice for selection is to have employees interview for the new or changed jobs for all positions below senior management. Although this minimizes employee relations issues, this approach may not be the most effective process. Our experience suggests that “placing” people in the new or changed positions has a great deal of merit; to do so usually requires due diligence in assessing employees’ experience, skill, knowledge, and potential.

The ideal approach is to discuss changes throughout the process. Test out your ideas, solicit the views of others, and understand their interests. The intent is to make this part of the process more about creating choice rather than one of arbitrary selection. This means designing jobs and selecting individuals to fill them simultaneously. Begin by forming a template for the job and engage the job candidates in finalizing the job requirements. Participative planning minimizes resistance and creates a more amenable outcome.

As you are staffing the organization, the elements to be addressed in a change implementation plan become more apparent. Your plan needs to include an impact analysis-that is, how have your proposed changes impacted the current organization? (Remember, most people will have concerns about the pending changes even if the drivers of the change see the changes as positive.) How have the people been impacted? How will they see the changes? If you have been as inclusive as the authors think you need to be, you will already know the answer to these questions.

In the change plan include: staffing and selection requirements, new skills needed, recruiting needs, technology requirements, outplacement needs, training and development needs, a phased implementation strategy, ongoing communication avenues, facilities requirements, resource requirements, and evaluation process.

Organizational design, when done well, has a flow. It begins with a general view and gradually tests that view by creating more and more specific descriptions of what will go on in the new organization. Because design changes impact so many people and can make them feel powerless, we encourage you to take great care in managing the design flow. The process must value the contribution of all those impacted. We also caution you that the process is not linear or mechanical. It cannot be forced. It is more like a puzzle. If you know and have all the pieces, careful consideration of each one will help you create a picture that is rewarding to all involved.

[1] Joan Magreta. “Why Business Models Matter,” Harvard Business Review, 80, no. 5 (2002/05): 86-92.

Graziadio Business Review | Graziadio School of Business and Management | Pepperdine University

Graziadio School of Business and Management | Pepperdine University

Self-Organizing Conversation as an Invitation to Serendipity

The Big Shift

From Knowledge Stocks to Knowledge Flows

Shaping Serendipity

Self-Organizing Conversation

The World Café*

Open Space Technology*

Conclusion

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Transforming Toxic Leaders by Alan Goldman

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