-
-
Marketplace
-
Channel Resources
Articles from this Site
-
One brand, one Web site! DM Review is now the home of all the content you're used to at BIReview.com and much more. If you are registered at BIReview.com, you're already registered at DM Review. If not, take just a moment to sign up for all the free services we have for you at the new DMReview.com.
The Fruits of Frustration
I recently attended a conference teeming with earnest sounding speakers touting how their companies had embraced novel, organization-wide approaches to solving this or that perplexing business problem, and how we in the audience, by following in their footsteps, could do so too. What's more, there was a magic elixir for creating this success: all we needed to do, we were repeatedly told, was to get our executive management's commitment to these novel approaches, without which, we were also sternly warned, our hopes for replicating their success would quickly turn to ash.
Being a curious sort, and wanting to know how to brew this magical executive management commitment to organizational change potion, I inquired of various speakers about exactly how they went about gaining their management's backing for these new, organizational ways of doing things. After all, organization-wide change has never been, in my experience, easy or generally successful, yet each speaker seemed to have found a way to have done so. Hence, the brewing process appeared now to be a repeatable one. However (and usually after trying to deflect my question), each speaker eventually copped to the fact that leadership's commitment to organizational change hadn't come in a wizard's potion's cup. It instead had arrived at the end of a knotted rope.
Paying the Piper
As it turns out, executive office interest in doing things differently was owed solely to the existence of external, company-killing forces that their management had to deal with. For example: new government regulations that could spell potential imprisonment for the senior executives); changes in the competitive/technology landscape that no longer could be ignored; and or shareholder/customer revolts caused by dismal corporate performance, often leading to a change in executive leadership. When I pressed the speakers harder about why their companies' management needed the hangman's persuasion to make their organization-wide changes, they merely shrugged their shoulders, smiled meekly and asked if there were any other questions.
My fellow audience members were none too pleased with me either, for I was disturbing the afterglow of all the happy talk they had just heard. It is uncomfortable to contemplate that your company's best opportunity for needed change arrives when it is about to die. Unfortunately, in my 30 years of business consulting, I have only come across a handful of companies that have initiated fundamental changes to their business operations before they were forced by circumstances to do so.
One is Rockwell Collins of Cedars Rapid, Iowa, named by Forbes magazine as the best managed aerospace and defense company in 2004 and again in 2006. This recognition was a long time in development. In the late 1980s, Collins senior management, during an annual strategic review, peered into the future, compared it with the company's (then) strategic trajectory, and realized that the company had to fundamentally change its business model and business processes if it wanted to survive. Beginning in 1990 and continuing even today, Collins has undertaken an ongoing series of initiatives to improve its competitive capabilities, changing everything from its supporting business infrastructure (e.g., consolidating all of its various financial systems) to its decision making processes about how to pursue new sources of business.
Another organization that has institutionalized organizational change is the Mayo Clinic in Rochester, Minnesota. Beginning in 1991, Mayo began its pursuit of paperless medical care, which it achieved in 2004. Mayo has created an electronic medical record system that captures all patient information - medical, insurance, billing, and administrative - digitally. Going paperless has meant changing the fundamental work processes of just about everyone working at Mayo Clinic, especially those of its doctors. Because of the potential patient care and safety issues that changing medical practice can cause, Mayo very carefully and deliberately introduced electronic medical records in graduated steps over a period of a decade. Mayo is only one of a handful of medical facilities that is completely paperless. It's not something Mayo had to do, it was something the Clinic saw as needed to improve the quality of patient care and reduce the cost of its medical care. A national effort is now underway in the U.S. to have electronic medical records available to most Americans - in the year 2014.
Trapped by Success
Former Rockwell Collins CEO Jack Cosgrove once told me that the most difficult task in his career was trying to get Collins people, who were almost all highly trained engineers, to buy into the need to change while the company was still very successful. It would have been a lot easier, he reckoned, if the company had been in trouble. The reasons he gave were pretty simple. If you are successful, you have, by definition, found the "right thing" to do. Deviating from a successful business model is likely to lead to less success rather than more, so why do it? Second, tomorrow is about possibilities, not facts. Bad things that might happen in the future might also not happen. It is easy to convince yourself to do nothing. Third, there are personal vested interests in the current way of doing business and in the products and services being produced or sold. Almost everyone in the company who is selling or making them will fight any attempt to change if they perceive a loss in status or position. And then there are the current bills that need to be paid. A U.S. $10 billion company has to generate revenue on average of about $5 million per work hour just to stay even. This means there is little incentive for trying out novel business approaches that may end up as costly failures. All in all, for most companies, it is better to stick with what you know.
These are just some of the reasons why companies are successful up until the day they are not and why it usually takes a hangman's noose to make a company change its ways. Both Rockwell Collins and the Mayo Clinic practice what can be called passionate, disciplined frustration. Neither organization's executive leadership is content to assume that future organizational success is assured. Both organizations' leadership is rarely satisfied with the status quo, and are extremely passionate in their approaches to seek out new ways to improve their respective business positions. Furthermore, once new ways are discovered, both organizations' management teams support very disciplined and deliberate approaches to improving their organizations. It is worth noticing that management doesn't need to be convinced to change; their hardest problem is convincing their organizations to follow.
In many ways, what Collins and Mayo do reminds us of former Intel chairman Andy Grove's maxim, that only the paranoid survive. But even at superb companies like Intel, which has dominated the world of microprocessors for over 20 years, complacency is always ready to slip in the backdoor. It seems late last year, Andy Grove was attending a meeting to discuss Intel's strategic direction. The company had just announced that it had lost eight points of market share to its archrival Advanced Micro Devices. According to reports, the discussion on strategy was polite and respectful. When it was over, everyone filed out of the meeting except for Grove and the most senior manager present. Grove, as this manager later reported, "beat the tar out of him" for not being confrontational, for not challenging the ideas being presented, for not questioning the data used to support those ideas. Where were the shouting matches and heated arguments of the old days, Grove demanded to know. He made it clear that he wasn't going to come to any more meetings where everyone was merely a bobble head, nodding in agreement to whatever was being presented. To say the least, Grove's tirade left an impression, and over the past year Intel has undertaken a number of well-discussed strategic moves to regain luster that had been lost.
Apply BI
In my mind, one of the best but underutilized techniques for creating a sense of disciplined frustration is through the use of business intelligence. BI can be put to work to challenge current ideas and to question current data - as Grove suggests is required if corporate complacency is to be avoided. BI can also be very effective in confronting strategic and operational assumptions to determine if they still hold. A change in either may signal that the company may either be at major risk or, just as bad, missing a major opportunity. If applied BI does not create a certain level of corporate frustration, or if senior management isn't using BI results to generate frustration, then BI probably isn't doing its job.
In my experience, the best companies - the ones that consistently do well over the long term - are those which are inevitably frustrated with where they are today - even if they are successful. Pittsburgh Steelers Hall of Fame coach Chuck Noll, the only head coach to lead a team to 4 super bowl wins, probably summed the attitudes of these companies up best: "A life of frustration is inevitable for any coach whose main enjoyment is winning." When a company stops being frustrated, it should start fearing for its future.
Robert Charette is president of risk management consultancy ITABHI Corp. and director of the Cutler Consortium's ERM & Governance practice. He can be reached at charette@itabhi.com.
For more information on related topics, visit the following channels:
