5 Images to Guide Organization Renewal

I've spent decades helping executive teams renew their organizations to keep them healthy and relevant.  I've learned  a lot while working for marquee clients around the world.  In fact I often feel swamped by my learnings - they sometimes seem to be contradictory.

So recently I sat down to answer the question: "what are the basic principles for organizational renewal?"  What is the core to my work?  Where are the safe harbors to which I return when the seas of change are in turmoil.  I came up with five principles and added an image to each.  They should be self-explanatory.  

Here you go.  Enjoy!

Well, that's my career in organizational renewal.  

I'm looking to share what I have learned through: keynote addresses, workshops, and intense consulting assignments.  I'd like to hear from you, so click here to send me a direct email so we can find time to talk.

Change Management – I’m Tired of Culture

Say What????

What is culture?  I read a lot about it these days, particularly as a barrier to implementing change.  Culture has become a curmudgeon.  A general consensus has developed that solving “the way we do things around here” will bring implementation bliss to change management.

My only problem is that the more I read about culture the less I know what to do about it.  It seems that we’re happy defining the problem without giving the specifics of a solution.  Why wake a sleeping dog?

Come on – we’ve got to do better than that.  It’s time that we parsed culture into its essential elements and then offered up ways to change it?  We all know the elements – they’re common to any change readiness assessment. 

Management factors, such as:

• Organization design – with roles & responsibilities
• Planning processes – from strategic through business plans to projects
• Reporting & Measurement systems – for operations & programs
• Reward schemes – for compensation & recognition
• Procedures, processes, & controls

Leadership factors, such as: 

• Setting a vision
• Inspiring the passion in all employees
• Communicating authentically & transparently

You can make up your own list but at the end of the day isn’t that the definition of “culture.”  Doesn’t that describe, “how we do things around here?”  Aren’t these the things we’re trying to change so that an organization can alter or accelerate the path that it’s on?

Here’s an example.  Several years ago I was working at Whirlpool, a great company with many great brands; however, at the time resource power & control rested in the vertical operations – those who designed, manufactured, distributed, and sold the durable appliances.  Brand managers worked horizontally to influence changes across these verticals.

For many months my team worked with the Kitchen-Aid brand to develop ideas for product innovations and enhanced customer experiences.  We were neck deep in great ideas & little results.  Efforts at implementation veered off course and generally withered.  At the heart of the problem was Whirlpool’s refined and efficient planning process.  There was a drumbeat that was known and obeyed by all.  Culture was eating change.

Once we figured out that planning was a barrier to innovation the executive team agreed that we could work with the finance & planning people to redesign the planning system.  It took close to a year and involved things such as:

• New mandates for planning sub-teams to make them more diverse & distribute decision make power
• Criteria to get change initiatives out of the regular flow of decision making and monitoring
• Detailed revision of forms that drove the process

In essence we needed to change the rules of the game if we were going to change resource allocation decision.  Culture wasn’t the problem, the disciplined legacy planning process was.

I believe it’s time to expunge the “culture” word for change management.  If change isn’t happening we need to disaggregate “how things are done,” roll-up our sleeves and change the rules of the game.

Organization Renewal – The Key To Being Healthy & Relevant

Renewal for Health & Relevance

As organizations mature they face the prospect of death through atrophy and disruption.  All companies start the same way: someone has a unique idea for a service or good for a specific customer; sales grow exponentially, then competitors enter the field.  Soon the organization enters the "desert of despair" where the market is saturated with look-a-likes that are "faster, better, cheaper." 

To maintain profitability, the next step for the company is to go to the premium end of customers and pricing.  Then they wake up to find that their mass market has disappeared and they have become a niche player in a disappearing market.  Death by a thousand cuts and irrelevance.  Blockbuster, Kodak, Blackberry, Nokia.

This doesn't have to be part of the natural business cycle; and some companies know this: Samsung, Pixar, Starbucks, P&G.  What do they know that others don't?  This question has fascinated me for my entire career.  What I have come to realize is that some companies understand that organizations aren’t build to change: we build them for efficiency, consistency, and low risk. 

Some leaders recognize that improving their organizations sets up a dilemma where constantly making the right decision is eventually the wrong decision.  They know, as Nokia learned, that excellence as the world's leading manufacturer of cell phone handsets comes at a cost of not developing smartphone technology - now Nokia is the handset manufacturer for Microsoft.  No amount of urgency or burning platforms could transform Nokia and prevent its demise through its success.

Some companies like the once dying Pixar, clue into the notion of what I call "organization renewal."  They know that protection against irrelevance comes from inside - death is not dictated by the market.  They avoid the need for "change management" and "organization transformation."  They know they must build a culture of renewal.  They know that everyone in the organization must be sensitized to the signals of decay, and they must have the knowledge of what to do and access to the organization to make changes.

This is not chaos or leadership through consensus on everything all the time.  It's about knowing what the organization is and protecting that core while testing, learning, and moving into unchartered territories.  Sometimes it's a simple operational improvement like putting healthy food choices at the grocery checkout; other times it's a simple work improvement like cutting most of the authorities needed for a regular purchase; and other times it moving into new domains like mobile apps for the growing Millennial market.  These changes cannot be controlled from the center - they are too unpredictable.  They must come from a culture of trust and openness where everyone knows how to influence the organization.

In my experience with marquee clients around the world - like Whirlpool, Microsoft Europe, Canadian Pacific, Toyota South Africa, and Korea Telecom – I stress the following essential principles:

1. Know who you are

What can you become - not what do you want to become?  Change

the right things.

2. Engage Employees through Trust, Openness, and Tolerance for failure

·   Know leadership behaviors that shut down the organization.  Learn to listen.  Be inclusive and even vulnerable.

3. Ideate based on Insight

·   Build a discipline and capability for Ideation.  Get ideas from everyone, everywhere.  Show people how to spot trends in their area of interest; understand customers and their unarticulated needs; challenge the organizational beliefs that once were required but now hold you back.

4. Identify & Test renewal opportunities

·    Show people how to convert an idea into a business opportunity.  Be sure employees really know: the customer, the product or service, and how it will make money - or at least a difference.  After defining the opportunity, identify its fatal assumptions then develop a hypothesis to test, learn, and commercialize at low risk.

Organization renewal is the ability to take what you have and keep it fresh so that your organization will always be healthy and relevant.  It's a mindset supported by disciplined tools that can be applied to specific problems. 

Ron Johnson – Questions about Innovation & Change

Did the Apple fall too far from the tree?

I live in Dallas.  My personal case study for the past two years has been Ron Johnson as the CEO of JC Penny.  The business section of the local paper tells me that my study is over.  Johnson has been fired.  His style, innovations, and vision of change managed to drive the stock from $35 to $15.  Oooops!

Most people know Ron Johnson as the genius behind the Apple Genius Bar.  He’s the guy that changed the face of retail.  He gave us wide-open spaces, a place for kids to play, and chest high tables to play with our tablets.  I’ve been to his flagship stores in New York City and London, not as a customer but as a tourist. 

Ron Johnson has gravitas.  So when he took over JC Penny in June 2011 I bought a front row seat.  I’m a change and innovation practitioner.  I wanted to learn at the foot of the master.  Closing out 2011 everything looked good.  Johnson announced: 

• his vision to make JC Penny “America’s favorite store;” 
• new people he wanted on the bus; 
• “fair and square” pricing supported by a new logo dominated by a “square” – no more confusing coupons and complex pricing, just everyday low prices and value; and 
• shift from a promotional department store to boutique stores within the store.

It didn't work.  What was left of JC Penny’s loyal customer base abandoned the store in droves.

I don’t know Ron Johnson.  I’m not his apologist.  But what did he do wrong?  Why did he fail?  Didn’t Johnson do all the things that change managers and innovators implore of their clients? 

• Set a vision, commit to it, and get in front of it 
• Change out the old executives with their defense of legacy
• Challenge orthodoxies like coupons, discount pricing, and spiff’s 
• Know the unarticulated needs of customers – like Apple has done so well

All of this advice resulted in failure, but I can only find two rationalizations for why it didn’t work: 

1. Change is a journey – even in an exponentially changing world.  The impatience of the Board for shareholder returns trumped this needed transformation
2. Test and learn – the innovators mantra.  Johnson seems to have pushed ahead with the arrogant leaders mantra of “got-a-hunch, bet-a-bunch”

But is this the full explanation?  Maybe there is a part of the real world that says that organizations, like natural species, have a shelf life.  Maybe the world just moves past the installed base of business.  Maybe death is natural, and should be accepted.

When we study success we ascribe it to the actions we want to observe.  When we study failure we do so to make the point that the leader didn’t follow the certified game plan.  That’s not the Ron Johnson case, from what I understand.   

Can we, as change agents and innovators, learn from JC Penny, or are we afraid to?

Change Management: Does Compromise = Failure?

Compromising Dreams

I hate it when I hear people say that 70% of change efforts fail.  First I think the number is urban legend espoused by people who don’t realize the damage this statement does to our profession.  How many financial advisors would you hire with a 70% failure rate.

Sure, I understand the marketing gravitas.  We’re trying to create pain within potential clients.  We’re trying to say: “you're entering dangerous seas.  Most change efforts fail so you need an experienced guide – like me.”  Well, since we’ve been saying this for about 20 years don’t you think clients will inevitably conclude that our “profession” is really a shell game?

Do we really fail 70% of the time?  I know that I’ve worked on dozens of change initiatives and I would say my success rate is close to 100%.  Similarly I have polled many consultants & corporate change practitioners about how often they fail – their experience is close to mine.

So what’s going on here?  Do I only have access to successful change agents?  I think not.  In fact, I have access to experienced practitioners who claim that: “given the circumstances we were as successful as we could be.”  Is this a rationalization or a confession?

Fundamentally I think that practitioners are saying: “… we advise our clients on what to do; then we compromise within their real world realities.”  Is it compromise that is causing failure that we choose not to see?  I think so and here are three common compromises.

Scope:  

Often the change aspiration is inspiring but when it’s broken down into near term tasks we’re asked not to disturb sacred organizational silos or protected customer classes – the very hot spots where the change should have the biggest impact.

Timing:  

Everyone knows that change is a journey within an exponentially changing world.  We want near term results, quick wins.  When the low hanging fruit is harvested the exasperated sigh is: “is that all there is?  We knew that!”

Resources:  

How often does the organization devote the best and brightest to the change effort?  Rarely; these people are needed in the business to get real results.  Similarly, how often does change get it’s own, needed funding?  Again, rarely; usually change is expected to be self-funding through re-purposing of resources.

I believe that every time we make a small compromise decision we foreshadow our failure.  Each of these decisions makes us less accountable for the result.  In the end we can claim that we colored within the lines.  That seems to be our definition of success.