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. 

Innovation – Is It Just Another “Shiny Thing?”

There'll be Another Soon

Innovation has a head of steam.  It’s in all the business publications and on every CEO’s lips.  It’s today’s silver bullet.  It’s the key to growth, sustainability, and employee engagement.  But is Innovation here to stay or is it just another “shinny thing?”

I can make the case on either side of the question; however, recently I’ve had my faith restored in Innovation becoming deeply embedded in the science and practice of management.  My encouragement comes from the Management Innovation Exchange web site where it lists finalists in this year’s Innovation contest.  Two of the entries come from clients and friends.

Whirlpool Corporation

The first comes from Moises Norena the Global Director of Innovation at Whirlpool Corporations.  He writes about: Whirlpool’s Innovation Journey: An On-Going Quest for a Rock-Solid and Inescapable Innovation Capability.  The full story is at: Whirlpool's Innovation Journey.

For me the significant part of Moises’ story is that it starts in 1999.  As he says, the Innovation journey can be long but it has big rewards.  I was involved in the early chapters when Gary Hamel started Whirlpool down the Innovation path.  He and his team at Strategos used their tools to begin building the Innovation capability within the corporation.

My role in the early 2000’s was to lead the team that focused on Customer Loyalty.  We used our global customer research as the primary input into understanding Customer Insights and Discontinuities in the appliance market.  We then used the Innovation tools to frame and implement innovations that would capture the articulated and unarticulated needs of Whirlpool’s customers.

From these green-shoots Moises weaves an interesting tale of the constant adjustment Whirlpool makes to the expectations and theories about embedding Innovation.  I’m not sure if Moises agrees, but my major take away from his work is that: Innovation can’t be embedded; it can only be a capability that evolves to meet the business needs of the day.

Korea Telecom

The second article is from Misook Lim the Director of the Innovation Management Center at Korea Telecom.  Her story is about Transforming Culture Through Pervasive Innovation.  It can be found at: Korea Telecom - Innovation Changes Culture.

I worked with Misook and her team for about 26 months.  Again the connection was through Gary Hamel and this allowed us to draw on the Whirlpool experience through the generous support of people like Moises and his boss Nancy Tennant who has been named by Business Week as one of the world’s 25 Innovation Champions.

Misook does a wonderful job of relating the multiple fronts that had to be pursued to have Innovation recognized as a needed tool to position Korea Telecom for the aggressive changes taking place in its market.  She walks us through a series of initiative such as: building capability in a core team; leading Innovation challenges within business units; setting the governance structure; and developing the companies executive team and vice presidents.

For me the Korea Telecom experience re-proved something we all know: culture is a major issue when implementing change.  I learned that you have to understand culture and respect it as a starting point for change.  The culture at Korea Telecom was hierarchical and deferential; sometimes our western beliefs about equality and participation had to wait.

Often in the Innovation consulting business we’re asked for proof, best practices, and where this has been done before.  Moises and Misook answer the question.

Employee Engagement->Innovation->Customer Loyalty: Case Study

Leverage Innovation

Organization transformation is a business full of: principles, tools, models, approaches, frameworks and perspectives.  It’s a mind-boggling and mind-numbing stew of overlapping and contradictory ideologies.  Just defining a word like “innovation” will call forth passionate debate.

When I get tossed in these storms of righteousness I struggle back to a few “truisms” that I’ve learned along the way, like:

… nothing happens in organization transformation unless the executive team is “open and trusting.”  If you can’t fix this problem then you can’t fix the organization!

I discovered another truism when I spent 26 months in Korea working the transformation of a 30,000-employee public company.  A decade ago I came to the understanding that organizational change had to be driven from the outside-in.  Successful change is customer driven change.

As I worked with this idea of “customer driven change” I found collateral benefits.  I found that when employees leverage customers, the employees become engaged in their organizations.  A short line of sight between employees and their customers not only generates effective change, but it does it by solving the biggest malaise in organization’s today – the disengagement of employees.

So it became clear to me that organizational transformation should be based in engaging employees to solve customer issues.  Trite, but true!

My practical problem was that HR programs aimed at solving employee engagement didn’t always solve customer issues; and marketing programs aimed at customer loyalty didn’t always engage employees.  A link was missing.

Then in mid-2010 we got a request from the CEO of Korea Telecom to help him engage his people to change the organization.  KT’s market was shifting, yet the employees tended to abide by traditional hierarchical and deferential rules.  How could we connect employees to their changing customer base?  The answer was “innovation.”

Innovation has some glorious characteristics that go beyond the customary Employee Engagement and Customer Loyalty programs.

1. Innovation needs to be framed within the context of a “customer value proposition,”
2. Innovation draws on the energy and passion derived from creativity which is innate in all humans, irrespective of culture, and
3. Innovation has a discipline that leads to commercialization.

Thus another truism: organization transformation is based on the virtuous value chain of:

Employee Engagement->Innovation->Customer Loyalty

This understanding was fundamental to our success in Korea – and that success has been documented in the public domain.  Here are two references.

The first reference is a case study at the London Business School.  The study was prepared about a year and a half into our 26-month engagement.  The connection to LBS was through Gary Hamel who led our project.  The case study has a strategic focus on the large issues of transformation.

 KT-Transforming to an Agile Organization

The second reference is written by my client and best friend in Korea, Misook Lim who now heads the Innovative Management Center at Korea Telecom.  Misook has just published this article.  It comes about a year after the first reference.  This article focuses on the practical working level and implementation of the strategic context provided in the first reference.

Pervasive Innovation at KT

I’m not a fan of the common wisdom that: “70% of change efforts fail.”  The virtuous value chain and the dedication of my Korean colleagues have proven it wrong.

Change Management Wisdom From My Top 5 CEO’s!

Help Me Figure It Out!

“Whatever happened to naked fear?”  The CEO on one of my first change jobs caught me off guard with this question.  It influenced my career.  So I got thinking about the top CEO’s I’ve worked with and culled out some other mind breakers that have shaken me and formed my prejudices about organization transformation.  I chose the top 5.  Here they are – in chronological order.

1. Whatever Happened to Naked Fear?

This happened early in my career.   A lot of the executives in the 1970’s had learned about management and leadership as officers in World War II.  They understood the need for clarity of mission and discipline in execution.  Usually the mission devolved from on high and execution was within defined parameters.

I was naïve and had bought into some of the new theories about “humanity” in “personnel management.”  There was an emerging idea that people should participate in defining the mission and be empowered to execute within broad parameters.

I came up against a grizzled veteran who was struggling to see the benefit of a new way.  The old way worked.  We had won the war.

My struggle isn’t with the executive, because in many ways I’ve come to believe in his type of strong leadership – particularly in this era of record low employee engagement.

My struggle is with the incessant volumes of literature that paint participation and empowerment as new.  It isn’t.  We know more about it.  We’ve polished it more.  We aggrandize it, but it isn’t new.

Lesson #1:  Empowerment and participation aren’t the only way.

2. There’s Nothing Attached to the Strings!

I was consulting to a CEO to implement some new management techniques in the business.  I worked with him, his executive team, and project teams for several months to come up with the definitive implementation plan of: issues, goals, projects, and accountabilities.  As he signed off on the tome he sighed:

“People think all I do all day is sit up here and pull strings.  Well I do, but there is nothing attached to those strings.”

That simple comment taught me the fallacy of the CEO.  We tend to believe that with all of their positional power and personal influence that they can do miracles.  In change management the #1 reason for failure is cited as the “lack of leadership commitment.”  Don’t believe it for a minute.  Leaders are committed, but they need help tying the strings together.

Lesson #2:  Knowing the answer is only half of the solution; knowing what to do with it is the other half.

3. Don’t Believe What You Believe!

I was consulting to the CEO of a private company that had won a multi-billion dollar, long-term contract to privatize and manage an iconic government service.

We had about a dozen bi-party “tables” examining the major transition issues.  We were in heavy negotiations with government officials.  Things were not going well.

My CEO and his counterpart convened a meeting of “table leaders.”  There were about 30 people in the boardroom.  It turned into an emotional, pressure filled “knock ‘em down drag ‘em out.”  The two CEO’s were bulls at center stage.  We were scolded and told to get back to work.

That night my CEO called me and asked if I wanted to play golf the next day.  I agreed to meet him for lunch on the verandah of his club.  As I walked up to his table you know who was sitting with him – his counter-CEO.   The whole meeting had been staged.  They were both angry about the “table gridlock” and decided to blow the whole thing up and lay down the law.

As we teed off my CEO told me to “never believe what you believe.”  Since that day I’m the first to examine: orthodoxies, paradigms, myths and legends.

Lesson #3:  When you're working with CEO’s there are no rules.

4. It’s About More than the Money!

About a decade ago I was asked to lead a customer loyalty initiative for a large global manufacturing company. 

In my first meeting with the CEO I asked why customer loyalty had become a priority.  He said that he was near the end of his career; he’d made a lot of money for himself and others.  But he felt that leaving might be like taking his hand out of a bucket of water.  Before long there would be little evidence of his time at the helm. 

He was searching for something that had sustaining power.  He wanted the customer experience to differentiate the company in what had become a price-driven commodity industry.

One thing he knew was that deeply ingrained silo metrics were getting in between employees and their customers.  Sure, numbers were essential for setting goals and understanding performance; however, they got in the way of people doing the right things.

He rejected the adage: “if you can’t measure it, you can’t manage it.”  He had concluded: “if you're measuring it, you're not leading  it.”

Much of our job was to set up a tension between internal metrics and external outcomes.  Resolving the tension was usually a matter of how strongly the company believed in its stated values about employees and customers.

Lesson #4:  Beware of metrics – they work.

5. I Can Create Meaningful Work!

Recently I finished a two-year assignment in Asia.  We were asked to transform a large complex organization.  The project started in the usual way – working with the CEO and executives to describe the current and future states.  It was boring and uninspiring.  Their business sounded just like all others in their industry.

Yet, the CEO was an energizing leader.  He was far from boring and totally inspiring.  He emoted a passion that wasn’t in the written words of mission, strategy, and business plans. 

One evening the CEO invited our team to dinner.  I took this informal opportunity to dig deeper into why he took on this challenging job.  His passionate response was surprising and revealing.

He knew that his position gave him tremendous power to shape the working lives of young people in his country.  His view was that his country had gained its economic strength by doing the outsourcing work from the west.  He believed that he could influence the creation of thousands of creative-content jobs, not only in the company he led but also throughout the nation.

This was a turning point in our work.  When we better understood him, we better understood our job.

Lesson #5:  CEO’s have a passion that drives them.  You’ve just got to find it.

Our leaders influence our lives.  These CEO’s deeply shaped the way I do my work.

The End OF Change Management As We Know It?

Now Just Hit The Shot!

What do we really achieve as Change Management practitioners?  Or maybe the question is: “do we make enough difference to justify our cost?

These questions disturb me.  We may be the only profession on earth that develops business on the strength of the rallying cry: “70% of change initiatives fail.”

Let me be clear about what I mean by Change Management.  I’m not talking about the mechanics of project management to launch an idea, flip an ERP switch, or have one company buy another.   In all of these cases something eventually changes if you follow and force the steps of good project management.  What I’m talking about is whether we can transform an organization by changing its fundamental approach to business so it is better positioned to cope with its changing world.

I know that we do a lot of good.  We do remedial business education; build capability; and position people for success.  Those who work with us love us; they say it is a career changing experience.

However, at a point in time in most transformation engagements the client hits fee fatigue and the work ends.  We leave declaring victory on the strength of our other rallying cry: “change is a journey.”  How is this possible?  We all extoll the fact that the world is changing at an exponential rate, but we tell our clients that our work is a journey.  In effect we bring them to the brink of success then let them be dragged back into the tar pit as we fly off to our next opportunity.

I believe there’s something wrong with the way we work if we’re comfortable in the world of “70% of our work fails on this journey of change.”  Where is the issue?  I’m not sure, but sometimes I think we’re just too nice. 

Most of our change management methodology is build on the principles of participation and empowerment to generate ownership and sustainability.  This is great in organizations with high employee empowerment and engagement.  But these aren’t the types of organizations that typically engage change management agents. 

Organizations in need of transformation are rarely hot spots of engagement.  Have you looked at employee engagement data later?  A trickle of decline has turned into a torrent.  Clients need us because their employees aren’t empowered or engaged.

Sure, individual empowerment trumps obedience in the ideal world; but we’re rarely afforded the time and resources to change organizations one person at a time.  Our lever is to influence mass movements within the organizational setting.  It’s our job to find and force the “tipping points” to initiate these movements.  Friendly facilitation may be a barrier to transformation due to:

1. Lack of Resources:  Today’s organizations are lean; the fat is gone.  We are often working with and through people who have “a real job.”  They’re working with us in the fringes of their time.  Often they miss the deadlines for their change tasks or complete them with perfunctory poor quality.
2. Lack of Capability:  Often we’re working with staff who have no passion or potential for the work, or we’re working with high potentials that we need to teach.  We spend lots of time with either “encrusted resisters” or “neophyte sponges.”
3. Lack of Leadership:  We all know the face of leadership, and that’s exactly what we get.  A face with platitudes but no commitment.  Well, what do we expect?  Executives have dozens of competing priorities.  They never have enough time to give us the attention we’re seeking.

Are these symptoms sentencing facilitative change management to its journey of 70% failure?

Maybe it’s time to inject confident strength into our work.  I fully understand that we need to draw on people and knowledge from within the organization to develop solutions.  I know we’re the caddies; we never get to hit the shot.  However, there comes a time when the caddie has to push the seven iron into the golfers hands. 

Our biggest issues in change management are that often client team members don’t do their work, are absent from the project, and cancel meetings.  This is exacerbated when executives don’t make the needed decisions.  When this happens we need to intervene with strong conviction to:

• Select Teams:  The criterion for participation is not “availability.”  Client team members need to understand organization dynamics; be passionate about making changes; and be willing to take risks – even with their careers.
• Replace Participants:  No passengers.  No shirkers.  Members have to own their commitments.  Replacement is the answer for missed deadlines and poor quality work.
• Remove Resisters:  A big part of change management is “change – management.”  If key stakeholders don’t want to play then we need to ask that they be removed from the line of sight.
• Be an Irritant:  Our primary purpose is change, not developing relationships.  We’re not about: cooperating, coordinating, and integrating.  Our careers are dependent upon the organizations transformation, not its politics. 
• Take up the Slack:  Stop waiting for others to do their work or coaching them when they can’t perform.  Reallocate the work or do it for them.  Get the result and move on. 
• Feed the Executives:  Do the executive level work for the executives.  Executives want to look good.  They’ll demonstrate their commitment as long as everything is done for them.  Clear the path, write scripts, and make decisions inescapable.

I know there is a school of thought that says change can’t be imposed from the outside.  There is a belief that our job is to reveal change to people; have them learn heuristically and change through epiphany.  Well has this delivered high returns?  Isn’t it time to change the practice of Change Management as we know it?