8 10/05

Managing Org, Change

Kotter Chapters 1-2

Strategic Planning and Goal Setting Part 1

Kotter Chapters 3-6

Strategic Planning Part 2

Kotter Chapters 7-8

1 1

Organization Culture: The Symbolic Frame

Bolman & Deal Chapters 12-14

Discussion 8,9,10,11 topics

Discussion 8: How does a leader set a sense of urgency for change in an organization?

Discussion 9:Why is change difficult in any organization?

Discussion 10:Why are strategic planning and goal setting critical to an organization?

Discussion 11 What are some communications issues that need to be resolved in your organization?

CHAPTER 1-8 IS FOR DISCUSSION 8,9,10

Transforming Organizations: Why Firms Fail

By any objective measure, the amount of significant, often traumatic, change in organizations has grown tremendously over the past two decades. Although some people predict that most of the reengineering, restrategizing, mergers, downsizing, quality efforts, and cultural renewal projects will soon disappear, I think that is highly unlikely. Powerful macroeconomic forces are at work here, and these forces may grow even stronger over the next few decades. As a result, more and more organizations will be pushed to reduce costs, improve the quality of products and services, locate new opportunities for growth, and increase productivity.

To date, major change efforts have helped some organizations adapt significantly to shifting conditions, have improved the competitive standing of others, and have positioned a few for a far better future. But in too many situations the improvements have been disappointing and the carnage has been appalling, with wasted resources and burned-out, scared, or frustrated employees.

To some degree, the downside of change is inevitable. Whenever human communities are forced to adjust to shifting conditions, pain is ever present. But a significant amount of the waste and anguish we’ve witnessed in the past decade is avoidable. We’ve made a lot of errors, the most common of which are these.

Error #1: Allowing Too Much Complacency

By far the biggest mistake people make when trying to change organizations is to plunge ahead without establishing a high enough sense of urgency in fellow managers and employees. This error is fatal because transformations always fail to achieve their objectives when complacency levels are high.

When Adrien was named head of the specialty chemicals division of a large corporation, he saw lurking on the horizon many problems and opportunities, most of which were the product of the globalization of his industry. As a seasoned and self-confident executive, he worked day and night to launch a dozen new initiatives to build business and margins in an increasingly competitive marketplace. He realized that few others in his organization saw the dangers and possibilities as clearly as he did, but he felt this was not an insurmountable problem. They could be induced, pushed, or replaced.

Two years after his promotion, Adrien watched initiative after initiative sink in a sea of complacency. Regardless of his inducements and threats, the first phase of his new product strategy required so much time to implement that competitor countermoves offset any important benefit. He couldn’t secure sufficient corporate funding for his big reengineering project. A reorganization was talked to death by skilled filibusterers on his staff. In frustration, Adrien gave up on his own people and acquired a much smaller firm that was already successfully implementing many of his ideas. Then, in a subtle battle played out over another two years, he watched with amazement and horror as people in his division with little sense of urgency not only ignored all the powerful lessons in the acquisition’s recent history but actually stifled the new unit’s ability to continue to do what it had been doing so well.

Smart individuals like Adrien fail to create sufficient urgency at the beginning of a business transformation for many different but interrelated reasons. They overestimate how much they can force big changes on an organization. They underestimate how hard it is to drive people out of their comfort zones. They don’t recognize how their own actions can inadvertently reinforce the status quo. They lack patience: “Enough with the preliminaries, let’s get on with it.” They become paralyzed by the downside possibilities associated with reducing complacency: people becoming defensive, morale and short-term results

If complacency were low in most organizations today, this problem would have limited importance. But just the opposite is true. Too much past success, a lack of visible crises, low performance standards, insufficient feedback from external constituencies, and more all add up to: “Yes, we have our problems, but they aren’t that terrible and I’m doing my job just fine,” or “Sure we have big problems, and they are all over there.” Without a sense of urgency, people won’t give that extra effort that is often essential. They won’t make needed sacrifices. Instead they cling to the status quo and resist initiatives from above. As a result, reengineering bogs down, new strategies fail to be implemented well, acquisitions aren’t assimilated properly, downsizings never get at those least necessary expenses, and quality programs become more surface bureaucratic talk than real business substance.

Error #2: Failing to Create a Sufficiently Powerful Guiding Coalition

Major change is often said to be impossible unless the head of the organization is an active supporter. What I am talking about here goes far beyond that. In successful transformations, the president, division general manager, or department head plus another five, fifteen, or fifty people with a commitment to improved performance pull together as a team. This group rarely includes all of the most senior people because some of them just won’t buy in, at least at first. But in the most successful cases, the coalition is always powerful—in terms of formal titles, information and expertise, reputations and relationships, and the capacity for leadership. Individuals alone, no matter how competent or charismatic, never have all the assets needed to overcome tradition and inertia except in very small organizations. Weak committees are usually even less effective.

Efforts that lack a sufficiently powerful guiding coalition can make apparent progress for a while. The organizational structure might be changed, or a reengineering effort might be launched. But sooner or later, countervailing forces undermine the initiatives. In the behind-the-scenes struggle between a single executive or a weak committee and tradition, short-term self-interest, and the like, the latter almost always win. They prevent structural change from producing needed behavior change. They kill reengineering in the form of passive resistance from employees and managers. They turn quality programs into sources of more bureaucracy instead of customer satisfaction.

As director of human resources for a large U.S.-based bank, Claire was well aware that her authority was limited and that she was not in a good position to head initiatives outside the personnel function. Nevertheless, with growing frustration at her firm’s inability to respond to new competitive pressures except through layoffs, she accepted an assignment to chair a “quality improvement” task force. The next two years would be the least satisfying in her entire career.

Error #3: Underestimating the Power of Vision Urgency and a strong guiding team are necessary but insufficient conditions for major change. Of the remaining elements that are always found in successful transformations, none is more important than a sensible vision. Vision plays a key role in producing useful change by helping to direct, align, and inspire actions on the part of large numbers of people. Without an appropriate vision, a transformation effort can easily dissolve into a list of confusing, incompatible, and time-consuming projects that go in the wrong direction or nowhere at all. Without a sound vision, the reengineering project in the accounting department, the new 360-degree performance appraisal from human resources, the plant’s quality program, and the cultural change effort in the sales force either won’t add up in a meaningful way or won’t stir up the kind of energy needed to properly implement any of these initiatives. Sensing the difficulty in producing change, some people try to manipulate events quietly behind the scenes and purposefully avoid any public discussion of future direction. But without a vision to guide decision making, each and every choice employees face can dissolve into an interminable debate. The smallest of decisions can generate heated conflict that saps energy and destroys morale. Insignificant tactical choices can dominate discussions and waste hours of precious time. In many failed transformations, you find plans and programs trying to play the role of vision. As the so-called quality czar for a communications company, Conrad spent much time and money producing four-inch-thick notebooks that described his change effort in mind-numbing detail. The books spelled out procedures, goals, methods, and deadlines. But nowhere was there a clear and compelling statement of where all this was leading. Not surprisingly, when he passed out hundreds of these notebooks, most of his employees reacted with either confusion or alienation. The big thick books neither rallied them together nor inspired change. In fact, they may have had just the opposite effect. In unsuccessful transformation efforts, management sometimes does have a sense of direction, but it is too complicated or blurry to be useful. Recently I asked an executive in a midsize British manufacturing firm to describe his vision and received in return a barely comprehensible thirty-minute lecture. He talked about the acquisitions he was hoping to make, a new marketing strategy for one of the products, his definition of “customer first,” plans to bring in a new senior-level executive from the outside, reasons for shutting down the office in Dallas, and much more. Buried in all this were the basic elements of a sound direction for the future. But they were buried, deeply. A useful rule of thumb: Whenever you cannot describe the vision driving a change initiative in five minutes or less and get a reaction that signifies both understanding and interest, you are in for trouble. Error #4: Undercommunicating the Vision by a Factor of 10 (or 100 or Even 1,000) Major change is usually impossible unless most employees are willing to help, often to the point of making short-term sacrifices. But people will not make sacrifices, even if they are unhappy with the status quo, unless they think the potential benefits of change are attractive and unless they really believe that a transformation is possible. Without credible communication, and a lot of it, employees’ hearts and minds are never captured. Three patterns of ineffective communication are common, all driven by habits developed in more stable times. In the first, a group actually develops a pretty good transformation vision and then proceeds to sell it by holding only a few meetings or sending out only a few memos. Its members, thus having used only the smallest fraction of the yearly intracompany communication, react with astonishment when people don’t seem to understand the new approach. In the second pattern, the head of the organization spends a considerable amount of time making speeches to employee groups, but most of her managers are virtually silent. Here vision captures more of the total yearly communication than in the first case, but the volume is still woefully inadequate. In the third pattern, much more effort goes into newsletters and speeches, but some highly visible individuals still behave in ways that are antithetical to the vision, and the net result is that cynicism among the troops goes up while belief in the new message goes down. One of the finest CEOs I know admits to failing here in the early 1980s. “At the time,” he tells me, “it seemed like we were spending a great deal of effort trying to communicate our ideas. But a few years later, we could see that the distance we went fell short by miles. Worse yet, we would occasionally make decisions that others saw as inconsistent with our communication. I’m sure that some employees thought we were a bunch of hypocritical jerks.” Communication comes in both words and deeds. The latter is generally the most powerful form. Nothing undermines change more than behavior by important individuals that is inconsistent with the verbal communication. And yet this happens all the time, even in some well-regarded companies. Error #5: Permitting Obstacles to Block the New Vision The implementation of any kind of major change requires action from a large number of people. New initiatives fail far too often when employees, even though they embrace a new vision, feel disempowered by huge obstacles in their paths. Occasionally, the roadblocks are only in people’s heads and the challenge is to convince them that no external barriers exist. But in many cases, the blockers are very real. Sometimes the obstacle is the organizational structure. Narrow job categories can undermine efforts to increase productivity or improve customer service. Compensation or performance-appraisal systems can force people to choose between the new vision and their self-interests. Perhaps worst of all are supervisors who refuse to adapt to new circumstances and who make demands that are inconsistent with the transformation. One well-placed blocker can stop an entire change effort. Ralph did. His employees at a major financial services company called him “The Rock,” a nickname he chose to interpret in a favorable light. Ralph paid lip service to his firm’s major change efforts but failed to alter his behavior or to encourage his managers to change. He didn’t reward the ideas called for in the change vision. He allowed human resource systems to remain intact even when they were clearly inconsistent with the new ideals. With these actions, Ralph would have been disruptive in any management job. But he wasn’t in just any management job. He was the number three executive at his firm. Ralph acted as he did because he didn’t believe his organization needed major change and because he was concerned that he couldn’t produce both change and the expected operating results. He got away with this behavior because the company had no history of confronting personnel problems among executives, because some people were afraid of him, and because his CEO was concerned about losing a talented contributor. The net result was disastrous. Lower-level managers concluded that senior management had misled them about their commitment to transformation, cynicism grew, and the whole effort slowed to a crawl. Whenever smart and well-intentioned people avoid confronting obstacles, they disempower employees and undermine change. Error #6: Failing to Create Short-Term Wins Real transformation takes time. Complex efforts to change strategies or restructure businesses risk losing momentum if there are no short-term goals to meet and celebrate. Most people won’t go on the long march unless they see compelling evidence within six to eighteen months that the journey is producing expected results. Without short-term wins, too many employees give up or actively join the resistance. Creating short-term wins is different from hoping for short-term wins. The latter is passive, the former active. In a successful transformation, managers actively look for ways to obtain clear performance improvements, establish goals in the yearly planning system, achieve these objectives, and reward the people involved with recognition, promotions, or money. In change initiatives that fail, systematic effort to guarantee unambiguous wins within six to eighteen months is much less common. Managers either just assume that good things will happen or become so caught up with a grand vision that they don’t worry much about the short term. Nelson was by nature a “big ideas” person. With assistance from two colleagues, he developed a conception for how his inventory control (IC) group could use new technology to radically reduce inventory costs without risking increased stock outages. The three managers plugged away at implementing their vision for a year, then two. By their own standards, they accomplished a great deal: new IC models were developed, new hardware was purchased, new software was written. By the standards of skeptics, especially the divisional controller, who wanted to see a big dip in inventories or some other financial benefit to offset the costs, the managers had produced nothing. When questioned, they explained that big changes require time. The controller accepted that argument for two years and then pulled the plug on the project. People often complain about being forced to produce short-term wins, but under the right circumstances that kind of pressure can be a useful element in a change process. When it becomes clear that quality programs or cultural change efforts will take a long time, urgency levels usually drop. Commitments to produce short-term wins can help keep complacency down and encourage the detailed analytical thinking that can usefully clarify or revise transformational visions. In Nelson’s case, that pressure could have forced a few money-saving course corrections and speeded up partial implementation of the new inventory control methods. And with a couple of short-term wins, that very useful project would probably have survived and helped the company. Error #7: Declaring Victory Too Soon After a few years of hard work, people can be tempted to declare victory in a major change effort with the first major performance improvement. While celebrating a win is fine, any suggestion that the job is mostly done is generally a terrible mistake. Until changes sink down deeply into the culture, which for an entire company can take three to ten years, new approaches are fragile and subject to regression. In the recent past, I have watched a dozen change efforts operate under the reengineering theme. In all but two cases, victory was declared and the expensive consultants were paid and thanked when the first major project was completed, despite little, if any, evidence that the original goals were accomplished or that the new approaches were being accepted by employees. Within a few years, the useful changes that had been introduced began slowly to disappear. In two of the ten cases, it’s hard to find any trace of the reengineering work today. I recently asked the head of a reengineering-based consulting firm if these instances were unusual. She said: “Not at all, unfortunately. For us, it is enormously frustrating to work for a few years, accomplish something, and then have the effort cut off prematurely. Yet it happens far too often. The time frame in many corporations is too short to finish this kind of work and make it stick.” Over the past few decades, I’ve seen the same sort of thing happen to quality projects, organization development efforts, and more. Typically, the problems start early in the process: the urgency level is not intense enough, the guiding coalition is not powerful enough, the vision is not clear enough. But the premature victory celebration stops all momentum. And then powerful forces associated with tradition take over. Ironically, a combination of idealistic change initiators and self-serving change resisters often creates this problem. In their enthusiasm over a clear sign of progress, the initiators go overboard. They are then joined by resisters, who are quick to spot an opportunity to undermine the effort. After the celebration, the resisters point to the victory as a sign that the war is over and the troops should be sent home. Weary troops let themselves be convinced that they won. Once home, foot soldiers are reluctant to return to the front. Soon thereafter, change comes to a halt and irrelevant traditions creep back in. Declaring victory too soon is like stumbling into a sinkhole on the road to meaningful change. And for a variety of reasons, even smart people don’t just stumble into that hole. Sometimes they jump in with both feet. Error #8: Neglecting to Anchor Changes Firmly in the Corporate Culture In the final analysis, change sticks only when it becomes “the way we do things around here,” when it seeps into the very bloodstream of the work unit or corporate body. Until new behaviors are rooted in social norms and shared values, they are always subject to degradation as soon as the pressures associated with a change effort are removed. Two factors are particularly important in anchoring new approaches in an organization’s culture. The first is a conscious attempt to show people how specific behaviors and attitudes have helped improve performance. When people are left on their own to make the connections, as is often the case, they can easily create inaccurate links. Because change occurred during charismatic Coleen’s time as department head, many employees linked performance improvements with her flamboyant style instead of the new “customer first” strategy that had in fact made the difference. As a result, the lesson imbedded in the culture was “Value Extroverted Managers” instead of “Love Thy Customer.” Anchoring change also requires that sufficient time be taken to ensure that the next generation of management really does personify the new approach. If promotion criteria are not reshaped, another common error, transformations rarely last. One bad succession decision at the top of an organization can undermine a decade of hard work. Poor succession decisions at the top of companies are likely when boards of directors are not an integral part of the effort. In three instances I have recently seen, the champions for change were retiring CEOs. Although their successors were not resisters, they were not change leaders either. Because the boards simply did not understand the transformations in any detail, they could not see the problem with their choice of successors. The retiring executive in one case tried unsuccessfully to talk his board into a less seasoned candidate who better personified the company’s new ways of working. In the other instances, the executives did not resist the board choices because they felt their transformations could not be undone. But they were wrong. Within just a few years, signs of new and stronger organizations began to disappear at all three companies. Smart people miss the mark here when they are insensitive to cultural issues. Economically oriented finance people and analytically oriented engineers can find the topic of social norms and values too soft for their tastes. So they ignore culture—at their peril. The Eight Mistakes None of these change errors would be that costly in a slower-moving and less competitive world. Handling new initiatives quickly is not an essential component of success in relatively stable or cartel-like environments. The problem for us today is that stability is no longer the norm. And most experts agree that over the next few decades the business environment will become only more volatile. Making any of the eight errors common to transformation efforts can have serious consequences (see figure 1–1). In slowing down the new initiatives, creating unnecessary resistance, frustrating employees endlessly, and sometimes completely stifling needed change, any of these errors could cause an organization to fail to offer the products or services people want at prices they can afford. Budgets are then squeezed, people are laid off, and those who remain are put under great stress. The impact on families and communities can be devastating. As I write this, the fear factor generated by this disturbing activity is even finding its way into presidential politics.

Chapter 2

Successful Change and the Force That Drives It

People who have been through difficult, painful, and not very successful change efforts often end up drawing both pessimistic and angry conclusions. They become suspicious of the motives of those pushing for transformation; they worry that major change is not possible without carnage; they fear that the boss is a monster or that much of the management is incompetent. After watching dozens of efforts to enhance organizational performance via restructuring, reengineering, quality programs, mergers and acquisitions, cultural renewal, downsizing, and strategic redirection, I draw a different conclusion. Available evidence shows that most public and private organizations can be significantly improved, at an acceptable cost, but that we often make terrible mistakes when we try because history has simply not prepared us for transformational challenges. The Globalization of Markets and Competition People of my generation or older did not grow up in an era when transformation was common. With less global competition and a slower-moving business environment, the norm back then was stability and the ruling motto was: “If it ain’t broke, don’t fix it.” Change occurred incrementally and infrequently. If you had told a typical group of managers in 1960 that businesspeople today, over the course of eighteen to thirty-six months, would be trying to increase productivity by 20 to 50 percent, improve quality by 30 to 100 percent, and reduce new-product development times by 30 to 80 percent, they would have laughed at you. That magnitude of change in that short a period of time would have been too far removed from their personal experience to be credible. The challenges we now face are different. A globalized economy is creating both more hazards and more opportunities for everyone, forcing firms to make dramatic improvements not only to compete and prosper but also to merely survive. Globalization, in turn, is being driven by a broad and powerful set of forces associated with technological change, international economic integration, domestic market maturation within the more developed countries, and the collapse of worldwide communism. (See figure 2–1.) No one is immune to these forces. Even companies that sell only in small geographic regions can feel the impact of globalization. The influence route is sometimes indirect: Toyota beats GM, GM lays off employees, belt-tightening employees demand cheaper services from the corner dry cleaner. In a similar way, school systems, hospitals, charities, and government agencies are being forced to try to improve. The problem is that most managers have no history or legacy to guide them through all this. Given the track record of many companies over the past two decades, some people have concluded that organizations are simply unable to change much and that we must learn to accept that fact. But this assessment cannot account for any of the dramatic transformation success stories from the recent past. Some organizations have discovered how to make new strategies, acquisitions, reengineering, quality programs, and restructuring work wonderfully well for them. They have minimized the change errors described in chapter 1. In the process, they have been saved from bankruptcy, or gone from middle-of-the-pack players to industry leaders, or pulled farther out in front of their closest rivals. FIGURE 2-1 Economic and social forces driving the need for major change in organizations Source: From The New Rules: How to Succeed in Today’s Post-Corporate World by John P. Kotter. Copyright © 1995 by John P. Kotter. Adapted with permission of The Free Press, a Division of Simon & Schuster. An examination of these success stories reveals two important patterns. First, useful change tends to be associated with a multistep process that creates power and motivation sufficient to overwhelm all the sources of inertia. Second, this process is never employed effectively unless it is driven by high-quality leadership, not just excellent management—an important distinction that will come up repeatedly as we talk about instituting significant organizational change. The Eight-Stage Change Process The methods used in successful transformations are all based on one fundamental insight: that major change will not happen easily for a long list of reasons. Even if an objective observer can clearly see that costs are too high, or products are not good enough, or shifting customer requirements are not being adequately addressed, needed change can still stall because of inwardly focused cultures, paralyzing bureaucracy, parochial politics, a low level of trust, lack of teamwork, arrogant attitudes, a lack of leadership in middle management, and the general human fear of the unknown. To be effective, a method designed to alter strategies, reengineer processes, or improve quality must address these barriers and address them well. All diagrams tend to oversimplify reality. I therefore offer figure 2–2 with some trepidation. It summarizes the steps producing successful change of any magnitude in organizations. The process has eight stages, each of which is associated with one of the eight fundamental errors that undermine transformation efforts. The steps are: establishing a sense of urgency, creating the guiding coalition, developing a vision and strategy, communicating the change vision, empowering a broad base of people to take action, generating short-term wins, consolidating gains and producing even more change, and institutionalizing new approaches in the culture. FIGURE 2-2 The eight-stage process of creating major change Source: Adapted from John P. Kotter, “Why Transformation Efforts Fail,” Harvard Business Review (March–April 1995): 61. Reprinted with permission. The first four steps in the transformation process help defrost a hardened status quo. If change were easy, you wouldn’t need all that effort. Phases five to seven then introduce many new practices. The last stage grounds the changes in the corporate culture and helps make them stick. People under pressure to show results will often try to skip phases—sometimes quite a few—in a major change effort. A smart and capable executive recently told me that his attempts to introduce a reorganization were being blocked by most of his management team. Our conversation, in short form, was this: “Do your people believe the status quo is unacceptable?” I asked. “Do they really feel a sense of urgency?” “Some do. But many probably do not.” “Who is pushing for this change?” “I suppose it’s mostly me,” he acknowledged. “Do you have a compelling vision of the future and strategies for getting there that help explain why this reorganization is necessary?” “I think so,” he said, “although I’m not sure how clear it is.” “Have you ever tried to write down the vision and strategies in summary form on a few pages of paper?” “Not really.” “Do your managers understand and believe in that vision?” “I think the three or four key players are on board,” he said, then conceded, “but I wouldn’t be surprised if many others either don’t understand the concept or don’t entirely believe in it.” In the language system of the model shown in figure 2–2, this executive had jumped immediately to phase 5 in the transformation process with his idea of a reorganization. But because he mostly skipped the earlier steps, he ran into a wall of resistance. Had he crammed the new structure down people’s throats, which he could have done, they would have found a million clever ways to undermine the kinds of behavioral changes he wanted. He knew this to be true, so he sat in a frustrated stalemate. His story is not unusual. People often try to transform organizations by undertaking only steps 5, 6, and 7, especially if it appears that a single decision—to reorganize, make an acquisition, or lay people off—will produce most of the needed change. Or they race through steps without ever finishing the job. Or they fail to reinforce earlier stages as they move on, and as a result the sense of urgency dissipates or the guiding coalition breaks up. Truth is, when you neglect any of the warm-up, or defrosting, activities (steps 1 to 4), you rarely establish a solid enough base on which to proceed. And without the follow-through that takes place in step 8, you never get to the finish line and make the changes stick. The Importance of Sequence Successful change of any magnitude goes through all eight stages, usually in the sequence shown in figure 2–2. Although one normally operates in multiple phases at once, skipping even a single step or getting too far ahead without a solid base almost always creates problems. I recently asked the top twelve officers in a division of a large manufacturing firm to assess where they were in their change process. They judged that they were about 80 percent finished with stage #1, 40 percent with #2, 70 percent with #3, 60 percent with #4, 40 percent with #5, 10 percent with #6, and 5 percent with #7 and #8. They also said that their progress, which had gone well for eighteen months, was now slowing down, leaving them increasingly frustrated. I asked what they thought the problem was. After much discussion, they kept coming back to “corporate headquarters.” Key individuals at corporate, including the CEO, were not sufficiently a part of the guiding coalition, which is why the twelve division officers judged that only 40 percent of the work in #2 was done. Because higher-order principles had not been decided, they found it nearly impossible to settle on the more detailed strategies in #3. Their communication of the vision (#4) was being undercut, they believed, by messages from corporate that employees interpreted as being inconsistent with their new direction. In a similar way, empowerment efforts (#5) were being sabotaged. Without a clearer vision, it was hard to target credible short-term wins (#6). By moving on and not sufficiently confronting the stage 2 problem, they made the illusion of progress for a while. But without the solid base, the whole effort eventually began to teeter. Normally, people skip steps because they are feeling pressures to produce. They also invent new sequences because some seemingly reasonable logic dictates such a choice. After getting well into the urgency phase (#1), all change efforts end up operating in multiple stages at once, but initiating action in any order other than that shown in figure 2–2 rarely works well. It doesn’t build and develop in a natural way. It comes across as contrived, forced, or mechanistic. It doesn’t create the momentum needed to overcome enormously powerful sources of inertia. Projects within Projects Most major change initiatives are made up of a number of smaller projects that also tend to go through the multistep process. So at any one time, you might be halfway through the overall effort, finished with a few of the smaller pieces, and just beginning other projects. The net effect is like wheels within wheels. A typical example for a medium-to-large telecommunications company: The overall effort, designed to significantly increase the firm’s competitive position, took six years. By the third year, the transformation was centered in steps 5, 6, and 7. One relatively small reengineering project was nearing the end of stage 8. A restructuring of corporate staff groups was just beginning, with most of the effort in steps 1 and 2. A quality program was moving along, but behind schedule, while a few small final initiatives hadn’t been launched yet. Early results were visible at six to twelve months, but the biggest payoff didn’t come until near the end of the overall effort. When an organization is in a crisis, the first change project within a larger change process is often the save-the-ship or turnaround effort. For six to twenty-four months, people take decisive actions to stop negative cash flow and keep the organization alive. The second change project might be associated with a new strategy or reengineering. That could be followed by major structural and cultural change. Each of these efforts goes through all eight steps in the change sequence, and each plays a role in the overall transformation. Because we are talking about multiple steps and multiple projects, the end result is often complex, dynamic, messy, and scary. At the beginning, those who attempt to create major change with simple, linear, analytical processes almost always fail. The point is not that analysis is unhelpful. Careful thinking is always essential, but there is a lot more involved here than (a) gathering data, (b) identifying options, (c) analyzing, and (d) choosing. Q: So why would an intelligent person rely too much on simple, linear, analytical processes? A: Because he or she has been taught to manage but not to lead. Management versus Leadership Management is a set of processes that can keep a complicated system of people and technology running smoothly. The most important aspects of management include planning, budgeting, organizing, staffing, controlling, and problem solving. Leadership is a set of processes that creates organizations in the first place or adapts them to significantly changing circumstances. Leadership defines what the future should look like, aligns people with that vision, and inspires them to make it happen despite the obstacles (see figure 2–3). This distinction is absolutely crucial for our purposes here: A close look at figures 2–2 and 2–3 shows that successful transformation is 70 to 90 percent leadership and only 10 to 30 percent management. Yet for historical reasons, many organizations today don’t have much leadership. And almost everyone thinks about the problem here as one of managing change. For most of this century, as we created thousands and thousands of large organizations for the first time in human history, we didn’t have enough good managers to keep all those bureaucracies functioning. So many companies and universities developed management programs, and hundreds and thousands of people were encouraged to learn management on the job. And they did. But people were taught little about leadership. To some degree, management was emphasized because it’s easier to teach than leadership. But even more so, management was the main item on the twentieth-century agenda because that’s what was needed. For every entrepreneur or business builder who was a leader, we needed hundreds of managers to run their ever-growing enterprises. FIGURE 2-3 Management versus leadership Source: From A Force for Change: How Leadership Differs from Management by John P. Kotter. Copyright © 1990 by John P. Kotter. Adapted with permission of The Free Press, a Division of Simon & Schuster. Unfortunately for us today, this emphasis on management has often been institutionalized in corporate cultures that discourage employees from learning how to lead. Ironically, past success is usually the key ingredient in producing this outcome. The syndrome, as I have observed it on many occasions, goes like this: Success creates some degree of market dominance, which in turn produces much growth. After a while, keeping the ever-larger organization under control becomes the primary challenge. So attention turns inward, and managerial competencies are nurtured. With a strong emphasis on management but not leadership, bureaucracy and an inward focus take over. But with continued success, the result mostly of market dominance, the problem often goes unaddressed and an unhealthy arrogance begins to evolve. All of these characteristics then make any transformation effort much more difficult. (See figure 2–4.) Arrogant managers can overevaluate their current performance and competitive position, listen poorly, and learn slowly. Inwardly focused employees can have difficulty seeing the very forces that present threats and opportunities. Bureaucratic cultures can smother those who want to respond to shifting conditions. And the lack of leadership leaves no force inside these organizations to break out of the morass. The combination of cultures that resist change and managers who have not been taught how to create change is lethal. The errors described in chapter 1 are almost inevitable under these conditions. Sources of complacency are rarely attacked adequately because urgency is not an issue for people who have been asked all their lives merely to maintain the current system like a softly humming Swiss watch. A powerful enough guiding coalition with sufficient leadership is not created by people who have been taught to think in terms of hierarchy and management. Visions and strategies are not formulated by individuals who have learned only to deal with plans and budgets. Sufficient time and energy are never invested in communicating a new sense of direction to enough people—not surprising in light of a history of simply handing direct reports the latest plan. Structures, systems, lack of training, or supervisors are allowed to disempower employees who want to help implement the vision—predictable, given how little most managers have learned about empowerment. Victory is declared much too soon by people who have been instructed to think in terms of system cycle times: hours, days, or weeks, not years. And new approaches are seldom anchored in the organization’s culture by people who have been taught to think in terms of formal structure, not culture. As a result, expensive acquisitions produce none of the hoped-for synergies, dramatic downsizings fail to get costs under control, huge reengineering projects take too long and provide too little benefit, and bold new strategies are never implemented well. FIGURE 2-4 The creation of an overmanaged, underled corporate culture Source: From Corporate Culture and Performance by John P. Kotter and James L. Heskett. Copyright © 1992 by Kotter Associates, Inc. and James L. Heskett. Adapted with permission of The Free Press, a Division of Simon & Schuster. Employees in large, older firms often have difficulty getting a transformation process started because of the lack of leadership coupled with arrogance, insularity, and bureaucracy. In those organizations, where a change program is likely to be overmanaged and underled, there is a lot more pushing than pulling. Someone puts together a plan, hands it to people, and then tries to hold them accountable. Or someone makes a decision and demands that others accept it. The problem with this approach is that it is enormously difficult to enact by sheer force the big changes often needed today to make organizations perform better. Transformation requires sacrifice, dedication, and creativity, none of which usually comes with coercion. Efforts to effect change that are overmanaged and underled also tend to try to eliminate the inherent messiness of transformations. Eight stages are reduced to three. Seven projects are consolidated into two. Instead of involving hundreds or thousands of people, the initiative is handled mostly by a small group. The net result is almost always very disappointing. Managing change is important. Without competent management, the transformation process can get out of control. But for most organizations, the much bigger challenge is leading change. Only leadership can blast through the many sources of corporate inertia. Only leadership can motivate the actions needed to alter behavior in any significant way. Only leadership can get change to stick by anchoring it in the very culture of an organization. As you’ll see in the next few chapters, this leadership often begins with just one or two people. But in anything but the very smallest of organizations, that number needs to grow and grow over time. The solution to the change problem is not one larger-than-life individual who charms thousands into being obedient followers. Modern organizations are far too complex to be transformed by a single giant. Many people need to help with the leadership task, not by attempting to imitate the likes of Winston Churchill or Martin Luther King, Jr., but by modestly assisting with the leadership agenda in their spheres of activity. The Future The change problem inside organizations would become less worrisome if the business environment would soon stabilize or at least slow down. But most credible evidence suggests the opposite: that the rate of environmental movement will increase and that the pressures on organizations to transform themselves will grow over the next few decades. If that’s the case, the only rational solution is to learn more about what creates successful change and to pass that knowledge on to increasingly larger groups of people. From what I have seen over the past two decades, helping individuals to better understand transformation has two components, both of which will be addressed in some detail in the remainder of this book. The first relates to the various steps in the multistage process. Most of us still have plenty to learn about what works, what doesn’t, what is the natural sequence of events, and where even very capable people have difficulties. The second component is associated with the driving force behind the process: leadership, leadership, and still more leadership. If you sincerely think that you and other relevant people in your organization already know most of what is necessary to produce needed change and, therefore, are quite logically wondering why you should take the time to read the rest of this book, let me suggest that you consider the following. What do you think we would find if we searched all the documents produced in your organization in the last twelve months while looking for two phrases: “managing change” and “leading change”? We would look at memos, meeting summaries, newsletters, annual reports, project reports, formal plans, etc. Then we would turn the numbers into percentages—X percent of the references are to “managing change” and Y percent to “leading change.” Of course the findings from this exercise could be nothing more than meaningless semantics. But then again, maybe they would accurately reflect the way your organization thinks about change. And maybe that has something to do with how quickly you improve the quality of products or services, increase productivity, lower costs, and innovate.

CHAPTER 3

Establishing a Sense of Urgency

Ask almost anyone over thirty about the difficulty of creating major change in an organization and the answer will probably include the equivalent of “very, very tough.” Yet most of us still don’t get it. We use the right words, but down deep we underestimate the enormity of the task, especially the first step: establishing a sense of urgency.

Whether taking a firm that is on its knees and restoring it to health, making an average contender the industry leader, or pushing a leader farther out front, the work requires great cooperation, initiative, and willingness to make sacrifices from many people. In an organization with 100 employees, at least two dozen must go far beyond the normal call of duty to produce a significant change. In a firm with 100,000 employees, the same might be required of 15,000 or more.

Establishing a sense of urgency is crucial to gaining needed cooperation. With complacency high, transformations usually go nowhere because few people are even interested in working on the change problem. With urgency low, it’s difficult to put together a group with enough power and credibility to guide the effort or to convince key individuals to spend the time necessary to create and communicate a change vision. In those rare circumstances in which a committed group does exist inside a canyon of complacency, its members may be able to identify the general direction for change, to reorganize, and to cut staffing levels. If these executives run a corporation, they might even make an acquisition and put in new compensation systems. But sooner or later, no matter how hard they push, no matter how much they threaten, if many others don’t feel the same sense of urgency, the momentum for change will probably die far short of the finish line. People will find a thousand ingenious ways to withhold cooperation from a process that they sincerely think is unnecessary or wrongheaded.

Complacency: An Example

A major global pharmaceuticals company has had more than its share of challenges over the past few years. Neither sales nor net income growth has kept up with prior hopes or expectations. The firm has gotten bad press, especially after a costly layoff that further eroded morale. The stock is not much higher today than it was six years ago. Complaints about its products are up compared with the mid-1980s, and one important customer has become increasingly negative. A few institutional investors have threatened to dump sizable holdings, an action that might send the stock price down another 5 or even 10 percent. The firm has a proud history and has had significant wins in the past, all of which makes the current situation look rather depressing.

Because the company is in a battle with tough competition, one might expect to find scenes at headquarters that are right out of a WW II vintage film, with war rooms, generals barking orders every two minutes, thousands of troops on twenty-four hour alert, and major assaults being directed on the enemy. But a visit to the company shows nothing of the sort. Visible war rooms don’t exist. Generals seem to give orders at a rate that makes baseball look like a fast-paced sport. Many people show no signs of being on alert for eight hours, much less twenty-four. There is little sense of enemy or that the competition is breathing down the company’s neck. There is no focus on a compelling mission. Assaults on rivals are often done with BB guns. More powerful shooting with more lethal weapons is aimed inward

Complacency: An Example A major global pharmaceuticals company has had more than its share of challenges over the past few years. Neither sales nor net income growth has kept up with prior hopes or expectations. The firm has gotten bad press, especially after a costly layoff that further eroded morale. The stock is not much higher today than it was six years ago. Complaints about its products are up compared with the mid-1980s, and one important customer has become increasingly negative. A few institutional investors have threatened to dump sizable holdings, an action that might send the stock price down another 5 or even 10 percent. The firm has a proud history and has had significant wins in the past, all of which makes the current situation look rather depressing. Because the company is in a battle with tough competition, one might expect to find scenes at headquarters that are right out of a WW II vintage film, with war rooms, generals barking orders every two minutes, thousands of troops on twenty-four hour alert, and major assaults being directed on the enemy. But a visit to the company shows nothing of the sort. Visible war rooms don’t exist. Generals seem to give orders at a rate that makes baseball look like a fast-paced sport. Many people show no signs of being on alert for eight hours, much less twenty-four. There is little sense of enemy or that the competition is breathing down the company’s neck. There is no focus on a compelling mission. Assaults on rivals are often done with BB guns. More powerful shooting with more lethal weapons is aimed inward: workers at managers, managers at workers, sales at manufacturing, ad nauseam. In one-on-one conversations with employees, everyone readily admits there are problems. Then come the “Buts.” But the whole industry is having these problems. But we really are making some progress. But the problem is not here, it’s over there in that department. But there is nothing else I can do because of my thickheaded boss. Visit a typical management meeting at the company and you begin to wonder if all the facts you gathered about the firm’s revenues, income, stock price, customer complaints, competitive situation, and morale could have been wrong. In these meetings, reference is rarely made to any indexes of unacceptable performance. The pace is often leisurely. The issues discussed can be of marginal importance. The energy level is rarely high. Discussions become heated only when one manager tries to grab resources from another or to point the finger of blame elsewhere. And most incredibly, every once in a while you hear someone sincerely make a speech about how good things are. After two days at the firm, you begin to wonder if you’ve entered the Twilight Zone. In this complacency-filled organization, change initiatives are dead on arrival. Someone in a meeting suggests that long new-product development cycles are increasingly hurting the firm, but within twenty minutes the discussion has shifted elsewhere and no action is taken to begin shortening development times. Someone else offers a new approach to information technology, yet within a short time the IT group and its ancient system are being praised. Even when the CEO throws out an idea for change, the suggestion tends to sink in the quicksand of complacency. If you think this story is irrelevant because nothing comparable happens in your organization, I strongly suggest that you look more closely. These conditions can be found almost everywhere. The credit department is a disaster, yet gives no signs of admitting that even a minor problem exists. The French subsidiary is a turnaround case, yet management there seems perfectly content with the current situation. I cannot count the number of times I have heard an executive claim that all of the people on his or her management team recognize the need for major change only to discover myself that half of that “team” thinks the status quo isn’t really so bad. In public, they may parrot the boss’s line. In private, I hear a different story. “When the recession ends, we will be in good shape.” “As soon as last year’s cost-cutting programs kick in, the numbers will go up.” And, of course, “The bigger problems are over there; my department is fine.” Q: How big a deal is this sort of complacency? A: A huge deal. Sources of Complacency Q: So why do people behave this way? A: For lots and lots and lots of reasons. When I show twenty-five-year-old MBA students a company that is in trouble yet where complacency is high, they often talk as if the firm were being run by a group of people with an average IQ of forty. Their implicit diagnosis: If the place is in trouble yet urgency is low, then the management must be a bunch of dopes. Their action recommendation: Fire them and hire us. The MBA student diagnosis linking ineptitude and complacency does not fit well with my experiences. On occasions I’ve seen inappropriately low senses of urgency among highly intelligent, well-intentioned people. I can still vividly remember sitting in a meeting of a dozen senior managers in a severely underperforming European corporation and listening to an intellectual debate that might have played well at Harvard. And why not? Many of the people around the table that day had degrees from the world’s best schools. Unfortunately, both the analysis of alleged competitor mistakes and the rather abstract discussion of “strategy” avoided confronting any of the firm’s key problems. Predictably, no decision of any consequence was made at the end of the meeting, since you can’t make important decisions without talking about the real issues. I’m sure that the typical person in that room that day was not very happy with the session. These were not fools. But they found the meeting acceptable because on an urgency scale of 0 to 100, the average rating among those executives was certainly less than 50. At least nine reasons help explain this sort of complacency (figure 3–1). First, no highly visible crisis existed. The firm was not losing money. No one had threatened a big layoff. Bankruptcy was not an issue. Raiders were not knocking at the door. The press was not serving up constantly negative headlines about the firm. As a rational analyst, you could argue that the company was in a crisis because of steadily declining market shares and margins, but that’s a different issue. The point here: Employees saw no tornado-like threat, which was one reason their sense of urgency was low. FIGURE 3-1 Sources of complacency Second, that meeting was taking place in a room that screamed “Success.” The thirty-foot antique mahogany table could have been traded evenly for three new Audis and a Buick. The wall fabrics, wool carpeting, and overall decor were as beautiful as they were expensive. The entire corporate headquarters, especially the executive area, was the same way: marble, rich woods, deep carpets, and oil paintings in abundance. The subliminal message was clear: we are rich, we are winners, we must be doing something right. So relax. Have lunch. Third, the standards against which these managers measured themselves were far from high. Wandering around that firm, if I heard once, I heard ten times: “Profits are up 10 percent over last year.” What was not said was that profits were down 30 percent from five years before, and industrywide profits were up nearly 20 percent over the previous twelve months. Fourth, the organizational structure focused most people’s attention on narrow functional goals instead of broad business performance. Marketing had its indexes, manufacturing had a different set, personnel yet another. Only the CEO was responsible for overall sales, net income, and return on equity. So when the most basic measures of corporate performance were going down, virtually no one felt responsible. Fifth, the various internal planning and control systems were rigged to make it easy for everyone to meet their functional goals. People in the corporate marketing group told me they achieved 94 percent of their objectives during the previous year. A typical goal: “Launch a new ad campaign by June 15.” Increasing market share in any of the firm’s product lines was not deemed to be an appropriate target. Sixth, whatever performance feedback people received came almost entirely from these faulty internal systems. Data from external stakeholders rarely went to anyone. The average manager or employee could work for a month and never be confronted with an unsatisfied customer, an angry stockholder, or a frustrated supplier. Some people could probably work from day one until retirement and never hear directly from an unhappy external stakeholder. Seventh, when enterprising young employees went out of their way to collect external performance feedback, they were often treated like lepers. In that corporate culture, such behavior was seen as inappropriate because it might hurt someone, reduce morale, or lead to arguments (that is, honest discussions). Eighth, complacency was supported by the very human tendency to deny that which we do not want to hear. Life is usually more pleasurable without problems and more difficult with them. Most of us, most of the time, think we have enough challenges to keep us busy. We are not looking for more work. So when evidence of a big problem appears, if we can get away with ignoring the information, we often will. Ninth, those who were relatively unaffected by complacency sources 1–8 and thus concerned about the firm’s future were often lulled back into a false sense of security by senior management’s “happy talk.” “Sure, we have challenges, but look at all that we’ve accomplished.” People who were around during the 1960s will remember a terrifying example of this: the many reports of how the United States was winning the war in Vietnam. Although happy talk is sometimes insincere, it is often the product of an arrogant culture that, in turn, is the result of past success. Much of the problem here is related to historical victories—for the firm as a whole, for departments, and for individuals. Past success provides too many resources, reduces our sense of urgency, and encourages us to turn inward. For individuals, it creates an ego problem; for firms, a cultural problem. Big egos and arrogant cultures reinforce the nine sources of complacency, which, taken together, can keep the urgency rate low even in an organization faced with major challenges and managed by perfectly intelligent and reasonable people. I think we often assume that if only other individuals were more like us—strong and alert achievers—complacency would not be an issue. Or we think that the people are, for the most part, pretty smart, so all you have to do is give them the facts about poor product quality, sliding financial results, or lack of productivity growth. In both cases, we underestimate the power of the subtle and systemic forces that exist in virtually all organizations. A good rule of thumb in a major change effort is: Never underestimate the magnitude of the forces that reinforce complacency and that help maintain the status quo. Pushing Up the Urgency Level Increasing urgency demands that you remove sources of complacency or minimize their impact: for instance, eliminating such signs of excess as a big corporate air force; setting higher standards both formally in the planning process and informally in day-to-day interaction; changing internal measurement systems that focus on the wrong indexes; vastly increasing the amount of external performance feedback everyone gets; rewarding both honest talk in meetings and people who are willing to confront problems; and stopping baseless happy talk from the top. When confronted with an organization that needs renewal, all competent managers take some of these actions. But they often do not go nearly far enough. A panel of customers is brought to the annual management meeting, but no way is found to bring customer complaints to everyone’s attention on a weekly or even daily basis. That annual management meeting might be held at a less posh place, but then executives go back to offices that even Louis XIV would not think shabby. One or two relatively frank discussions of problems are initiated at the executive committee level, but the company newspaper is allowed to be full of happy talk. Creating a strong sense of urgency usually demands bold or even risky actions that we normally associate with good leadership. A few modest activities, like the customer panel at the annual management meeting, usually fail in the face of the overwhelmingly powerful forces fueling complacency. Bold means cleaning up the balance sheet and creating a huge loss for the quarter. Or selling corporate headquarters and moving into a building that looks more like a battle command center. Or telling all your businesses that they have twenty-four months to become first or second in their markets, with the penalty for failure being divestiture or closure. Or making 50 percent of the pay for the top ten officers based on tough product-quality targets for the whole organization. Or hiring consultants to gather and then force discussion of honest information at meetings, even though you know that such a strategy will upset some people greatly. (See table 3–1 for nine basic means of raising a sense of urgency.) We don’t see these kinds of bold moves more often because people living in overmanaged and underled cultures are generally taught that such actions are not sensible. If those executives have been associated with an organization for a long time, they might also fear that they will be blamed for creating the very problems they spotlight. It is not a coincidence that transformations often start when a new person is placed in a key role, someone who does not have to defend his or her past actions. TABLE 3-1 Ways to raise the urgency level 1. Create a crisis by allowing a financial loss, exposing managers to major weaknesses vis-à-vis competitors, or allowing errors to blow up instead of being corrected at the last minute. 2. Eliminate obvious examples of excess (e.g., company-owned country club facilities, a large air force, gourmet executive dining rooms). 3. Set revenue, income, productivity, customer satisfaction, and cycle-time targets so high that they can’t be reached by conducting business as usual. 4. Stop measuring subunit performance based only on narrow functional goals. Insist that more people be held accountable for broader measures of business performance. 5. Send more data about customer satisfaction and financial performance to more employees, especially information that demonstrates weaknesses vis-à-vis the competition. 6. Insist that people talk regularly to unsatisfied customers, unhappy suppliers, and disgruntled shareholders. 7. Use consultants and other means to force more relevant data and honest discussion into management meetings. 8. Put more honest discussions of the firm’s problems in company newspapers and senior management speeches. Stop senior management “happy talk.” 9. Bombard people with information on future opportunities, on the wonderful rewards for capitalizing on those opportunities, and on the organization’s current inability to pursue those opportunities. For people who have been raised in a managerial culture where having everything under control was the central value, taking steps to push up the urgency level can be particularly difficult. Bold moves that reduce complacency tend to increase conflict and to create anxiety, at least at first. Real leaders take action because they have confidence that the forces unleashed can be directed to achieve important ends. But for someone who has been rewarded for thirty or forty years for being a cautious manager, initiatives to increase urgency levels often look too risky or just plain foolish. If top management consists only of cautious managers, no one will push the urgency rate sufficiently high and a major transformation will never succeed. In such cases, boards of directors have a responsibility to find leaders and to place them in key jobs. If they duck that responsibility, as they sometimes do, they are failing to do the board’s most essential work. The Role of Crises Visible crises can be enormously helpful in catching people’s attention and pushing up urgency levels. Conducting business as usual is very difficult if the building seems to be on fire. But in an increasingly fast-moving world, waiting for a fire to break out is a dubious strategy. And in addition to catching people’s attention, a sudden fire can cause a lot of damage. Because economic crises are so visible, major change is often said to be impossible until an organization’s problems become severe enough to generate significant losses. While this conclusion may be true in cases where a huge and difficult transformation is needed, I think it applies poorly to most situations that need change. I have seen people successfully initiate restructurings or quality efforts during times when their firms were making record profits. They did so by relentlessly bombarding employees with information about problems (profits up but market share down), potential problems (a new competitor is showing signs of becoming more aggressive), or potential opportunities (through technology or new markets). They did so by setting vastly ambitious goals that disrupted the status quo. They did so by aggressively removing signs of excess, happy talk, misleading information systems, and more. Catching people’s attention during good times is far from easy, but it is possible. One great Japanese entrepreneur regularly stopped his management from becoming complacent despite record earnings by setting outrageous five-year goals. Just when people would start to become smug over their many achievements, he’d say something like: “We should set a target of doubling our revenues within four years.” Because of his credibility, his employees couldn’t ignore these pronouncements. Because he never pulled the goals out of thin air, but instead put careful thought into what stretch objectives would be feasible given inspired effort, his ideas were always defendable. And in defending them, he tied the objectives back to basic values with which his management identified. The net result: His five-year goals became little bombs that periodically blew up pockets of complacency. Real leaders often create these sorts of artificial crises rather than waiting for something to happen. Harry, for instance, instead of arguing with his managers’ plans, as was normally his style, decided to accept revenue and cost projections that he knew were unrealistic. The resulting 30 percent plunge in expected income caught everyone’s attention. In a similar manner, Helen accepted what she believed were unrealistic promises about a major new product introduction and allowed the whole thing to blow up in her face—not an action to be taken by the faint of heart. The result: Business as usual simply couldn’t continue. Some artificial crises rely on large financial losses to wake people up. One CEO of a well-known corporation cleaned up a balance sheet, funded a number of new initiatives, and created a loss of nearly $1 billion in the process. But this was an unusual situation. The CEO had a long-term contract and the firm was awash in cash. The problem with major financial crises, whether natural or rigged, is that they often drain scarce resources from the firm and thus leave less maneuvering room. After losing a billion or two, you can usually get people’s attention, but you end up with far fewer funds to support new initiatives. Even though transformations start more easily with a natural financial crisis, given a choice, it’s clearly smarter not to wait for one to happen. Better to create the problem yourself. Better still, if at all possible, help people see the opportunities or the crisislike nature of the situation without inducing crippling losses. The Role of Middle and Lower-Level Managers If the target of change is a plant, sales office, or work unit at the bottom of a larger organization, the key players will be those middle or lower-level managers who are in charge of that unit. They will need to reduce complacency and increase urgency. They will need to create a change coalition, develop a guiding vision, sell that vision to others, etc. If they have sufficient autonomy, they can often do so regardless of what is happening in the rest of the organization. If they have enough autonomy. Without sufficient autonomy in a firm where complacency is rife (not an unusual situation today), a change effort in a small unit can be doomed from the start. Sooner or later the broader forces of inertia will intervene no matter what the lower-level change agents do. Under these circumstances, plunging ahead with a transformation effort can be a terrible mistake. When people realize this fact, they often think they have only one alternative: Sit back and wait for someone at the top to start providing strong leadership. So they do nothing, and in the process strengthen the very forces of inertia that so infuriate them. Because they have the power, senior executives are usually the key players in reducing the forces of inertia. But not always. Occasionally a brave and competent soul at the middle or lower level in the hierarchy is instrumental in creating the conditions that can support a transformation. My favorite example is a middle manager in a large travel-related services company who almost singlehandedly confronted top management with data on the firm’s increasingly fragile competitive position. She used a nonroutine assignment—to put a product through a new distribution channel—as an excuse to hire consultants. With her behind-the-scenes encouragement, the consultants basically said that the firm would never be able to use the new channel successfully unless it first dealt with a half-dozen fundamental problems. Her peers ran for cover when they saw the results of this work, but she plunged ahead. Because she had political savvy, she deflected most of the criticism created by denial and anger onto the consultants. She had this amazing capacity to serve up lines like: “This really surprised me. Did the consultants screw up or is there something important here?”; “I can’t believe that they sent the report to all those people. We didn’t authorize that”; “You believe this? So do Gerry and Alice. Have the three of you ever talked about these issues?” If everyone in senior management is a cautious manager committed to the status quo, a brave revolutionary down below will always fail. But I have never seen an organization in which the entire top management is against change. Even in the worst cases, 20 to 30 percent seem to know that the enterprise isn’t living up to its potential, want to do something, but feel blocked. Middle-management initiatives can give these people the opportunity to attack complacency without being seen as poor team players or rabble rousers. For those in middle management who cannot find a way to help push up the urgency level in a firm that needs change but in which senior management is not providing the necessary leadership, a smart career decision may be to move elsewhere. In today’s economic environment, people often cling to their jobs, even if their firms are going nowhere. They convince themselves that with all the downsizing they are lucky to have a paycheck and health-care benefits. This attitude is understandable. But in the world of the twenty-first century, we will all need to learn and grow throughout our careers. One of the many problems in complacent organizations is that rigidity and conservatism make learning difficult. Punching a time clock, collecting a check, learning little, and allowing the urgency rate to remain low is at best a parochial and short-term strategy. Parochial and short-term strategies rarely lead to long-term success anymore, for either companies or their employees. How Much Urgency Is Enough? Regardless of how the process is started or by whom, most firms find it difficult to make much progress in phases 2–4 of a major change effort unless most managers honestly believe that the status quo is unacceptable. Sustaining a transformation effort in stages 7 and 8 demands an even greater commitment. A majority of employees, perhaps 75 percent of management overall, and virtually all of the top executives need to believe that considerable change is absolutely essential. Because some initial movement is possible with low levels of urgency and because the assault on complacency may create anxiety, it can be tempting to skip stage 1 and begin the transformation process with a later step. I’ve seen people start by building the change coalition, by creating the change vision, or by simply making changes (reorganizing, laying off staff, making an acquisition). But the problems of inertia and complacency always seem to catch up with them. Sometimes they quickly hit a wall, as when a lack of urgency makes it impossible to put together a powerful enough leadership team to guide the changes. Sometimes people go for years—perhaps with an acquisition fueling growth and excitement—before it becomes apparent that various initiatives are flagging. Even when people do begin major change efforts with complacency-reduction exercises, they sometimes convince themselves that the job is done when in fact more work is necessary. I have seen exceptionally capable individuals fall into this trap. They speak with fellow executives who only reinforce their rationalizations. “We’re all ready for this. Everyone understands that the current situation has to be changed. There’s not much complacency around here. Right Phil? Right Carol?” They move ahead on a shaky base and eventually come to regret it. Outsiders can be helpful here. Ask well-informed customers, suppliers, or stockholders what they think. Is the urgency rate high enough? Is complacency low enough? Don’t just talk to fellow employees who have the same incentives as you to discount reality. And don’t ask these questions only of a few friends on the outside. Talk to others who know your firm or even to people who seem to be at odds with your organization. And, most important, muster up the courage to listen carefully. If you do this, you will find that some people are not well enough informed to offer a credible judgment and that others have axes to grind. But you can sort all of this out if you talk to enough people. The point is to counteract insider myopia with external data. In a fast-moving world, insider myopia can be deadly.

Creating the Guiding Coalition

Major transformations are often associated with one highly visible individual. Consider Chrysler’s comeback from near bankruptcy in the early 1980s, and we think of Lee Iacocca. Mention Wal-Mart’s ascension from small-fry to industry leader, and Sam Walton comes to mind. Read about IBM’s efforts to renew itself, and the story centers around Lou Gerstner. After a while, one might easily conclude that the kind of leadership that is so critical to any change can come only from a single larger-than-life person.

This is a very dangerous belief.

Because major change is so difficult to accomplish, a powerful force is required to sustain the process. No one individual, even a monarch-like CEO, is ever able to develop the right vision, communicate it to large numbers of people, eliminate all the key obstacles, generate short-term wins, lead and manage dozens of change projects, and anchor new approaches deep in the organization’s culture. Weak committees are even worse. A strong guiding coalition is always needed—one with the right composition, level of trust, and shared objective. Building such a team is always an essential part of the early stages of any effort to restructure, reengineer, or retool a set of strategies.

Going It Alone: The Isolated CEO

The food company in this case had an economic track record between 1975 and 1990 that was extraordinary. Then the industry changed, and the firm stumbled badly.

The CEO was a remarkable individual. Being 20 percent leader, 40 percent manager, and the rest financial genius, he had guided his company successfully by making shrewd acquisitions and running a tight ship. When his industry changed in the late 1980s, he tried to transform the firm to cope with the new conditions. And he did so with the same style he had been using for fifteen years—that of a monarch, with advisors.

“King” Henry had an executive committee, but it was an information-gathering/dispensing group, not a decision-making body. The real work was done outside the meetings. Henry would think about an issue alone in his office. He would then share an idea with Charlotte and listen to her comments. He would have lunch with Frank and ask him a few questions. He would play golf with Ari and note his reaction to an idea. Eventually, the CEO would make a decision by himself. Then, depending on the nature of the decision, he would announce it at an executive committee meeting or, if the matter was somehow sensitive, tell his staff one at a time in his office. They in turn would pass the information on to others as needed.

This process worked remarkably well between 1975 and 1990 for at least four reasons: (1) the pace of change in Henry’s markets was not very fast, (2) he knew the industry well, (3) his company had such a strong position that being late or wrong on any one decision was not that risky, and (4) Henry was one smart fellow.

And then the industry changed.

For four years, until his retirement in 1994, Henry tried to lead a transformation effort using the same process that had served him so well for so long. But this time the approach did not work because both the number and the nature of the decisions being made were different in some important ways.

Prior to 1990, the issues were on average smaller, less complex, less emotionally charged, and less numerous. A smart person, using the one-on-one discussion format, could make good decisions and have them implemented

Developing a Vision and Strategy

Imagine the following. Three groups of ten individuals are in a park at lunchtime with a rainstorm threatening. In the first group, someone says: “Get up and follow me.” When he starts walking and only a few others join in, he yells to those still seated: “Up, I said, and now!” In the second group, someone says: “We’re going to have to move. Here’s the plan. Each of us stands up and marches in the direction of the apple tree. Please stay at least two feet away from other group members and do not run. Do not leave any personal belongings on the ground here and be sure to stop at the base of the tree. When we are all there . . .” In the third group, someone tells the others: “It’s going to rain in a few minutes. Why don’t we go over there and sit under that huge apple tree. We’ll stay dry, and we can have fresh apples for lunch.”

I am sometimes amazed at how many people try to transform organizations using methods that look like the first two scenarios: authoritarian decree and micromanagement. Both approaches have been applied widely in enterprises over the last century, but mostly for maintaining existing systems, not transforming those systems into something better. When the goal is behavior change, unless the boss is extremely powerful, authoritarian decree often works poorly even in simple situations, like the apple tree case. Increasingly, in complex organizations, this approach doesn’t work at all. Without the power of kings and queens behind it, authoritarianism is unlikely to break through all the forces of resistance. People will ignore you or pretend to cooperate while doing everything possible to undermine your efforts. Micromanagement tries to get around this problem by specifying what employees should do in detail and then monitoring compliance. This tactic can break through some of the barriers to change, but in an increasingly unacceptable amount of time. Because the creation and communication of detailed plans is deadly slow, the change produced this way tends to be highly incremental. Only the approach used in the third scenario above has the potential to break through all the forces that support the status quo and to encourage the kind of dramatic shifts found in successful transformations. (See figure 5–1.) This approach is based on vision—a central component of all great leadership.

FIGURE 5-1

Breaking through resistance with vision

Diagram Description automatically generated

Why Vision Is Essential

Vision refers to a picture of the future with some implicit or explicit commentary on why people should strive to create that future. In a change process, a good vision serves three important purposes. First, by clarifying the general direction for change, by saying the corporate equivalent of “we need to be south of here in a few years instead of where we are today,” it simplifies hundreds or thousands of more detailed decisions. Second, it motivates people to take action in the right direction, even if the initial steps are personally painful. Third, it helps coordinate the actions of different people, even thousands and thousands of individuals, in a remarkably fast and efficient way.

Clarifying the direction of change is important because, more often than not, people disagree on direction, or are confused, or wonder whether significant change is really necessary. An effective vision and back-up strategies help resolve these issues. They say: This is how our world is changing, and here are compelling reasons why we should set these goals and pursue these new products (or acquisitions or quality programs) to accomplish the goals.

initiative. Bad visions are sometimes too vague, sometimes too specific. Finally, effective visions are easy to communicate. Ineffective visions can be impenetrable. An Imaginable Picture of the Future What would you think if you saw the following in the company newspaper: “Our vision is to become a firm that pays the very lowest wages possible, charges the highest prices the market will bear, and divides the spoils between stockholders and senior executives, mostly the latter.” Stated this bluntly, the message sounds outrageous, yet it is not far from the transformational vision that guides some companies today. Although the cynic in all of us would like us to believe that these firms are doing very well, the truth is that they rarely succeed except for short periods of time, if even that. Reengineering, restructuring, and other change programs never work well over the long run unless they are guided by visions that appeal to most of the people who have a stake in the enterprise: employees, customers, stockholders, suppliers, communities. A good vision can demand sacrifices from some or all of these groups in order to produce a better future, but it never ignores the legitimate long-term interests of anyone. Visions that try to help some constituencies by trampling on the rights of others tend to be associated with the most nefarious of demigods. Although these kinds of visions can succeed for a while, especially in the hands of a charismatic leader, they ultimately demoralize followers, and they always motivate a counterattack. In business today, these counterattacks come from big institutional stockholders who pressure senior management in a number of ways, from customers who stop buying or join legal suits, and from employees who kill change through passive resistance. Corporate visions that aren’t deeply rooted in the reality of product or service markets are increasingly recipes for disaster. Given a choice—and in most industries today buyers have choices—customers rarely tolerate producers that are not focused on their interests. The same is true in financial or labor markets. If employees or investors have alternatives, the organization that ignores their needs pursues a self-destructive path. Why would an intelligent group of people pursue a vision that ignores the needs of customers, employees, or investors? From what I’ve observed, this normally happens when management is feeling pressure from one constituency at the same time that it has a quasi-monopoly position over another constituency. For example: When a strong labor union demands high wages and benefits, a weary management copes by passing all the costs on to customers who have few or no alternatives. Or the reverse: When customers with increasing alternatives from around the world demand better and cheaper products, a beleaguered management copes by squeezing salary and benefits out of weak employee groups. Short-term pressures and the human capacity to rationalize unwise or negative actions can combine to lead reasonable people to act in unreasonable ways. Asking the following kinds of basic questions can help determine the desirability of a vision for change. 1. If the vision is made real, how will it affect customers? For those who are satisfied today, will this keep them satisfied? For those who are not entirely happy today, will this make them happier? For people who don’t buy from us now, will this attract them? In a few years, will we be doing a better job than the competition of offering increasingly superior products and services that serve real customer needs? 2. How will this vision affect stockholders? Will it keep them satisfied? If they are not entirely happy today, will this improve matters? If we are successful in implementing this change, are we likely to provide better financial returns than if we do otherwise? 3. How will this vision affect employees? If they are satisfied today, will this keep them happy? If they are disgruntled, will this help capture their hearts and minds? If we are successful, will we be able to offer better employment opportunities than those firms with whom we compete in labor markets? Much has been written in the last decade about “balancing” the interests of stakeholders. That’s not what I’m talking about here. A vision that balances interests perfectly by promising to provide merely average benefits to customers, employees, and stockholders will not generate the support that is needed to accomplish major change. In competitive customer, financial, and labor markets, more is required. Everyone needs to be served well. Increasingly, the relevant question is not “do we cut costs or improve the product?” but “how do we both reduce our expenses and increase product quality?” Not “do we build a highly skilled and well-paid workforce or become the low-cost producer?” but “how do we create a top-of-the-line workforce that can make us the low-cost producer?” RETORT: But that’s very difficult! RESPONSE: You bet! And being able to deal with that challenge is more and more what separates winners from losers. Strategic Feasibility One sometimes sees corporate visions these days that promise the world but don’t provide a clue as to how or why a transformation is feasible. We will go from the lowest in productivity in our industry to the head of the pack. Terrific, but how? We will change from being a middle-of-the-road company to being the customer’s preferred choice. Wonderful, but how? A vision with feasibility is more than a pipe dream. An effective description of the future involves stretching resources and capabilities. A vision that requires only a 3 percent improvement per year will never force the fundamental rethinking and change that are so often needed in rapidly shifting environments. But if transformation goals seem impossible, they will lack credibility and thus fail to motivate action. How much of a stretch will seem feasible is to a great degree a function of the communication process. Great leaders know how to make ambitious goals look doable—and I’ll have more to say about that in the next chapter. Feasibility also means that a vision is grounded in a clear and rational understanding of the organization, its market environment, and competitive trends. This is where strategy plays an important role. Strategy provides both a logic and a first level of detail to show how a vision can be accomplished. For example, because the single biggest trend today is toward faster-moving and more competitive market environments, many firms need to become less inwardly focused, centralized, hierarchical, slow in decision making, and political if they are to succeed in the marketplace, provide superior financial returns, etc. An effective vision and the strategies that back it up must rationally address these realities. An entire industry has blossomed, mostly in the last two decades, to help organizations with these issues. Strategy consultants gather all kinds of data, especially about markets and competition, and assist firms in making fundamental choices about what products to manufacture and how best to produce those offerings. The huge growth in this kind of consulting business says something significant about the difficulty organizations have in abandoning historical biases, developing new strategies, and assessing their feasibility. Focus, Flexibility, and Ease of Communication Effective visions are always focused enough to guide employees—to convey which actions are important and which are out of bounds. Statements of direction so vague that people can’t relate to them are not helpful. Thus, “To be a great company” does not express a very good vision, nor does the slightly more specific “To become the best firm in the telecommunications industry.” In both cases, the question left unanswered is “best at what?” Having the best cafeteria food? The best parking lots? Of course, people sometimes go too far in trying to be clear. Effective visions are open ended enough to allow for individual initiative and for changing conditions. Long and detailed pronouncements not only can feel like straitjackets but can soon become obsolete in a rapidly changing world. At the same time, visions that need constant readjustments lose their credibility. Between the two extremes of impossibly vague and meticulously detailed is a lot of room. In selecting where to operate, executives guiding successful transformations often choose communicability as a key criterion. Even a desirable, focused, and feasible description of the future is useless if it is so complex that communicating it to large numbers of people is impossible. The point here is not to take a good idea and “dumb it down.” But as we will see in the next chapter, communicating even a simple vision to a large number of people can be enormously difficult. Simplicity is essential. Effective and Ineffective Visions: A Few Examples In some ways, it’s easier to describe visions that don’t help produce needed change than those that do. For example: 1. “Fifteen percent earnings per share growth” is not an effective vision. As I’ve seen in a number of companies, such a financial goal will not feel desirable to some, may not seem feasible to others, and offers few clues as to what actions are needed to achieve it. 2. An effective vision is not a four-inch-thick notebook describing the “Quality Program.” After reading 800 pages, most people tend to become depressed instead of motivated. 3. An effective vision is not a hopelessly vague listing of positive values (“We stand for integrity, safe products, a clean environment, good employee relations, etc.”). Such lists never provide clear direction and turn off everyone but extreme idealists. So what is an effective vision? The management in one U.S. insurance company believes the following is helping to transform the firm: It is our goal to become the world leader in our industry within ten years. As we use this term, leadership means more revenue, more profit, more innovation that serves our customers’ needs, and a more attractive place to work than any other competitor. Achieving this ambitious objective will probably require double-digit revenue and profit growth each year. It will surely require that we become less U.S. oriented, more externally focused, considerably less bureaucratic, and more of a service instead of a product company. We sincerely believe that if we work together we can achieve this change, and in the process create a firm that will be admired by our stockholders, customers, employees, and communities. Statements as brief as this one are sometimes nothing but meaningless happy talk. But read the above paragraph again and you will see that it contains a lot of information. While the statement does not give anything close to a detailed directive, it does provide focus by (1) eliminating many possibilities (for example, becoming a conglomerate, remaining strictly a U.S.-based company, exploiting the workforce), (2) pointing specifically to areas that need to change (for example, from a product orientation to a service culture), and (3) stating a clear target (number one in the industry in ten years). There is an explicit statement about desirability (“admired by stockholders . . .”). And it is reasonably easy to communicate (only a hundred or so words). An expanded version of this short statement fills three pages and more directly addresses the feasibility issue with a discussion of strategy. But even the content of the three-page document can be conveyed within five minutes. Remember my rule of thumb: If you cannot describe your vision to someone in five minutes and get their interest, you have more work to do in this phase of a transformation process. Here’s another example, this one more narrowly focused on a particular project: The vision driving our department’s reengineering effort is simple. We want to reduce our costs by at least 30 percent and increase the speed with which we can respond to customers by at least 40 percent. These are stretch goals, but we know based on the pilot project in Austin that they are achievable if we all work together. When this is completed, in approximately three years, we will have leapfrogged our biggest competitors and achieved all the associated benefits: better satisfied customers, increased revenue growth, more job security, and the enormous pride that comes from great accomplishments. Like these two examples, the most effective transformational visions I’ve seen in the past few years all seem to share the following characteristics: 1. They are ambitious enough to force people out of comfortable routines. Becoming 5 percent better is not the goal; becoming the best at something is often the goal. 2. They aim in a general way at providing better and better products or services at lower and lower costs, thus appealing greatly to customers and stockholders. 3. They take advantage of fundamental trends, especially globalization and new technology. 4. They make no attempt to exploit anyone and thus have a certain moral power. Creating the Vision Over the past decade, I’ve closely observed a dozen companies as they tried to create effective visions for change. From that experience, I conclude the following: developing a good vision is an exercise of both the head and the heart, it takes some time, it always involves a group of people, and it is tough to do well. The first draft often comes from a single individual. Such a person draws on his or her experiences and values to create a set of ideas that both makes sense and is personally exciting. In successful transformations, these ideas are then discussed at length with the guiding coalition. The discussion almost always modifies the original ideas by eliminating one element, adding others, and/or clarifying the statement. I have seen some people try to accomplish this in a process that is as disciplined as the formal planning system, but that never seems to work well. Vision creation is almost always a messy, difficult, and sometimes emotionally charged exercise. In one typical case, the head of a medium-size retail business had his human resources and strategic planning vice presidents draft a statement based on his ideas. That document became the focus of attention at a stressful two-day off-site management meeting. Halfway through that session, despite a beautiful and sunny resort setting, most of the attendees probably wished they were back home in two feet of snow. The boss may even have felt that way himself. The problem was that the draft vision statement brought to the surface a number of conflicting worldviews held by members of the executive committee. It also made one person extremely anxious, because it spoke of a future in which his group would become less important. And for at least two of the attendees, maybe more, the process was too fuzzy and soft. Today, I think almost all the senior managers at this company would agree on the value of that meeting and subsequent discussions. But at the time, the session was not much fun. Instead of backing down when the conflicts emerged, the boss gently but firmly pushed ahead. He used his not inconsiderable interpersonal skills to keep the pressure at a tolerable level. If he had skipped the first two phases of the transformation process, the meeting might have blown up. But having developed a sense of urgency and established a healthy degree of trust and a shared commitment to excellence, the group was able to work its way through a difficult set of topics and tentatively agree on a modified version of the document. With notes from that session and some additional staff work, the boss then drafted a second statement, which was discussed with his guiding coalition over a six-month period. He went public with a revised document after that and has added to or modified it slightly on two occasions over the past four years. Vision creation can be difficult for at least five reasons (as summarized in table 5–2). First, we have raised a number of generations of very talented people to be managers, not leaders or leader/managers, and vision is not a component of effective management. The managerial equivalent to vision creation is planning. Ask a good manager what his or her vision is, and you’ll likely hear about the operating plan—for example, to introduce this product in June, to hire X new people by September, to make $Y after taxes this year. But a plan can never direct, align, and inspire action the way vision can, and it is therefore not sufficient during transformation. In a slower-moving past, we didn’t need to teach people much about this sort of activity, so we didn’t. Again, history is working against us. TABLE 5-2 Creating an effective vision • First draft: The process often starts with an initial statement from a single individual, reflecting both his or her dreams and real marketplace needs. • Role of the guiding coalition: The first draft is always modeled over time by the guiding coalition or an even larger group of people. • Importance of teamwork: The group process never works well without a minimum of effective teamwork. • Role of the head and the heart: Both analytical thinking and a lot of dreaming are essential throughout the activity. • Messiness of the process: Vision creation is usually a process of two steps forward and one back, movement to the left and then to the right. • Time frame: Vision is never created in a single meeting. The activity takes months, sometimes years. • End product: The process results in a direction for the future that is desirable, feasible, focused, flexible, and is conveyable in five minutes or less. Second, although a good vision has a certain elegant simplicity, the data and the syntheses required to produce it are usually anything but simple. A ten-foot stack of paperwork, reports, financials, and statistics are sometimes needed to help produce a one-page statement of future direction. And the analysis of all that information is not the sort of activity that can be delegated to a supercomputer. Third, both head and heart are required in this exercise. After seventeen or more years of formal education, most of us know something about using our heads but little about using our hearts. Yet all effective visions seem to be grounded in sensible values as well as analytically sound thinking, and the values have to be ones that resonate deeply with the executives on the guiding coalition. As a result, creating a vision is not just a strategy exercise in assessing environmental opportunities and organizational capabilities. The process very much involves getting in touch with ourselves—who we are and what we care about. In a personal sense, the exercise can be quite rewarding. But for people who are not introspective or self-aware, this activity can also be difficult and anxiety producing. Fourth, if teamwork does not exist in the guiding coalition, parochialism can turn vision creation into an endless negotiation. I once watched a frustrated group of executives in a computer company work for two years to try to get agreement on the basic elements of a transformational vision. The time spent in formal meetings and in more informal, one-on-one discussions added up to a staggering number of hours. Yet these executives never achieved their objective: the creation of a sensible vision to which they were committed. The biggest problem was that too few people were actually trying to achieve that goal. Instead, most were protecting their subgroup’s narrowly defined interests. Finally, if the urgency rate is not high enough, you will never find enough time to complete the process. Meetings become hard to schedule. Work in between sessions moves slowly. Before you know it, a year has gone by and little has been accomplished. Pressures build to create something, so afar less than ideal product is accepted and you move on. Under these circumstances, the resulting vision is usually a small increment from the status quo or a bolder statement that most people on the guiding coalition don’t really believe. The fact that the vision isn’t quite right, or isn’t ambitious enough, or has limited support eventually undermines the change effort. Because of the anxieties and conflicts attending vision creation, I often see people cutting the process off prematurely. Long before the members of the guiding coalition have had sufficient chance to think, feel, argue, and reflect, the vision is engraved on wall plaques or encased in clear plastic. When this happens, the transformation process is always hurt. Remember: An ineffective vision may be worse than no vision at all. Pursuit of a poorly developed vision can sometimes send people off a cliff. And lip service without commitment creates a sort of dangerous illusion. People will think they are building on a solid base, only to find that the bottom of the structure eventually collapses, destroying all their work. In either case, once they learn of the problems caused by the premature shutting off of the vision creation process, employees can become deeply cynical about transformation. With deeply cynical people, you rarely achieve successful change. I’ve said it before, but the idea deserves repeating. Whenever you leave one of the steps in the eight-stage change process without finishing the work, you usually pay a big price later on. Without a sufficiently strong foundation, the redirection collapses at some point, forcing you to go back and rebuild. For stage 3, creating a vision and strategy, this means taking the time to do the process correctly. Think of it as an investment, an important investment, in creating a better future.

Communicating the Change Vision

A great vision can serve a useful purpose even if it is understood by just a few key people. But the real power of a vision is unleashed only when most of those involved in an enterprise or activity have a common understanding of its goals and direction. That shared sense of a desirable future can help motivate and coordinate the kinds of actions that create transformations.

Gaining understanding and commitment to a new direction is never an easy task, especially in large enterprises. Smart people make mistakes here all the time, and outright failure is not uncommon, even in well-known firms. Managers undercommunicate, and often not by a small amount. Or they inadvertently send inconsistent messages. In either case, the net result is the same: a stalled transformation.

Two Cases of Failure to Communicate

A division-level general manager running a telecommunications business says that a group developed a vision for change last year and spent a great deal of time communicating it broadly. Go down a few levels in the hierarchy, and people say, “Vision? What vision?” Checking further, you find that the seeming inconsistency is quite explainable. Senior managers did expend what seemed to them like a lot of effort communicating the vision. They devoted precious time at the annual strategic planning meeting to that topic. They ran three or four articles in the company newspaper. One senior manager spent hours helping to produce a video for employees. And the general subject was on the executive committee agenda during at least a dozen meetings. Furthermore, if you push first-line managers a little harder, they admit to having heard something. But they honestly cannot remember much, mostly because they are overwhelmed with information, only a small fraction of which has to do with the new vision. “Something about customers and partnerships, wasn’t it?” And the more candid among them will say: “It was just a bunch of jaw movements. Two weeks after they announced the new vision, they promoted some jerk whose approach is totally inconsistent with that message.”

Another disastrous but not uncommon scenario: The vision is communicated often, but poorly. “Our goal is to become the first truly transnational firm at the conjunction of the converging communication/information industries to achieve both a boundaryless organization and a paradigm shift strategy.” As ridiculous as this may sound, some interesting ideas lurk in that sentence. But as communication, even if repeated often, the statement works very poorly.

Why does this happen? Failure in the first three phases of a transformation effort often contributes to problems here. When the urgency rate isn’t high enough, people don’t listen carefully to information about a new vision. If the guiding coalition isn’t the right group, it will have difficulty both creating and sending an appropriate message. If the vision itself is too blurry or just a bad idea, selling poor goods becomes a tough job. But even when the first three phases of change are handled well, people still often have difficulty because of the sheer magnitude of the task. Getting a hundred, a thousand, or ten thousand people to understand and accept a particular vision is usually an enormously challenging undertaking.

For people who have been trained only to be managers, communication of vision can be particularly difficult. Managers tend to think in terms of their immediate subordinates and boss, not the broader constituencies that need to buy into a vision. They tend to be most comfortable with routine factual communication, not future-oriented strategizing and dreaming. Of course, they can learn. But that

Keep It Simple The time and energy required for effective vision communication are directly related to the clarity and simplicity of the message. Focused, jargon-free information can be disseminated to large groups of people at a fraction of the cost of clumsy, complicated communication. Technobabble and MBA-speak just get in the way, creating confusion, suspicion, and alienation. Communication seems to work best when it is so direct and so simple that it has a sort of elegance. TABLE 6-1 Key elements in the effective communication of vision • Simplicity: All jargon and technobabble must be eliminated. • Metaphor, analogy, and example: A verbal picture is worth a thousand words. • Multiple forums: Big meetings and small, memos and newspapers, formal and informal interaction—all are effective for spreading the word. • Repetition: Ideas sink in deeply only after they have been heard many times. • Leadership by example: Behavior from important people that is inconsistent with the vision overwhelms other forms of communication. • Explanation of seeming inconsistencies: Unaddressed inconsistencies undermine the credibility of all communication. • Give-and-take: Two-way communication is always more powerful than one-way communication. The challenge of simple and direct communication is that it requires great clarity of thought plus more than a little courage. Remember the old saw: If I had more time, I’d write you a shorter letter. It’s much harder to be clear and concise than overcomplicated and wordy. Simple also means no bamboozling. Technobabble is a shield. If the ideas are dumb, others will recognize them as dumb. Dropping the armor makes us more vulnerable in the short term, which is why we are often reluctant to do so. A few examples: VERSION #1: Our goal is to reduce our mean time to repair parameters so that they are perceptually lower than all major competitors inside the United States and out. In a similar vein, we have targeted new-product development cycle times, order process times, and other customer-relevant processes for change. VERSION #2: We are going to become faster than anyone in our industry at satisfying customer needs. All professions develop a specialized vocabulary, partly out of necessity when needed language doesn’t exist, partly as a means of differentiating themselves. Using specialized language helps when you are talking to a brother or sister professional. Similar speech is confusing when you are talking to someone outside the profession. Because most organizations have employees and external constituencies (such as customers and suppliers) that belong to dozens of professions (mechanical engineers, accountants, market researchers, managers), whenever jargon is used, some people will understand and feel included while most of the audience will feel confused and left out. Consequently, all widespread communication in a change effort must be jargon free. When accountants talk only to other accountants, that’s a different matter. Consider two more examples: VERSION #1: Through a process of debureaucratization, we will empower our frontline employees to better serve idiosyncratic customer requirements. VERSION #2: We are going to throw out some of the rule books and give employees more discretion to do the right thing for our customers. Use Metaphors, Analogies, Examples I’ve often heard people say: Because our company is big and complex, we cannot communicate a sensible vision in a short time using simple language. What these individuals don’t understand is the power of metaphor, analogy, example, or just plain colorful language to communicate complicated ideas quickly and effectively. For example: VERSION #1: We need to retain the advantages of economies of great scale and yet become much less bureaucratic and slow in decision making in order to help ourselves retain and win customers in a very competitive and tough business environment (thirty-nine words). VERSION #2: We need to become less like an elephant and more like a customer-friendly Tyrannosaurus rex (sixteen words). The image of a vicious dinosaur may seem odd, but for the electronics company that chose it, that idea accurately communicated a great deal. The industry had experienced an explosion of new competition. Small firms were failing each month, and many of the big firms were losing money. The T-rex company decided that it needed to become much more aggressive if it was to survive. The idea of a tiger came to mind, but the company was too big for that to be credible. Besides, size had its advantages if the firm could become fast and tough in the service of customers. Hence, the idea of a customer-friendly Tyrannosaurus rex. If most of the management and employee base in this company liked the image of an elephant or were disgusted by the notion of becoming a T-rex, this communication would have failed. But just the opposite was true. At some hard-to-explain emotional level, most people loved the king-of-dinosaurs idea. It helped them to come to grips with their concerns about change. Another example: VERSION #1: We want to begin designing and manufacturing more products that are perceived by the customer base as different, highly recognizable, and prestigious. Such products will have significantly higher prices and margins (thirty-one words). VERSION #2: We are going to be making fewer Fiats and more Mercedes (eleven words). Again, if the employees valued Fiats more than Mercedes, this communication would fail. Or if they were in some isolated mountain village in Asia and had little experience with these cars, the message would mean little. But neither was the case for the actual company. This simple, eleven-word sentence delivered a great deal of information in an emotionally appealing way. Well-chosen words can make a message memorable, even if it has to compete with hundreds of other communications for people’s attention. Really good advertising people are skilled at this sort of word/image selection. Those of us with degrees in engineering, economics, physical science, or finance are often not. Nevertheless, anyone can draw on the expertise of others. And most people, at least in my experience, can with practice become better at finding imaginative ways to get across their ideas. Use Many Different Forums Vision is usually communicated most effectively when many different vehicles are used: large group meetings, memos, newspapers, posters, informal one-on-one talks. When the same message comes at people from six different directions, it stands a better chance of being heard and remembered, on both intellectual and emotional levels. So channel A helps answer some of the questions people have, channel B addresses others, and so on. The cost conscious among us will correctly point out that communication is not free. Although firms occasionally spend a great deal of money on vision communication, most of the successful transformation efforts I’ve seen exploit the fact that much useless information typically clogs expensive channels of communication. One-third or more of the agenda at the annual management meeting is often dictated by tradition but no longer relevant, or is there to prop up someone’s ego, or is in some other way a waste of time. Much of the company newspaper is filler, or ego booster, or propaganda so shameless that it would make the former editors of Pravda blush. At least 10 percent of one-on-one conversations every day are about the NBA, a new movie, or golf. Clearing away even some of this talk creates room for important information at no additional cost. Repeat, Repeat, Repeat The most carefully crafted messages rarely sink deeply into the recipient’s consciousness after only one pronouncement. Our minds are too cluttered, and any communication has to fight hundreds of other ideas for attention. In addition, a single airing won’t address all the questions we have. As a result, effective information transferral almost always relies on repetition. Contrast these two scenarios: In case A, the new vision is introduced as part of three speeches at the annual management meeting and is the subject of three articles in the company newspaper, for a grand total of six repeats over a six-month period. In case B, each of the firm’s twenty-five executives pledges to find four opportunities per day to tie conversations back to the big picture. So when Hiro is meeting with his top twenty people to review monthly results versus plan, he asks that all decisions be evaluated in light of the new vision, which he repeats. When Gloria does performance evaluations for her employees, she ties her assessments to major change initiatives. When Jan conducts a Q and A at a plant, he answers the first inquiry by saying: “I think yes, but let me explain why. The vision directing our change efforts is . . .” The net result: twenty-five executives, four times a day, over six months equals more than 12,000 repeats. Six versus 12,000. All successful cases of major change seem to include tens of thousands of communications that help employees to grapple with difficult intellectual and emotional issues. This happens not because the public relations department takes on “vision distribution” as a “project.” This happens because dozens of managers, supervisors, and executives look at all of their daily activities through the lens of the new vision. When people do this, they can easily find many meaningful ways to talk about the direction of change, communications that can always be tailored to the specific person or group with whom they are talking. Willie and three of his people are walking to a meeting when they pass a new poster on the wall about the quality program. Willie points and asks them, “What do you think? Does this get the point across? What does this say to you?” Frances and fifteen of her people are in a conference room listening to a request for funds. When the formal presentation is over, she asks: “How does this relate to all the reengineering work? As I understand it, the vision guiding those efforts is . . .” Todd is in a cafeteria addressing 200 employees. He is asked: “Do you think the number of people we employ here might ever go up?” His response: “If we are successful in implementing our vision, the answer will surely be yes. Is that vision clear to you? Is it credible?” A sentence here, a paragraph there, two minutes in the middle of a meeting, five minutes at the end of a conversation, three quick references in a speech—collectively, these brief mentions can add up to a massive amount of useful communication, which is generally what is needed to win over both hearts and minds. Walk the Talk, or Lead by Example Often the most powerful way to communicate a new direction is through behavior. When the top five or fifty people all live the change vision, employees will usually grasp it better than if there had been a hundred stories in the in-house newsletter. When they see top management acting out the vision, a whole set of troublesome questions about credibility and game playing tends to evaporate. Consider this example: The central element in a new transformation effort at a major airline relates to customer service. Whenever the CEO receives a letter of complaint from a customer, he personally sends a response back within forty-eight hours. After a while, stories about his letters circulate throughout the company. The net result: An outside research firm finds that 90 percent of the employees can describe the change vision when asked and nearly 80 percent say that they believe senior management is committed to making it a reality. Another example: The change effort at a huge European manufacturing company focuses on creating a flatter, leaner firm. At about the same time that the new direction is first communicated to employees, senior management eliminates one level at the top of the hierarchy—executive vice presidents—and announces that headquarters staff will be reduced by 50 percent over a period of eighteen months through attrition, early retirements, and job cutting. Soon afterward, a consulting firm finds that a high percentage of lower-level employees can correctly describe the direction of change in the company. Another example: A general is trying to communicate to a gigantic organization that defense budgets are shrinking and that everyone must become more frugal. So when he travels, instead of climbing into a U.S. Army Blackhawk helicopter outside the Pentagon and then onto a dedicated USAF C-12 jet at Andrews Air Force Base, he does the following as often as possible: He descends to the basement of the Pentagon, boards the subway for 80 cents to Washington National Airport, takes a shuttle to the terminal, and then rides coach on a commercial airline. The word of his travels spreads fast. We often call such behavior “leadership by example.” The concept is simple. Words are cheap, but action is not. The cynical among us, in particular, tend not to believe words but will be impressed by action. In a similar vein, telling people one thing and then behaving differently is a great way to undermine the communication of a change vision. Division head Sally O’Rourke tells her 1,200 employees that speed, speed, speed should become the hallmark of their organization. Then she takes nine months to approve a capital request from one of her product managers, allowing the competition to grab the lion’s share of the market in a new and expanding segment. CEO John Jones preaches lower costs, lower costs, lower costs. Then he has his office remodeled for $150,000. Executive vice president Harold Rose talks endlessly about customer service, but when complaints about a new product flood in and an inquiring reporter from the Wall Street Journal calls, he defends his product instead of his customers. In short: Nothing undermines the communication of a change vision more than behavior on the part of key players that seems inconsistent with the vision. The implications are powerful: (1) Trying to sell a vision before top management can embody it is tough; and (2) even under the best of circumstances, carefully monitoring senior management behavior is a good idea so that you can identify and address inconsistencies between words and deeds. Explicitly Address Seeming Inconsistencies I recently visited a bank that was undergoing major cost-cutting initiatives as a part of a broader transformation effort. Employees were feeling the pain and were understandably sensitive to any sign that management wasn’t doing its share. Unfortunately, those signs were everywhere. While productivity task forces seemed to be slashing costs twenty-four hours a day, the corporation continued to lease six jets for executive use. While a hundred employees were laid off here, another hundred there, top management presided in regal quarters. While Christmas parties were being cancelled at some locations to save money, the CEO flew his entire board first class to London for one of its meetings. When I point out such inconsistencies, executives either roll their eyes or become extremely defensive. “What are you saying? You want us to pry the wood off the walls and make this place (headquarters) look shabby?” “We’ve done the analysis six times, and the jets keep looking like a good deal. Without them, there’s no way to get to some remote plants. You really think it’s a good use of a busy person’s time to go to an airport, wait for a commercial jet, transfer at the other end to a commuter jet, and then drive two hours?” “A part of our vision is to internationalize the business, so we have got to globalize the board. That’s why we’re meeting in London. Do you want a board that thinks only in terms of the U.S.?” Executives become frustrated when asked to defend the jets, the mahogany, and the overseas trips because they can see no easy way to deal with these issues. They don’t want to encourage cynicism among employees, but selling headquarters, cancelling the leases, and forgetting London doesn’t make sense to them. “We really did look into selling the building, but the disruption and relocation costs are significant. So what do we do?” In some cases, the answer is ditch the offices, jets, and trips. But in other instances, that won’t be practical or sensible. Then the answer is to explicitly address the issues in honest communication. For example: With all the cost cutting that is going on out of necessity throughout the company, it is inexcusable for any of us to be wasting money, especially on unneeded luxuries. Within this context, we have decided that the offices and furnishings for our executives are not justifiable. At present, selling headquarters and moving to less luxurious surroundings would cost more than it would save. But we will continue to look for a cost-effective and practical way to reduce this sign of excess. Straightforward and honest messages are often laughed at by cynics. If most employees are highly suspicious of management, then such messages won’t help. But for the employee who wants to believe in his or her company, such a communication is usually much appreciated. Credibility and trust increase, which in turn contribute to communicating the change vision. Q: Why don’t people do this sort of thing more often? A: They are doing it more and more often. Imperial, feed-the-mushrooms-manure styles of management are dying out. In a fast-moving world, where there’s a need to engage employees’ hearts and minds, uncommunicative executives will not be able to transform their firms into tough competitors. Because we’ve all seen situations in which withholding information or just plain telling lies seemed to help someone win, we are all somewhat skeptical of this observation. But it’s the truth. In successful transformations, important inconsistencies in the messages employees are getting are almost always addressed explicitly. If mixed signals can’t be eliminated, they are usually explained, simply and honestly. Listen and Be Listened To Because the communication of vision is often such a difficult activity, it can easily turn into a screeching, one-way broadcast in which useful feedback is ignored and employees are inadvertently made to feel unimportant. In highly successful change efforts, this rarely happens, because communication always becomes a two-way endeavor. I’ve seen more than a few cases in which guiding coalitions didn’t get the vision exactly right and some employees figured this out or could have solved the problems had they been well informed. Yet because feedback wasn’t solicited, the errors were never corrected until late in the process. In one instance in particular, this problem proved to be enormously costly in terms of unnecessary information technology expenses. A half-dozen computerwise young sales reps would have seen immediately, had they been briefed, that the basic concept guiding new hardware and software purchases for the sales force was flawed. But they were never briefed until after the new equipment arrived. By then, after a less computer-literate middle management had accepted and implemented a faulty vision, course corrections were very costly. Even more fundamentally, two-way discussions are an essential method of helping people answer all the questions that occur to them in a transformation effort. Clear, simple, memorable, often repeated, consistent communication from multiple sources, modeled by executive behavior, helps enormously. But most human beings, especially well-educated ones, buy into something only after they have had a chance to wrestle with it. Wrestling means asking questions, challenging, and arguing. This, of course, is precisely what happens when the vision is first created by the guiding coalition. Change initiators sometimes avoid two-way communication because of concerns over cost. Their logic is straightforward; whatever the expense for one-way information flow, double that—at a minimum—for two-way. They correctly point out that everyone can’t be put through the same experience as the guiding coalition. But here again they overlook the usefulness of getting as many managers as possible to view hourly events through the lens of the new vision. When people do so, they invariably find dozens of inexpensive ways to generate dialogue around the vision. Five minutes in a product launch meeting, two minutes in a hallway conversation, ten minutes at the end of a speech—the minutes can add up to thousands of hours. As change initiators, we sometimes also avoid this activity because we are afraid our visions won’t survive two rounds in a ring. Such behavior is understandable, but regrettable. If people don’t accept a vision, the next two steps in the transformation process—empowering individuals for broad-based action and creating short-term wins—will fail. Employees will neither take advantage of their empowerment nor put in the effort to guarantee the wins. Worse yet, if they accept and then attempt to implement a poorly formulated vision, as in the information technology example, precious time and resources will be wasted and many people will suffer the consequences. The downside of two-way communication is that feedback may suggest that we are on the wrong course and that the vision needs to be reformulated. But in the long run, swallowing our pride and reworking the vision is far more productive than heading off in the wrong direction—or in a direction that others won’t follow.

Empowering Employees for Broad-Based Action

“If I hear the word empowerment one more time,” someone recently told me, “I think I’ll gag.” He was expressing exasperation at the fact that the more this increasingly popular term is used, the less it seems to mean. “It’s become a politically correct mantra,” he said. “Empower, empower, empower. I ask people what they mean by that and they either become inarticulate or they look at me like I’m an idiot.”

A few years ago, I might have agreed with his reservations. Today, I don’t. I’m still not enthusiastic about using faddish words, but in this ever faster-moving world, I think the idea of helping more people to become more powerful is important.

Environmental change demands organizational change. Major internal transformation rarely happens unless many people assist. Yet employees generally won’t help, or can’t help, if they feel relatively powerless. Hence the relevance of empowerment.

FIGURE 7-1

Barriers to empowerment

Diagram Description automatically generated

Effectively completing stages 1 through 4 of the transformation process already does a great deal to empower people. But even when urgency is high, a guiding coalition has created an appropriate vision, and the vision has been well communicated, numerous obstacles can still stop employees from creating needed change. The purpose of stage 5 is to empower a broad base of people to take action by removing as many barriers to the implementation of the change vision as possible at this point in the process.

What are the biggest obstacles that often need to be attacked? Four can be particularly important: structures, skills, systems, and supervisors (see figure 7–1).

Removing Structural Barriers

The firm in this case is a financial services organization in Australia. A new president pushes up the urgency rate, assembles a guiding coalition at the top, and helps it develop a new direction for the company that is centered around superior customer service. The basic concept is simple: to develop a capability that will not just gain share in Australia but that will allow the firm to compete effectively in emerging markets throughout Asia. The team’s success in communicating the new vision leaves many employees convinced that the firm is on the right path. When top management sees the enthusiastic response to its initiatives, its members conclude that the most difficult part of the transformation process may be over—which is probably why they take their collective eye off the ball.

Twenty-four months later, a frustrated and angry group of senior managers tries to assess what went wrong. They felt they had been doing their part. They had been visiting customers throughout the region, helping set up new systems to measure customer satisfaction, making speeches inside the firm to reinforce the customer service message, and working with consultants to redesign products and services to better meet marketplace requirements. But for some reason, the once enthusiastic troops just aren’t delivering.

A postmortem finds the following. Many employees really did want to provide superior products and services, and they tried. But the organizational structure so fragmented resources and authority that delivering well any of the new financial products was nearly impossible. A typical product required people from four different functional organizations to work together seamlessly. Even when employees tried to create cross-functional teams that were product/customer focused, they found the process enormously frustrating. Strong structural silos undermined the teams in dozens of subtle ways, making the timely delivery of new services to customers virtually impossible. When employees complained to their supervisors, they were told that they should try to be better team players. When they

Aligning Systems to the Vision “We’ve done everything,” one manager tells me, “but they just keep resisting.” “OK,” I say, “tell me more.” “We’ve worked enormously hard to develop an exciting concept for what we want to become. We’ve communicated those ideas endlessly through every mechanism we could think of. We reorganized last year to make the structure consistent with the new concept. Where necessary, we’ve retrained people. All this has demanded great time and energy, but we’ve done it.” “So what’s the problem?” “Far too many people are still conducting business the old way,” he complains. “Why do you think that is?” “I’m beginning to suspect that it’s just human nature to resist change.” “If you won the lottery for $10 million,” I ask, “would you refuse to accept the money?” “Are you kidding?” “But there is plenty of evidence that when people win a lot of money their lives change in some pretty important ways.” “So?” “So you’re telling me you wouldn’t resist that change.” “OK, OK,” he says. “So maybe people don’t resist all kinds of change.” “When don’t they resist?” “I suppose if they see it’s in their best interests.” “And do your HR systems make it in people’s best interests to implement your new vision?” “HR systems?” “Performance appraisal. Compensation. Promotions. Succession planning. Are they aligned with the new vision?” “Well, maybe not entirely.” Examination of this firm’s human resource systems reveals: • The performance evaluation form has virtually nothing about customers on it, yet that is at the core of the new vision. • Compensation decisions are based much more on not making mistakes than on creating useful change. • Promotion decisions are made in a highly subjective way and seem to have at best a limited relationship to the change effort. • Recruiting and hiring systems are a decade old and only marginally support the transformation. Further investigation also shows that management information systems haven’t changed much to help the transformation; likewise the strategic planning process, which still focuses much too much on short-term financial information and much too little on market/competitive analysis. During the first half of a major change effort, owing to constraints on time, energy, and/or money, you can’t alter everything. Barriers associated with the organization’s culture, for example, are extremely difficult to remove completely until the end of each change project, after performance improvements are clear. Systems are easier to move, but if you tried to iron out every little inconsistency between the new vision and the current systems, you’d simply fail. Before some solid short-term wins are established, the guiding coalition rarely has the momentum or power to make that much change. Nevertheless, when the big, built-in, hard-wired incentives and processes are seriously at odds with the new vision, you must deal with that fact directly. Dodging the issue disempowers employees and risks undermining the change. Q: How often do the systems, especially the HR systems, get in the way? A: Far too often. History often leaves HR people in highly bureaucratic personnel functions that discourage leadership and make altering human resource practices a big challenge. Breaking out of this pattern is not easy. Yet in successful transformations, I increasingly see gutsy HR men and women helping provide the leadership needed to change the systems to fit a new vision. In some cases they do so despite little encouragement from line managers or even from their HR colleagues. They do so because they care deeply about employees and are appalled by the consequences of poorly handled change efforts. Dealing with Troublesome Supervisors Frank doesn’t seem to get it. He’s been told a dozen times that the company is trying to become more innovative because creativity is paying off greatly in its industry. But he refuses to change a command-and-control style that snuffs out initiative and creativity as quickly as carbon dioxide kills a fire. Watching him operate, you might wonder if he didn’t get a degree in disempowerment. “We’ve tried that before,” he says again and again. “You need to do more analysis on the downside possibilities,” he tells his people. “We don’t have time for that, just do this please.” “Yeah, yeah, that’s very interesting, but . . . No, no, don’t send that report around; people don’t need that information.” “Please Martha, next time check with me first before you do anything.” Frank runs a department with about a hundred employees. Waves of change wash up to his door, break, and then retreat out to sea. A few of his people try to support the corporate renewal program despite Frank’s best efforts. But most don’t. Some tried initially and then gave up. Some, like Frank, just don’t get it. Others are cautious and political and take their cue from the boss. Change zealots tend to demonize Frank, but he’s not really a bad person. To a large degree, like all of us, he’s a product of his history. He learned a command-and-control style early on, and because that behavior seemed to work and help him get ahead in the company, it developed into a deeply ingrained set of habits. If Frank’s problem were related to only a single discrete element, change would come much more easily. But that’s not the case. He has dozens of interrelated habits that add up to a style of management. If he alters just one aspect of his behavior, all the other interrelated elements tend to put great pressure on him to switch that one piece of behavior back to the way it was. What he needs is to change all the habits as a group, but that can feel as hard as trying to quit smoking, drinking, and eating fatty foods all at the same time. The fact that Frank doesn’t entirely believe in the new “innovation” vision makes all this even more difficult, as does the fact that he’s not entirely sure what he would need to do to help implement that vision. And, like all of us, he’s skilled at rationalizing the situation so that, in his own eyes, he looks like the good corporate citizen while others are political, self-serving, or incompetent. People like Frank seem to exist in all cases of reengineering, restructuring, or strategic change. If there are enough of them, or if they are in charge of enough employees, they can be a huge problem. If particularly powerful people like Frank are not confronted early in a change process, they can undermine the entire effort. I’ve seen at least a dozen cases where three or four key players were Frank-like. Instead of confronting the problem, an enthusiastic change agent and a few colleagues dragged those people through stages 1 to 4 of a transformation. But in stage 5, the refusal of these supervisors to let go and empower their employees finally brought a strained effort to a halt. One major reason why the Franks of the world aren’t confronted is that others are afraid that these people can’t change, yet they are unwilling to demote or fire them. Sometimes the unwillingness to act is driven by guilt, especially if the disempowerers are friends or former mentors. Political considerations also play a big role in these cases. People fear that if a fight erupts, the Franks may be powerful enough to win, perhaps even forcing the change agents out. In many other situations, the reluctance to act is related to the good short-term results delivered by people like Frank. Easy solutions to this sort of problem often don’t exist. Faced with that reality, managers sometimes concoct incredibly complicated political strategies. They try to manipulate the Franks into a corner where they can be contained or killed off. The problem with such an approach is that it is often slow, and if exposed to daylight it can look terrible—sleazy, cruel, unfair. From what I’ve seen, the best solution to this kind of problem is usually honest dialogue. Here’s the story with the industry, the company, our vision, the assistance we need from you, and the time frame in which we need all this. What can we do to help you help us? If the situation really is hopeless, and the person needs to be replaced, that fact often becomes clear early in this dialogue. If the person wants to help but feels blocked, the discussion can identify solutions. If the person wants to help but is incapable of doing so, the clearer expectations and timetable can eventually make his or her removal less contentious. The basic fairness of this approach helps overcome guilt. The rational and thoughtful dialogue also helps minimize the risk that good short-term results will suddenly turn bad or that Frank and others like him will be able to launch a successful political counterattack. Guilt, political considerations, and concerns over short-term results stop people all the time from having these honest discussions. In retrospect, executives often express regret that they didn’t confront problem managers sooner in the process. If I’ve heard it once, I’ve heard it a hundred times: “I should have dealt with Hal/George/Irene much earlier.” An unwillingness to confront managers like Frank is common in change efforts. It rarely helps. These blockers stop needed action. Perhaps even more important, others see that these people are not being confronted and they become discouraged. Discouraged employees do not produce the short-term wins that are vital to building momentum in a transformation effort. Discouraged employees do not help manage the large number of change projects that typically are needed in a transformation. Instead, they give up long before you have reached the finish line and anchored new approaches in the organization’s culture. Tapping an Enormous Source of Power Discouraged and disempowered employees never make enterprises winners in a globalizing economic environment. But with the right structure, training, systems, and supervisors to build on a well-communicated vision (see table 7–2), increasing numbers of firms are finding that they can tap an enormous source of power to improve organizational performance. They can mobilize hundreds or thousands of people to help provide leadership to produce needed changes. TABLE 7-2 Empowering people to effect change • Communicate a sensible vision to employees: If employees have a shared sense of purpose, it will be easier to initiate actions to achieve that purpose. • Make structures compatible with the vision: Unaligned structures block needed action. • Provide the training employees need: Without the right skills and attitudes, people feel disempowered. • Align information and personnel systems to the vision: Unaligned systems also block needed action. • Confront supervisors who undercut needed change: Nothing disempowers people the way a bad boss can.

Generating Short-Term Wins

When one of the most visionary, charismatic executives I’ve known was appointed president of a $1.7 billion division of a large U.S. company, the level of excitement at that business rose dramatically. To many employees, his first year felt like a wonderful and needed breath of fresh air. Suddenly, bold ideas were discussed in meetings instead of seeming trivialities. Sacred cows were herded away, and anyone with valid information on problems or opportunities was given a hearing. As a coalition of people emerged around the new leader, that team began talking of shifts in the fundamental strategic direction of the firm.

A vision of a global powerhouse began to emerge, a firm that would exploit new technologies to offer some basic, high-quality building materials at remarkably low prices. By the middle of year two, communication about the new vision permeated every part of the organization. By the beginning of year three, more and more changes were being made to help convert the vision into reality. New products were launched. New training programs were introduced. Departments were reorganized. A major reengineering effort was begun in the finance function. One key executive took an early retirement. Nearly $500 million was spent on a major acquisition. All the activity was exhilarating. Even the business press loved it; in the middle of year three, four different publications ran flattering articles about the changes being made at that firm.

This story impressed me greatly. Not that I didn’t see some red flags. Our hero’s guiding coalition was never linked very strongly to corporate headquarters. But so much of what he was doing was right on target that if you had asked me during year three, I would probably have said that this business would become the leader in its industry within the next forty-eight months. I couldn’t imagine that the transformation process could be derailed.

I was wrong.

To make a long story short, in the middle of year four, the charismatic leader was fired. Over the next twelve months, many of his initiatives collapsed and disappeared. During that time, probably two or three other managers were forced out of the firm, and at least a half-dozen more left on their own accord. Employee morale collapsed. Financial results actually improved for a few quarters before beginning a long march downward. As I write this, the division is still a mess.

With the benefit of hindsight, the errors are easy to spot. Only one executive at corporate headquarters was a part of the guiding coalition, and he wasn’t a particularly influential individual. By the middle of year two, people who disagreed with that coalition were ignored, even if they were trying to be helpful. But the worst mistake was that insufficient attention was given to short-term results. People became so caught up in big dreams that they didn’t effectively manage the current reality. When critics asked for evidence that all this activity was moving the firm in the right direction, despite few if any performance improvements, nothing convincing was offered. When the coalition accused the disgruntled of being a bunch of unvisionary poops, corporate headquarters grew wary. When the division missed almost all of its financial projections in year three by a small amount, without warning corporate much in advance, the CEO grew wary. When the division lost money in the second quarter of year four, again without much warning, the charismatic division president was fired.

Some people both inside and outside of this company still think the CEO made a terrible mistake. They could

The Nature and Timing of Short-Term Wins The kind of results required in stage 6 of a transformation process are both visible and unambiguous. Subtlety won’t help. Close calls don’t either. Having a good meeting usually doesn’t qualify as the kind of unambiguous win needed in this phase, nor does getting two people to stop fighting, producing a new design that the engineering manager thinks is terrific, or sending 5,000 copies of a new vision statement around the company. Any of these actions may be important, but none is a good example of a short-term win. A good short-term win has at least these three characteristics: 1. It’s visible; large numbers of people can see for themselves whether the result is real or just hype. 2. It’s unambiguous; there can be little argument over the call. 3. It’s clearly related to the change effort. When a reengineering effort promises that the first cost reductions will come in twelve months and they occur as predicted, that’s a win. When a reorganization early in a transformation reduces the first phase of the new-product development cycle from ten to three months, that’s a win. When the early assimilation of an acquisition is handled so well that Business Week writes a complimentary story, that’s a win. In small companies or in small units of enterprises, the first results are often needed in half a year. In big organizations, some unambiguous wins are required by eighteen months. Regardless of size, this means that you’re probably still not out of most of the early stages when phase 6 has to produce something. Q: But isn’t operating in multiple stages at once complicated? A: Yes. But that’s what happens in successful cases of major change. The Role of Short-Term Wins Short-term performance improvements help transformations in at least six ways (as summarized in table 8–1). First, they give the effort needed reinforcement. They show people that the sacrifices are paying off, that they are getting stronger. TABLE 8-1 The role of short-term wins • Provide evidence that sacrifices are worth it: Wins greatly help justify the short-term costs involved. • Reward change agents with a pat on the back: After a lot of hard work, positive feedback builds morale and motivation. • Help fine-tune vision and strategies: Short-term wins give the guiding coalition concrete data on the viability of their ideas. • Undermine cynics and self-serving resisters: Clear improvements in performance make it difficult for people to block needed change. • Keep bosses on board: Provides those higher in the hierarchy with evidence that the transformation is on track. • Build momentum: Turns neutrals into supporters, reluctant supporters into active helpers, etc. Second, for those driving the change, these little wins offer an opportunity to relax for a few minutes and celebrate. Constant tension for long periods of time is not healthy for people. The little celebration following a win can be good for the body and spirit. Third, the process of producing short-term wins can help a guiding coalition test its vision against concrete conditions. What is learned in these tests can be extremely valuable. Sometimes the vision isn’t entirely right. More often, the strategies need some adjustments. Without the concentrated effort to produce short-term wins, such problems can become apparent far too late in the game. Fourth, quick performance improvements undermine the efforts of cynics and major league resisters. Wins don’t necessarily quiet all of these people (which is probably good, since diversity of opinion can keep a firm from blindly walking off a cliff), but they take some of the ammunition out of opponents’ hands and make it much more difficult to take cheap shots at those trying to implement needed changes. As a general rule, the more cynics and resisters, the more important are short-term wins. Fifth, visible results help retain the essential support of bosses. From middle management all the way up to the board of directors, if those hierarchically above a transformation effort lose faith, it’s in deep trouble. Finally, and perhaps most generally, short-term wins help build necessary momentum. Fence sitters are transformed into supporters, reluctant supporters into active participants, and so on. This momentum is critical, because, as we’ll see in the next chapter, the energy needed to complete stage 7 is often enormous. Planning versus Praying for Results Transformations sometimes go off track because people simply don’t appreciate the role that quick performance improvements play in a change effort. But more often the effort is undermined because managers don’t systematically plan for the creation of shortterm wins. “So what kind of evidence do you think we’ll see within twenty-four months that all this is on track?” I ask. “There are four or five possibilities,” a member of the guiding coalition replies. “Possibilities?” I say. “Yes. With a little luck, costs will be significantly down in either the order processing areas or the order fulfillment group.” “A little luck,” I say. “If marketing can get its act together fast enough, we might see some real revenue increases by then because of the new niching strategies.” “You might?” “Yes. And it’s possible, I suppose, that the new ad agency—we’re selecting one now—will have implemented enough of the TV strategy to show some measurable market share improvement.” “It’s possible?” “Yes, any of that might happen.” In highly successful change efforts, you don’t hear much dialogue like this. Short-term wins don’t come about as the result of a little luck. They aren’t merely possibilities. People don’t just hope and pray for performance improvements. They plan for short-term wins, organize accordingly, and implement the plan to make things happen. The whole point is not to maximize short-term results at the expense of the future. The point is to make sure that visible results lend sufficient credibility to the transformation effort. Q: Sounds obvious. So why doesn’t everyone do it? A: For at least three reasons. First, people don’t plan sufficiently for these wins because they are overwhelmed. Often the urgency rate hasn’t been pushed high enough, or the vision isn’t clear. As a result, the transformation isn’t going well and people are scrambling to somehow set things right. With all the panic, planning for short-term wins doesn’t receive sufficient time or attention. In other cases, people don’t even try very hard to produce these wins because they believe you can’t produce major change and achieve excellent short-term results. Thousands and thousands of managers have been taught that life in organizations is a trade-off between the short run and the long run. In this belief system, you can focus long and take your lumps now or you can do well now and throw the future up for grabs. According to this line of thinking, undertaking a major change program means looking to the long term, which in turn means expecting short-term results to be problematic. Sure, you still need to pay attention to the immediate future, but you can’t plan for great results. It’s just not possible. Ten years ago I might have agreed with this point of view. But I’ve seen too much recent evidence that contradicts it. In the words of a renowned executive: “The job of management is to win in the short term while making sure you’re in an even stronger position to win in the future.” In the past decade, I’ve watched dozens of firms have it both ways. They transformed themselves into better organizations for the future and they produced good results quarter by quarter. A third element that undermines the planning for necessary wins is lack of sufficient management, especially on the guiding coalition, or a lack of commitment by key managers to the change process. To a large degree, leadership deals with the long term and management with the immediate future. Without enough good management, the planning, organizing, and controlling for results will not be sufficient. Without competent management, inadequate thought is usually given to the whole question of measurement. So existing information systems either fail to record important performance improvements or underestimate their size. Without competent management, tactical choices are glossed over or implemented poorly. Acquisitions are made more on the basis of impulse instead of rational support of the vision. Sequencing of events—do we do the restructuring this year or after the quality effort is farther along—doesn’t get sufficient attention. Because of all of the emphasis on management in the twentieth century, most organizations—with the exception of small, young firms—rarely lack this perspective. Up to a point, small firms can get away without much planning or control. If the company founder is a visionary who dislikes structure (not an unusual situation), he or she may resist the encroachment of managerial thinking, which can then prove to be a problem in this stage of a change effort. In larger and older firms, the problem of insufficient management is typically associated with either a new strong leader who ignores his managers or a lack of commitment from those managers to the transformation. The former was true in the case of the charismatic division general manager who eventually lost his job. Deep in his heart, he thought people who kept the current system operating were of limited importance. He’d never actually say that, but you could read it between the lines. So when some of those people tried to advise him about short-term economic matters, he often ignored them. A lack of commitment to change from managers in big, old organizations is often found when the early stages of a transformation are not handled well. With no sense of urgency, a lack of key managers on the guiding coalition, the failure to communicate an effective vision well, and little effort put into broad-based employee empowerment, people in overmanaged and underled organizations sit on the sidelines during change, especially managers who could be instrumental in producing needed short-term results. More Pressure Isn’t All Bad Targeting short-term wins during a transformation effort does increase the pressures on people. The argument is sometimes made that these extra demands are inappropriate. “We’ve got enough going on,” people say, “without more burdens. Give us a break.” This way of thinking is not without merit. But more often than not, I’ve found that short-term pressure can be a useful way to keep up the urgency rate. A year or two into a major change program, with the end still not in sight, people naturally tend to let up. They begin to think: “If this is going to require four more years, a slide to four and a quarter won’t hurt.” But as soon as the urgency rate goes down, everything becomes much harder to accomplish. Minor tasks that were completed in a month suddenly take three times as long. Of course, pressure doesn’t always produce urgency. The burden of producing short-term wins can create only stress and exhaustion. In successful change efforts, executives link pressure to urgency through the constant articulation of vision and strategies. “This is what we are trying to do and this is why it is so important. Without these short-term wins, we could lose everything. All that we want to do for our customers, shareholders, employees, and communities becomes problematic. So we have got to produce these results.” This kind of communication gives meaning to hardships and spurs people on. Twelve to thirty-six months into a major change effort, tired employees often need renewed motivation. Short-Term Wins Aren’t Short-Term Gimmicks To some degree, all management is manipulation—and that includes the production of short-term performance improvements. But in a few cases I’ve seen this manipulation taken to new heights, with increased potential for both good and harm. To keep momentum building in a massive change effort, Phil becomes an accounting magician. He amortizes this, depreciates that, squeezes this group hard, and sells off a few assets. The net result is a bottom line that goes up slowly but steadily each quarter. Anytime people criticize his change program, he thrusts the net income data in their faces much as a fearless vampire killer uses a cross. And the strategy works, at least for a while. Accounting wizardry of this sort can be helpful in certain difficult situations. But the risks involved are substantial. First, it can be addictive. Once you start this game, stopping can be difficult. Shortterm gimmicks can produce problems in the future that often can be covered up only with more short-term gimmicks. Second, it can create more cynics and resisters among the key executives who are sophisticated enough to see what is really happening. Powerful cynics can be very disruptive. Third, it can alienate people who see the practice as unethical. Some of the downside risk can be eliminated if the entire guiding coalition discusses and agrees to the use of these methods. But even then, contrived results rarely provide a strong enough base on which to build further change in stages 7 and 8. Short-term wins that support transformation are usually genuine. They aren’t the product of smoke and mirrors. The Role of Management Systematically targeting objectives and budgeting for them, creating plans to achieve those objectives, organizing for implementation, and then controlling the process to keep it on track—this is the essence of management. With that in mind, one can easily see that the need to create short-term wins in a successful change effort demonstrates an important principle: Transformation is not a process involving leadership alone; good management is also essential. A balance of the two is required, as shown in figure 8–2. Because leaders are so central to any major change effort, we sometimes conclude that transformation equals leadership. Certainly without strong and capable leadership from many people, restructurings, turnarounds, and cultural changes don’t happen well or at all. But more is involved. Restructuring usually calls for financial expertise, reengineering for technical knowledge, acquisitions for strategic insight. And the process in all major change projects must be managed to keep the operation from lurching out of control or off a cliff.

THIS BOOK FOR DISCUSSION 11 ONLY

REFRAINING ORGANIZATIONS

CHAPTER 12 ORGANIZATIONAL SYMBOLS AND CULTURE

A people without the knowledge of their past history, origin and culture is like a tree without roots.

—Marcus Garvey

For 800 years, neighborhoods in Siena, Italy, have competed twice each summer in a horse race known as the palio. Each side has its club, hymn, costumes, museum, and elected head. A crowd of more than 100,000 gathers to witness a 75-second event that people live for throughout the year. Riding under banners of the goose, seashell, or turtle, jockeys attack one another with whips and hang on desperately around 90-degree turns. The first horse to finish, with or without rider, wins. “The winners are worshipped. The losers embarrass their clan” (Saubaber, 2007, p. 42).

In July 2007, 22-year-old Giovanni Atzeni won the race in a photo finish. His followers were ecstatic. A young woman shouted, “We’ve waited 10 years,” as she showered him with kisses. An old man almost fainted with joy at the chance to see a victory before he died. The legendary Aceto, a 14-time winner, once said, “Palio is a drug that makes you a God…and then crucifies you.” The rest of Italy considers the event barbaric, but locals are proudly unfazed. Unless you were born in Siena, they insist, you will never understand the palio. Rooted in a time when Siena was a proud and powerful republic, the occasion embodies the town’s unique identity.

Building distinctive identity or community around a brand name in business updates ancient traditions based on tribe and homeland, like those surrounding the palio. Consider the characteristics of a unique modern business: Carnival-like zaniness. Free food and vending machines. Corporate values placing a premium on delivering “wow” and “creating fun and weirdness” (Heathfield, 2012). New recruits offered shots of vodka during hiring interviews and offered $2,000 to quit after their first round of training (Chafkin, 2009).

The 95 percent who turn down the $2,000 graduate in full ceremony to “Pomp and Circumstance” in front of families and members of their new, nontraditional departments: “Each department has its own décor, ranging from the rain forest–themed to Elvis-themed, and employees are encouraged to decorate their work spaces…” (Rogers-Kante, 2011.)

Employees carrying cowbells and noisemakers lead spontaneous office parades in costume (Frei, Ely, and Winig, 2010). Departments sponsor cookouts and other fun events throughout the year. Managers are required to spend 10 to 20 percent of their hours “goofing off” with employees. Managers and employees are encouraged to fraternize outside normal office hours. Three big company events—a summer picnic, a January party at the Boss’s home, and a vendor party—fill out the year’s cycle of fun and happiness.

Welcome to Zappos, CEO Tony Hsieh’s “Culture of Happiness” (introduced in Chapter 3 ). All the merriment and spirit captures the hearts of the company’s employees. But it also pays off in employee satisfaction and business results. Hsieh credits the company’s phenomenal success to its distinctive culture with carnival-like zaniness that bears some resemblance to Siena’s palio.

Zappos and the palio are two examples of how symbols permeate every fiber of society and organizations. “A symbol is something that stands for or suggests something else; it conveys socially constructed meanings beyond its intrinsic or obvious functional use” (Zott and Huy, 2007, p. 72). Distilled to the essence, people seek meaning in life. Because life is mysterious, symbols arise to sustain hope, belief, and faith. They express themselves in analogies. Symbols are metaphoric expression of psychic energy. Their content is far from obvious; it is expressed in unique and individual ways while embodying universal and collective imagery (Ghareman, 2016). These intangibles then shape our thoughts, emotions, and actions. Symbols cut deeply into the human psyche and tap the collective unconscious (Jung, [1912] 1965).

Symbols are basic elements of culture that pop up to fit unique circumstances. Symbols and symbolic actions are part of everyday life and are particularly perceptible at weekly, monthly, or seasonal high points. Symbols stimulate energy in moments of triumph and offer solace in times of tribulation. After 9/11, Americans relied on symbols to cope with the aftermath of a devastating terrorist attack. Flags flew. Makeshift monuments honored victims and the heroic acts of police and firefighters who gave their lives. Members of Congress sang “God Bless America” on the Capitol steps. Across the country, people gathered in both formal and informal healing ceremonies.

A comparably intense expression of shock, grief, and compassion came in the wake of the senseless 2012 shootings of 20 young schoolchildren and their adult caretakers at the Sandy Hook School in Newtown, Connecticut. Mourners from all over the nation sent flowers and toys, which were piled up in huge mounds in front of the school. Memorials of white angels appeared across the country. President Obama shed a tear in his nationally televised speech. It was another example of the spiritual magic that symbols represent.

The symbolic frame interprets and illuminates the basic issues of meaning and belief that make symbols so potent. It depicts a world distinct from popular canons of rationality, certainty, and linearity. This chapter journeys into the symbolic inner sanctum. We discuss symbolic assumptions and highlight various forms that symbols take in human organizations. We then move on to discuss organizations as cultures or tribes. Finally, we describe how two distinctive companies—BMW and Nordstrom department stores—have successfully applied symbolic ideas.

Symbolic Assumptions

The symbolic frame forms an umbrella for ideas from several disciplines, including organization theory and sociology (Selznick, 1957; Blumer, 1969; Schutz, 1967; Clark, 1975; Corwin, 1976; Hatch and Cunliffe, 2013; March and Olsen, 1976; Maitlis and Christianson, 2014; Meyer and Rowan, 1978; Weick, 1976; Davis et al., 1976; Hofstede, 1984), political science (Dittmer 1977; Edelman, 1971), magic (O’Keefe, 1983), and neurolinguistic programming (Bandler and Grinder, 1975).

Jung relied heavily on symbolic concepts to probe the human psyche and unconscious archetypes. Anthropologists have traditionally focused on symbols and their place in the lives of humans (Mead, 1928, 1935; Benedict, 1934; Goffman, 1974; Ortner, 1973; Bateson, 1972). In the early 1980s, business books began to apply cultural ideas to corporations, health care, and nonprofit enterprises (Deal and Kennedy, 1982; Peters and Waterman, 1982; Schein, 1992).

The symbolic frame distills ideas from diverse sources into five suppositions:

· What is most important is not what happens but what it means.

· Activity and meaning are loosely coupled; events and actions have multiple interpretations as people experience situations differently.

· In the face of uncertainty and ambiguity, symbols arise to help people resolve confusion, find direction, and anchor hope and faith.

· Events and processes are often more important for what they express or signal than for their intent or outcomes. Their emblematic form weaves a tapestry of secular myths, heroes and heroines, rituals, ceremonies, and stories to help people find purpose and passion.

· Culture forms the superglue that bonds an organization, unites people, and helps an enterprise to accomplish desired ends.

The symbolic frame sees life as allegorical, mystical, and more serendipitous than linear. Organizations are like constantly changing organic pinball machines. Issues, actors, decisions, and policies carom through an elastic labyrinth of cushions, barriers, and traps. Managers turning to Peter Drucker’s The Effective Executive (1967) might do better to seek advice from Lewis Carroll’s Through the Looking Glass. But apparent chaos has an underlying pattern and an emblematic order increasingly appreciated in corporate life (Kotter and Heskett, 1992).

Organizational Symbols

An organization’s culture is revealed and communicated through its symbols: GEICO’s gecko, Target’s bullseye, Airbnb’s Bélo or Aflac’s duck. McDonald’s franchises are unified as much by golden arches, core values, and the legend of Ray Kroc as by sophisticated control systems. Harvard professors are bound less by structural constraints than by rituals of teaching, values of scholarship, and the myths and mystique of Harvard. Symbols take many forms in organizations. Myth, vision, and values imbue an organization with deep purpose and resolve. The words and deeds of heroes and heroines serve as icons or logos for others to admire or emulate. Fairy tales and stories tender explanations, reconcile contradictions, and resolve dilemmas (Cohen, 1969). Rituals and ceremonies offer direction, faith, and hope (Ortner, 1973). Metaphor, humor, and play loosen things up and form communal bonds (Lewin, 1998; Romero and Cruthirds, 2006; Statler and Roos, 2007). We look at each of these symbolic forms in the following sections.

Myths, Vision, and Values

A myth is a collective dream (Jung, 1965). Myths, operating at a mystical level, are the story behind the story (Campbell, 1988). They explain, express, legitimize, and maintain solidarity and cohesion. They communicate unconscious wishes and conflicts, mediate contradictions, and offer a narrative anchoring the present in the past (Cohen, 1969). All organizations rely on myths or sagas of varying strength and intensity (Clark, 1975). Myths can transform a place of work into a beloved, revered, hallowed institution and an all-encompassing way of life.

Myths often originate in the launching of an enterprise. The original plan for Southwest Airlines, for example, was sketched on a cocktail napkin in a San Antonio bar. It envisioned connecting three Texas cities: Dallas, Houston, and San Antonio. As legend has it, Rollin King, one of the founders, said to his counterpart Herb Kelleher, “Herb, let’s start an airline.” Kelleher, who later became Southwest’s CEO, replied, “Rollin, you’re crazy. Let’s do it!” (Freiberg and Freiberg, 1998, p. 15).

As the new airline moved ahead, it met fierce resistance from established carriers. Four years of legal wrangling kept the upstart grounded. In 1971, the Texas Supreme Court ruled in Southwest’s favor, and its planes were ready to fly. A local sheriff’s threat to halt flights under a court injunction prompted a terse directive from Kelleher: “You roll right over the son of a bitch and leave our tire tracks on his uniform if you have to” (Freiberg and Freiberg, 1998, p. 21). (That directive, of course, signaled resolve, not homicidal intent.) The persistence and zaniness of Southwest’s mythologized beginnings shape its unique culture: “The spirit and steadfastness that enabled the airline to survive in its early years is what makes Southwest such a remarkable company today” (p. 14).

Myths undergird an organization’s values. Values characterize what an organization stands for, qualities worthy of esteem or commitment. Unlike goals, values are intangible and define a unique character that helps people find meaning and feel special about what they do.

The values that count are those an organization lives, regardless of what it articulates in mission statements or formal documents. Southwest Airlines has never codified its values formally. But its Symbol of Freedom billboards and banners once expressed the company’s defining purpose: extending freedom to fly to everyone, not just the elite, and doing it with an abiding sense of fun. Other organizations make values more explicit. The Edina (Minnesota) School District, following the suicide of a superintendent, involved staff, parents, and students in formally articulating values in a document: “We care. We share. We dare.” The values of the U.S. Marine Corps are condensed into a simple phrase: “Semper Fi” (short for semper fidelis—always faithful). More than a motto, it stands for the traditions, sentiments, and solidarity instilled into recruits and perpetuated by veteran Marines: “The values and assumptions that shape its members…are all the Marines have. They are the smallest of the U.S. military services, and in many ways the most interesting. Theirs is the richest culture: formalistic, insular, elitist, with a deep anchor in their own history and mythology” (Ricks, 1998, p. 19).

Vision turns an organization’s core ideology, or sense of purpose, into an image of the future. It is a shared fantasy, illuminating new possibilities within the realm of myths and values. Martin Luther King’s “I have a dream” speech, for example, articulated poetically a new future for race relations rooted in the ideals of America’s founding fathers.

Vision is deemed vital in contemporary organizations. In Built to Last, Collins and Porras profile a number of extraordinary companies and conclude, “The essence of a visionary company comes in the translation of its core ideology and its own unique drive for progress into the very fabric of the organization” (1994, p. 201). Johnson & Johnson’s commitment to the elimination of “pain and disease” and to “the doctors, nurses, hospitals, mothers, and all others who use our products” motivated the company to make the costly decision to pull Tylenol from store shelves when several tainted bottles were discovered. 3M’s principle of “thou shalt not kill a new product idea” came to life when someone refused to stop working on an idea that became Scotch Tape. The same principle paved the way for Post-it® notes, a product resurrected from the failed development of an adhesive. A vision offers mental pictures linking historical legend and core precepts to future events. Shared, it imbues an organization with spirit, resolve, and élan.

Myths, values, and visions often overlap. Take eBay, which emerged as a highly visible success amid a sea of 1990s dot-com disasters. Its interplay of myth, values, and vision contributes to its success even in a tough economic environment. Pierre Omidyar, eBay’s founder, envisioned a marketplace where buyers would have equal access to products and prices, and sellers would have an open outlet for goods. Laws of supply and demand would govern prices.

But Omidyar’s vision incorporated another element: community. Historically, people have used market stalls and cafés to swap gossip, trade advice, and pass the time of day. Omidyar wanted to combine virtual business site and caring community. That vision led to eBay’s core values of commerce and community. Embedded in these are corollary principles: “Treat other people online as you would like to be treated, and when disputes arise, give other people the benefit of the doubt.”

eBay is awash in myths and legends. Omidyar’s vision is said to have taken root over dinner with his fiancée. She complained that their move from Boston to Silicon Valley severed her ties with fellow collectors of Pez dispensers. He came to her rescue by writing code and laying the foundation for a new company. Did it happen this way? Not quite. Mary Lou Song, an eBay publicist, hatched this story in an effort to get media exposure. Her rationale: “Nobody wants to hear about a 30-year-old genius who wanted to create a perfect market. They want to hear that he did it for his fiancée” (CNN Money, 2011). Her version persists because myths are truer than truth.

Airbnb, like Uber, is a young brand in the upcoming “sharing economy.” Success has come so quickly that the 2008 start-up is now valued at $30 billion and has become a verb in everyday communication: “Let’s ‘Airbnb’ in Los Angeles this weekend.”

The company’s rise had not been without its challenges, but one of its key successes is its search for a mission. The cofounders have succeeded in identifying the company’s soul and how it interplays with employees, hosts, guests, and the outside world (Gallagher, 2016).

The quest for a unifying identity began in 2013 and was guided by key questions: Why does Airbnb exist? What’s its purpose? What’s its role in the world? The questions were put to founders, employees, hosts, and guests around the world. The answers would become the “rudder that guides the whole ship.”

Early on, consensus began to emerge around “belonging.” This formed the cornerstone for Airbnb’s new mission: to make people around the world feel like they could “Belong Anywhere.” Airbnb would become the place where anyone could engage with people and cultures as insiders, to meet the “universal human yearning to belong.” The Company fashioned a new logo, the “Bélo,” a cute squiggly shape resembling a heart, a location pin and the “A” in Airbnb. It stands for four things: people, places, love, and Airbnb (Gallagher, 2017).

Heroes and Heroines

Organizations often rely on CEOs or other prominent leaders as exemplars. They may not be media celebrities, like Jeff Bezos or Elon Musk, or symbols of corporate greed, like Ken Lay, Bernie Ebbers, and Dennis Kozlowski. They are solid leaders who build time-tested companies and deliver results.

One is Mary Barra, the first woman to serve as CEO of General Motors. She took the helm at a challenging time for the venerable automaker, which had barely survived bankruptcy and was under heavy fire for concealing a defective ignition switch that produced 13 deaths in GM Cobalts. Barra handled that with a directness and transparency that were new to General Motors and used it as an opportunity to begin to change GM’s sclerotic culture. Since becoming GM’s chief in 2014, she has tripled profits and engineered a dramatic revival (Colvin, 2014; Varchaver, 2016).

Another, Costco’s James Sinegal, took pride in his disdain for corporate perks. He answered his own phone and personally escorted guests to his spartan office—no executive bathroom, no walls, 20-year-old furniture. He commented: “We’re low-cost operators, and it would be a little phony if we tried to pretend that we’re not and had all the trappings” (Byrnes et al., 2002, p. 82).

Executives like Barra and Sinegal embrace their role as cultural heroes. They act as living logos, human icons, whose words and deeds exemplify and reinforce core values. Bernie Marcus, cofounder of Home Depot, underscores the impact of well-placed cultural heroes and heroines: “People watch the titular heads of companies, how they live their lives, and they know [if] they are being sold a bill of goods. If you are a selfish son-of-a-bitch, well that usually comes across fairly well. And it comes across no matter how many memos you send out [stating otherwise]” (Roush, 1999, p. 139).

Not all icons are at the top of organizations. Ordinary people often perform exemplary deeds. The late Joe Vallejo, custodian at a California junior high school, kept the place immaculate. He was also a liaison between the school and its community. His influence knew few limits. When emotions ran high, he attended parent conferences and often negotiated a compromise acceptable to all parties. He knew the students and checked report cards. He was not bashful about telling seasoned teachers how to tailor lessons to student interests and needs. When he retired, a patio was named in his honor. It remains today, commemorating a hero who made a difference well beyond his formal assignment.

Some heroic exploits go unrecognized because they happen out of view. Southwest Airlines annually recognizes its behind-the-scenes employees in a “Heroes of the Heart” award ceremony. The honor goes to the backstage individual or group that contributes most to Southwest’s unique culture and successful performance. The year following the award, a Southwest aircraft flies with the winner’s name on its fuselage. A song written for the occasion expresses the value Southwest places on its heroes and heroines whose important work is often hidden:

Heroes come in every shape and size;

Adding something very special to others in their lives

No one gives you medals and the world won’t know your name

But in Southwest’s eyes you’re heroes just the same.

The Twin Towers tragedy reminded Americans of the vital role heroism plays in the human spirit. New York City police officers and firefighters touched people’s hearts by risking their lives to save others. Many perished as a result. Their sacrifices reaffirmed Americans’ spirit and resolve in enduring one of the nation’s most costly tragedies. Every day, less dramatic acts of courage come to light as people go out of their way to help customers or serve communities. NBC’s Nightly News airs a recurring segment recognizing people who “have made a difference.” In 2007, Colin Powell proposed an “Above the Call” citizen award, recognition on par with the Congressional Medal of Honor.

Exploits of heroes and heroines are lodged in our psyches. We call on their examples in times of uncertainty and stress. American POWs in North Vietnamese prisons drew upon stories of the courage of Captain Lance Sijan, Admiral James Stockdale, and Colonel Bud Day, who refused to capitulate to Viet Cong captors. “[Their examples] when passed along the clandestine prison communications network…helped support the resolve that eventually defeated the enemy’s efforts” (McConnell, 2004, p. 249). During the Bosnian conflict, the ordeal of Scott O’Grady, a U.S. Air Force fighter pilot, made headlines. To survive after being shot down, O’Grady drew on the example of Sijan: “His strong will to survive and be free was an inspiration to every pilot I knew” (O’Grady, 1998, p. 83). Although drawn from nightmares of warfare, these examples demonstrate how human models influence our decisions and actions. We carry lessons of teachers, parents, and others with us. Their exploits, animated through stories, serve as guides to choices we make in our personal lives and at work.

Stories and Fairy Tales

It is said that God made people because he loves stories. “Human life is so bound up in stories that we are desensitized to their weird and witchy power” (Gottschall, 2012, p. 1). Stories, like folk or fairy tales, offer more than entertainment or moral instruction for small children. They grant comfort, reassurance, direction, and hope to people of all ages. They externalize inner conflicts and tensions (Bettelheim, 1977). We tend to dismiss stories as the last resort of people without substance. As an older retiree remarked, “Why, I have a perfect memory. I even remember things that never happened.” We denigrate professors and elders for telling “war stories.” Yet stories convey information, morals, and myths vividly and convincingly (Mitroff and Kilmann, 1975; Denning, 2005; Gottschall, 2012). They perpetuate values and keep heroic feats alive. This helps account for the recent proliferation of business books linking stories and leadership (Clark, 2004; Denning, 2004, 2005; Simmons, 2006, 2007; Seely et al., 2004). Barry Lopez captures poetically why stories are significant:

Remember only this one thing,

The stories people tell have a way of taking care of them.

If stories come to you, care for them.

And learn to give them away where they are needed.

Sometimes a person needs a story more than food to stay alive.

That is why we put these stories in each other’s memories.

This is how people care for themselves (Lopez, 1998).

Stories are deeply rooted in the human experience. It is through story that we can see into each other’s souls, and apprehend the soul of the organization. The stories that both individuals and organizations tell about themselves anchor identity and hope. Vough and Caza (2017) note that when individuals experience career setbacks, they do better going forward if they tell a positive story. For example, one manager said about a career setback: “I actually don’t regret…[not being promoted], because it helped me better understand how to navigate the political landscape, to really trust myself, and not allow others’ opinions to influence my own sense of self-worth” (p. 203).

Stories are told and retold around campfires and during family reunions (Clark, 2004). David Armstrong, CEO of Armstrong International, notes that storytelling has played a commanding role in history through the teachings of Jesus, the Buddha, and Mohammed, among many others. It can play an equally potent role in contemporary organizations: “Rules, either in policy manuals or on signs, can be intimidating. But the morals in stories are invariably inviting, fun, and inspiring. Through storytelling our people can know very clearly what the company believes in and what needs to be done” (Armstrong, 1992, p. 6). To Armstrong, storytelling is a simple, timeless, and memorable way to have fun, train newcomers, recognize accomplishments, and spread the word. Denning (2005) puts the functions of stories into eight categories:

· Sparking action

· Communicating who you are

· Communicating who the company is—branding

· Transmitting values

· Fostering collaboration

· Taming the grapevine

· Sharing knowledge

· Leading people into the future

Effective organizations are full of good stories. They often focus on the legendary exploits of corporate heroes. Marriott Hotels founder J. W. Marriott Sr. died many years ago, but his presence lives on. Stories of his unwavering commitment to customer service linger. His aphorism “Take good care of your employees and they’ll take good care of your customers” is still part of Marriott’s philosophy. According to fable, Marriott visited new general managers and took them for a walk around the property. He pointed out broken branches, sidewalk pebbles, and obscure cobwebs. By tour’s end, the new manager had a long to-do list—and, more important, an indelible lesson in what mattered at Marriott.

Not all stories center on the founder or chief executive. Ritz-Carlton is famous for the upscale treatment it offers guests. It begins with the Ritz-Carlton credo and service values, reviewed at the daily “lineup” in every property and carried by every employee in a wallet-sized card. (Another hotel chain planned to implement a similar approach but then canceled the initiative to save the cost of the cards.) “My pleasure” is employees’ traditional response to requests, no matter how demanding or trivial. One hurried guest jumped into a taxi to the airport but left his briefcase on the sidewalk. The doorman retrieved the briefcase, abandoned his post, sped to the airport, and delivered it to the panicked guest. Instead of being fired, the doorman became part of the legends and lore—a living example of the company’s commitment to service (Deal and Jenkins, 1994).

Stories are a key medium for communicating corporate myths. They establish and perpetuate tradition. Recalled and embellished in formal meetings and informal coffee breaks, they convey and buttress an organization’s values and identity to insiders, building loyalty and support. At a company’s annual celebration banquet, a nervous executive serving as the night’s emcee introduced all the VIPs seated at the head dais. As he was completing his obviously compulsory assignment, a younger man stepped up behind him and whispered, “You forgot to mention the chairman.”

A red-faced, flustered emcee turned to the crowd and apologized, “Oh yes, and of course our esteemed chairman of the board, Dr. Frye. Excuse me, Dr. Frye, my secretary left your name off the list.” Frye turned to his COO: “John, I want that guy fired tomorrow. That’s not the way we do things around here. Honesty and owning your mistakes are a big part of who we are.” The story spread quickly through the cultural network. Point made.

Or take Costco, widely recognized for its low prices and high value. Jim Sinegal, founder and former CEO of Costco, is known as a masterful storyteller constantly spinning yarns that reinforce the value of putting the interests of customers and employees ahead of stockholders:

In 1996 we were selling between $150,000 and $200,000 worth of salmon fillet every week at $5.99 a pound. Then our buyers were able to get an improved product with belly fat, back fins, and collarbones removed, at a better price. As a result we reduced our retail price to $5.29. So they improved the product and lowered the price. The buyers weren’t finished with the improvements, though. Next our buyers negotiated for a product with the pin bone out and all of the skin removed, and it was at an even better price, which enabled us to lower our price to $4.99 a pound. Then, because we had continued to grow and had increased our sales volume, we

CHAPTER 13 CULTURE IN ACTION

Not a having and a resting, but a growing and becoming is the character of perfection as culture conceives it.

—Matthew Arnold

The public has been fascinated with the U.S. Navy’s secret SEAL strike teams ever since one of them, SEAL Team Six Red Squadron, tracked down Osama bin Laden in 2012. The public eye typically focuses on the modern weaponry, awesome firepower, and sheer bravado of the SEAL operators. At least three books and a hit movie, Zero Dark Thirty—each with its own interpretation of that operation—came out in 2013. But lurking beneath the surface of Red Squadron’s successful foray is another story about the culture of SEAL Team Six, which has not been fully told.

The books written by SEALs generally underscore the important contributions of the team’s tightly knit culture. The members of Team Six “are bound together not only by sworn oaths, but also by the obligations of their brotherhood” (Pfarrer, 2011, p. 28). As one SEAL described it, “My relationship with Team Six has been more important than my marriage” (Wasdin and Templin, 2011, p. 254). Posttraumatic stress disorder among returning soldiers has been attributed to the loss of brotherhood. Published sources sometimes mention pranks, humor, ritual, and specialized language, but they don’t describe in depth the essential cultural components that create these intense emotional and spiritual bonds.

Descriptions, prescriptions, and theories about improving teamwork often miss the deeper secrets and mysteries of how groups and teams reach the elusive state of grace and peak performance. Former Visa CEO Dee Hock captured the heart of the issue: “In the field of group endeavor, you will see incredible events in which the group performs far beyond the sum of its individual talents. It happens in the symphony, in the ballet, in the theater, in sports, and equally in business. It is easy to recognize and impossible to define. It is a mystique. It cannot be achieved without immense effort, training, and cooperation, but effort, training, and cooperation alone rarely create it” (quoted in Schlesinger, Eccles, and Gabarro, 1983, p. 173).

With a population of only slightly more than 2 million people in the 1770s, how was the United States able to produce an extraordinary leadership team that included John Adams, Benjamin Franklin, Alexander Hamilton, Thomas Jefferson, and George Washington? In World War II, did anyone believe that Britain’s Royal Air Force could defend the island nation against the overwhelming power of Hitler’s Luftwaffe? As Winston Churchill later commented, “Never have so many owed so much to so few.”

Did anyone expect the Iraqi soccer team to take home the Asian Cup in 2007? With all the turmoil and strife at the time in Iraq, it is hard to picture the country even fielding a team. And how could two graduate students who came from opposite ends of the earth (Michigan and Moscow), and who initially didn’t like each other, create a company whose name—Google—became a global household word?

Are such peak performances simply a great mystery—beautiful when they happen but no more predictable or controllable than California’s next earthquake? Too often we try to attribute success to extraordinary individuals, enlightened structural design, or political harmony. In this chapter, we scrutinize a classic case of a team that achieved a state of transcendence. Tracy Kidder spent a year embedded in a group of engineers, intimately observing it in operation. The unusually in-depth and close-grained story takes us directly to the symbolic roots of flow, spirit, and magic. Very few studies of teams can match Kidder’s rigor and attention to detail.

The Eagle Group’s Sources of Success

Kidder’s Soul of a New Machine (1981) is the dazzling and detailed account of the extensive period of time he spent at the minicomputer firm Data General in the 1970s with a group of engineers who created a new computer in record time. Despite scant resources and limited support, the Eagle Group outperformed all other Data General divisions to produce a new state-of-the-art machine. The technology they developed is now antiquated, but lessons drawn from how they pulled it off are as current and instructive ever.1

Why did the Eagle Group succeed? So many groups of engineers—or educators, physicians, executives, or graduate students—start out with high hopes but falter and fail.

Were the project members extraordinarily talented? Not really. Each was highly skilled, but there were equally talented engineers working on other Data General projects.

Were team members treated with dignity and respect? Quite the contrary. As one engineer noted, “No one ever pats anyone on the back” (p. 179). Instead, the group experienced what they called mushroom management: “Put ‘em in the dark, feed ‘em shit, and watch ‘em grow” (p. 109). For over a year, group members jeopardized their health, their families, and their careers: “I’m flat out by definition. I’m a mess. It’s terrible. It’s a lot of fun” (p. 119).

Were financial rewards a motivating factor? Group members said explicitly that they did not work for money. Nor were they motivated by fame. Heroic efforts were rewarded neither by formal appreciation nor by official applause. The group quietly dissolved shortly after completing the new computer, and most members moved unrecognized to other parts of Data General or to other companies. Their experience fits later successes at Cisco Systems, about which Paulson concludes, “All personnel are driven by the desire to be a part of a winning organization” (2001, p. 187).

Perhaps the group’s structure accounted for its success. Were its members pursuing well-defined and laudable goals? The group leader, Tom West, offered the precept that “not everything worth doing is worth doing well.” Pushed to translate his maxim, he elaborated, “If you can do a quick-and-dirty job and it works, do it” (p. 119). Did the group have clear and well-coordinated roles and relationships? According to Kidder, it kept no meaningful charts, graphs, or organization tables. One of the group’s engineers put it bluntly: “The whole management structure—anyone in Harvard Business School would have barfed” (p. 116).

Can the political frame unravel the secret of the group’s phenomenal performance? Possibly group members were motivated more by power than by money: “There’s a big high in here somewhere for me that I don’t fully understand. Some of it’s a raw power trip. The reason I work is because I win” (p. 179). They were encouraged to circumvent formal channels to advance group interests: “If you can’t get what you need from some manager at your level in another department, go to his boss—that’s the way to get things done” (p. 191).

Group members were also unusually direct and confrontational: “Feeling sorely provoked, [David] Peck one day said to this engineer, ‘You’re an asshole.’ Ordered by his boss to apologize, Peck went to the man he had insulted, looking sheepish, and said, ‘I’m sorry you’re an asshole’” (p. 224).

The group was highly competitive with others in the company: “There’s a thing you learn at Data General, if you work here for any period of time…that nothing ever happens unless you push it” (p. 111). They also competed with one another. Their “tube wars” are a typical example. Carl Alsing, head of a subgroup known as the Microkids, returned from lunch one day to find that all his files had become empty shells: the names were there, but the contents had vanished. It took him an hour to find where the real files were. Alsing counterattacked by creating an encrypted file and tantalizing the team, “There’s erotic writing in there and if you can find it, you can read it” (p. 107).

Here we begin to encounter the secrets of the group’s success. The tube wars—and other exchanges among group members—were more than power struggles. They were a form of play that released tensions, created bonds, and contributed to an unusual group spirit. A shared and cohesive culture rather than a clear, well-defined structure was the invisible force that gave the team its drive.

From the Eagle Group’s experience, we can distill several important tenets of the symbolic frame that are broadly applicable to groups and teams:

· How someone becomes a group member is important.

· Diversity supports a team’s competitive advantage.

· Example, not command, holds a team together.

· A specialized language fosters cohesion and commitment.

· Stories carry history and values and reinforce group identity.

· Humor and play reduce tension and encourage creativity.

· Ritual and ceremony lift spirits and reinforce values.

· Informal cultural players contribute disproportionately to their formal roles.

· Soul is the secret of success.

Becoming a Member

Joining a team involves more than a rational decision. It is a mutual choice marked by some form of ritual. In the Eagle Group, the process of becoming a member was called “signing up.” When interviewing recruits, Alsing conveyed the message that they were volunteering to climb Mount Everest without a rope despite lacking the “right stuff” to keep up with other climbers. When the new recruits protested they wanted to climb Mount Everest anyway, Alsing told them they would first have to find out whether they were good enough. After the selections were made, Alsing summed it up this way: “It was kind of like recruiting for a suicide mission. You’re gonna die, but you’re gonna die in glory” (p. 66).

Through the signing-up ritual, an engineer became part of a special effort and agreed to forsake family, friends, and health to accomplish the impossible. It was a sacred declaration: “I want to do this job and I’ll give it my heart and soul” (p. 63).

Diversity Is a Competitive Advantage

Though nearly all the group’s members were engineers, each had unique skills and style. Tom West, the group’s leader, was by reputation a highly talented technical debugger. He was also aloof and unapproachable, the “Prince of Darkness.” Steve Wallach, the group’s computer architect, was a highly creative maverick. According to Kidder (p. 75), before accepting West’s invitation to join the group, he went to Edson de Castro, the president of Data General, to find out precisely what he’d be working on:

“Okay,” Wallach said, “what the fuck do you want?”

“I want a 32-bit Eclipse,” de Castro told him.

“If we can do this, you won’t cancel it on us?” Wallach asked. “You’ll leave us alone?”

“That’s what I want, a 32,” de Castro assured him, “a 32-bit Eclipse and no mode bit.”

Wallach signed up. His love of literature, stories, and verse provided a literary substructure for the technical architecture of the new machine. Alsing, the group’s microcode expert, was as warm and approachable as West was cold and remote. Alsing headed the Microkids, the group of young engineers who programmed the new machine. Ed Rasala, Alsing’s counterpart, headed the Hardy Boys, the group’s hardware design team. Rasala was a solid, hyperactive, risk-taking, detail-oriented mechanic: “I may not be the smartest designer in the world, a CPU giant, but I’m dumb enough to stick with it to the end” (p. 142).

Diversity among the group’s other top engineers was evident in specialty as well as personality. One engineer, for example, was viewed as a creative genius who liked inventing an esoteric idea and then trying to make it work. Another was a craftsman who enjoyed fixing things, working tirelessly until the last bug had been tracked down and eliminated.

West buffered the team from upper management interference and served as a group “devil.” Wallach created the original design. Alsing and the Microkids created “a synaptic language that would fuse the physical machine with the programs that would tell it what to do” (p. 60). Rasala and the Hardy Boys built the physical circuitry. Understandably, there was tension among these diverse, highly specialized individuals and groups. Harnessing the resulting energy galvanized the parts into a working team.

Example, Not Command

Wallach’s design generated modest coordination for Eagle’s autonomous individuals and groups. The group had some rules but paid little attention to them. Members viewed de Castro, the CEO, as a distant god. He was never there physically, but his presence was. West, the group’s official leader, rarely interfered with the actual work, nor was he around in the laboratory. One Sunday morning in January, however, when the team was supposed to be resting, a Hardy Boy happened to come by the lab and found West sitting in front of one of the prototypes. The next Sunday, West wasn’t in the lab, and after that they rarely saw him. For a long time he did not hint that he might again put his hands inside the machine.

West contributed primarily by causing problems for the engineers to solve and making mundane events and issues appear special. He created an almost endless series of “brushfires” so he could inspire his staff to douse them. He had a genius for finding drama and romance in everyday routine. Other members of the group’s formal leadership followed de Castro and West in creating ambiguity, encouraging inventiveness, and leading by example. Heroes of the moment gave inspiration and direction. Subtle and implicit signals rather than concrete and explicit guidelines or decisions held the group together and directed it toward a common goal.

Specialized Language

Every group develops words, phrases, and metaphors unique to its circumstances. A specialized language both reflects and shapes a group’s culture. Shared language allows team members to communicate easily, with minimal misunderstanding. To the members of the Eagle Group, for example, a kludge was a poor, inelegant solution—such as a machine with loose wires held together with duct tape. A canard was anything false. Fundamentals were the source of enlightened thinking. The word realistically typically prefaced flights of fantasy. “Give me a core dump” meant tell me your thoughts. A stack overflow meant that an engineer’s memory compartments were too full, and a one-stack-deep mind indicated shallow thinking. “Eagle” was a label for the project, and “Hardy Boys” and “Microkids” gave identity to the subgroups. Two prototype computers received the designations “Woodstock” and “Trixie.”

Shared lingo binds a group together and is a visible sign of membership. It also sets a group apart and reinforces unique values and beliefs. Asked about the Eagle Group’s headquarters, West observed, “It’s basically a cattle yard. What goes on here is not part of the real world.” Asked for an explanation, West remarked, “Mm-hmm. The language is different” (p. 50).

Stories Carry History, Values, and Group Identity

In high-performing organizations and groups, stories keep traditions alive and provide examples to channel everyday behavior. Group lore extended and reinforced the subtle yet powerful influence of Eagle’s leaders—some of them distant and remote. West’s reputation as a “troublemaker” and an “excitement junkie” spread through stories about computer wars of the mid-1970s. Alsing said of West that he was always prepared and never raised his voice. But he coolly conveyed intensity and the conviction that he knew the way out of whatever storm was currently battering the group.

West also possessed the skills of a good politician. He knew how to develop agendas, build alliances, and negotiate with potential supporters or opponents. When he had a particular objective in mind, he would first sign up senior executives.

Then he went to people one at a time, telling them the bosses liked the idea and asking them to come on board: “They say, ‘Ah, it sounds like you’re just gonna put a bag on the side of the Eclipse,’ and Tom’ll give ‘em his little grin and say, ‘It’s more than that, we’re really gonna build this fucker and it’s gonna be fast as greased lightning.’ He tells them, ‘We’re gonna do it by April’” (p. 44).

Stories of persistence, irreverence, and creativity encouraged others to go beyond themselves, adding new exploits and tales to Eagle’s lore. For example, as the group neared completion, a debugging problem threatened the entire project. Jim Veres, one of the engineers, worked day and night to find the error. Ken Holberger, one of the Hardy Boys, drove to work early one morning, pondering the state of the project and wondering if it would ever get done.

He was startled out of his reverie by an unexpected scene as he entered the lab. “A great heap of paper lies on the floor, a continuous sheet of computer paper streaming out of the carriage at [the] system console. Stretched out, the sheet would run across the room and back again several times. You could fit a fairly detailed description of American history…on it. Veres sits in the midst of this chaos, the picture of the scholar. He’s examined it all. He turns to Holberger. ‘I found it,’ he says” (p. 207).

Humor and Play

Groups often focus single-mindedly on the task, shunning anything not directly work related. Seriousness replaces playfulness as a cardinal virtue. Effective teams balance seriousness with play and humor. Surgical teams, cockpit crews, and many other groups have learned that joking and playful banter are essential sources of invention and team spirit. Humor releases tension and helps resolve issues arising from day-to-day routines as well as from sudden emergencies.

Play among the members of the Eagle project was an innate part of the group’s process. When Alsing wanted the Microkids to learn how to manipulate the computer known as Trixie, he made up a game. As the Microkids came on board, he told each of them to figure how to write a program in Trixie’s assembly language. The program had to fetch and print contents of a file stored inside the computer. The Microkids went to work, learned their way around the machine, and felt great satisfaction—until Alsing’s perverse sense of humor tripped them up. When they finally found the elusive file, a message greeted them: “Access Denied.”

Through such play, the Microkids learned to use the computer, coalesced into a team, and practiced negotiating their new technical environment. They also learned that their playful leader valued creativity.

Humor was a continuous thread as the team struggled with its formidable task. Humor often stretched the boundaries of good taste, but that too was part of the group’s identity:

[Alsing] drew his chair up to his terminal and typed a few letters—a short code that put him in touch with Trixie, the machine reserved for the use of his micro coding team. “We’ve anthropomorphized Trixie to a ridiculous extent,” he said.

He typed, WHO.

On the dark-blue screen of the cathode-ray tube, with alacrity, an answer appeared: CARL.

WHERE, typed Alsing.

IN THE ROAD, WHERE ELSE! Trixie replied.

HOW.

ERROR, read the message on the screen.

“Oh, yeah, I forgot,” said Alsing, and he typed, PLEASE HOW.

THAT’S FOR US TO KNOW AND YOU TO FIND OUT.

Alsing seemed satisfied with that, and he typed, WHEN.

RIGHT FUCKING NOW, wrote the machine.

WHY, wrote Alsing.

BECAUSE WE LIKE TO CARL (pp. 90–91).

Throughout the year and a half it took to build their new machine, engineers of the Eagle project relied on play and humor as a source of relaxation, stimulation, enlightenment, and spiritual renewal.

Ritual and Ceremony

Rituals and ceremonies are expressive occasions. As parentheses in an ordinary workday, they enclose and define special forms of symbolic behavior. What occurs on the surface is not nearly as important as the deeper meaning communicated below ground. With little time for anything not related to the task of building the machine, the Eagle Group intuitively understood the importance of symbolic activity. From the beginning, leadership encouraged ritual and ceremony.

As one example, Rasala, head of the Hardy Boys, established a rule requiring that changes in public boards of the prototype be updated each morning. This activity allowed efforts to be coordinated formally. More important, the daily update was an occasion for informal communication, bantering, and gaining a sense of the whole. The engineers disliked the daily procedure, so Rasala changed it to once a week—on Saturday. He made it a point always to be there himself.

Eagle’s leaders met regularly, but their meetings focused more on symbolic issues than on substance. “We could be in a lot of trouble here,’ West might say, referring to some current problem. And Wallach or Rasala or Alsing would reply, ‘You mean you could be in a lot of trouble, right, Tom?’ It was Friday, they were going home soon, and relaxing, they could half forget that they would be coming back to work tomorrow” (p. 132). Friday afternoon is a customary time at the end of the workweek to wind down and relax. Honoring such a tradition was all the more important for a group whose members often worked all week and then all weekend. West made himself available to anyone who wanted to chat. Near the end of the day, before hurrying home, he would lean back in his chair with his office door open and entertain any visitor.

In addition to recurring rituals, the Eagle Group members convened intermittent ceremonies to raise their spirits and reinforce their dedication to a shared, intensely zealous mission. Toward the end of the project, Alsing instigated a ceremony to trigger a burst of renewed energy for the final push. The festivities called attention to the values of creativity, hard work, and teamwork. A favorite pretext for parties was presentation of the Honorary Microcoder Awards that Alsing and the Microcoder Team instituted. Not to be outdone, the Hardy Boys cooked up the PAL Awards (named for the programmable array logic chips used in the machines). The first presentation came after work at a local establishment called the Cain Ridge Saloon. The citation read as follows (p. 250):

Honorary PAL Award

In recognition of unsolicited contributions to the advancement of Eclipse hardware above and beyond the normal call of duty, we hereby convey unto you our thanks and congratulations on achieving this “high” honor.

The same values and spirit were reinforced again and again in a continued cycle of celebratory events:

Chuck Holland [Alsing’s main submanager] handed out his own special awards to each member of the Microteam, the Under Extraordinary Pressure Awards. They looked like diplomas. There was one for Neal Firth, “who gave us a computer before the hardware guys did,” and one to Betty Shanahan, “for putting up with a bunch of creepy guys.” After dispensing the Honorary Microcoder Awards to almost every possible candidate, the Microteam instituted the All-Nighter Award. The first of these went to Jim Guyer, the citation ingeniously inserted under the clear plastic coating of an insulated coffee cup (p. 250).

The Contribution of Informal Cultural Players

Alsing was the main organizer and instigator of parties. He was also the Eagle Group’s conscience and nearly everyone’s confidant. For a time when he was still in college, Alsing had wanted to become a psychologist. He acted like one now. He kept track of his team’s technical progress but was more visible as the social director of the Microteam and often of the entire Eclipse Group. Fairly early in the project, Chuck Holland had complained, “Alsing’s hard to be a manager for, because he goes around you a lot and tells your people to do something else.” But Holland also conceded, “The good thing about him is that you can go and talk to him. He’s more of a regular guy than most managers” (p. 105).

Every group or organization has a “priest” or “priestess” who ministers to spiritual needs. Informally, these people hear confessions, give blessings, maintain traditions, encourage ceremonies, and intercede in matters of gravest importance. Alsing did all these things and, like the tribal priest, acted as a counterpart to and interpreter of the intentions of the chief:

West warned him several times, “If you get too close to the people who work for you, Alsing, you’re gonna get burned.” But West didn’t interfere, and he soon stopped issuing warnings.

One evening, while alone with West in West’s office, Alsing said: “Tom, the kids think you’re an ogre. You don’t even say hello to them.”

West smiled and replied. “You’re doing fine, Alsing” (pp. 109–110).

The duties of Rosemarie Seale, the group’s secretary, also went well beyond formal boundaries. If Alsing was the priest, she was the mother superior. She performed the usual secretarial chores—answering the phones, preparing documents, and constructing budgets. But she found particular joy in serving as a kind of den mother who solved minor crises that arose almost daily. When new members came on, it was Rosemarie Seale who worried about finding them a desk and some pencils. When paychecks went astray, she would track them down and deliver them to their intended recipients. She liked the job, she said, because she felt that she was doing something important.

In any group, a network of informal players deals with human issues outside formal channels. On the Eagle project, their efforts were encouraged, appreciated, and rewarded outside the formal chain of command; they helped keep the project on track.

Soul Is the Secret of Success

The symbolic tenor of the Eagle Group was the actual secret of its success. Its soul, or culture, created a new machine: “Ninety-eight percent of the thrill comes from knowing that the thing you designed works, and works almost the way you expected it would. If that happens, part of you is in that machine” (p. 273).

All the members of the Eagle Group put something of themselves into the new computer. Individual efforts went well beyond the job, supported by a unique way of life that encouraged each person to commit to doing something of significance. Their deep commitment and unwavering spirit jelled in the ritual of signing up. Both were then intensified and expanded by diversity, exceptional leaders, common language, stories, rituals, ceremonies, play, and humor. In the best sense of the word, the Eagle Group was a team, and the efforts of the individual members were interwoven by symbolic fibers. Cultural elements were the heart and soul of the group’s success.

CHAPTER 14 ORGANIZATION AS THEATER

All the world’s a stage, and all the men and women merely players.

—William Shakespeare, As You Like It

More than 400 years ago, Shakespeare captured an enduring truth we sometimes neglect in our love affair with facts and logic. Much of human behavior aims at getting things accomplished. The assumption of linear causality works sometimes when outcomes are tangible and a link between means and ends is clear. A factory, we surmise, rises or falls on what it produces. But the logic falters when outcomes are less tangible and the connection between actions and outcomes is more elusive.

Think about a church or temple. Shall we rely on income statements and congregation size to gauge success? How do we capture the value of souls saved and lives enriched? Such elusive variables are hard to quantify, but focusing on what we can measure rather than what we care about is a formula for disappointment and failure. In theater, what appears on stage is draped in perception. The same is true of organizations. We judge them by how they appear and how well they follow the script we expect. Shared faith and liturgy tie believers together and bestow legitimacy. As in theater, performance, faith, and devotion matter more than data and logic.

This is illustrated in a story and its accompanying drama that are central to the faith of Ethiopian Christians. The existence and location of the Ark of the Covenant is one of history’s greatest mysteries…but not to Ethiopians. They know that the Ark is now enshrined in a modest Chapel surrounded by a small courtyard in Azum. The Ark is overseen by a High Priest who, it is alleged, chooses his successor on his deathbed. Very few Ethiopians have seen the Ark’s caretaker. No one, including religious leaders and the president of Ethiopia, has ever laid eyes on the Ark, though they have seen models because every Orthodox church in Ethiopia has one (Raffaele, 2007).

A reporter once approached the chapel and was able to talk briefly to the guardian. He said, “I have heard of the Ethiopian tradition that the Ark of the Covenant is kept here…in this Chapel. I have also heard that you are the Guardian of the Ark. Are these things true?”

“They are true.”

“But in other countries, nobody believes these stories.”

“People can say what they wish. People can believe what they wish. Nevertheless, we do possess the Ark of the Covenant and I am its Guardian. It is not a lesson. It is history.”

“But no one has seen the Ark. Don’t people need some proof that it’s really here?”

“I’ve seen the Ark as did my predecessor and will my successor. The story of the Ark has passed through generations. What other proof do we need? In the very distant past, the Ark was brought out for religious rituals at Tikrit. But we don’t do that anymore because of the turmoil and civil war around us. It is much too dangerous to have the Ark exposed.”

“Do people have memories of seeing it before, in more peaceful times?”

“The Ark was always draped. Its brilliance would have blinded onlookers.”

The ongoing drama surrounding the Ark creates its own kind of proof. Belief suffices; facts are irrelevant. Any attempt to challenge the truth of the historical interpretation is thwarted by a dramatic explanation that reinforces the prevailing account.

Even in technical environments, a dramaturgical view of situations offers enlightenment. The story of the U.S. Navy’s Polaris missile system is a classic example of the role show business can play. One of its outstanding attributes was reliance on modern management techniques such as PERT (Program Evaluation Review Techniques) and PPBS (Program Planning and Budgeting Systems)—both better known by their acronyms than by their names. Specialist roles, technical divisions, management meetings, and the Special Projects Office embodied the methods.

In the wake of the project’s success—on time and under budget—analysts credited the project’s innovative management approach. The admiral in charge received recognition for his leadership in bringing modern management techniques to the U.S. Navy. A team of British experts visiting the project were impressed and, upon returning home, highly recommended PERT and PPBS to their Admiralty.

A later study by Sapolsky (1972) revealed a very different explanation for the project’s accomplishments. Management innovations were highly visible but only marginally connected to the actual work. Specialists’ activities linked loosely to other elements of the project. Plans and charts produced by the technical division received scant attention. Management meetings served as public arenas to chide poor performers and to stoke the project’s religious fervor. The Special Projects Office served as an official briefing area. Visiting dignitaries were regaled with impressive diagrams and charts almost entirely unrelated to the project’s progress. The team from the British Navy apparently surmised all this and still recommended a similar approach back home (Sapolsky, 1972).

Instead of serving intended rational purposes, modern management techniques contributed to a saga that built external legitimacy and support and kept critics and legislators at bay. The myth afforded breathing space for work to go forward and elevated participants’ spirits and self-confidence. The Polaris story demonstrates the virtues of drama in engaging the attention and appreciation of both internal and external audiences: “An alchemist’s combination of whirling computers, bright-colored charts, and fast-talking public relations officers gave the Special Projects Office a truly effective management system. It mattered not whether the parts of the system functioned, or even existed. It mattered only that certain people, for a certain period of time, believed that they did” (Sapolsky, 1972, p. 129).

Of course, not all theater has a happy conclusion. The drama in theater or on television features tragedy as well as triumph. U2’s music video “The Saints Are Coming” demonstrates the power of drama in driving home the meaning of an experience. The video, which focuses on the effects of Hurricane Katrina, opens with scenes of the storm’s traumatic aftermath: New Orleans under water, survivors trapped on roofs pleading for help, the horror of conditions at the Superdome, widespread devastation. The song lyrics plaintively call for the next act: When will aid arrive?

CNN news flashes appeared periodically on the screen below images of the ravaged city: “U.S. Iraq Troops Redeployed to New Orleans,” “U.S. Troops Come Home to Help Katrina Victims,” “Air Force Launches Aid Drops.” With the melancholic lyrics as musical background, the video shows swarms of Black Hawk helicopters arriving to pluck victims from roofs, and larger helicopters and Harrier fighters dropping food and medical supplies. The video fades and a large sign appears: “Not as seen on TV.”

The U2 video packs a wallop for several reasons: Bono himself is a heroic symbol on the world stage. The opening acts reveal the pathos all Americans observed initially. The “troops to the rescue” imagery conveys what everyone wanted to believe; the final scene transports us back to the reality viewers actually saw firsthand on their television sets.

During previous hurricanes, drama played quite differently. The Federal Emergency Management Agency (FEMA) came onstage as a heroic rescuer. The script was clear. A hurricane hits, bringing devastation and suffering. FEMA arrives with symbolic fanfare to dispense aid and hope to victims. A world audience applauds the performance. FEMA takes a bow. In New Orleans, the drama went off track. The hero missed most of the show. The audience waited for an actor who arrived too late and then muffed his lines. The world saw a once-heroic agency become a bumbling performer in a bad play.

The juxtaposed theatrical masks of comedy and tragedy capture the different dramas played out by Polaris and FEMA. Polaris staged a drama that wowed its audience and became a smash hit. FEMA blew its act. Hurricane Sandy in 2012 gave FEMA an opportunity for a comeback with a new director, a new cast, and a revised script from a skilled playwright. This time the performance received an ovation from the audience, including the governor of New Jersey and the mayor of New York City.

Theater arouses emotions and kindles our spirit or reveals our fears. It reduces bewilderment and soothes open wounds. It provides a shared basis for understanding the present and imagining a more promising tomorrow. Dramaturgical and institutional theorists have explored the role of theater in organizations, and we begin this chapter by discussing their views. We then look at structure and other organizational processes as theater.

Dramaturgical and Institutional Theory

Institutional theory, a fairly recent addition to the management literature, draws on ideas from earlier dramaturgical theories. We can identify two traditions (Boje, Luhman, and Cunliffe, 2003): one represented by the work of Erving Goffman (1959, 1974), who pioneered in the use of theater as a metaphor for understanding organizations, and the other by the work of Kenneth Burke (1937, 1945, 1972), who drew his inspiration from philosophy and literary criticism. Goffman approached organizations as if they were theatrical; Burke saw them as theater. Despite their differences, both theorists opened a window for seeing organizations in a new way: “Most of our organizational life is carefully scripted; we play out our scenes in organizationally approved dress codes and play the game by acceptable roles of conduct” (Boje, Luhman, and Cunliffe, 2003, p. 4).

Whereas dramaturgical theorists focus on social interaction among individuals and on internal situations, institutional scholars extend theatrical examples like Polaris and FEMA to the interface between organizations and their various publics. Scott (2014) sees the institutional view encompassing three schools of thought, each embedded in different literatures. The first views institutions as providing the rules of the game in which organizations are the players (North, 1989). A second view holds that “individual organizations devise distinctive characteristics over time, developing commitments that channel and constrain future behavior in the service of their basic values (Williamson 1985; Selznick, 1957).

The third view argues that structure in institutional organizations reflects prevailing social myths and ideas in good currency about what constitutes a good organization. Contemporary organizations gain legitimacy through isomorphism—reflecting current thinking about modern management technology. Accordingly, technical organizations plan in order to change, whereas institutionalized organizations plan instead of changing. “Plans are regarded as ends in themselves—as evidence that we are a humane and scientific people who have brought yet another problem under rational control” (Meyer and Rowan, 1983, p. 126).

DiMaggio and Powell agree that in some contexts organizations worry more about how innovations appear than what they add to effectiveness: “New practices become infused with value beyond the technical requirements of the task at hand…As an innovation spreads, a threshold is reached beyond which adoption provides legitimacy rather than improves performance” (1983, p. 142). Staw and Epstein (2000) present evidence that adoption of modern management techniques accentuates a company’s legitimacy and increases CEO compensation—even if the methods are not fully put into action. Performance may not improve, but perceptions of innovativeness and confidence in management still rise.

Institutional theory has been criticized for focusing more on why organizations don’t change than how they do and for attending to why organizations are irrational instead of how they might become more effective (see Peters, 2000; Scott and Davis, 2007). But the ideas provide a counterweight to traditional views of organizations as closed, rational systems (Meyer, 2008). In such views, functional demands shape social architecture. The environment serves as a source of raw materials and a market for finished products. Efficiency, internal control of the means of production, and economic performance are key concerns. Exterior fluctuations and production uncertainties are buffered by rational devices such as forecasting, stockpiling, leveling peaks and valleys of supply and demand, and growth (so as to get more leverage over the environment).

Institutional theorists present a dramaturgical retake on rational imagery. Organizations, particularly those with vague goals and weak technologies, cannot seal themselves off from external events and pressures. They are constantly buffeted by larger social, political, and economic trends. The challenge is sustaining isomorphism—that is, schools need to look like schools “ought to” and churches need to look like churches “should” in order to project legitimacy and engender belief, support, faith, and hope among a variety of constituents. Structure and processes must reflect widely held myths and expectations. When production and results are hard to measure, correct appearance and dramatic presentation become the principal gauge of an organization’s effectiveness.

Greatest Hits from Organization Studies

Hit Number 1: Paul J. DiMaggio and Walter Powell, “The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields,” American Sociological Review, April 1983, 48, 147–160

At the top of our list of greatest hits is an article by Paul J. DiMaggio and Walter Powell that parallels our view of organization as theater. Isomorphism, as DiMaggio and Powell use the word, refers to processes that cause organizations to become more like other organizations, particularly members of the same “organizational field.” The authors define an organizational field as a set of organizations that “constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products” (p. 148). This is similar to the concept of an organizational ecosystem, discussed in Chapter 11 . As an example, think about public schools. They are like each other but unlike most other kinds of organization. They have similar buildings, classrooms, curricula, staffing patterns, gyms, and parent-teacher organizations. The structural frame explains these similarities as resulting from the need to align structure with goals, task, and technology. DiMaggio and Powell counter that isomorphism occurs for reasons unrelated to efficiency or effectiveness.

They describe three kinds of isomorphism: coercive, mimetic, and normative. Coercive isomorphism occurs when organizations become more similar in response to outside pressures or requirements. For example, MBA programs tend to have similar admission requirements, curricula, and faculty credentials because so many of them are accredited by the same body using the same standards. Mimetic isomorphism occurs when one organization simply copies another, as when a university of modest reputation adopts a set of freshman requirements borrowed from those at Harvard or Yale. To DiMaggio and Powell, imitation is particularly likely in the presence of fuzzy goals and uncertain technology. When uncertainty makes it hard to prove one approach better than another, imitation saves time and may buy legitimacy.

Normative isomorphism, the third type, occurs because professionals (such as lawyers, doctors, engineers, and teachers) bring shared ideas, values, and norms from their training to the workplace. DiMaggio and Powell argue that professionally trained individuals are becoming more numerous and predominant. Managers with MBAs from accredited business schools carry shared values, beliefs, and practices wherever they go. New ideas from business schools may or may not produce better results, but they spread rapidly because the newly minted professionals believe in them.

The primary benefit of isomorphism is to improve an organization’s image rather than its products and services: “Each of the institutional isomorphic processes can be expected to proceed in the absence of evidence that they increase internal organizational efficiency. To the extent that organizational effectiveness is enhanced, the reason will often be that organizations are rewarded for being similar to other organizations in their fields. This similarity can make it easier for organizations to transact with other organizations, to attract career-minded staff, to be acknowledged as legitimate and reputable, and to fit into administrative categories that define eligibility for public and private grants and contracts” (p. 153).

The idea that appearance can be more important than tangible outcomes may seem heretical. Such heresy can easily lead to cynicism, undercutting confidence in organizations and undermining faith and morale for those struggling to make a difference. Skepticism is also spawned by rationalists who champion a tidy cause-and-effect world where concrete outcomes matter most.

The symbolic frame offers a more hopeful interpretation. Institutionalized structures, activities, and events become expressive components of organizational theater. They create ongoing drama that entertains, creates meaning, and portrays the organization to itself and outsiders. They undergird life’s meaning. Geertz observed this phenomenon in Balinese pageants, where “the carefully crafted and scripted, assiduously enacted ritualism of court culture was…‘not merely the drapery of political order but its substance’” (Mangham and Overington, 1987, p. 39).

Organizational Structure as Theater

Recall that the structural frame depicts a workplace as a formalized network of interdependent roles and units coordinated through a variety of horizontal and vertical linkages. Structural patterns align with purpose and are determined by goals, technologies, and environment (Lawrence and Lorsch, 1967; Perrow, 1979; Woodward, 1970). In contrast, a symbolic view approaches structure as stage design: an arrangement of space, lighting, props, and costumes that make the drama vivid and credible to its audience.

One dramaturgical role of structure is reflecting and conveying prevailing social values and myths. Settings and costumes should be appropriate: a church should have a suitable building, religious artifacts, and a properly attired member of the clergy. A clinic should have examination rooms, uniformed nurses, and licensed physicians, with diplomas prominently featured on the wall. Meyer and Rowan (1978) depict the structure of public schools as largely symbolic. A school has difficulty sustaining public support unless it offers fashionable answers to three questions: Does it offer appropriate topics (for example, third-grade mathematics or world history)? Are topics taught to age-graded students by certified teachers? Does it look like a school (with classrooms, a gymnasium, a library, and a flag near the front door)?

An institution of higher education is judged by the age, size, and beauty of the campus, the amount of its endowment, its faculty-student ratio, and the number of professors who received doctorates from prestigious institutions. Kamens (1977) suggests that the major function of a college or university is to redefine novice students as graduates who possess special qualities or skills. The value of the status transformation is negotiated with important constituencies through constant references to the quality and rigor of educational programs. The significance of the conversion from novice to graduate is validated by structural characteristics, reputation of faculty, success of former students, or appearance of the institution.

A valid structural configuration, in Kamens’s view, depends on whether an institution is elite or not and whether it allocates graduates to a specific social or corporate group. Each type of institution espouses its own myth and dramatizes its own aspects of structure. Ivy League schools such as Harvard, Yale, and Princeton are known for producing graduates who occupy elite roles in society. Elite schools dramatize selectivity, maintain an attractive residential campus, advertise a favorable ratio of faculty to students, and develop a core curriculum that restrains specialization in favor of a unified core of knowledge.

If an institution or its environment changes, theatrical refurbishing is needed. Audiences call for revisions in actors, scripts, or settings. Because legitimacy and worth are anchored in the match between structural characteristics and prevailing myths, organizations alter appearances to mirror changes in social expectations. For example, if total quality management, reengineering, or Six Sigma becomes the fashionable addition to the screenplay for progressive companies, corresponding programs and consultants spread like fire in a parched forest.

New structures reflect legal and social expectations and represent a bid for legitimacy and support from the attending audience. An organization without an affirmative action program, for example, is suspiciously out of step with prevailing concerns for diversity and equity. Nonconformity invites questions, criticism, and inspection. It is easier to appoint a diversity officer than to change hiring practices deeply embedded in both individual and institutional beliefs and practices. Because the presence of a diversity officer is more visible than revisions in hiring priorities, the addition of a new role may signal to external constituencies that there has been a new development in the drama even if the appointment is “window dressing” and no real change has occurred.

In this light, government agencies serve mostly political and symbolic functions: “Congress passes on to these agencies a type of symbolic control; they represent our belief in the virtues of planning and the value of an integrated program of action. But the agencies are given no formal authority over the organizations whose services they are to control and few funds to use as incentives to stimulate the cooperation of these existing organizations” (Scott, 1983, p. 126).

In practice, agencies reduce tension and uncertainty and increase the public’s sense of confidence and security. Only in a crisis—as when people or pets die from eating contaminated food—do people ask why regulators failed to do their job. Theatrically, agencies enact their roles to create a drama showing that violators will be identified and punished and flaws will be remedied so that the problems never recur.

Organizational Process as Theater

Rationally, procedures produce results. Administrative protocols coordinate work. Technology improves efficiency. Lectures impart information, knowledge, and wisdom. Medical care cures illness. Social workers manage cases and write reports to, occasionally, identify and remedy social ills.

People in organizations spend much of their time engaged in such endeavors. To justify their toil, they want to believe that their efforts produce the intended outcomes. Even if the best intentions or the most sophisticated technologies do not yield expected results, the activities play a vital theatrical role. They serve as scripts and stage markings for self-expressive opportunities, improvisation for airing grievances, and amphitheaters for negotiating new understandings. We illustrate how these figurative forms alter the context of meetings, planning, performance appraisals, collective bargaining, the exercise of power, and symbolic management.

Meetings

March and Olsen (1976) were ahead of their time in depicting meetings as improvisational “garbage cans.” In this imagery, meetings are magnets attracting individuals looking for something to do, problems seeking answers, and people bringing solutions in search of problems. The results of a meeting depend on a serendipitous interplay among items that show up: Who came to the meeting? What problems, concerns, or needs were on their minds? What solutions or suggestions did they bring?

Garbage-can scripts are likely to play out in meetings dealing with emotionally charged, symbolically significant, or technically fuzzy issues. The topic of mission, for example, attracts a more sizable collection of people, problems, and solutions than the topic of cost accounting. Meetings may not always produce rational discourse, sound plans, or meaningful improvements. But they serve as expressive occasions to clear the air and promote collective bonding. Some players get opportunities to practice and polish their lines in the drama. Others revel in the chance to add excitement to work. Audiences feel reassured that issues are getting attention and better times may lie ahead. But problems and solutions characteristically linger on, detached from one another.

Planning

An organization without a plan is in peril of being seen as reactive, shortsighted, and rudderless. Planning, then, is an essential ceremony that organizations stage periodically to maintain legitimacy. A plan is a decoration displayed conspicuously and with pride. A strategic plan carries even higher status. A new leader in a school, college, or public agency almost invariably initiates a strategic planning process shortly after arrival. Mintzberg’s insightful book The Rise and Fall of Strategic Planning (1994) presents an array of survey and anecdotal evidence questioning the link between strategic planning and its stated objectives. He shows that the presumed linear progression from analysis to objectives to action to results is more fanciful than factual. Many executives recognize the shortcomings of strategic planning yet continue to champion the process: “Recently I asked three corporate executives what decisions they had made in the last year that they would not have made were it not for their corporate plans. All had difficulty identifying one such decision. Since each of their plans [was] marked ‘secret’ or ‘confidential,’ I asked them how their competitors might benefit from the possession of their plans. Each answered with embarrassment that their competitors would not benefit. Yet these executives were strong advocates of corporate planning” (Russell Ackoff, quoted in Mintzberg, 1994, p. 98).

Planning persists because it plays an eminent role in an organization’s enduring drama. Quinn notes: “A good deal of the corporate planning I have observed is like a ritual rain dance; it has no effect on the weather that follows, but those who engage in it think it does. Moreover, it seems to me that much of the advice and instruction related to corporate planning is directed at improving the dancing, not the weather” (quoted in Mintzberg, 1994, p. 139).

Discussing universities, Cohen and March (1974) list four symbolic roles that plans play:

· Plans are symbols. Academic organizations have few real pieces of objective evidence to evaluate performance. They have nothing comparable to profit or sales figures. How are we doing? No one really knows. Planning is a signal that all is well or improvement is just around the corner. A school or university undergoing an accreditation review engages in a “self-study” and lays out an ambitious strategic plan, which can then gather a decade of dust until it is time to repeat the process.

· Plans become games. Especially where goals and technology are unclear, planning becomes a test of will. A department that wants a new program badly must justify the expenditure by substantial planning efforts. An administrator who wishes to avoid saying yes but has no real basis for saying no can test commitment by asking for a plan. Benefits lie more in the process than the result.

· Plans become excuses for interaction. Developing a plan forces discussion and may increase interest in and commitment to new priorities. Occasionally, interaction yields positive results. But rarely does it yield an accurate forecast. Conclusions about what will happen next year are notoriously susceptible to alteration as people, politics, policies, or preferences change, but discussions of the future seldom modify views of what should be done differently today.

· Plans become advertisements. What is frequently labeled as a plan is more like an investment brochure. It is an attempt to persuade private and public donors of an institution’s attractiveness. Plans are typically adorned with glossy photographs of beautiful people in pristine settings, official pronouncements of excellence, and a noticeable dearth of specifics.

Cohen and March (1974) asked college presidents their views of the linkage between plans and decisions. Responses fell into four main categories:

“Yes, we have a plan. It is used in capital project and physical location decisions.”

“Yes, we have a plan. Here it is. It was made during the administration of our last president. We are working on a new one.”

“No, we do not have a plan. We should. We’re working on one.”

“I think there’s a plan around here someplace. Miss Jones, do we have a copy of our comprehensive, ten-year plan?” (p. 113).

Evaluation

Assessing the performance of individuals, departments, or programs is a major undertaking. Organizations devote considerable time, energy, and resources to appraising individuals, even though many doubt that the procedures connect closely with improvements, and Culbert (2010) insists that they do more harm than good. Organization-wide reviews yield lengthy reports presented with fitting pomp and ceremony. Universities convene visiting committees or accrediting teams to evaluate schools or departments. Government requires

8,9,10,11

CHAPTER 13 CULTURE IN ACTION

The Eagle Group’s Sources of Success

Becoming a Member

Diversity Is a Competitive Advantage

Example, Not Command

Specialized Language

Stories Carry History, Values, and Group Identity

Humor and Play

Ritual and Ceremony

Honorary PAL Award

The Contribution of Informal Cultural Players

Soul Is the Secret of Success

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CHAPTER 13 CULTURE IN ACTION

The Eagle Group’s Sources of Success

Becoming a Member

Diversity Is a Competitive Advantage

Example, Not Command

Specialized Language

Stories Carry History, Values, and Group Identity

Humor and Play

Ritual and Ceremony

Honorary PAL Award

The Contribution of Informal Cultural Players

Soul Is the Secret of Success

Do you need a similar assignment done for you from scratch? Order now! Use Discount Code "Newclient" for a 15% Discount!

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DISCLAIMER

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CONTACT US

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Archive

Do you need a similar assignment done for you from scratch? Order now!
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