A contrarian’s guide to organisational transformation

10 April
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A contrarian’s guide to organisational transformation

Written by: PH Editor

Hello Dear Readers,

About 18 months ago, I wrote a piece in which I made a somewhat oft-handed prediction that 2016 would be the Year of Innovation and Agility. And for the most part, I reckon I was on the money. Just like a reliable indicator of the peak in an overcooked sharemarket is when cab drivers start dispensing stock tips, when the likes of painfully staged videos such as this one and this one appear—both of which represent the folly of artificial attempts to ‘be’ innovative and agile—you know we’ve reached peak fad.

Innovation and agility has became the must-do mantra of nearly every organisation today.

And yet, despite the mantra’s popularity, it seems that very few folk talking about innovation and agility actually understand what they are saying*. More often than not, they have a fundamental misunderstanding of the concepts: indeed, ‘being’ innovative and agile is exactly that; it’s a way of being, not a process of doing**.

*if you’d like to understand more about these concepts, my suggestion is to start with the work of Professor Clayton Christensen (regarding disruptive innovation), and the Agile Manifesto (regarding agility, because I think the popularity of ‘being’ agile has derived from the process of Agile Software Development).
**unless you’re talking about Agile as a process—refer to * above—which I’m not here.

But anyway, this isn’t another tedious newsletter with requisite seven discrete innovative and agile things you can do, because, well… that would be bullshit—it just doesn’t work that way, despite the promises of your workshop facilitator or your internationally-renown consultant.

Rather, this piece of writing is all about transformation.

Transformation is so hot right now

And that’s because organisational transformation is—just like Hanselso hot right now.

Yep, that’s right: simply talking about being innovative and agile is so yesterday, and instead a transformation to becoming an innovative and agile organisation is the latest must-do organisational development fad*.

*OK, so that’s not quite right. The notion of business transformation isn’t entirely new, but from what I’ve seen across corporate Australia and indeed the globe over the past 12 months, it seems like pretty much every organisation in every industry is undergoing a large-scale transformation of some kind, be it structurally, strategically or operationally. Of these three types of transformation, the most exciting and yet potentially most over-hyped are those concerning structural transformations from hierarchy to network.

Wanna know when a management fad becomes uber* cool? It’s when the big consultancies such as the McKinseys and Bains and the business schools such as the Harvards and Whartons rapidly increase their number of articles referencing it: see here and here, and here and here, for just a few examples.

*written with some irony.

And the reason for this?

It’s because the business of transforming big business has become, well, really big business. It’s the stuff that keeps the big consulting firms’ business models humming along quite nicely, thank you very much. It’s not uncommon for consultants working on large organisational transformation initiatives to wrack up literally tens of millions of dollars in fees.

But in this increasingly complex world, the traditional engineered, mechanistic and repeatable approach taken to organisational transformation is highly problematic: a fundamental misunderstanding about the nature of this interconnected and complex world* takes care of that. It is grossly flawed, and more often than not, it just doesn’t work. And when I say that it doesn’t work, I am talking not only from a theoretical viewpoint, but also anecdotally and empirically** & ***.

*now, if you read my previous piece here, where I was suggesting that our modern, western approach to the world is flawed, you won’t be surprised to hear this. But if you’re a new subscriber, can I suggest that you visit it at some point?
**in the work that I do, I am exposed to this evidence on a relatively frequent basis. Note that I’m not referring to the oft-quoted statistic that 70% of transformation efforts fail, as cited by the Harvard Business Review, nor the 60% that McKinsey consistently refers to. In fact, I’m somewhat sceptical of these numbers, and I suspect that they are conveniently, and ironically, pushed to sell consulting services and mechanistic organisational transformation initiatives… which inevitably don’t work. It’s a vicious circle.
***this resource here provides a treasure-trove of failed project examples, with some (but not all) being transformational in nature.

Why the traditional approach to transformation doesn’t work

The traditional approach to organisational transformation doesn’t work, because it goes something like this:

  1. engage ‘expert’ consultant of high international repute to implement previously proven transformation formula (preferably based on a quadrant model), and tell everyone about it.
  2. identify how dire the current situation is, and tell everyone about it. Make it seem so desperate that if we choose not to do anything at all, the stars will fall from the sky and the business will fail spectacularly.
  3. build a team of leaders who will lead the organisation through the transformation, and tell everyone about it. These leaders will need to be inspirational, as they’ll have to rally the troops. Once more unto the breach, dear friends, once more!
  4. identify a desired and idealised end state, and tell everyone about it. These days, that end state always looks suspiciously like the latest Silicon Valley start-up success, such as Uber or Airbnb.
  5. identify a fixed date and budget by which the end state will be reached, and tell everyone about it.
  6. build a multi-year strategy to enable the end state to be reached, and tell everyone about it. Identify all current obstacles to that end state, and seek to remove them.
  7. create an artificial narrative to convince people both internally and externally about the merits of the transformation and utopic end state. Spend a lot of money on creating this narrative. And then tell everyone about it.
  8. institutionalise the processes and behaviours identified within the strategy and narrative to ensure the end state is reached no matter what, and tell everyone about it.
  9. once it becomes clear a few years later that the transformation effort has failed, tell nobody about it.
  10. repeat steps 1-9, ad infinitum.

OK, so this list is based upon what is probably the most well-known contemporary transformational dogma of them all, Dr John Kotter’s 8 Steps, making it an easy target for skeptics such as myself. But there’s a plethora of similar mechanistic approaches out there, all from the world’s leading ‘experts’ on organisational transformation—just check out this recent piece from McKinsey for example, where it is suggested that “a successful organisation is like a colony of bees—a well structured entity with clear processes and talented contributors who work effectively together” and where catchy platitudes like “agility rhymes with stability” float with gay abandon.

Seriously?!?

The problem with this traditional approach, I think, is threefold:

  1. many organisational transformations these days focus on increasing efficiency, which stems from an industrialised approach to business and management—most commonly attributed to the illustrious Frederick Winslow Taylor, but equally attributable to a lesser-known fellow by the name of Daniel Craig McCallum*, general superintendent of the New York and Erie Railroad Company in the 1850’s—and which is chronically rooted in the complicated domain. Efficiency inevitably removes diversity, and with it, adaptive and evolutionary potential, which is where the true roots of innovation lie.

 

*more on this fellow in a later newsletter, I reckon, as he’s had a huge impact on your working life, more-so than Fred.

 

  1. transformations with fixed strategies, budgets and end states fail to deeply consider the numerous and rapidly-shifting subtleties of the context in which the organisation exists. In the predictable cause-and-effect linearity of the complicated domain, such depths of consideration are not required because no such subtleties nor speeds of change exist. However, in the unpredictable non-linear domain of the complex, they do. As each day goes by, the subtleties become more nuanced, murkier and, I might add, interconnected. Ultimately, the rigidity of the traditional transformation approach can lead to irrelevance.
  2. ‘expert’ driven case-based approaches (i.e. the notion that past success can be repeated via formulaic repetition) don’t work in the complex domain (indeed, experts cannot by definition exist in the complex domain). Sometimes referred to as the Narrative Fallacy, and also intertwined with Nassim Nicholas Taleb’s Ludic Fallacy*, is the mistake that we are all prone to making: confusing correlation with causality, looking at past data points and weaving together a cohesive narrative of convenience**. In this instance, the narrative of convenience is that the expert consultant has all the answers and success is guaranteed.

    *the mistaken tendency to apply simplified models to the complex domain—something many consultants are prone to doing, including yours truly (formerly).
    **which might explain the recent fad amongst Australian executive teams of travelling to Silicon Valley to learn from the success of current Unicorns, under the false assumption that that success is repeatable. In actual likelihood, much of the success is attributable to circumstances of luck and serendipity.

    A contrarian approach to transformation

    Which of course leads us to the where this piece of writing has been heading*: a contrarian approach to organisational transformation.

    *as an aside, you might be interested to know that I don’t start out writing these missives with any particular intent or end-point in mind. Rather, it inevitably stems from a vague thought I’ve been nursing in the murky space between my conscious and the sub-conscious for an extended period of time**.  As I write, more often than not, I am genuinely surprised with where it leads… which is one of the beautiful traits of emergence. Of course, this approach means that I’m not terribly productive nor efficient according to ‘traditional’ metrics, but by now I think you know what I think about traditional metrics.
    **not surprisingly (if you’ve read my previous piece on the benefits of conducting an exercise in nothingness), these extended periods of time often feature surfing, time in the mountains, and long road trips.

    In searching for the roots of my attraction to this contrarian approach, I realised that they had been slowly twisting their malaise with the traditional approach from three separate yet ultimately (for me) interconnected places: my time at university, my time in the office, and my time in the mountains. My university studies in anthropology, geography and psychology had me curious about the ways in which people do what they do, both individually and in groups, around the planet, but I was ultimately dissatisfied with the linear pedagogy that seemed to encourage rote learning but little else. After ten years of employ within a consulting firm, I bore witness to an organisational restructure born from challenging market conditions and an international merger that decimated* a previously wonderous and uniquely-diverse workplace culture. In parallel with these, as my commitment to climbing in the Himalayas grew ever deeper, I was privy to numerous instances in which people of different ethnicity were subjugated in the name of traditional linear efficiencies and personal transformations of a more wealthy elite.

    *as in employee numbers of the unit I worked within dropped from 120 to about 20 in the space of a few years.

    Having proactively made a decision to leave the rigidity of the complicated domain before it killed me—both metaphorically and literally—my studies and private consulting progressively exposed me to good folk trying to enable their organisations to adapt to the changing landscape with limited amounts of success and considerable amounts of frustration and disappointment. Building upon my own thinking and truths, my exposure to the unabashed contrarianism of the likes of Nassim Nicholas Taleb (author of The Black Swan and Antifragile, amongst others), Dave Snowden (father of the Cynefin Framework and Cognitive Edge) and Danny Burns (co-author of Navigating Complexity in International Development) gave me a vernacular and the basis for a loose skeleton on which to hang this approach.

    At its most abstract level, this contrarian approach to organisational transformation is about working from where you already are, rather than aiming for where you want to be. It is about working with what you’ve already got, rather than what you’d like to have. It is about quietly going-about an ongoing transformation with minimal energy expenditure, rather than loudly going-about a finite transformation with massive energy expenditure.

    Nested beneath this level of abstraction you’ll find the following, interrelated, ideas:

– don’t tell people what’s wrong with them and why they need to change. Rather, let them tell you (via natural story capture, not via survey) what’s not working within the organisation and how it needs to change.

– don’t launch launch one finite large-scale initiative with fixed timeframes, budgets and end states. Rather, enable multiple ongoing small-scale initiatives without fixed timeframes, budgets and end states.

– don’t try and change the individual. Rather, experiment and tinker with the surrounding system.

– don’t identify the new behaviours, processes and systems that will enable the predetermined end state to be reached. Rather, identify the existing behaviours, processes and systems that you already have and which have evolutionary (adaptive and exaptative) potential, and allow them to evolve in a favourable direction.

– don’t talk about absolutes and end states. Rather, talk about dispositions and directional movement.
If you don’t quite get this yet and prefer the use of metaphor, perhaps one of the more relevant ones we can use is known as the Swimmer’s Body Illusion. This fallacy suggests that we tend to admire the professional swimmer’s body for its leanness and length, and assume that if we become swimmers and train enough then we too can acquire such physiques. The mistake of course is to assume that the swimmer’s physique has resulted from all of the training. What if, as is more likely to be the case, the swimmer’s body is naturally lean and long, making them more naturally gifted at swimming, and therefore more likely to be successful as a professional swimmer?*

*if you’re thinking that this aligns with the strengths-based approaches of Tom Rath, you’re right.

With this metaphor now illustrated, let’s revisit the three abstractions previously described, and see if they make any further sense:

  1. work from where you already are, rather than aiming for where you want to be.
  2. work with what you’ve already got, rather than what you’d like to have.
  3. quietly go-about an ongoing transformation with minimal energy expenditure, rather than loudly going-about a finite transformation with massive energy expenditure.

Compared to the traditional approach to transformation, this contrarian approach might at first view appear to be quite radical. Indeed, it will upset a lot of people who are heavily invested in the traditional approach. But after some time, it will more-likely-than-not dawn upon you that it actually just makes an awful lot of sense.

If—like most folk I encounter these days—your organisation is going through a transformation at the moment using the traditional approach, then perhaps you might forward this email to your CEO, and suggest they read it. And if the ideas here have really piqued your interest, then know that my next writing project—other than these newsletters—will be a short guidebook* based on these ideas, particularly as they relate to structural organisational transformation from hierarchy to network (I think transformation from hierarchy to network will be the key trend you’ll see in organisational development over the next five years). If you’d like to register your interest in this guidebook, let Geraldine know here, and she’ll be in touch when it’s closer to production.

*note that it’ll be a guidebook, and not an instruction manual. In the mountains, we use guidebooks to help us understand the strange new world that we’re about to enter. Guidebooks contain written and visual descriptions about the mountain’s features and potential routes to the summit—but they don’t give all of the information away—that would remove all potential for the emergent to occur. Rather, a guidebook helps us move with some confidence through the doubt and uncertainty that we all experience every time we venture into the unknown.

Patrick

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