STAT Part 3: Failure at CTO (anonymized) mindful action without performance optimization

This article is the third of a five-article series on the Strategic Tensions Model for Organizational Resilience. The Strategic Tensions Assessment Tool (STAT) is an online Organizational Resilience survey. In this series of articles, I will discuss each of the four approaches to Organizational Resilience (preventative control, mindful action, performance optimization, and adaptive innovation). I will highlight key differences in terms of purpose, people, process, and product. I will use real-world examples of organizational failures to reveal potential blind spots and risk factors. I will also suggest areas for improvement.

The case vignette

A consultancy and training organization (CTO - anonymized) had been a market leader in the UK for over 30 years.  CTO’s highly decentralized business units and culture of 'ask for forgiveness, not permission' enabled creative problem solving and rapid response to client needs. CTO opened multiple new business units in different sectors and geographic areas to respond to client demands. The business units operated as independent entities, each with highly experienced, autonomous staff meaning they could react more quickly to the specific needs of their clients. Each group could decide what services to sell to particular industries or specific markets. CTO offered services that were highly customized, personalized, and required a high level of resource to undertake.

 In 2016, CTO faced declining revenues and a potential disaster. The environment in which CTO worked was changing very rapidly. CTO faced a perfect storm of uncertainty in the business environment combined with the emergence of new entrants in the market and growing international competition.  New competitors offered standardized, 'off the shelf' solutions that are available 24/7 and were highly predictable, consistent, and more efficient than CTO products. CTO found itself in a situation of having high fixed costs in a volatile and uncertain market with competitors offering lower-cost alternatives. CTO suffered financial losses unprecedented in its fifty-year history, and 15% of the workforce suffered redundancy.

Failure at CTO - summary using the STAT

Mindful Action

 Summary: Organizational Resilience is typically created by people who use their experience, expertise, and teamwork to anticipate and adapt to threats and respond effectively to unfamiliar or challenging situations utilizing creative problem solving and improvisation. Mindful action is a defensive strategy based on flexibility.

 Purpose: Sensing environmental change and responding rapidly, creatively, and heedfully to restore a relatively stable and functioning state. Building dynamic capabilities that can adapt quickly to new challenges and opportunities while retaining the essence of 'what we do here,' 'what our reputation is built on.' The focus is on 'bouncing back' rather than fundamental reinvention.

People: Individuals hold the belief that the future is unpredictable and volatile, and the only way to cope with disruption is readiness and the ability to anticipate, notice, and respond rapidly to problems. The resilience of the organization is not static but is regarded as something that must be accomplished every day. Expertise is highly valued. People have a “healthy uneasiness” about what might go wrong. Diversity of opinion is encouraged so that people can express different ideas, perspectives, and solutions. People deal with threats and leverage opportunities, and they mobilize quickly, are nimble, and empowered to act.

 Process: The organization is relatively unstructured, informal, and decentralized. It has an adaptive, flexible, or 'organic' nature, which enables groups to be responsive as new issues and challenges arise. Because adaptation is created within known boundaries, it is easy to give people with expertise the freedom to work creatively within those boundaries. The organization is information-rich and makes deliberate attempts to create a complete picture of the work environment.  

 Product: The core aim is to defend market share or position and/or profitability and/or maintaining the current service levels. The organization delivers bespoke solutions and builds long-term relationships. Segmenting and targeting markets precisely and then tailoring offerings to match precisely the dynamic demands of customers.

At its best: Opportunities and problems are noticed, understood, and addressed quickly. People are empowered to act. The shifting demands of customers, regulators, and other stakeholders are rapidly addressed.

 Blind spots and risk factors. Mindful action is weakened when organizations stop investing in the competence of their people. If authority and boundaries are unclear, then the creative responses of some individuals or groups can become disruptive. Without preventative control, the lack of structure can lead to disarray and silos with individuals or groups acting independently. Decision-makers can become so overwhelmed that they start making bad decisions. Without performance optimization, the decentralized system can be inefficient, with much duplication of resources and activities. Without adaptive innovation, people are always firefighting and do not have time to be more forward-thinking, agile, and cutting edge.

 Areas for consideration. Increase preventative control by clearly defined roles and responsibilities; introduce a formal planning process with budgets and audits, and procedures that are regularly monitored. Increase performance optimization by rethinking and redesigning the way work is done to better support productivity, efficiency, and quality. Increase adaptive innovations by exploring new markets, capabilities and technologies, and business models. Create safe spaces for multi-disciplinary groups to create novel solutions and exploring new opportunities.

The STAT Series

In the five articles in this series, I discuss each of the four approaches and will highlight key differences in terms of purpose, people, process, and product. I will use real-world examples of organizational failures to reveal potential blind spots and risk factors. I will also suggest areas for improvement.

Articles in this series:

STAT Part 1: An Introduction to the Strategic Tensions Assessment Tool (STAT)

STAT Part 2: Failure at Thorp (Sellafield): preventative control without mindful action

STAT Part 3: Failure of CTO (anonymized): mindful action without performance optimization

STAT Part 4: Failure at Kodak: performance optimization without adaptive innovation

STAT Part 5: Failure at Uber: adaptive innovation without preventative control

If you would like a PDF copy of our report Introduction to the STAT, please connect and send me a message via LinkedIn.

About David Denyer

David Denyer is a highly cited author, engaging keynote speaker and an inspiring educator. He is a Professor of Leadership and Organizational Change, as well as a Commercial Director, at Cranfield School of Management. He runs the Organizational Resilience and Change Leadership Group. David is a trusted advisor to the leaders of some of the world's most renowned companies and government organisations. He helps them to understand issues, identifies their specific needs and then works with them to produce solutions that bring immediate improvement to their business. David also runs the Leading Organisational Resilience Programme at Cranfield, which is consistently rated as one of the world's top providers of executive development.