Why change is a challenge
Level 1.2 The internal playing field
This level addresses the main obstacles that prevent most organisations from transforming challenges into change.
Background
In the years running up to this book, there have been various officials from different organisations, at different times, offering feedback on the challenges in their playing field. Among the interviewees, there were managers within the airfreight industry, retail, C-suite, managers of charities, the financial director of a large cable company, executives of banks, construction companies and booksellers. When asked, "What is your long-term vision?" The answer given was increasingly this: "I am happy when I have the chance to think three months ahead." Or: "Everything is going so fast nowadays, that what we think about or invent today is already outdated by tomorrow. "
In recent years, the world around changes so much faster than any organisation can adapt to it. Fewer and fewer organisations are managing to succeed in keeping up with the changes in the world and in making their internal systems suitable and up to date. The question that arises then: "Why is it that it is so difficult for organisations to (continuously) adapt to the current reality? "
According to the interviewees, the internal obstacles are mainly those that often stand in the way of change issues for organisations, and these can be divided into:
The obstacles mentioned here are explored further below.
Structures
‘Nobody uses a phone that is older than five years, why then are there organisational structures that are older than fifty years still around?’
Organisations were at one point established by founders (shareholders and directors) who, while the organisation grew, hired new people to invent, make and sell new products to meet a demand in the marketplace. If an organisation grows above an x-number of people (on an average of ten to twenty employees), employees would then be made responsible for certain functions and fields of expertise. We then distinguish between departments and functions, such as that of purchasing, production and sales. After that staff positions are added, such as administration, finance and personnel management as support. Eventually, an organization chart is created for an organisation, usually with a hierarchical distribution from the top down.
This linear or pyramid-shaped organisational structure came into being over time from management guru Frederick Taylor, who may have taken his inspiration from the feudal system. It dates to the industrial revolution when Ford only produced one type of car - in the colour black - and would be sold en masse to the consumer. Employees used the same cars that were produced on the same assembly line in the factory. The thought-concept of Taylor assumed that people who do low-skilled work (read: repetitive work), are also dumb. Managers are necessary to keep those people working and to check their work from a hierarchical perspective in the organisational structure. Managers sat above everyone to be able to physically supervise a factory hall (the shop floor). There was a clear distance between manager and employee, not just in the workplace, but also privately.
Unfortunately, there still is a lot of 'top-down' regulation and communication within organisations. Strangely enough, though, many organizations still work this way, even after the introduction of the hierarchical organizational model a hundred years ago, even though the business playing field has completely changed. Organizations have been trying for decades, via various change processes to alter their way of working, but job titles, roles, tasks and associated responsibilities just continue to persist.
At the beginning of the century, Stephen Covey established the principle of servant leadership, where managers took on a more facilitative role but too few organisations managed to embed it in their culture. Using the idea of servant leadership, the pyramid shape of the hierarchical organisational model can be reversed. Seen in this reversed way, board members and managers become supportive (serving) members of the organisation.
In and of itself, this isn’t such a crazy thought. Managers have to ensure that the life of their employees is as pleasant as possible, if that’s the case then those employees will work at their maximum output ability. The drawback of a top-to-bottom or bottom-to-top organisational structure is not just that people with different KPIs continue to work in silos, but also that it remains a static "linear" structure. If such a structure is used in a highly variable and dynamic marketplace, then it’s easy to see that it could never effectively increase the capacity for change of an organisation.
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A pyramid is solid and can stand for centuries, but the markets of the future require nomadic organisations that can move quickly and adapt to new living environments. The organisation maybe doesn’t move physically, but the market around it is moving, constantly and ever faster.?
Systems
There is often a second reason given as an answer to the question of why it is so difficult for organisations to stay relevant in an ever-changing business playing field. And that reason has to do with systems. It is then usually concerned with hardware, networks and software. To cope with the ever-changing outside world the main question then is how systems can be utilised optimally.
Systems maintain structures
Immediately after the organisational structure is established, the systems that make up this structure and keep it in place are formed, and they are the dominant obstacle to the ability for organisations to change. On the one hand, this is logical, because in that way it can be neatly determined how each department is performing separately. But on the other hand, there is a lack of logic in this, because people within the organisation than are enormously limited in developing their creativity and in their choice of what their optimal way of working is for them.
Within the systems, the final financial reporting is often the highest tier in the central pyramidal structure. The activities and actions of employees are subordinate to how the systems are used to create desired reports that are based on the business units and accounting numbers that the organisation uses. The cost centres and defined categories lead to the question of how the organisation’s members can contribute to the set KPIs. These systems offer little room for freedom and force users to act to work in a way that is, in fact, not humane and desirable.
In addition to this, most software systems have been presented as business models for the supplier or 'service provider'. But is service being rendered here? These systems are often just a lock-in for an organization, which then loses tons of money on customization and support.
As long as these static systems are still used, organisations won’t move forward and will remain in place while structures are maintained. Both aspects support each other like glue and wood or - perhaps more accurately stated - like cement and bricks, like with a pyramid.
To build a better and more flexible building, everything must be demolished down to the foundation. Subsequently, systems must be chosen that support the optimal working processes for an organisation and not the other way around.
Collaboration (is more important than) > systems
The email was at one point launched as a so-called improved 'communication’s form', but, of course, it was no more than the digital version of regular mail. It was nice to exchange messages between colleagues and friends, but it was far from being suitable for the processes of cooperating. The email was already technically possible in the 1970s but became especially popular in the 1990s. In the meantime, we’ve learned to use email within departments and for various processes. To make sure that everyone is informed, as many people as possible will be cc’d into an email. This results in an excess of information (or rather: data) and delegated responsibility (unloading). It would be much better to speak to people face to face and to show them where necessary documents could be found (on a disk drive), and not have to share those documents via email. The more people added to a Cc in an email, the more likely it is that no one takes responsibility for something particular unless of course it's stated as being part of the job. Some of the executives that were interviewed indicated that their work consisted of handling emails and sitting in meetings. This doesn't sound very appealing, nor dynamic.
Fortunately, nowadays there are quite a few alternative software systems that allow for a better level of cooperation. Slack for example is a tool that stems from a gaming company and is one that has saved organisations from email traffic and wasting tons of time. It's an intranet environment that can be organised around channels. Those channels can be freely defined, for example, around products or processes. Channels can also be assigned per employee or team where they can communicate and collaborate. Various forms of content can be shared via Slack, such as text documents and photos. It can also be linked to Google docs and other plug-ins so that every conceivable document is shareable without the need for email. The value of the company was estimated to be at two billion euro in 2016, not bad for a company that was founded in 2013. Alternative online collaboration systems are Asana, Basecamp and Yammer, to name but a few.
In addition to the aforementioned standard solutions for promoting collaboration and reducing e-mail traffic, there are also custom solutions nowadays that are a lot more affordable than ten to fifteen years ago. At the time, you easily paid a few million euros for a custom software solution, nowadays custom systems can be developed for less than a hundred thousand euros (depending on the complexity of course). These are systems that work on every device and that can support a dynamic way of working, including delivering reports in the desired format. Of course, these systems will eventually be available as turn-key systems for other organizations.
It’s not my intention to give a solution in just two paragraphs for the obstacle 'systems'. With this brief description, I rather want to quickly sketch out how systems, on the one hand, maintain the aforementioned obstacle of ‘structure' and, on the other hand, are usually not even designed to support an organization in achieving its objectives. They are instead designed for easy generation of reports that provide management with insights into the balance sheet and profit-and-loss account. The fact that the whole organization has to settle this so that a handful of people can have an insight into the progress of the organization, has been passed over for some reason for the last few decades.
Please share below if you recognize these obstacles in your organisation and how you address them (if at all). In my next posts I will elaborate on two other structural challenges and eventually propose innovations that can overcome these obstacles. #business #management #organogram #structure #agile #peterdrucker