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From the PublisherBack in the good old days, when news travelled at the speed oftelex and the world seemed big, change was something that happenedto companies once every few years.
Chief executives would initiate "change programmes" to rid theirorganisations of old habits and inculcate new ones. Strategy wouldbe re-examined, priorities reset, jobs redesigned and reportinglines redrawn.
To be sure, these initiatives came with a variety of labelsattached. In the 1970s, diversification and job enrichment were thewatchwords. The 1980s belonged to strategic focus and quality. The1990s gave us business process re-engineering and e-commerce. Butthe underlying assumption was always the same: change was periodic,planned and uncomfortable, given that the natural state oforganisations was reckoned to be equilibrium.
The snag is that these days news travels so fast - and competitiveadvantage is so fleeting - that the planned approach has provedwoefully inadequate. Change programmes come and go so quickly thatmanagers and employees can barely keep up. The result isdysfunctional organisations with low morale and poor customerservice. Yet chief executives who decide to slow the pace of changerisk being overtaken by competitors.
If you think this is an exaggeration, take a look at Built toChange, a splendid new book by Ed Lawler and Chris Worley,both of the University of Southern California's Centre forEffective Organisations. As the authors note: "An analysis ofFortune 1000 corporations shows that between 1973 and 1983, 35 percent of companies in the top 20 were new. The number of newcompanies rises to 45 per cent when the comparison is between 1983and 1993. It increases even further, to 60 per cent, when thecomparison is between 1993 and 2003. Any bets to where it will bebetween 2003 and 2013?"
Yes, a handful of companies do seem to be able to hang in there.The management practices of this select few were examined in Builtto Last, by Jerry Porras and Jim Collins, published in 1994. Butsurviving is hardly the same as thriving. About half of thecompanies featured in Built to Last have fallen from grace sincethe book appeared. The same fate befell many of the companiesfeatured in 1982's In Search of Excellence. The disquieting truthis that very, very few companies (including Procter & Gamble,Johnson & Johnson, Toyota and a handful of others) manage tosustain high performance over long periods.
The problem, argue Profs Lawler and Worley, is that wecontinue to design organisations with stability in mind. Executivesneed to think about building companies not only to last but also tochange, in the sense of responding to the competitive environmentwithout going through the trauma of planned change.
The message is not entirely new. Management writers such as TomPeters and Rosabeth Moss Kanter first took issue with the plannedchange paradigm more than 20 years ago. They argued instead forcorporate cultures that rewarded innovation and let change bubbleup from below. More recently, managers have been urged to drawinspiration from complex adaptive systems found in nature bycreating organisations that operate "on the edge of chaos".Alternatively, they have been told to make their bureaucracies morelike markets by introducing internal competition for ideas, capitaland labour. Enron, the energy trader, you may recall, was astandard-bearer for many of these trendy ideas before it became abyword for malfeasance.
What makes Built to Change worth reading is its careful attentionto the unglamorous stuff of management - organisational design,decision-making processes, measurement and reward systems,recruitment criteria and so on. Yes, corporate culture isimportant. Yes, internal market mechanisms may work sometimes. Butof more immediate concern are the policies and processes thatunderpin day-to-day work.
If we want our company to be more responsive to changingcircumstances, how should we organise ourselves? (Answer: inself-managing teams and small close-to-the-customer businessunits.) What kind of people should we hire? (Normal folk will dojust fine.) How should we appraise individual performance? (Do notexempt top management, measure outcomes as well as behaviour, avoidforced ranking.)
The ultimate Built to Change company? Profs Lawler andWorley offer nothing so gauche as a league table. My vote goes toToyota, which has over the years shifted its source of competitiveadvantage from low price to high quality to sharp marketsegmentation and eco-friendly technology.
All in all, this is classic Ed Lawler. A serious student oforganisations before many of today's chief executives were born, hehas collected more detailed data about the management practices ofmore companies over a longer period than almost any otherresearcher. His writing is research-based, relevant, long oninsight and short on extravagant claims. For the record, Built toChange is his 38th book.
My only quibble is with the notion that the average person willalways embrace change if the organisational context is correct.Personal experience tells me that change - even voluntary change -always involves fear, uncertainty and elements of loss. I willdevote next week's column, my last after 15 years as an FinancialTimes journalist, to this piquant topic. (The Financial TimesLimited, 22 February 2006)
"...bold,fascinating..." (getAbstract, August 2006)