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Toward an Atlas of Organizational Change
Look ahead twenty or thirty years. Does anyone expect the next twenty years to be less tumultuous than the last twenty years? Given the changes expected in technology, biology, medicine, social values, demography, the environment, and international relations, what kind of world might humanity face? No one can say for sure, but one thing is reasonably certain: Continuing challenges will tax our collective abilities to deal with them. Failure to rethink our enterprises will leave us little relief from our current predicaments: rising turbulence causing rising stress; increasing disconnection and internal competitiveness; people working harder, rather than learning how to work smarter; and increasingly intractable problems beyond the reach of any individual or organization. If you are an organizational leader, someone at any level concerned deeply about these challenges, then you face a daunting task. In effect, you are engaged in a great venture of exploration, risk, discovery, and change, without any comprehensive maps for guidance.
Actually, for most of human history, intrepid explorers have set out on their journeys of discovery without comprehensive maps. The "portolans" and "rutters" of the European Renaissance, for example, were hand-drawn charts describing specific routes along byways and coastlines, often derived from the hasty notes of previous travelers. No one expected them to provide more than rough guidance. Sea and land alike were turbulent, ever-changing environments. Currents and wind patterns shifted. Vegetation evident in August might be gone the following March. Storms altered the contours of sandbars and shoals.
Yet, however imperfect, maps and guides have been among humankind's most treasured artifactsjealously guarded, often worth more than gold. The sixteenth-century explorer Ferdinand Magellan quashed an on-board mutiny because he kept his maps hidden, and thus made himself indispensable; only he knew where to pilot the ships. Even today, in an age of satellite positioning and cellular telephony, sailors and fishing fleets still regard hand-drawn rutters passed on among family and friends as their most precious cargo.
Not surprisingly, the first atlas makers, who gathered and collected those charts and notes into books and portfolios, changed history. Some, like the sixteenth-century Spanish royal court-appointed "pilot major," Amerigo Vespucci, were former explorers themselves. In Seville, Vespucci hung a giant wall chart where navigators sailing into port traced their discoveries. (Less favored map publishers had to bribe sailors and courtiers, or ply them with drink.) Vespucci's efforts did not go unrewarded: He was credited, for a time, with discovering the "Americas," and the Western Hemisphere still bears his name.
Ultimately, however, the most significant atlas maker of his time contributed something more important than just a name to history. Gerardus Mercator, a Flemish mathematician, created a medium for systematically organizing diverse data into a coherent image of the Earth as a whole. He drew the first map of the world on a grid of uniform north-south, east-west parallels. Not just Europe and the "Indies," but all of the inhabited continents could fit. To be sure, Mercator's world map was distorted: Greenland appeared almost as big as Africa (due to projecting a three-dimensional surface onto a two-dimensional map), and he placed almost two thirds of the globe above the equator, an unabashedly Eurocentric view. But Mercator's framework enabled cartographers to gradually assemble the tales of many journeys onto one global picture. The grid framework ushered in a new era of scientific mapmaking.
We, the authors of this book, likewise aspire to establish a simple and systematic way to organize the diverse tales recounted by organizational change explorers into a coherent whole.
At first glance, it appears that people seeking change in organizations have very different goals in mind. Some seek the "accelerating," "visionary," or "intelligent" organization; others, the "innovative," "living," "adaptive," or "transformational" company. They try total quality, re-engineering business processes, "boundarylessness," strategic alliances, or scenario planning. Drawing upon the predecessors to this book (The Fifth Discipline and The Fifth Discipline Fieldbook), many seek to build "learning organizations." But despite the different labels, common aspirations guide most of their efforts. They are trying to respond quickly to external changes and think more imaginatively about the future. They want better relationships, with less games-playing and more trust and openness. They want to unleash employees' natural talents and enthusiasm. They hope to move genuinely closer to their customers. Through all of this, they are striving to shape their destiny, and thereby achieve long-term financial success.
Current management literature is full of practical advice and suggestions; but it lacks a way to effectively organize diverse insights. Like the portolans and rutters of yore, it can only orient people relative to a predetermined path and destination, not relative to a broader terrain. The framework developed in the following pages represents an alternativea simple "grid." Undoubtedly, there are flaws. Like Mercator's Eurocentrism, some of these imperfections may only become evident years from now, as we see the flaws in our assumptions. Other flaws may be inherent limitations of the framework itself, like the distortion of Greenland. And it is impossible to say what measure of success will meet this new mapmaking endeavor. But without better maps, it is extremely unlikely that organizational change efforts will ever sustain themselves. Each new adventure will be the first.
We thus hope that, over time, the framework of "the dance of change" will provide a starting point, enabling all of us who care deeply about building new types of organizations to become part of a common knowledge-building process, leading gradually to better maps and healthier organizations.
The Challenges of Profound Change Art Kleiner, Charlotte Roberts, Rick Ross, George Roth, Peter Senge, Bryan Smith
"This Learning Stuff" Can Work
In 1988, the Harvard Business Review carried an article called "Planning as Learning," by Arie de Geus, coordinator of group planning at Royal Dutch/Shell. Though he was not well known outside of Shell, his article resonated with a great many peopleparticularly this line:
"We understand that the only competitive advantage the company of the future will have is its managers' ability to learn faster than their competitors."
Eight years later, the American CEO most admired by his peers, Jack Welch of General Electric, showed that he had come to the same conclusion. Welch made this statement in a GE annual report:
"Our behavior is driven by a fundamental core belief: The desire, and the ability of an organization to continuously learn from any source and to rapidly convert this learning into actionis its ultimate competitive advantage."
Several other large companiesincluding Coca-Cola, First National Bancorp, Chevron, Mead Industries, Shell Oil, and Tennecohave also featured the "learning organization" concept in recent annual reports. These and other corporate statements echo the theme that learning is the only infinitely renewable resource. Competitors can gain access to other resources: capital, labor, raw materials, and even technology and knowledge (for example, they can hire away your people). But no one can purchase, duplicate, or reverse-engineer an organization's ability to learn.
By now, there are many years of experience to draw upon from organizations that have explicitly sought to enhance their capacity to learn. While the gains from downsizing, reengineering, and "slash and burn" retrenchments often fail to sustain themselves, the gains from enhancing learning capacity have proven to be sustainable, cumulative, and self-reinforcing. Here are just a few examples described in this book:
The Ford Motor Company's Electrical and Fuel Handling Division (EFHD, now part of Ford/Visteon, a freestanding Ford operation that combines all Ford's components businesses) had been a poorly regarded division, losing $50 million in 1991. It changed into a "successful learning community" that made more than $150 million in 1996. The division's sales doubled, and it expanded from three United States plants to ten around the world, with an unprecedented style of collegiality across international boundaries. "We talk about problems openly, without penalty, so the problems don't happen again," said one senior manager.
"Transformation" endeavors at the Shell Oil Company in Houston, and more recently within the Royal Dutch/Shell group of companies worldwide, have been credited with sparking a renaissance of business initiative and innovation. Shell Oil has evolved a "federalist" governance structure, in which formerly bureaucratic entities like Shell Chemicals and Shell Services (formerly the "Administration" department, responsible for information technologies and other centralized services) have become new global businesses independent and viable in their own right.
The U.S. Army's highly innovative National Training Center uses elaborate practice fields, simulations, and "After Action Reviews" to build a sophisticated organizational self-awareness involving officers and enlisted men. The success of tactical operations in Desert Storm, Haiti, and Bosnia has been attributed to this new approachand so has a recognizable leap in soldiers' capabilities and commitment.
Similar stories in this book cover a wide range of organizations: Detroit Edison, British Petroleum, Burch-Lowe, Chrysler, Covenant Insurance, Eskom, Harley-Davidson, Intel, Hewlett-Packard, Mitsubishi Electric, Scania, Springfield Remanufacturing Company, Toyota, Xerox, and many others. There are enough similar stories about schools to fill an entire Fifth Discipline Fieldbook on education (which is scheduled to appear early in the year 2000).
Ultimately, these learning initiatives are judged through the lens of business results. People learning in business settings have no difficulty defining meaningful indicators of real progresslike time to market, customer loyalty, quality, and long-term profitability and growth. But people also ascribe meaning to the satisfaction of the journey itself. "This was the first time in [my long career] with this company that I, as an individual, felt valued by management," commented an engineer involved in a multiple-year learning initiative. "I felt that they had an absolute trust in me and in the team. Because I had trust from them, I put a lot of trust in my team. On other programs, I was constantly double checking and telling people what to donot asking them, 'What do you think we should do?' It's enthused a lot of people who have not been enthused at this company for twenty years."
Each of the authors of this book has had the experience of being pulled aside by a manager or executive. "I just want to tell you," the manager will say, "what I appreciate more than anything else about this work. I've rediscovered my love of learning."
This "Learning Stuff" Can Be Dangerous (The Challenges of Sustaining Progress)
But amid all of the success and satisfaction, there are also many stories of failure, setbacks, and organizational backlash. Some learning initiatives never seem to get off the ground, despite interest, resources, and a compelling business case. In other cases, initial success is never recognized. Innovators who expected to be rewarded and promoted lose their jobs instead. Or they just move on, searching for organizational settings more open to their ideas. Even after years of success, learning-oriented cultures can come under relentless attack from new bosses, new members who don't appreciate their benefits, or sudden changes in the business environment that lead to a perceived need for tighter controls. Unexpected problems seem to come from nowhere. We who have been working in the field of organizational learning for many years have experienced all of the above problems, and a few more. Indeed, leaders of innovation have faced these sorts of setbacks for the two-hundred-year history of modern corporations, and throughout human history.
Recognizing that learning is not just a matter of good intentions, some leaders seek to reinforce those intentions with shifts in governance structures or top-down policies. Jack Welch, in his 1997 letter to GE shareholders, pointed to "critical enablers," such as new compensation and appraisal mechanisms, as essential mechanisms "if the rhetoric [of organizational learning] is to become reality."
While changes in measurement and performance appraisal mechanisms might be important, we are skeptical about whether they are sufficient. In fact, inappropriate measurement of people's performance is but one of several limits to learning. There are equally deep and difficult impediments to change. For example, an unspoken attitude that "managers should never present problemsonly solutions" could ensure, if unchallenged, that all reward systems promote "lone ranger-style" heroics and discount team learning. Unless this assumption is openly examined and unless it eventually shifts, any new performance appraisal mechanism that managers design will simply reproduce the same chronic problems that plagued the company before.
So far, we have identified ten distinct challengessets of forces that oppose profound change (as well as three growth processes that sustain such changes). Each grows from distinct limits to learning and change. Although we have encountered these challenges in the context of "learning initiatives"change initiatives in which enhancing learning capability was an overt part of the strategywe believe they will just as likely come into play in all initiatives aimed at deep and extensive change. They are, as best we can tell, the organizational analogs to water, soil nutrients, sunlight, and space for roots to spread. They are the limits to any profound change process, and any one of them can be sufficient to thwart such change.
All of these challenges are predictable. They arise as natural counterpressures to generating change, just as the need for soil, sunlight, and water arise as natural limits when plants start to grow. Though they often appear as seemingly independent events, they are interconnected and interdependent. There are high-leverage strategies that can help teams and individuals deal with each challenge separately. But the greatest leverage comes from understanding them as an ensemble of forces.