METAMORPHOSING MANAGEMENT
Only the very wisest and the very stupidest never change.
[Confucius]
There is an enormous literature and consulting practice aimed at helping managers deal with major changes in their organisations – turnaround, revitalisation, downsizing, etc. Most of this is about ‘managed change’. Be careful: the point can well be made – done articulately in our first reading, by Jim Clemmer – that this term is an oxymoron. Change should not be ‘managed’, he suggests, at least when this word is used to mean forced, made to happen. Maybe the best way to ‘manage’ change is to just let it happen – to set up the conditions whereby people will follow their natural instincts to experiment and transform behaviour.
That’s David K. Hurst’s conclusion too – that ‘senior managers aren’t cooks, they’re ingredients’. But will this keep management on the rails? The next piece tells why British trains today ride on the rails determined by the size of Roman chariots.
So, how to reconcile all this? Easy, according to Richard Pascale’s investigation of how Honda really gained such immense success in the American motorcycle business. In effect, the cooks were on the ground, where they learned their way off the old rails. The parable that follows reinforces Pascale’s findings. It compares American with Japanese management. Pascale’s message is three cheers for middle managers. And next comes more cheers for our worldly, wounded and especially wiki world, which Jonathan Gosling describes in his thoughtful piece.
Henry Mintzberg puts all of ‘incrementalism’ in perspective with a short piece on ‘crafting strategy’. He challenges the popular view of the strategist as someone sitting on a pedestal, dictating brilliant strategies for everyone else to implement, proposing instead a view of the strategist as pattern recogniser, a learner who manages a process in which strategies emerge through all sorts of efforts.
‘Change Management’ is an oxymoron
by Jim Clemmer
A dubious consulting industry and ‘profession’ has developed, claiming to provide ‘change management’ services. Those two words make about as much sense together as ‘holy war’ [and] ‘nonworking mother’ … ‘Change management’ comes from the same dangerously seductive reasoning as strategic planning. They’re both based on the shaky assumption that there’s an orderly thinking and implementation process which can objectively plot a course of action, like Jean-Luc Picard on the starship Enterprise, and then ‘make it so’. But if that ever was possible, it certainly isn’t in today’s world of high velocity change.
Change can’t be managed. Change can be ignored, resisted, responded to, capitalized upon, and created. But it can’t be managed and made to march to some orderly step-by-step process … Whether we become change victims or victors depends on our readiness for change … [As Abraham Lincoln] once said, ‘I will prepare myself and my time must come.’ That’s how change is managed.
… We can’t quickly win back customers who’ve quietly slipped away because of neglect and poor service. We can’t suddenly turn our organization into an innovative powerhouse in six months because the market shifted. We can’t radically and quickly re-engineer years of sloppy habits and convoluted processes when revolutionary new technology appears. When cost pressures build, we can’t dramatically flatten our organizations and suddenly empower everyone who has had years of traditional command and control conditioning. These are long-term culture, system, habit, and skill changes. They need to be improved before they’re needed. In the words of an ancient Chinese proverb, ‘dig a well before you are thirsty’.
… To effectively deal with change you don’t focus on change as some kind of manageable force. You deal with change by improving you. And then your time must come …
Source: Adapted by Jim Clemmer from Jim Clemmer, Pathways to Performance, www.jimclemmer.com, 1995.
Senior managers aren’t cooks, they’re ingredients
by David K. Hurst
In the final analysis, when it comes to fundamental change in organizations, there can be no final analysis. For it is the very frameworks of analysis that need to be changed. In fundamental organizational change, it takes behavior to change behavior: change cannot be managed, it can only be led. Thus, managers of change are not just cooks preparing a meal by following a recipe, they are also key ingredients. Senior managers are powerful role models, and their key contribution to the process of change is to lead by modeling the new behaviors that they expect of their people. They can plan and orchestrate the arrangements only up to a point. Then they have to throw themselves into the mixture with everyone else and trust that their behavior will be copied by others …
Our Western bias is to believe that we can think our way into a better way of acting. Experience with real change suggests that just the opposite is true – we have to act our way into a better way of thinking. As managers, the only behavior we can hope to change directly is our own.
Source: Excerpted from an article originally published as ‘When it comes to real change, too much objectivity may be fatal to the process’, by David K. Hurst, Strategy and Leadership, March/April 1997, pp. 6–12.
Staying on track
The U.S. standard railroad gauge (distance between the rails) is 4 feet 8.5 inches. That is an exceedingly odd number. Why was that gauge used? Because that’s the way they built them in England, and the U.S. railroads were built by English expatriates. Why did the English build them that way? Because the first rail lines were built by the same people who built the pre-railroad tramways, and that’s the gauge they used. Why did ‘they’ use that gauge? Because the people who built the tramways used the same jigs and tools that they used for building wagons, which used that wheel spacing.
So why did the wagons have that particular odd spacing? Well, if they tried to use any other spacing, the wagon wheels would break on some of the old, long distance roads in England, because that was the spacing of the wheel ruts.
So who built those old rutted roads? The first long distance roads in Europe (and England) were built by Imperial Rome for their legions. The roads have been used ever since. And the ruts in the roads? The ruts in the roads, which everyone had to match for fear of destroying their wagon wheels, were first formed by Roman war chariots. Since the chariots were made for (or by) Imperial Rome, they were all alike in the matter of wheel spacing.
The U.S. standard railroad gauge of 4 feet 8.5 inches derives from the original specification for an Imperial Roman war chariot. Specifications and bureaucracies live forever. So the next time you are handed a specification and wonder what horse’s ass came up with it, you may be exactly right, because the Imperial Roman war chariots were made just wide enough to accommodate the back end of two war horses. Thus we have the answer to the original question.
Now for the twist to the story. When we see a space shuttle sitting on its launching pad, there are two booster rockets attached to the side of the main fuel tank. These are solid rocket boosters, or SRBs. The SRBs are made by Thiokol at their factory in Utah. The engineers who designed the SRBs might have preferred to make them a bit fatter, but the SRBs had to be shipped by train from the factory to the launch site. The railroad from the factory had to run through a tunnel in the mountains. The tunnel is slightly wider than the railroad track, and the railroad track is about as wide as two horses’ rumps. So, a major design feature of what is arguably the world’s most advanced transportation system was determined over two thousand years ago by the width of a horse’s ass!
Don’t you just love engineering?
Source: Anon.
Backing into a Brilliant Strategy
by Richard Pascale
In 1959, Honda, a Japanese manufacturer of motorcycles, not (yet) automobiles, entered the American market. By 1966, it had 63 percent of that market. Partly the company beat American and British manufacturers in selling large motorcycles to what was the initial market: macho, black-leather jacket types. And partly it created a new market for small motorcycles driven by ordinary people, thanks to a legendary advertising campaign called ‘You meet the nicest people on a Honda’. The company had in fact been producing these small motorcycles for the Japanese market since the 1940s, when Takeo Fujisawa convinced his partner, Soichiro Honda, whose love was designing and racing big motorcycles, that many of the Japanese people could not afford automobiles post-war but would be amenable to small inexpensive motorcycles for regular transportation.
The British government, whose motorcycle manufacturers saw their share of the import market drop from 49 to 10 percent in that 1959–1966 period, hired the Boston Consulting Group to explain what happened and suggest how their manufacturers could come back. BCG replied, in 1975, in a report that became famous, and formed the basis for cases written at schools such as Harvard and UCLA.
Two excerpts from that report are reproduced below, to give the sense of it. This is followed by the transcript of parts of an interview held by Richard Pascale, co-author of The Art of Japanese Management (1981), who had his doubts about the BCG report, with the Honda managers who were responsible for the entry into the American market. The story speaks for itself; so does the contrast between the two interpretations.
Various excerpts related to these two stories are then reproduced.
From the Boston Consulting Group report
The success of the Japanese motorcycle industry originated with the growth of their domestic market during the 1950s. [By 1960] … they had developed huge production volumes in small motorcycles in their domestic market, and volume-related cost reductions had followed. This resulted in a highly competitive cost position which the Japanese used as a springboard for penetration of world markets with small motorcycles in the early 1960s …
The Japanese motorcycle industry, and in particular Honda, the market leader, present a [consistent] picture. The basic philosophy of the Japanese manufacturer is that high volumes per model provide the potential for high productivity as a result of using capital intensive and highly automated techniques. Their marketing strategies are therefore directed towards developing these high volume models, hence the careful attention that we have observed them giving to growth and market share, and then in production, the cost reduction potential is realized in practice as a result of a primary focus on production engineering and investment for cost reduction.
SOURCE: BOSTON CONSULTING GROUP, STRATEGY ALTERNATIVES FOR THE BRITISH INDUSTRY, 1975.
From the interview with the Honda managers
In truth we had no strategy other than the idea of seeing if we could sell something in the United States … [We had] to obtain a currency allocation from the Ministry of Finance. They were extraordinarily skeptical. Toyota had launched the Toyopet in the U.S. in 1958 and had failed miserably. ‘How could Honda succeed?’ they asked. Months went by. We put the project on hold. Suddenly, five months after our application, we were given the go-ahead – but at only a fraction of our expected level of commitment. ‘You can invest $250,000 in the U.S. market,’ they said, ‘but only $110,000 in cash’. The remainder of our assets had to be in parts and motorcycle inventory …
Our focus … was to compete with the European exports. We knew our products at the time were good but not far superior. Mr. Honda was especially confident of the 250cc and 305cc machines. The shape of the handlebar on these larger machines looked like the eyebrow of Bhudda, which he felt was a strong selling point. Thus, after some discussion and with no compelling criteria for selection, we configured our start-up inventory with 25 percent of each of our four products – the 50cc Supercub, and the 125cc, 250cc and 305cc. In dollar value terms, of course, the inventory was heavily weighted toward the larger bikes.
The stringent monetary controls of the Japanese government together with the unfriendly reception we had received during our 1958 visit caused us to start small. We chose Los Angeles where there was a large second and third generation Japanese community, a climate suitable for motorcycle use, and a growing population. We were so strapped for cash that the three of us shared a furnished apartment that we rented for $80 per month. Two of us slept on the floor. We obtained a warehouse in a run-down section of the city and waited for the ship to arrive. Not daring to spare our funds for equipment, the three of us stacked the motorcycle crates three high – by hand – swept the floors, and built and maintained the parts bin.
We were entirely in the dark the first year. We were not aware that the motorcycle business in the United States occurs during a seasonal April-to-August window – and our timing coincided with the closing of the 1959 season. Our hard-learned experiences with distributorships in Japan convinced us to try to go to the retailers direct. We ran ads in the motorcycle trade magazine for dealers. A few responded. By spring of 1960, we had forty dealers and some of our inventory in their stores – mostly larger bikes. A few of the 250cc and 305cc bikes began to sell. Then disaster struck. By the first week of April 1960, reports were coming in that our machines were leaking oil and encountering clutch failure. This was our lowest moment. Honda’s fragile reputation was being destroyed before it could be established. As it turned out, motorcycles in the United States are driven much farther and much faster than in Japan. But not knowing that, we had to dig deeply into our precious cash reserves to air freight our motorcycles to the Honda testing lab in Japan. Throughout the dark month of April, Pan Am was the only enterprise in the U.S. that was nice to us. Our testing lab worked twenty-four-hour days bench testing the bikes to try to replicate the failure. Within a month, a redesigned head gasket and clutch spring solved the problem. But in the meantime, events had taken a surprising turn.
Throughout our first eight months, following Mr. Honda’s and our own instincts, we had not attempted to move the 50cc Supercubs. While they were a smash success in Japan (and manufacturing couldn’t keep up with demand there), they seemed wholly unsuitable for the U.S. market where everything was bigger and more luxurious. As a clincher, we had our sights on the import market – and the Europeans, like the American manufacturers, emphasized the larger machines.
We used the Honda 50s ourselves to ride around Los Angeles on errands. They attracted a lot of attention. One day we had a call from a Sears buyer. While persisting in our refusal to sell through an intermediary, we took note of Sears’ interest. But we still hesitated to push the 50cc bikes out of fear they might harm our image in a heavily macho market. But when the larger bikes started breaking, we had no choice. We let the 50cc bikes move.
Source: From an article originally entitled ‘Perspectives on strategy: the real story behind Honda’s success’. Copyright © 1984 by the Regents of the University of California. Reprinted from the California Management Review, Vol. 27, No. 1. By permission of the Regents.
A Modern Parable
A Japanese company and an American company decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race.
On the big day, the Japanese won by a mile.
The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.
Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing.
Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager.
They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the ‘Rowing Team Quality First Program’, with meetings, dinners and free pens for the rower. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices and bonuses.
The next year the Japanese won by two miles.
Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year’s racing team was out-sourced to India.
Sadly, The End.
Sad, but oh so true! Here’s something else to think about: Ford has spent the last thirty years moving all its factories out of the US, claiming they can’t make money paying American wages. Toyota has spent the last thirty years building more than a dozen plants inside the US. The last quarter’s results: Toyota makes 4 billion in profits while Ford racked up 9 billion in losses. Ford folks are still scratching their heads.
Source: unknown.
Wither our wiki, worldly, wounded world?
by Jonathan Gosling
What kind of world are we dealing with? Here are three big things to take account of:
- It’s a wiki world. In the old days, knowledge was stored up in banks – called schools, colleges and universities, in planning departments and expert systems. University researchers, for example, would go out into the world to gather information, take it back to their labs and libraries, and some years later publish the general rules and patterns. Meanwhile everyone else got on with life. But now, thanks to the internet, anyone can publish the lessons learned from daily work; we can all comment on each others’ ideas, and thus knowledge becomes almost immediately actionable. This has a big impact on power – the most important basis of leadership. If leaders no longer control what people know about, they must exert influence by their ability to make connections, to facilitate the actions and opinions of well-informed knowledge-rich active citizens.
- It’s a worldly world. We are getting used to seeing how all the parts interconnect: global warming will create vast diasporas of displaced people, so we will all be faced with radical challenges to our shared identity – Who is to say who belongs here if we have collectively destroyed there? Equally stimulating will be the opportunities offered by a population with family connections all over the world. Previous diasporas have created hugely valuable networks of trusted clan members, but many of them living in ghettoes, taking generations to assimilate and belong in their new-found homes. But with so many more people on the move, how will we sustain communities and shared values and traditions?
Historically, when communities are faced with the twin challenges of asserting a common identity and seizing opportunities for improvement, they have tended to throw up charismatic leaders – and have often resorted to xenophobic scapegoating and military adventure, usually ending badly. Can we prepare and promote a wiser and more caring variety of leader? - It’s a wounded world, socially and environmentally, stuggling to deal with the damage we are doing. This is not all new: in many ways, it’s the same old world. Most things continue: we need to eat, preferably with savour; to educate ourselves and others, enjoy nature, care for the people we love and deepen our humanity through art, culture and spiritual life. Heaven save us from leaders who champion change if they forget or ignore all that continues and should be preserved! This is where distributed leadership becomes crucial; no central authority or charismatic hero can know enough detail about the particular pleasures and local conditions of our lives; it’s down to us to get organised (loosely) and vocal (sonorously), and to take a lead in making things better.
Now for 3 small things to develop the leaders and types of leadership that we need:
- The best way to predict who will take initiative and serve as a leader is to see what young people do at school. Participating in sports, school clubs and volunteering in the community are all strongly correlated with activism in later life. Strengthening our youth organisations is a real and proven way of growing leadership for the region. And as many people born and raised here are likely to return in later life, even if they have moved away between, this is a long term investment with several pay-back opportunities.
- Travel broadens the mind, and there is nothing like it for giving a sense of proportion to incipient grandiosity. Humility – plain realism to most of us – is an unlikely leadership trait, but vital if we are to remain sane and well balanced. The best way to root it to the core of our attitudes is to discover how very peculiar we are – by looking at ourselves through the eyes of others. We should find low-carbon ways to travel, slowly so we can watch and listen, absorbing worldviews and priorities other than our own. This is an investment in tolerance, but also in cultural conviction, knowing what we really treasure. What all this adds up to is that we want leaders who are wise in their judgements about what really matters to us, and are able to adapt and preserve these through the complex changes ahead.
- If everyone is creating their own version of knowledge, who is to say what’s right? I suppose there will still be some use for authorities on arcane subjects – we are bound to need some Professors. But much more significantly, we must ensure that we are all sensing, thinking, feeling, and judging as wisely as possible. We must make ourselves as fully human as we can – not merely rich. As John Ruskin famously said, ‘There is no wealth but life’,1 by which he meant a life force, the aspiration to beauty and harmony. We are blessed with wonderful nature and vivid arts here in the South West; we should accept no-one into leadership who is not a lover of the arts; we should train our leaders in culture and creativity – and that means all of us, because in the world of wikipedia, we are all authors and authorities.
Ours is indeed a wiki world, a worldly world, and in many ways it is a wounded world, in need of care. To produce the wise leaders we need, we should give young people an experience of leadership so they recognise the necessities of collective effort and responsibility; encourage travel and meaningful interaction with people very different to ourselves, so that we come to value our own treasures more realistically; and select only people with a love of beauty and culture to lead our institutions both within and beyond the region.
Readers will have noticed that I am much taken with words beginning with ‘w’ in this article (though I have desisted from mentioning our weather in the West of England, where I live – warm, windy and wet!). The most important reference in the forgoing is to wise leadership, because the main question underlying everything I have said is ‘wither the world’? We seem to be on the edge of crises in both the natural and financial climate, circumstances that all too often prompt calls for strong leadership, the rise of charismatic characters and the appeal of simple solutions. These are good and virtuous things – like most people, I like to be well led; and wise leadership is most likely when we share in its making.
Source: Jonathan Gosling, University of Exeter, 2008.
Footnote
1 The opening passage of Unto this Last, the book that inspired Mahatma Gandhi and, subsequently, Martin Luther King.
Crafting Strategy
by Henry Mintzberg
At work, the potter sits before a lump of clay on the wheel. Her mind is on the clay, but she is also aware of sitting between her past experiences and her future prospects. She knows exactly what has and has not worked for her in the past. She also has an intimate knowledge of her capabilities and her materials. As a craftsperson, she senses rather analyzes things. All this is working in her mind as her hands are working the clay. What emerges on the wheel is likely to be in the tradition of her past work, but she may break away and embark on a new direction. Even so, the past is no less present, projecting itself into the future.
Managers are craftspeople and strategy is their clay. Like the potter, they sit between a past of corporate capabilities and a future of market opportunities. And if they are truly craftspeople, they bring to their work an equally intimate knowledge of the materials at hand. That is the essence of crafting strategy.
The popular view sees the strategist as a planner or as a visionary, someone sitting on a pedestal dictating brilliant strategies for everyone else to implement. While recognizing the importance of thinking ahead and especially of the need for creative vision in this pedantic world, I wish to propose an additional view of the strategist – as a pattern recognizer, a learner if you will – who manages a process in which strategies (and visions) can emerge as well as be deliberately conceived. I also wish to redefine that strategist, to extend that someone into the collective entity made up of the many actors whose interplay speaks an organization’s mind. This strategist finds strategies no less than creates them.
What does it mean to craft strategy? Let us look at the words associated with craft: dedication, experience, involvement with the material, the personal touch, mastery of detail, a sense of harmony and integration. Managers who craft strategy do not spend much time in executive suites reading reports or industry analyses. They are involved, responsive to their materials, learning about their organizations and industries through personal touch. They appreciate that strategies can form without being formulated: they can emerge as people, learn their way into new patterns that work.
Manage stability
Managing strategy is mostly managing stability, not change. Indeed, most of the time senior managers should not be formulating strategy at all; they should be getting on with making their organizations as effective as possible in pursing the strategies they already have. Like distinguished craftsmen, organizations become distinguished because they master the details.
To manage strategy, then, at least in the first instance, is not so much to promote change as to know when to do so. Organizations that reassess their strategies continuously are like individuals who reassess their jobs or their marriages continuously – they can drive themselves crazy.
So-called strategic planning must be recognized for what it is: a means, not to create strategy, but to program a strategy already created – to work out its implications formally. This process is essentially analytic in nature, while strategy creation is essentially a process of synthesis. That is why trying to create strategies through formal planning most often leads to extrapolating existing ones or copying those of competitors.
Detect discontinuity
Environments do not change on any regular or orderly basis. And they seldom undergo continuous dramatic change, claims about our ‘age of discontinuity’ and environmental ‘turbulence’ notwithstanding. Much of the time, change is minor and even temporary and requires no strategic response. Once in a while there is a truly significant discontinuity or, even less often, a gestalt shift in the environment, where everything important seems to change at once. But these events, while critical, are easy to recognize.
The real challenge in crafting strategy lies in detecting the subtle discontinuities that may undermine a business in the future. And for that, there is no technique, no program, just a sharp mind in touch with the situation. The trick is to manage within a given strategic orientation most of the time yet be able to pick out the occasional discontinuity that really matters.
Note the kind of knowledge involved here: not analytical reports or abstracted facts and figures (although these can certainly help), but personal knowledge, intimate understanding, equivalent to the craftsman’s feel for the clay. Facts are available to anyone; this kind of knowledge is not.
Manage patterns
A key to managing strategy is the ability to detect emerging patterns and help them take shape. The job of the senior manager is not just to preconceive strategies but also to recognize the emergence of strategies as new patterns anywhere in the organization and intervene when appropriate.
Like weeds that appear unexpectedly in a garden, some emergent strategies may need to be uprooted immediately. But management cannot be too quick to cut off the unexpected, for tomorrow’s vision may grow out of today’s aberration. (Europeans, after all, enjoy salads made from the leaves of the dandelion, America’s most notorious weed.) Thus some patterns are worth watching until their effects have more clearly manifested themselves. Then those that prove useful can be made deliberate and so be incorporated into the formal strategy.
Create a fertile climate
To manage in this context, then, is to create the climate within which a wide variety of strategies can grow. In more complex organizations, this may mean building flexible structures, hiring creative people, defining broad visions, and watching for the patterns that emerge.
Appreciate the past
While strategy is a word that is usually associated with the future, its link to the past is no less central. As Kierkegaard once observed, life is lived forward but understood backward. Managers may have to live strategy in the future, but they must understand it through the past.
Like potters at the wheel, organizations must make sense of the past if they hope to manage the future. Only by coming to understand the patterns that form in their own behavior do they get to know their capabilities and their potential. Thus crafting strategy, like managing craft, requires a natural synthesis of the future, present, and past.
Growing strategic flowers on the ground
Strategies are not tablets conceived atop mountains, to be carried down for execution; they are learned on the ground by anyone who has the experience and capacity to see the general beyond the specifics. Remaining in the stratosphere of the conceptual is no better than having one’s feet firmly planted in concrete.
Add all this up and it appears that managers may be most effective as strategists by letting a thousand strategic flowers bloom in their organizational gardens, rather than trying to raise their strategies in a hothouse. Thus, the strategy process is close to craft and enhanced by art. Science enters the process at the beginning and end but not in the middle. In the form of analyses, it feeds in data and findings, and at the end of the process it programs the strategies that come out by other means.
Source: Adapted from an article by this title in the Harvard Business Review, September–October, 1987. Copyright © 1987 by the Harvard Business School Publishing Corporation; all rights reserved. See also Tracking Strategies, Oxford University Press, 2007, and Strategy Safari, Pearson, 1998.
All change seems impossible, but once accomplished, it is the state you are no longer in that seems impossible.
Alain