The Chicken-Egg Problem with Organizational Change

The Chicken-Egg Problem with Organizational Change

 by Ron Ashkenas

Timing is critical for successful organizational change. What you do first and the sequence of actions that follow can make or break your effort. But in many cases, it's not completely clear whether one step causes another or vice versa. Like the classic "chicken or the egg" dilemma, you're left asking yourself: Which should come first? Here are two examples of this problem:

Headcount reduction or simplification? Following a merger, the CEO of a large manufacturing company was concerned that the newly combined business had too many complex and unnecessary processes, all of which made it difficult to get things done and drove up costs. Since many jobs had already been eliminated during the initial integration period, the CEO was concerned that another round of layoffs would be disruptive, so he argued that the firm should focus first on simplifying processes, and that lower costs would be a natural byproduct. Several key line executives, however, felt that they should first eliminate more jobs, which would force the remaining people to streamline their work.

Delayering or expanding management roles? The CEO of a fast-growing technology services firm realized that the company was becoming increasingly soloed and unable to develop broad-based solutions for customers — a problem that would eventually constrain their growth. After considerable thought, she decided that the best way to force her managers to take a more holistic perspective was to increase their spans of control so that they were responsible for end-to-end processes and wouldn't have the time to micro-manage the technical details. She also was convinced that the increased spans would result in fewer organizational layers, lower costs, and faster response times. But many members of her team thought that they should start by training managers in the skills required to develop solutions with customers in mind before changing the structure.

The truth is that good arguments could be made for both sides in each of these cases. Yes, eliminating jobs forces people to streamline work; and streamlining work can eliminate jobs. And yes, delayering can force managers to take broader perspectives, which can in turn facilitate changes in structure. It's like the Miller Lite ads where drinkers argue over whether the beer is "less filling" or "tastes great." What's the right answer when the logic can go either way? But unlike beer, with changing an organization you can't do both simultaneously. You need to make a choice about where to start.

Let me suggest two simple principles to keep in mind when you are faced with dilemmas like these:

Prioritize the goals. In the cases described here, as with many change efforts, there are multiple goals. While all are important, one of the best ways to find a starting point is to determine which of the goals is most critical. In the first case, for example, the CEO felt strongly that most important goal was to stabilize the organization following the merger, which meant that headcount reduction should not be the starting point. However, in the second case, the senior team all agreed that developing broader solutions was the most critical goal, but there was still disagreement about whether that should be done through training or through structural change. So what should you do if clarifying the goals doesn't provide guidance about where to start?

Rely on structural shifts to change behaviors. The next principle to consider is that structural change usually drives behavioral change, and not vice versa. In other words, training people in new ways of working — without modifying job responsibilities, reporting relationships, and incentives — is often a prescription for failure. Because old patterns are often entrenched, structural change can be a forcing function to break them. In the second case, for example, the senior team tried to convince, guide, and teach senior people to collaborate more effectively to create solutions for customers — but the shifts didn't take hold until they reorganized into broader teams, with larger spans of control and fewer layers.

Deciding where to start with organizational change is often a complex argument about what should come first. Rather than get caught in the debate, it's important first to clarify what you want to achieve, and then find the most powerful way to get there.

Many times goals are ambiguous and soloed divisions will understand the goal differently.  Usually in a manner most beneficial to local needs.  More interesting is point of using structural change as a catalyst. 

Training is quickly forgotten and little ever becomes of it unless it is applied immediately   Structural change will force the organization to learn.  Learning has to be actively managed and not just introduced in training sessions and post-project analysis.

Sustaining success depends on an organization's ability to adapt to a changing environment--whether it's an external change, such as a transformative technology or a changing economy, or an internal one, such as a restructuring or key process overhaul. Unfortunately, 70% of organizational transformations fail. Rarely is the cause a flawed strategy or lack of commitment by leaders. Usually, says Jayme de Lima, failure occurs because the organization never wins its employees' commitment.

SUMMERY

Managing change is tough, but part of the problem is that there is little agreement on what factors most influence transformation initiatives. Ask five executives to name the one factor critical for the success of these programs, and you’ll probably get five different answers. That’s because each manager looks at an initiative from his or her viewpoint and, based on personal experience, focuses on different success factors. The experts, too, offer different perspectives. A recent search on Amazon.com for books on “change and management” turned up 6,153 titles, each with a distinct take on the topic. Those ideas have a lot to offer, but taken together, they force companies to tackle many priorities simultaneously, which spreads resources and skills thin. Moreover, executives use different approaches in different parts of the organization, which compounds the turmoil that usually accompanies change.

In recent years, many change management gurus have focused on soft issues, such as culture, leadership, and motivation. Such elements are important for success, but managing these aspects alone isn’t sufficient to implement transformation projects. Soft factors don’t directly influence the outcomes of many change programs. For instance, visionary leadership is often vital for transformation projects, but not always. The same can be said about communication with employees. Moreover, it isn’t easy to change attitudes or relationships; they’re deeply ingrained in organizations and people. And although changes in, say, culture or motivation levels can be indirectly gauged through surveys and interviews, it’s tough to get reliable data on soft factors.

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