Corporate anorexia: a dangerous epidemic.

With companies downsizing to appease stockholders, American workers' hopes and dreams are being crushed.

THE FRONT-LINE employees who represent business in America these days seem newer, and fewer, than ever. The customer interface with business too often is a pre-recorded, computer-generated, joyless frustration. The slogans and mission statements promising quality remain, but the actual delivery is left to untrained new hires with lower pay and benefits. Experienced professionals are disappearing.

Corporate anorexia is the 1990s' response to business competitiveness. Anorexia nervosa is a serious disorder characterized by a pathological fear of weight gain leading to faulty eating patterns, malnutrition, and even death. Businesses driven by an obsessive compulsion for short-term efficiency can become caught up in a similar destructive pattern. Whether workers are laid off (downsizing) or managers are fired (a shake-up), it means the same thing--removal of a primary cost, in this case, people.

Why does this phenomenon occur? The naturalist's view is that a socioeconomic drama is being played out. As a result of the interaction of simple economic laws related to oversupply and international competition, a kind of social Darwinism is occurring with the most fit taking their rightful places in a new economic order.

There is another, slightly more cynical view that the current generation of business and government leaders finally is doing to the organization what has been needed all along. They righteously are declaring war on a despised, bureaucratic, staff-driven organization that always has been inefficient and self-serving. "It is time to return to business basics. Throw the rascals out!," they cry.

These explanations seem sensible, but can a healthy regimen become a dangerous fetish? At first, cuttings and sackings are reinforced when profitability soars. The quick-fix results from business process re-engineering (BPR) projects are one explanation for the current frenzy around this anorexic fad. All too frequently, though, the restructuring/realignment of work that follows BPR is done poorly, sometimes with breathtaking incompetence. Customers encounter the survivors of these purgings who have taken up the extra burden of work.

Surviving managers are motivated by naked fear as they continue the search for unrealistic perfection. It has been proved through biofeedback that emotions, such as fear, have a direct impact on the body and, ultimately, one's state of health. Meanwhile, more reductions are sought in the quest for leaner and meaner operations.

When the downsizing buyout offer is made, some of the brightest take the money and run, leaving gaping holes in the structure. Too often, when this happens, the "guts" of the organization are lost. The people with the keys to customer relationships and the road maps that guide organizational patterns are gone. In some organizations, downsizing seems to feed on itself, breeding the desirability of more cuts in a vicious cycle that eventually can lead to a death spiral.

Is there a way to prune without starvation? Diet and exercise alone will not create the structure needed to cope with the demands of mass customization. The organization and its people must be aligned with the strategy. Corporate behavior must be consistent with new standards of empowerment, responsibility, accountability, and innovation. In many cases, corporate downsizing focuses on financial figures instead of on a holistic view of the organization.

Anorexia, whether it be human or corporate, is a disease, not a cure. Corporate anorexia is a fear-and-denial-driven, dangerous reaction to often real competitive threats. In the final analysis, the status quo may be improved, but temporary gains are, after all, just temporary. Cutting and slashing without adequate restructuring of work must be replaced with common sense. The objective of reorganization is to reprocess the work to provide more customer value and productivity, not simply to eliminate jobs. When a new hierarchy of process replaces the old one of power, the organization can be more efficient and effective in meeting the challenges of world competition.

The outmoded notion of a vertical organization is seen as fatally inadequate to cope with new and more challenging markets. Perhaps this is correct, but it is like converting your favorite horse to the commodity status of refined glue. Yes, it can be more efficient and profitable, but who or what will replace the horse?

Unhappiness with the current state of things is as old as the Garden of Eden. There is little doubt that many business organizations have evolved to a high order of almost comical inefficiency. Since World War II, various revitalization programs have attempted to improve how the organization functions. Improvement meant more, better, faster, cheaper, but the basic structure remained unchanged.

By the early 1970s, Western business leaders began to realize that the era of mass production had given way to lean production systems. They scrambled to adjust to new, tougher competition from emerging global competitors. The 1980s were spent in hot pursuit of the secrets of lean production.

Today, there is much evidence that another new era is challenging even the vaunted Japanese. The forces of technology, global economics, speed, and more sophisticated customers are driving businesses to mass customization. Quality, standard procedures, and certification are but the price of admission to the marketplace. The challenge of mass customization takes dead aim at the structure of the organization and questions what is done. The new organization must be fast, focused, and flexible merely to survive.

Author Peter Drucker has termed ours a knowledge-based economy. Such an economy demands a high performance organization vastly different from what the traditional vertical one could provide. A consensus is emerging that this new organizational structure will be horizontal. It will be focused on customers and performance, flexible to adapt to rapid change, and fast enough to meet market requirements. Moreover, this must be judged by global standards, with the strong implication that it all can be done with lower overhead costs and fewer people.

So, if the corporate diet has drifted into self-destruction, what is to be done? How can the organization and its people be revitalized? Where and how can the regrowth be started, jobs created, and the economy recover from the ravages of corporate anorexia? What has to be accomplished must be aligned with what is necessary to be done.

The effective management of health requires proper alignment of thoughts and actions. In healthy organisms, the brain and body work as a synchronized unit to achieve strategic intent. Change management is a process of achieving the healthy "natural alignment" of the body.

Similar alignment of business strategy, culture, and structure is accomplished with a realistic assessment of the situation and data-based decisions. This is change management in business. The new organization structure no longer resists change; it understands and embraces such actions.

No organization can pave its way into the future simply through cost-cutting. Research and innovation also are keys to future growth. Managers must achieve a higher and more sophisticated understanding of human behavior. High performance can be achieved only when vision, strategy, structure, and culture are aligned.

The starting place, before compelling visions, strategic thinking, or anything else, is where most good things begin--the truth. Anorexia is a strategy of despair that never will be effective as a means of coping with stress. The primary source of stress is a marketplace reacting to "endemic overcapacity," a term coined by Gerald Sentell, chairman of Tennessee Associates International. As he explains, "Since there is more supply than demand at price levels that permit acceptable operating margins, the threat of overcapacity faces every organization-- if not today, then in the very near future. Although business problems have historically been cyclical, today's problems are not and require a different approach."

A new strategy is needed that will pursue an improved and sustainable competitive position in a marketplace beset with constant turbulence. Becoming mentally focused requires a genuine examination of the corporate psyche and its raison d'etre. Just fixing things is inadequate; a new order is necessary--a genuine high performance organization.

Revitalization starts with at least two basic premises: The backbone of any organization is people, and no real improvement is possible without them; and it is the responsibility of all managers to create and maintain an environment where the members of the organization can improve performance. The effort to revitalize can not succeed unless the respect and dignity of the members are confirmed. The challenge can not be met if leaders continue with futile attempts to confirm these basic premises with faddish, quick fixes.

The insight of Richard Cromer, an executive with Owens-Corning Fiberglas, is helpful. Years ago, during the heyday of the Total Quality Management craze, Cromer remarked, "This is not about technology. People are not the problem either. It's us. It's an organization problem that only management can solve." The issue is how leaders create the organization needed to cope with the turbulence of a dynamic marketplace.

Business leaders know how to downsize, how to create team-focused training programs, and, to some extent, how to focus on process. In military-like fashion, they know how to achieve these objectives. Yet, once they have achieved the objectives, they must learn how to manage and work towards the constant renewal required to achieve a high-performance organization. It is indeed a journey, not a destination. A drama is enacted when executive leaders come together, as a team, to work on the right things:

* In order to get everyone's attention, there must be pressure. A denial mindset, normally, will crowd out motivation to change unless there is pressure from customers, competitors, investors, or some combination of these. The discomfort from pressure must be connected to the root causes of performance that is not up to expectations. As author Mark Twain once wryly observed, "Nothing concentrates the mind so wonderfully well as one's own impending hanging."

* The element of commitment usually begins when executive leadership examines its fundamental business assumptions and strategies. This always is an exciting stroll down the corporate ego alley as the veteran tendency to overcontrol does battle with an emerging discontent over the status quo. If "keep 'em in line" and "who screwed up?" prevail, as often occurs under pressure, the result will be cynicism, not revitalization. Leaders should ask, "Do we have the organization, people, and culture needed to execute our strategies?" Again, "denial" and its close relative "blame" are the culprits at this stage of the operation.

* Discontent with the status quo must confront the issue: "What must change?" The solutions should help close immediate performance gaps as well as launch the process to create the organization of the future. It will become apparent that the new organization probably will take years to perfect. Leaders must understand that, regardless of the business, pressure from endemic overcapacity will never, ever go away and that only a true high-performance organization can survive and prosper.

The motivation to change must become strategic in nature. Otherwise, the failure to engage in a long-term strategic analysis inevitably will result in another well-known syndrome: solids always flow downhill. The emphasis will move away from a strategic management issue into an operational problem, and the pressure will be diverted to more, better, faster, and cheaper instead of systematic change.

Lou Gerstner, head of IBM, shocked observers when two senior vice presidents, who had surpassed their sales goals, were sacked. Analysts have concluded that their performance was accomplished via large mainframe computers, which was not aligned with IBM's new strategy. Dynamic alignment of vision, purpose, mission, and shared values always will be a leader's responsibility.

Strategic focus

One effective way to ensure the strategic focus is to gather the facts. A reality check is required of all managers. Such a test helps determine how well-synchronized are strategic direction, cultural norms (behaviors), organizational design, processes, individual skills, and key performance areas. The final customer of this evolution is the executive leader group. However, the reality check must be wanted and management prepared to believe the results before launching this exercise. Following the reality check, a recommitment to the plan will be necessary in order to close performance gaps.

Now comes a critical point. In order to keep the revitalization process on track, most organizations need third-party assistance. Outside agents are relatively immune, or at least accustomed, to the "shoot the messenger" syndrome. This is corporate culture's rejection of those things foreign to the current organization. Every executive group struggles with ego-driven denial and rationalization. It is the responsibility of outside agents to deal with the highly charged political voltage and keep the process clear and on track.

Experience has shown that maintaining a strategic focus is where many leaders go wrong. Executives must rethink the entire strategic alignment of the organization, not just separate tactical issues on operations, marketing, etc. As Fred Smith of Federal Express once said, "The main thing is to keep the main thing the main thing."

In the new high-performance organization construction, these truths will become evident:

* Living a compelling vision day to day is an absolute requirement.

* There is a shift from a hierarchy of personal power to one driven by process.

* The required culture is team-based and empowered. Most executives who have gone through the re-engineering frenzy have few clues as to how this really works.

* Real teamwork is required at the top, an experience largely unknown by executives.

* Movement is toward a smaller, federalist-type organization.

* Training and development become rigorous, ongoing, and outcome-focused.

* Manuals, certification, and related rhetoric are converted to action.

* New levels of participation and results from high performance require different systems for recognition and reward.

* The hallmark of the high-performance organization is added value.

Meaningful change does not occur without relentless determination and a structured plan combined with a healthy tolerance for pain and ambiguity. As the executive group evolves into a team, it begins to rely on a constant process of assessing the environmental conditions. Essentially, the evolution process asks, "Do people understand the rationale, the new direction, and their role? Are they committed to the new values and the added value they must provide? Do they have the resources to do their job and are they being used?"

Executive self-assessment is, perhaps, the most difficult of all. Most individuals tend to judge others on what they do and judge themselves on their own intentions. Like all managers, executive leaders must evaluate their role and contributions. If the intention to empower does not transfer to empowering behavior, a self-fulfilling prophecy occurs. Vaughn Beals, chairman of Harley-Davidson, may have stated it best: "You have to let go, and I mean really let go. Once you turn people loose, you will be amazed at what they will accomplish."

Executives must have faith and trust that people are the mainstays of their organization with capabilities that far exceed what they have been allowed to do in the past. Perhaps this is the best way to accelerate the revitalization process.

This is not just another think piece on business philosophy. Loss and despair are the legacy of corporate anorexia. Our society, our country, and our hopes and dreams are at stake.

Things never are going to be the same. The question is how to reposition and revitalize the wealth-producing engines so that more Americans can become stakeholders in the nation.

Corporate anorexia is an overt symptom of the failure to deal with the turbulence created by endemic overcapacity. The solution lies in what enlightened leadership must do to break the chains of denial.