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Getting out of the box: the role of leadership.

Progress comes to those who manage business transformation effectively. This means formulating a strategy to break down the barrier of one-dimensional thinking by implementing changes in both current business and management processes.

You have seen the puzzle in which nine dots form a box, and the challenge is to connect the dots with four straight lines without retracting any of the lines. This only can be achieved by extending the lines outside of the box. My experience has been that most people will not do this instinctively.

Business leaders may find themselves trapped in a similar box, which is formed by their current management and business processes. As with the puzzle, most businessmen do not recognize the solution right away--instead they concentrate on changing only one of the processes, hindering their ability to succeed.

PROCESS DEFINITIONS

Management processes are the things executives do every day, which cut across all businesses. Common examples include: planning, decision making, prioritizing, measuring, evaluating, and rewarding. Taken together, management actions define what leadership thinks is important. They create a picture of a company's shared values. These are the processes that continually drive an organization.

Business processes are the systems and tools used, for example, to develop, manufacture, sell, deliver, and fill orders for products. They also include resource allocation, information technology, and human resources.

MANAGING IN THE "COMFORT ZONE"

Together, current management and business processes form a box. It is inside this box that many management teams operate most comfortably. Cambridge, MA-based consulting firm CSC Index calls this area the "Comfort Zone". Many companies have initiated process quality improvement programs, making performance progress within the box.

However, the management that operates only in the Comfort Zone ultimately faces a problem: At some point, it comes to the seemingly impenetrable wall of the box--a barrier that stops progress. At this point, if continued progress is going to be made, leadership must determine a way out of the box. This comes as no surprise: We often realize that some action must be taken, but we fail to change both processes. For example, many quality improvement programs fail because management has not had the insight to change its reward and recognition criteria. In other words, we can install a new quality improvement business process, but if we do not change the evaluation management process, it is likely the objectives of the business process change will not be met.

ACHIEVING AND SUSTAINING SUPERIOR PERFORMANCE

To achieve a major business change, we must break out of the Comfort Zone and move in a diagonal direction to a superior area where effective business transformation may be realized. I call this the "Business Transformation Zone".

When management only implements one type of process change, it creates a one-dimensional area we'll call a "Problem Zone." For instance:

* Initiating only a business process change is management's knee-jerk reaction to adversity: We "reorganize," "restructure," or "downsize." Or we expect "a new system" alone will solve a specific problem. This is the "program of the year" approach that engenders cynicism among so many of us.

* Changing a strategic plan without anticipating and making the business process changes required to implement it, or giving a team of workers or an individual employee additional responsibilities without providing the systems and tools to fulfill them are examples of uni-dimensional thinking.

At best, trying to operate in either of these Problem Zones is a less efficient and less effective way of implementing a significant change. At worst, the change will not happen.

DEGREE OF DIFFICULTY

Which is more difficult to change, management or business processes? I believe it is much more difficult to change management processes. The more successful the historical "theory" has been, the more difficult it is to move away from it. "Every business, in fact every organization, operates on . . . a theory--that is, on a set of assumptions regarding the outside (customers, market, distributive channels, competition) and a set of assumptions regarding the inside (core competencies, technology, products, processes)," Peter F. Drucker wrote in The Wall Street Journal. "These assumptions are usually taken for holy writ by the company and its executives. It is on them that they base their decisions, their actions, their behavior. The longer such a business theory works, the more it pervades the organization."

We know that the knee-jerk business process-change reactions, such as reorganization and restructuring, are not uncommon, but how many organizations are willing to obsolete their own successful management techniques? For example, my experience has been that it is far easier to install new computers and software than it is to prepare our organizations to use them. It is well-known that the majority of these systems are underutilized.

While it is desirable to change both processes simultaneously, for a variety of reasons, this is not always possible. We need to begin with one change before another can be initiated. For example, many companies address opportunities to re-engineer their order fulfillment process, often using innovative information systems. Training activities, required for undefined, yet more sophisticated customer service skills, do not become evident until prototype systems are created. Therefore, it is not uncommon to see an iterative sequence in which changes are made in one process, which creates a need for a change in another process, which, in turn, prompts another change. We rarely can move in a straight line from the Comfort Zone to the Business Transformation Zone. We often move in a pattern which looks more like a staircase.

Going from a deeply entrenched process to a new one represents a significant organizational change. Michael Hammer, the consultant credited with naming major process changes "re-engineering," believes that the structural and technical (i.e., the business process) aspects are much easier to address than the challenge of selling management process changes to an organization stuck in its Comfort Zone.

HOW TO GET OUT OF THE BOX: CHANGE MANAGEMENT

Despite the focus on understanding the change process, I am not convinced the message is getting through--especially to senior executives. Here are six conditions I believe are required to implement effective change.

* Need or want to make a change. Fear, arrogance, complacency, tradition, naivete, and lack of imagination are only a few of the reasons we are uncomfortable about initiating change. Most of us will only undertake change when we are forced to--often as the result of a preemptive strike by a competitor or another outside force. This puts us in a reactive mode. There are many reasons to initiate change proactively because we want to enjoy the projected benefits.

* Have a vision of where you want to be. While a significant degree of dissatisfaction must be present to implement a new process, that is not reason enough. We also must have a vision created by a leader. A vision may not be well-defined and clear, but it is imperative to have one.

* Determine that the benefits will outweigh the costs and difficulties of making the change and communicate these benefits. It is my experience that one of the most critical leadership roles, often underestimated or overlooked, involves the identification of potential benefits. This is followed by the rigorous communication of both the vision and its benefits to the organization. The more significant the change, the more urgent and continuous this interactive communication must be.

* Formulate an implementable plan. The majority of time and effort will be spent planning and implementing the program to get from where we are ("current") to where we want to be ("new"). An outstanding leader creates and communicates the vision, whereas an outstanding manager implements the plan to achieve it. Significant program and project management skills must exist for this condition to be met.

* Create a measurement system to ensure that the company stays on course during the change journey. Changes take time. Significant changes often are complicated, multifunctional, and multiorganizational programs. At least two types of measurement are required. The first involves the creation of process milestone dates and deliverables which can be reviewed periodically. Strong leaders take the time to keep tabs on and discuss the progress being made during the implementation of an important change. Too often, some senior executives believe that once they communicate the vision to the organization, it will happen automatically.

Also, quantitative measurements must be identified. These are important, because they may yield more tangible benefits than the process deliverables. They are results-oriented and serve to encourage and drive the organization. For example, if a new business process is being installed that will dramatically reduce cycle time, measurements can be created and progress monitored. Whatever the appropriate measures, I am a firm believer in the old adage: "What gets measured, gets done."

* Adjust reward systems and recognition programs to reinforce the desired change. We need motivated people to operate our businesses and implement important changes. We must be sure that our reward systems and recognition programs are consistent with the change objectives we seek. For example, we cannot say that improving quality is important, while only rewarding lowest cost.

Change management is a complex subject. In addition to the business and technical issues, there are a range of human and organizational psychology challenges that must be addressed to successfully effect change.

SUMMARY

I have explained two models. The first describes moving out of the current box into an area which may enable superior performance. It is here we can achieve new competitive advantage and build competitive position. The second model suggests ideas for implementing organizational change.

For business leaders, only one thing is certain: Change will happen. Executives should examine situations in which changes were attempted but failed to succeed. Were business process changes made without making the necessary management process changes or vice versa? Alone, neither one will unlock the business box.

Alfred J. Battaglia is a group president of Becton Dickinson and Co., a $2.5 billion company based in Franklin Lakes, NJ. Becton Dickinson manufactures and sells a broad range of medical supplies, devices, and diagnostic systems.
COPYRIGHT 1993 Chief Executive Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Author:Battaglia, Alfred J.
Publication:Chief Executive (U.S.)
Date:Jul 1, 1993
Words:1658
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