Note: This is the fifth of a 6-part series, How to Harness the Power of Change Waves to Accelerate Growth.
In this post, I continue my focus on understanding what your organization can do internally to capitalize on external change cycles.
It is essential to know your organization’s exact position in its internal change cycle. Too often, leaders unwittingly design change programs that work against their organization’s momentum. The result is yet another failed initiative doomed to become fodder for a cartoon.
Why the S-Curve Doesn’t Work
In my experience, I’ve realized that most conventional models of organizational change and renewal are based on theory rather than experience and practice. The conventional wisdom leads to an S-curve model, as shown in the chart above.
Following this model, a strategic architect would choose a trajectory for the next up-cycle (following the stabilizing phase) and skillfully lead the organization along the path to unbounded growth and success, right?
Wrong. Those who have been through organizational change cycles have learned that this smooth, upward arc to the future does not reflect reality.
The reality, is that the resistance to change is actually a by-product of success.
Extremely strong countervailing forces conspire to pit those invested in the success of the first wave to strongly resist the formation of the second. The business model becomes entrenched. People are promoted for their expertise in harnessing the nuances of the first-wave business and new employees are recruited to fit into an organization that is increasingly specialized.
All these good and natural outcomes of success create high, invisible preferences to stay in the confines of the world in which the business was established and creates high anxiety for doing new things.
A Better Model: Crisis and Renewal
A more mature view of organizational change leverages the work of our friends in history and the environmental sciences, who write about civilizations, species and patterns of thinking. In the mid-90′s, David Hurst distilled this thinking in Crisis and Renewal, his seminal book for business leaders, which has valuable insights for change strategy.
- Forward curve: The arrow between choice and conservation.
- Reverse curve: The arrow between the words crisis and choice.
Crisis and Renewal: Yahoo!
Let’s use Yahoo as our example for understanding Hurst’s figure eight model. Yahoo started in 1994 as Jerry Yang and David Filo’s guide to the World Wide Web. This was the choice section of the forward curve. They made some good strategic choices and grew like crazy through the Internet bubble of the late 90′s. By 2000, they had their own search engine, had revamped their email and improved other services. They entered the conservation phase in 2008 with a large round of layoffs. The strategy and identity of Yahoo has been in flux in the last few years, trying search and advertising, news, sports, business tools and other products in quick succession. Since 2009, through the leadership change from Jerry Yang to Carol Bartz, the company has been in crisis and confusion.
Yahoo is working hard to get on the reverse curve. The model tells us that the company now needs significant leadership in order to put itself on the daunting turnaround path.
Leading the Right Way at the Right Time
- Use a planning-led model when your organization is on a forward curve with upward growth and you’ll be ideally positioned to capitalize on the external change wave. If you have created the breakthrough team (as discussed in the last post), the team needs to be partitioned off from the main business and given the resources to create its own well-designed forward growth curve.
- Use an action-led model when your organization is on the reverse curve with downward or stagnant growth – don’t even think about building a breakthrough team. Instead, devote all resources to righting your ship and getting back on course. Your greatest responsibility is to carefully select actions to take. You’ll need to have a hypothesis in order to do this. Make sure to err on the side of low-risk decisions.
The second greatest enemy of working through the reverse curve is attempting to skip the hard work and go straight to the entrepreneurial action.
I have seen and been part of organizations trying start the entrepreneurial cycle without doing the hard work on the left hand side of the chart and this simply does not work. The cross-currents of the old business model kill the momentum of the new cycle.
Applying the Theory
What does all this mean for you, the strategic architect for your team? Now that you’ve done your homework on external change waves, you need to determine whether your organization is on the forward or reverse part of the cycle.
Are you ready to catch lightning in a bottle?
- IF you have identified a change wave that meets our criteria of having both a long and powerful effect (such as “mobile first”)…
- AND your organization has momentum in the strategic management portion of the growth curve ….
- THEN you are poised to develop a plan to capture your share of the rising tide.
Write down your own answers to these questions and ask your key players to do the same. Then discuss your responses to see where your organization stands.
- Where is my organization on the figure eight of the growth and renewal cycle?
- How does that position fit with the external change that I would like to access?
- What experiments can I do that will help me accurately understand my organization’s ability to succeed?
In the final post we’ll add one more tool and wrap up the series. In the meantime, if you would like to talk, please drop me an email or tweet me @scottpropp. I would love to hear your thoughts and observations on organizational change curves.
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