Once upon a time, an engineering consulting company hit a speed bump. Revenue was falling so fast that staff attrition couldn't keep up with the contraction. So management leapt into action, declaring a salary freeze.
But there was a carrot — if the company met its revenue target, everyone would get a bonus. In consulting, revenue equates roughly to billable hours, so the engineers did their best to help Marketing find business. Trouble was, there wasn't enough business.
With less than a month to go before the CEO's annual state-of-the-company address, Management announced a buy-out for people close to retirement. After his address, in Q&A, a bright engineer asked him, "Since so many are taking the buy-out, we won't have enough billable hours left to meet the bonus target. Does this mean there's no bonus?"
Jacques, the CEO, was blind-sided, but he was no dummy. He knew that if he said yes, he could expect an exodus of his best engineers. So he replied, "I'll have to get back to you on that." Back in the calm of his office, Jacques and his team worked out the right answer: "We'll lower the bonus target proportionately."
So they issued a memo, and everyone relaxed some. But Jacques had been embarrassed at a time when he needed to show strong leadership. He probably wasn't ready for that question because it involved an intersection of two unrelated policies. Since there are so many policies in any company of even moderate size, the number of such intersections is large, and it's difficult to anticipate which intersections cause problems.
The executive team goofed, as most do now and then. Yet, even though we test our products thoroughly, we rarely test organizational changes before we "roll them out." It's a high-risk practice, because we end up testing our change plans using the company itself. To limit that risk, we must discover defects in change efforts before we execute them, and one approach that works well is the simulation.
Even though we test
our products thoroughly,
we rarely test organizational
changes before we
"roll them out"Simulations — sometimes called "games" — parallel reality. They're especially valuable when the event being simulated is high-risk. That's why the military runs war games, and why US presidential candidates run mock debates.
Simulations do require planning to ensure that they're faithful to reality, and you do need a skilled facilitator. But you can use simulations to test almost any organizational effort — process designs, project plans, test plans, reorganizations, mergers and acquisitions, marriage proposals — anything. Simulations can be off-site and small-scale, and you can use stand-ins for the actual players if security is an issue.
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More articles on Organizational Change:
- Workplace Taboos and Change
- In the workplace, some things can't be discussed — they are taboo. When we're aware of taboos,
we can choose when to obey them, and when to be more flexible. When we're unaware of them, they can
limit our ability to change.
- Conventional Foolishness
- Every specialization has a set of beliefs, often called "conventional wisdom." When these
beliefs are so obvious that they're unquestioned and even unnoticed, there's an opportunity to leap
ahead of the pack — by questioning the conventional wisdom.
- He's No Longer Here
- Sometimes we adopt inappropriate technologies, or we deploy unworkable processes, largely because of
the political power of their advocates, and despite widespread doubts about the wisdom of the moves.
Strangely, though, the decisions often stick long after the advocates move on. Why? And what can we
do about it?
- The True Costs of Cost-Cutting
- The metaphor "trimming the fat" rests on the belief that some parts of the organization are
expendable, and we can remove them with little impact on the remainder. Ah, if only things actually
worked that way...
- How to Find Lessons to Learn
- When we conduct Lessons Learned sessions, how can we ensure that we find all the important lessons to
be learned? Here's one method.
See also Organizational Change for more related articles.
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- The Power Affect: How We Express Our Personal Power
- Many people who possess real organizational power have a characteristic demeanor. It's the way they project their presence. I call this the power affect. Some people — call them power pretenders — adopt the power affect well before they attain significant organizational power. Unfortunately for their colleagues, and for their organizations, power pretenders can attain organizational power out of proportion to their merit or abilities. Understanding the power affect is therefore important for anyone who aims to attain power, or anyone who works with power pretenders. Read more about this program.
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