Changes in an organization’s environment are occasionally so significant that efforts to adapt are insufficient. To thrive, the organization must transform. Transformation involves abandoning refinement of an organization’s design in favor of sweeping renewal. Drawing from Open System Theory’s (OST’s) use of a biological idiom, this paper postulates that organizations undergo “punctuated” evolution in response to gradual environmental changes.[1],[2] This means that organizations will experience relatively long periods of stasis, when change yields adverse results; followed by a brief periods when a tip in market conditions which demands significant change. Unfortunately, during the stasis period—the refinement phase—a culture of efficiency develops which resists efforts to transform. Therefore, successful transformation initiatives must have an element of why and when: reason and season. The reason must be powerful enough to convert the refinement camp to the transformation message, and the season must acknowledge an eventual return to stasis.
John Kotter, a recognized expert on organizational transformation, explains that the most powerful impediment to changing an organization is the security of past success.[3] The reason for this is simply that, at some point, the “old” way of doing business worked. Firms which have the hardest time changing are generally those with powerful connections to recent market dominance.[4] At some point, when an organization was doing well, change to the business model would have been detrimental. However, as the market environment passes subtle boundaries, the characteristics which enabled yesterday’s success will cause tomorrow’s failure.
Consider a biological metaphor for organizational transformation. Organisms are adapted to thrive in a competitive environment. Environmental conditions appear static because change occurs at an imperceptible rate. Minute deviations in factors such as temperature and atmospheric composition cause a species which once thrived to experience biotic stress.[5] Avoid the temptation to conjure images of cataclysmic environmental change, since such events result in rapid mass-extinction rather than transformation. Transformation occurs in species which experience slow change to their environment over millions of years. In spite of the gradual changes, paleological evidence indicates that adaptation within species eschews “gradualist” characteristics.[6] Brief, dramatic, evolution punctuates otherwise relatively static fossil records. Paleontologists call theses biotic tipping points “boundary events:” where majorities of species either undergo rapid evolution or face eventual extinction. Boundaries are brief and followed by a prolonged return to stasis.
in an environment which demands brief periods of design renewal, followed by extended periods of design refinement. Renewal and refinement are mutually exclusive forces. They can not occupy the same physical and psychological space, so firms must know which to favor at any given time. The preponderance of a firm’s time is spent in the refinement phase, where the market is relatively static and firms maximize value by increasing efficiency. Efficiency can be thought of as doing a better job at hitting a known target than your competitors. Recognizing changes in the market place is an entirely different challenge. As 19th century philosopher, Arthur Schopenhauer famously said “[t]alent hits a target no one else can hit; Genius (sic) hits a target no one else can see.”[7]
The danger in an over-zealous pursuit of efficiency, or “organizational talent,” is that it requires narrow focus; whereas seeing changes in the market requires a broader perception. The science of refining organizational activities traces its origin to Fredrick W. Taylor. Taylor studied industrial production to look for ways to make the production process more efficient.[8] He is most well known for using “time and motion” studies to scientifically determine ways to optimize of manufacturing tasks.[9] “Taylorism” had a significant influence on the design of Henry Ford’s famous production line. Ford exploited Taylor’s techniques like “task fragmentation” where workers repetitively performed some aspect of a task to allow them to perfect their individual contribution. In effect, human laborers became literal cogs in a machine.
Taylor’s book, The Principles of Scientific Management, had a major influence over U.S. business culture at the start of 20th century. The success of Taylorism in Ford’s plant led other businesses to ply his scientific management principles to everything from making hamburgers at McDonalds to producing college graduates.[10],[11] In the middle of the 20th century, Taylorism gave way to other production philosophies. Methods like the “Toyota Production System” (TPS) trace their origin to Taylorism, but Japanese managers softened Taylor’s science with an appreciation of the human qualities of laborers.[12] Accommodating human input, some of which can hardly be expressed in strict scientific terms, forced the business world to reconsider the balance of management science with something else: something more akin to an art.
By the 1960’s, the “Art of Leadership” was entering in the American business vernacular.[13] Books on the role of leadership emphasized the importance of creativity, imagination, feedback, and vision. Part of the reason such a shift was necessary—from strict managerial science to a blend of management science with leadership art—was because the 1960s was such a rapidly changing business marketplace. The impact of automation, mass communication, the global corporation, computers, and mass marketing all required organizational transformations beyond the capacity of management science to predict or guide.
It is possible to go too far in favor of transformation. Multiple studies have shown that when organizations try to constantly renew themselves, never allowing some respite in the refinement phase, the business suffers. The most typical culprit is that workers begin to focus only on output, at the expense of the health of the organization itself. This tendency begins as willingness to “cut fat,” then proceeds to cutting corners, and ends in cutting into the organization’s muscle and bone.[14] Abandoning refinement of a working design too early is just as dangerous as clinging to a defunct strategy and structure for too long. Identifying this boundary—understanding basic changes in the market—is the key to explaining why the organization must transform. Leaders are responsible for delivering the “why” to their organization since it is the only thing which gives purpose to changing manager’s “what” and “how” activities.[15] So successful transformation must have an element of both why and when. Organizations which attempt to remain in a constant state of renewal will suffer, albeit in a different way, as organizations which never attempt to change. The key to transforming in the right way, at the right time, is the right leadership.
Visionary leaders are those who can anticipate the arrival of market boundaries with such clarity that they can articulate why transformation is necessary before the organization feels any stress. These would be Schopenhauer’s “genius marksmen.” Effective leaders can recognize stress caused by changes in the market and transform “before its too late;” often simply following the lead of visionaries. Failed leaders do neither and their organizations enter gradual periods of decline. The key trait of the leader then is vision, or at least effective perception of the business environment. Impediments to perceiving the need to change which generally grows from one of two sources: a physical inability to observe market changes, or psychological biases which inhibit accurate interpretation of perceived data.
IMPEDIMENT’S TO VISION
The first impediment to perceiving the need to change includes physical impediments. In fighter aviation, training a pilot to dogfight is not as simple as just explaining the “stick & throttle” movements required to cause maneuvers. There is a reason why fighter pilots need excellent vision. Maneuvers which may be appropriate with the adversary in one position can be a fatal error with him in another. The difference between perceiving an opportunity for an attack vs. the need for an immediate defense can be indicated by little more than the position of the opposing fighter’s flight controls, viewed in a split second, from thousands of feet away. Upgrading instructors teach maneuvers through a process of explaining the required perception, decision, and maneuver.[16] This requires instructors to first teach the student practical perceptive skills such as where to look, when to look, and how to avoid fixation. This shift in method accompanied a shift in instructional theory applied at the USAF Fighter Weapons School beginning in the late 1970s.[17] The theory held that if the student did not have accurate “situational awareness” through correct perception, his decision—which maneuver to apply—is likely to be incorrect; making his maneuver execution—however skillful—absolutely irrelevant.
Physical impediments to perception can be present within both leaders and the organizations they lead. are just as real in the operation of organizations. These impediments can include technological barriers, structural barriers, and temporal barriers; but they all result in an inability to look in the right place at the right time to see market shifts. The lack-luster performance of the intelligence community (IC) in understanding the forces at play in the “Arab spring” demonstrates these barriers to perception. After the IC failed to provide warning about the scope of protests in Egypt, in spite of the fact that the protests were organized and reported on open source internet platforms, one senator quipped “wasn’t anybody watching…the internet?”[1] It should be no surprise that the IC underestimated the importance of social media when so many of its leaders can’t get past the “giggle -factor” of considering Twitter© a serious source of intelligence.[2]
Organizationally, efforts are underway to developing technological aids to help analysts access and understand the vast amounts of information resident on social media sites, but IC efforts amount to playing catch-up.[3] The IC is still stymied from adapting to the new intelligence environment by structural barriers such as a definition of “collection,” “collection agency,” “SIGINT,” and “U.S. persons information” which seems archaic in the era of Web 2.0 and Facebook.[4] Potentially more damaging is the IC’s temporal barriers. : the fact that IC leaders and their organizations are forced spend so much time on damage control from failures rather than looking for current and future opportunities that there is little reflective space to develop strategies for the future. This can only get worse if IC leaders succumb to the temptation to reprieve their successes as managers.
Previously, this paper postulated that “visionary” leaders recognize the need to change before feeling organizational stress; while effective leaders at least successfully react in response to stress. Organizations which encapsulate themselves in a self-soothing mythology of success, particularly when they are dismissive of changes in the market, literally numb their ability to accurately perceive the market. Kotter illuminates this phenomenon in corporate culture; but it, again, has a corollary in biology.[5] Congenital analgesia is a condition where a human is absolutely unable to perceive pain. The absence of pain, the inability to react to a small harm, makes patients with this disorder unable to guard themselves from significant harm—often with life threatening consequences.[6]
Even if leaders, or their organizations, are actually able to perceive the need to change; “efficiency” culture, cocooned in “happy-talk” about past success, creates strong anti-change organizational inertia.[7] Kotter again emphasizes that “change resistors” will consciously and sub-consciously attack transformation initiatives for a host of reasons.[8] This resistance generally uses one of two justifications: either change is not really necessary in light of fleeting indicators, or all that is needed is a minor refinement in organizational practice.[9] The fact that managers, trained in their management sciences, look for solutions via refinements to status quo is no surprise. It takes a leader to perceive the difference between indicators which require only refinement, and those which require a radical new course correction. Indicators can be like icebergs hiding most of their mass below the surface; an organization only has to “get it wrong” once. Leaders can overcome cultural resistance, in part, by setting an end point for transformation efforts. This helps the culture accept both the urgency of transformation, and portends a transition back to a refinement phase.
Transformation is hard because organizations exist within a market place which is never truly static, yet changes at a pace which usually favors refinement over renewal. Narrow focus on efficiency creates real perceptive and cultural barriers to recognizing the need to transform. Successful transformation requires leaders who can articulate both why and when transformation is necessary—the right reason and right season.
[1] Marcus Baram, “CIA's Mideast Surprise Recalls History of Intelligence Failure,” Huffington Post || Politics, February 02, 2011. http://www.huffingtonpost.com/2011/02/11/cias-mideast-surprise-history-of-failures_n_822183.html#s239132&title=Iranian_Revolution_1979 (accessed October 18, 2011).
[2] DIA CTA-7A employee, interview with author, CTA-7A (Cyber Threat Analysis) office, September 22, 2011.
[3] Johansen, Fredrick Johansen;, et all. “Detecting Emergent Conflicts through Web Mining and Visualization” Swedish Defense Research Agency, October 11, 2011: 03. http://irevolution.files.wordpress.com/2011/10/detecting-emergent-conflicts-through-web-mining-and-visualization.pdf (Accessed October 15, 2011).
[4] The Office of the President, Executive Order 12333, (Washington, DC: White House printing office, 1981).
[5] Kotter, 41.
[6] JaymElaine, “No Pain, No Gain.” The Serendip Blog, article and comments posted on June 10, 2011, http://serendip.brynmawr.edu/exchange/node/235 (accessed December 14, 2011).
[7] Kotter, 47.
[8] Kotter, Ibid., 24.
[9] Ibid., 47.
[1] “OST:” Niklas Luhmann. Social Systems. (Stanford: Stanford University Press, 1995), 6-7.
[2] “Punctuated:” Richard Kerr, “When Evolution Surges Ahead,” Science Magazine, October 24, 1997, 577-585.
[3] John Kotter, Leading Change. (Boston, MA: Harvard Business School Press, 1996), 27.
[4] Ibid.
[5] Richard Kerr, “When Evolution Surges Ahead,” Science Magazine, October 24, 1997, 577-585.
[6] Milford Wolpoff, “Evolution in Homo Erectus: the Question of Statis,” Paleobilogy, Vol 10(4) 1984, 389-406.
[7] Arthur Shopenhauer, The World as Will and Representation, Volume Two. Trans E. F. J. Payne. (Cambridge: Cambridge University Press, 1971) 391.
[8] Fredric W. Taylor, The Principals of Scientific Management, (New York, NY: Harper & Brothers, 1911), iv.
[9] Ibid. 79.
[10] McDonalds: Caleb Mason, “The Fast Food Jungle,” In These Times.Com, April 30, 2001, http://www.inthesetimes.com/issue/25/11/mason2511.html (accessed December 13, 2011).
[11] College graduates: R.J. O’Hara, “The Global War on Taylorism,” Collegiate Way, April 29, 2008, http://collegiateway.org/news/2008-gwot (accessed December 13, 2011).
[12] William M. Tsutsui. Manufacturing Ideology: Scientific Management in Twentieth-Century Japan. (Princeton: Princeton University Press, 1998), ix.
[13] See, for example: Stephen Wentorth Roskill, The Art of Leadership, (New York, NY: Archon Books, 1965) 102-103.
[14] Collin Coulson-Thomas, “Managing Change,” Business Leadership Review, April 2006: 3. http://www.mbaworld.com/blr-archive/opinion/29/index.pdf (accessed December 13, 2011).
[15] Simon Sinek, Start With Why, (New York, NY: Penguin Books, 2009), 7.
[16] The Perception-Decision-Execution (P-D-E) model is a simplification of John Boyd’s “Observation, Orientation, Decision, Action” model for human thought. Although the lineage of development of the P-D-E is multi-faceted, it grew from the “Building Block Approach” developed at the USAF Fighter Weapons School in the 1976 & 1977 Fighter Weapons Review (an internal publication of the USAF Weapons School) and is now ubiquitous in training materials used throughout USAF tactical training. C.R. Andregg, Sierra Hotel: Flying Air Force Fighters in the Decade after Vietnam (Washington D.C.: Air Force History and Museums Program, 2001), 54.
[17] C.R. Andregg, Sierra Hotel: Flying Air Force Fighters in the Decade after Vietnam (Washington D.C.: Air Force History and Museums Program, 2001), 54.
[18] Marcus Baram, “CIA's Mideast Surprise Recalls History of Intelligence Failure,” Huffington Post || Politics, February 02, 2011. http://www.huffingtonpost.com/2011/02/11/cias-mideast-surprise-history-of-failures_n_822183.html#s239132&title=Iranian_Revolution_1979 (accessed October 18, 2011).
[19] Johansen, Fredrick; et all. “Detecting Emergent Conflicts through Web Mining and Visualization” Swedish Defense Research Agency, October 11, 2011: 03. http://irevolution.files.wordpress.com/2011/10/detecting-emergent-conflicts-through-web-mining-and-visualization.pdf (Accessed October 15, 2011).
[20] The Office of the President, Executive Order 12333, (Washington, DC: White House printing office, 1981).
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Department of Defense. Joint Publication 1-02 (2010, amended 2011) “DoD Dictionary of Military and Associated Terms.” 2011.
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