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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
Organisation Design vs Organisation Development

Is there a difference between Organisation Design and Organisation Development? Many people believe Design falls within Development while others see them as fields that belong in fundamentally different parts of the organisation, i.e. Design should sit with the strategy function/COO while Development belongs with HR.

In discussing this topic with Mark LaScola (Mark, an American, runs one of the leading niche but very much global Organisation Design firms and has been an Organisation Design practitioner for 30+ years), his view is that Europeans are confused about the difference between the two ODs while Americans have a very clear sense of their separation. In Europe they are seen as similar fields, with Design being a subset of Development. The below Venn Diagrams depict these two world views:

OrgVue - Organisation Design and Organisation Development viewed by Americans and Europeans

So what is the difference? Does the difference matter and if it does matter, in what way?

I really like Naomi Stanford’s analogy:

Organization design is deciding first what is the purpose of the car that you are about to design e.g. is it to cross the desert? Is it to win a Formula 1 race? Is it to transport two adults and three children to a party? Then designing and delivering a car that is fit for that purpose.

Organization development is about keeping that vehicle in the condition necessary to achieve the purpose e.g. using the right fuel, having it serviced regularly, teaching the driver how to drive it to maximize its performance, and so on.

OrgVue - Organisation Design and Organisation Development Analogy

The organisation design definition does not mention people or behaviours, while the organisation development definitions are all about these. In that sense, Design comes first.

All too frequently the Design is done around the people, not around the strategic requirements. This leads to bad design, because in practice it is hard to differentiate the role from the person, as we are not just our perfect job specs. Having a purely engineering, mathematical perspective can lead to some pretty stupid people-related decisions. In so many ways structure, governance rules and interfaces have a dramatic impact on behaviour; defining who decides what has a pretty significant impact on how people act, who they need to influence and who needs to interact with whom.

So in my view, the two ODs can never be truly separated. Equally, I believe you have to start somewhere. So, start with what needs to happen – the ideal design for a given set of criteria – and then think through the impact. Think through whether too many trade-offs are being made and if the desired behavioural outcomes are going to be met. Think through ‘How Will it Work in Practice’ or the ‘HOWWIP’. Think through the risks and people trade-offs, iterate the design if needs be (and iteration will almost certainly be needed) until the optimal design is established.

OrgVue - Organisation Design and Organisation Development BrainI regard them, therefore, as quite different but “mono-directionally interrelated disciplines”. What I mean is, you can’t have design without development BUT you can have development without design.

The way of thinking through a design process is quite different to that of a development process. It is more physical. It is more concrete. It is more left brain. But, ignore development and almost certainly the whole design will come to catastrophic implosion under the weight of real politics with a small ‘p’.  That means that those analytically driven souls like myself have to get to grips with a field that doesn’t come naturally. By the same token, however, those who come from the development side of the equation have to equally get to grips with the design field, and not just use the good old development tools & techniques as a way to fumble through.

Human skills, coaching skills, consulting skills can achieve amazing results, but there are some fundamental design techniques that need to be applied too. Design and development should team together, and to do so we still need a good appreciation of each other’s worlds.


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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
An organisation is a system

The literature in organisation design talks about system thinking and that an organisation is a system. Examples include:

  • Designing organisations is the process of purposefully configuring elements or organisation to effectively and efficiently achieve its strategy and deliver intended business, customer and employee outcomes (Mohrman, 2003)
  • Is driven by the business strategy and operating context; requires holistic thinking (systems, structures, people, performance measures, processes, culture, skills…); design for the future; not to be undertaken lightly; a fundamental process and not a repair job (paraphrased from Naomi Stanford, 2007)

So if this is true, should you run a mile because it is too complex? And anyway, what does this really mean? And how, pragmatically, can we make sense of this idea in a value adding way rather than just an academic concept?

Unfortunately (or fortunately, depending on your perspective) we humans have limited cognitive ability. Most of us can only really deal with two variables at any one time.  So we have to break the parts of the system down, understand the bit, then chunk it up again. The days of Leonardo de Vinci are long gone.

Let’s start with the organisational system. The below is a depiction (model) of the organisational system (all models are a simplification). An organisation has a vision. A reason for being and this is translated into goals & objectives (and more broadly into a strategy in how to get there). Those objectives are delivered by employees who fulfil roles. Roles fit within a reporting structure. The number of FTEs required is the right-sizing question, i.e. how many FTEs do we need? As I and many others constantly say, Org Design isn’t about who reports to whom. It is about what the role is required to do. What decisions need to be made? What activities need to be done? To do these things, competencies are required and employees have competencies. So what is the gap? How are customers going to be served and what are the value chains needed to serve those customers?

OrgVue - Draw Org ChartsIf you define answers to these questions, then you have designed your organisation. If you just draw org charts you haven’t really got much at all. Just boxes… So what?

The model can be made even more complex… (As can all models. All models are wrong, but some are useful).  Some examples of how it is often made more complex is by defining: who is responsible for each customer or an element of the customer value chain. The same is true for projects or risk management… but remember that we can “only really deal with 2 variables” at one time anyway.

That is why, in all our literature, that we define the system in the below chalk board diagram.

Organisation Design - OrgVueSo how can this be practically useful?

At its most basic, if you want something done, make clear to the person you want to do that “thing” that they are accountable AND it is them, not someone else. Give them that ownership. Equally, be sure that the key things that need doing are defined and that you have the right people (i.e. the right competencies) on it.

If you think this is all too much, then think about the time and effort that go into generating job descriptions. The elements in a classic job spec are those that are being defined by this system thinking.

OrgVue - Job DescriptionTo date I have not yet found an organisation that has good job specs.  (If you feel you have great job specs OR you know of an organisation that has good ones, please please let me know. I would love to learn about it). This is not through lack of effort. It is because each job spec is a standalone word document that is more often than not generated for a recruiting or job evaluation purpose (justification of pay and grading).

OrgVue has been developed to solve this issue. To provide a place for defining things like roles; listing out employees or defining processes, competencies, customers… and how they “link”. But linking them all together, you have a “graph” (read graph vs. relationship database). You don’t have to link them all together, but if you do, then by definition you have everyone’s job spec. You have total transparency on who is accountable for what.

Daniel Pink has famously popularised what really motivates employees in knowledge organisations: Purpose; Autonomy; Mastery. By defining the organisational system, you help to codify the broad organisational purpose and how that cascades. Each role in a defined system, should have purpose. By being clear on the accountabilities of each role, you are giving autonomy. Given the right level of autonomy requires trust. Trust means you have faith in the person’s ability to effectively do the role. This means they need to have enough competence to do the role… they need mastery.

It is all connected and it is all do-able. You don’t need to define everything at one. Start with processes in one area… and move out from there. Take the job specs and “see” what that looks like.

And that is my second to last point. You need to be able to “see” this stuff. It isn’t about codifying it in a black box. You need to almost touch it. Print it out. Break it down, experiment with various options and keep it updated (easily).

Which is why we, for the past 4 years, we have been on the journey of developing OrgVue and the Org Design thinking. It is way the product is schema-less because every situation is different. Equally, it is why we are developing standard sets of processes and competencies models… because they are painful to generate and why create it twice? Build on a starter for 10. It is why we are shooting to simplify as much of the process as possible, hence the push to take out the ACI from RACI (A = Accountable, C = Consulted, I = Informed)… these define roles people can take within a process or decision making… It is why we have made the product so visual with an ability to punch out to vector PDFs (and soon, PowerPoint slides).

To define your organisational system requires considered thought. But now, with OrgVue, for the first time it is actually possible. Embrace that revolution!


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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
5 Myths about 70:20:10

Discussions about 70:20:10

Internationally there are all kinds of discussions about the sense and nonsense of 70:20:10. The number of links is almost infinite and, in almost every language, there is something to be found. Typical patterns of these discussions again and again refer to the same so-called nonsense of 70:20:10, such as:

 

How informed is this discussion?

All of the above thoughts about 70:20:10 can be all rejected in a definitive book about 70:20:10. This book was written based on Tulser’s experience and practice in the Netherlands, and on experiences gathered across the world. This book is now available in Dutch, English and Korean and has been bought globally.

This ’70:20:10 Towards 100% Performance’ book describes the 70:20:10 methodology as a contribution to enhancing L&D practices in the world of organisational learning by expanding, renewing, and consistently connecting to the core business of organisations. It is at the core of a performance-oriented approach, which will lead to a measurable business impact for L&D.

Of course, neither the book nor the 70:20:10 Institute, are against formal learning, the 10. In our view, formal and informal learning in the world of corporate and organisational learning reinforce each other. But it is important to design any formal learning that is necessary as part of a business solution on rigorous evidence-based principles. In our practice, we see that this is often not the case.  This is reinforced in this book by Clark Quinn.

The field of informal learning is still an open one, because there has not been enough research in the field that is evidence-based. The exceptions are the domains of performance support and the demonstration of correlation between experience and deliverables. For instance, the many studies in medicine repeatedly show that experience leads to less complications, rework and mortality. This link provides a meta-analysis of that evidence.

There has also been significant (international) research on the time that people in organisations spend on formal and informal learning. This insight into the economic approach to learning in organisations is extremely informative with clear lessons for our profession. Andries de Grip offers an excellent overview of the power of informal learning.

More recent studies show a shift in percentages of time people spend in formal and informal learning. This is completely in line with the baseline of the 70:20:10 reference model. Not in exact percentages, of course, but in underlying principles. Everyone understands that Pareto’s 80:20 ratios is a principle that remains unchanged if the percentages do not exactly match 80:20. The same is true of 70:20:10. Even the initial Centre for Creative Leadership studies showed different rations with different groups.

Many people in the world of L&D realise that it is more effective if their solutions include more than offering formal learning interventions. With 70:20:10, we have developed a reference model with a concrete methodology and a multitude of solutions. Our goal is to strengthen L&D structurally and to further develop the 70:20:10 playing field with anyone who wants to join. Of course, we are open to work with a variety of researchers to develop evidence-based solutions.

 

Myth 1: Every professional learns according to 70:20:10

See the book in which 70:20:10 is described as a reference model aimed at strengthening L&D in the world of organisational learning and expanding services with measurable business impact. So, for us, 70:20:10 is not an intervention matrix, and the ratio is not prescriptive. Nor is it our idea that 70:20:10 should form the basis for the formal education system.

Confusion often occurs regarding whether 70:20:10 should also provide guidance for formal training. A good example of this is, for instance, the fact that, during his/her initial development, a surgeon will follow a formal education programme rather than gaining professional knowledge in the 70 through experimenting and learning from experience. Of course, the 70 includes a wide range of activities to work better (learning) and it is not the intention of the 70:20:10 reference model that surgeons should only learn through experience or experiment. This example is unfortunate when arguing against informal learning. Medical specialist training includes a strong and comprehensive practical component (70 and 20) to improve working, see Chapters 7 and 8 in Duvivier’s dissertation (2012): Or, said differently, it has been found effective that a significant part of formal education for doctors and medical specialists takes place in practice.

 

Myth 2: 70:20:10 as an ideal label

Of course, 70:20:10 may not be an ideal label. However, the principle is too important to ignore in the world of organisational learning.

From a variety of sources, L&D’s focus is around 80-100% on formal learning (learning apart from work), see ATD State and Industry Reports and or Towards Maturity benchmark studies. For L&D then, it’s a challenging task to also make a relevant contribution to informal learning (learning during work). We know that learning in organisations extends beyond the offer of formal learning and, specifically, onto the playing field of informal learning and work, where new opportunities for L&D arise. Who can resist that challenge?

 

Myth 3: Formal learning and training is only 10% and therefore useless

There is often a suggestion that a 10% spend on formal learning is too little. As explained earlier, the numbers are not meant to be taken literally. However a Dutch study showed that workers spend more than 1800 hours per year working in a full-time employment and a 36-hour working week. If the 70:20:10 ratio were to be taken literally, and assuming that all work provides a learning experience, it would mean that workers need to spend about 180 hours per year on formal learning. However, the CBS believes in practice that employees spend 35 hours a year on formal learning activities.

The suggestion that the 70:20:10 reference model works against formal learning is simply incorrect. There is certainly a shift of learning and a greater focus during and around work, but that is not at the expense of formal learning.

As demonstrated by De Grip’s research, formal learning reinforces informal learning. Therefore, it is certainly useful to design and execute formal learning interventions effectively – and (in the world of corporate and organisational learning) to connect all learning with the core business of the organisation.

 

Myth 4: There are 3 types of professional learning (70, 20 and 10)

For us, 70:20:10 is not an end in itself. At the 70:20:10 Institute we see it as a movement that is open to other approaches and (theory) formation. 70:20:10 is described in our book as the Droste effect: during 70 activities and learning you can also do 10 and 20 activities and vice versa. Of course, people might work and, at the same time, follow a MOOC, watch an instructional video, carry out e-learning or read a work-related article. All of these activities might be considered in the 10. The same principle applies to co-operation (20) or practical simulations (often part of 70) within the 10.

 

Myth 5: 70:20:10 highlights an L&D problem

As mentioned in the myth 2 response, L&D’s offerings in the corporate world are dominated by 10 solutions. However, with this approach, L&D leaders often face a problem, or challenge, because it is very important to be connected with the core business and to play an active role in supporting better performance. In the corporate world, L&D often finds it difficult to demonstrate business impact with 10 solutions. That’s why it’s up to us as a profession to tackle the challenge. The 70:20:10 methodology makes this possible.

 

What does the model deliver?

The benefits of the 70:20:10 reference model include

  • Better connection of L&D services with core business objectives;
  • Opportunities to extend and renew L&D services;
  • Improved ability to demonstrate measurable business impact.

Often, Self Directed Learning (SDL) is mentioned as a benefit for L&D. However, this is not always an advantage and also not in line with reality. An excellent blog by Mirjam Neelen and Paul Kirschner (2017) provides a good overview of the SDL concept, along with the possibilities and limitations of application of this concept in organisations.

 

And last but not least

We invite everyone from the world of HRD, L&D, HR business partners, managers and other interested parties to work with us and explore more deeply the possibilities and limitations of the application of 70:20:10.

For us, 70:20:10 is not the ideal label, but it is the logical basis for re-structuring L&D and aligning with the core business of organisations. The importance of this will only increase in the present knowledge economy, where knowledge is no longer limited to following formal training and e-learning. So let’s move forward together, instead of conducting insufficiently informed discussions about a label named 70:20:10. The underlying principles – the extension of services, the connection with the core business, and the improved business impact – are too important for our professions to leave ignore.


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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
Burnout: Our Biggest and Most Hidden Workplace Epidemic?

With the rise of technology and increasing hyper-connectivity in our work and social lives, people are finding they need to be ‘always-on.’

Much research has shown that increased demands at work such as workload, pressures, ambiguity, relationship conflict and poor management behaviours are contributing to employees feeling ‘burnt out.’

In fact, in a recent survey 50% of people report ‘always’ feeling exhausted. It is no surprise that there has been growing concern between the relationship between our work and overall mental health.

Photo by Kevin on Unsplash

The Deteriorating Mental Health Epidemic

According to The Mental Health Foundationtwo in three adults have experienced mental health issues at some point in their life with a total of 65 per cent of Briton’s having been affected by conditions ranging from panic attacks, anxiety to depression. Worryingly, the World Health Organisationhave reported that mental health has deteriorated by 50% since 1990, with experts concluding it is set to get worse.

Consequentially, we are seeing more and more people struggling to cope at work as they balance a myriad of demands with their overall mental wellness. This often leads to two organisational outcomes; 1) increased absenteeism, 2) increased presenteeism, whereby people turn up to work despite being ill and struggle to engage or be productive with their work.

It has been reported that 1 in 2 of all working days lost are now due to poor mental wellness; including stress, anxiety and depression (Office for National Statistics), costing in the order of £26 billion per year. Shockingly, research has indicated that presenteeism is far more costly than absenteeism, costing employers 2 to 7 times more.

Clearly, ensuring employees feel mentally well to be their best is not only a moral imperative but also a simple economic argument. Every ounce of our productivity at work comes from our mind and our state of mind dictates the effectiveness of our application; how we relate to others, behave at work, perform and engage with our work to contribute to the collective organisation success.

The Mental Health Foundation estimate that people working with a mental health problem are responsible for 12.1% of the UK’s GDP — that’s £226 billion of value.


The Invisible Problem

Photo by Johnson Wang on Unsplash

One of the biggest challenges organisations face is being able to identify a problem in the first place. Often, employees do not feel safe or confident in disclosing mental health issues so often the issue is invisible, leaving negative workplace behaviours and cultures to fester. A recent study showed that of the 49% of people who had taken mental-health related absence in the last year, 45% of them gave another reason for their absence. Delving in to this further, the same study by The Mental Health Foundation found that there were three top reasons not to disclose the true reason for their absence:

· 46% did not report mental-health related absence for fear of being discriminated against or harassed by colleagues

· 41% did not report mental-health related absence because they feel/ felt ashamed to do so

· 45% did not report mental-health related absence because they felt it is none of their employer’s business

It becomes a very bleak picture, when you also add to the mix that nearly half of all employees do not feel their workplace is an emotionally healthy environment, with 55 per cent of organisations having no formal strategy for handling employee wellbeing.


The Burning Platform

If we are to create workplaces that enrich us and enable us to thrive and perform, we have to start with tackling how we understand and challenge ourselves to address workplace demands, culture and burnout.

This means better identification, better awareness and creating safe environments. Ultimately, we not only need to focus on the problem and how best to support people at work, but we need a fundamental shift in how we empower and promote mental wellness at work.


People Matter exist to empower people and organisations from the negative impact of stress at work. Using powerful AI, we spot potential risks to wellness before things start to become problems.

Written by Amy Charlotte King

Find out more at www.peoplematter.tech


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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
What percentage of your people create 90 per cent of the value?

Asking a critical question about who creates the most value in a company can be unpopular but fundamentally important in designing and delivering performance-enhancing HR practices, writes Wayne Brockbank

If you want to have a very interesting, unpopular but centrally important discussion, you may ask your senior leadership team, “What percentage of our people create 90 per cent of the value?” I have seen some companies conclude that the answer is less than 1 per cent whereas I have seen other companies conclude that the answer is 80 per cent. (Assume for a moment that value is defined by sustainable profitability.)

The question will be unpopular because it assumes that some people in some positions are more important than others. It is centrally important because it helps you to identify whether value is created by a small number or a large number of individuals. This determination is important because of its implications for what kinds of people are hired and promoted (superstars or team players), for how rewards are distributed (normal or power distributions), how decision-making authority is allocated (centralised or dispersed), and how symbols of status such as office space and parking places are allocated (lavish to a few or evenly dispensed).

It may occur in some companies that the importance of a small number of individuals is overemphasised and the value created by large number is underemphasised. When this occurs, teamwork might be undermined, feelings of inequity might abound, strategy implementation might be sub-optimised and institutional synergy might be lost.

“The question will be unpopular because it assumes that some people in some positions are more important than others”

If the importance of large numbers of people is overemphasised and the value of a small number of individual key value creators is underemphasised, there might be a tendency for superstar talent not to be hired, for superstars to leave and for key talent not to be fully leveraged.

Therefore, it is appropriate to ask ourselves, “Under what conditions should small numbers or large numbers of value creators be emphasised?”

  • Startup versus mature. Business startups tend to be done by a small number of entrepreneurs (e.g. FedEx). When the firm is in the mature phase of its life cycle, value tends to be created by a larger number of people (e.g. Toyota assembly lines).
  • Individual genius versus collective genius. In some companies’ business results might rest on the genius of a small number of individuals (e.g. Steve Jobs at Apple). However, business success might also depend on the senior leadership leveraging the genius of the collective institution (e.g. Tim Cook at Apple).
  • Company values that focus on teamwork rather than individual prominence. We see this dynamic being debated at India’s Infosys in which the founders traditionally emphasised institutional equity; whereas the more recent senior leadership tended to emphasise C-suite eminence.
  • Individual-based work versus collaborative based work. The nature of the work itself might emphasise individual effort (e.g. Goldman Sachs Private Wealth Management) versus collective effort (e.g. Tata Consulting Services).
  • Demographic homogeneity versus heterogeneity. In some countries the capability and performance distributions are assumed to be relatively narrow because the population of the country is relatively homogenous (e.g. Finland); thus, collective effort tends to be more emphasised. In countries in more heterogeneous populations, the distribution of performance may be broader and individual effort might tend to count more (e.g. England).
  • Small numbers versus large numbers who are involved in strategy formation. In some firms it is assumed that a small number of individuals set the strategy and performance targets which the masses then execute (e.g. PetroChina). In other firms, it is assumed that strategy formulation and target setting is best done by large groups of individuals who collectively have access to broad cuts of market information and therefore may be more involved in strategy formation (e.g. Unilever)

“Getting the right balance is centrally important for the design and delivery performance enhancing HR practices”

Whether the above analysis indicates that small numbers of individuals or large numbers of individuals create the greatest value, getting the right balance is centrally important for the design and delivery performance enhancing HR practices.

Action items for HR

  1. As an individual HR professional, have a clear idea of how your firm creates value in the form of sustainable profitability.
  2. Pose the question to your management team, “What percent of our people create 90 percent of our values? Who are they and what do they do?”
  3. Ensure an open, honest, non-political and business-focused discussion in the search for the answer to the above questions.
  4. Translate the answers to these questions into their implications for staffing, measurement and rewards, and organisation design.


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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
What’s the formula for proactive change management?

There is a formula that HR professionals can use to help assess why people do or don’t mobilise well in crises, and it can be used successfully in a change management process, according to Dave Hanna

The plant manager in a troubled automobile factory gave a presentation in an all-hands meeting, reviewing the plant’s poor results that were forcing employee layoffs.

“Ladies and gentlemen,” the plant manager said in conclusion, “the figures don’t lie.”

The next speaker on the program was the union president. He began by saying, “Yes, ladies and gentlemen, the figures don’t lie. But, remember, liars figure!”

This experience highlights a significant challenge: how do you mobilise a workforce to change how it operates to turn around its performance?

The Centre for Workplace Leadership (CWL) at the University of Melbourne, in a 2016 survey of managers and employees in 2,700 organisations, found that 40 per cent of Australian companies are missing their targets for Return on Investment (ROI) and profitability. One third of these companies underperform on their sales targets. Furthermore, the CWL study showed:

  • Only 33 per cent of the surveyed companies display their Key Performance Indicators (KPIs) in a visible place. One in three does not provide employees with any access to KPIs.
  • Only 34 per cent of the workplaces indicate that all employees have access to the workplace’s performance targets.
  • Whereas 84 per cent of frontline managers believe they are good at information sharing and gaining commitment, only 50 per cent of their employees agree with them.
  • Some 40 per cent of Australian businesses don’t have mentoring or executive coaching programs and 60 per cent do not invest in formal leadership qualifications.

These CWL findings correlate closely with global research done by the Turnaround Management Society (TMS), a firm focusing on the dynamics of business turnarounds. In TMS’s 2014 study of factors that lead to corporate crises, note these leading internal factors:

What's the formula for proactive change management? How do you mobilise a workforce to change how it operates to turn around its performance?

“How do you mobilise a workforce to change how it operates to turn around its performance?”

These two studies reminded me of a change formula first postulated by consultant David Gleicher many years ago. I have found it is practical and helpful in assessing why people do or do not mobilise effectively in a crisis. Here is the Gleicher formula:

C = ƒ(ABD) > X

Where:

= the needed change

A = dissatisfied with the status quo

B = clear vision of the desired future state

D = practical first steps to the desired future state,

X = the perceived cost of making the change. (In this context, “cost” is any negative financial, political, social, or emotional impact.) (See the end of the article for the link between the formula and the cited research findings.)

A Success Story

Just what is possible when ABD > X? Ask the associates at Metro Cash & Carry International (MCC), a leading wholesale and food service specialist with 751 stores in 25 countries.

Dissatisfaction with The Present: when the Dutch firm Makro and the German firm METRO merged, employees on both sides felt their best days were behind them. Add to that senior management’s mandate to grow the MCC business significantly and you can see why no one was satisfied with the situation.

Clear Vision of the Desired Future State: In multiple strategy sessions, company leaders shaped a Mission Statement and Code of Conduct that spelled out what MCC’s business was and was not.

Practical First Steps: the HR function developed a communication process and training experiences to help every associate understand MCC’s future direction and demonstrate how his/her personal contribution added value to it. This training also demonstrated how each role was linked to others in the company’s work systems. Functional silos were subordinated to overall process excellence.

This process effectively mobilised all associates. In the next decade MCC met its challenging growth targets, including successful entries into the challenging Russian and Chinese markets.

“The consequences of 40 per cent missing their targets are not as severe as the pain of moving out of one’s comfort zone to change an entrenched culture”

Change Formula Correlation With Internal Causes of Crisis

David Gleicher’s change formula explains both sides of the change coin: why people do or do not change to produce a turnaround.

C = ƒ(ABD) > X

As METRO Cash & Carry demonstrated, when ABD > X, people make the needed changes. But if ABD < X, people resist the changes and may stay in their comfort zone even if they aren’t happy with the current state.

Notice how well the factors in the Change Formula correlate with the research factors that explain a corporate crisis situation:

  • People aren’t that dissatisfied with the status quo. Research Points: Hanging onto inadequate strategies, not wanting to change, not informed of KPIs or performance targets, insufficient internal communication, frontline leaders overestimate their skills.
  • Vision is not clear or doesn’t represent the future realities. Research Points: No vision, underestimated market changes.
  • Some key practical first steps aren’t in place. Research Points: Sporadic leadership coaching and development, too much bureaucracy, not well educated in business matters, insufficient controlling/accounting.
  • Apparently the personal cost of driving a turnaround is too high. Research Points: The consequences of 40 per cent missing their targets are not as severe as the pain of moving out of one’s comfort zone to change an entrenched culture.