KARL MOORE: This is Karl Moore of the Desautels Faculty of Management at McGill University, Talking Management for the Globe and Mail. Today, I am delighted to speak with Ed Lawler who is a professor at the Marshall School at USC [University of Southern California]and the Director of the Center for Effective Organizations.
KARL: Good Morning Ed!
ED LAWLER: Good morning!
KARL: Ed, you have written and thought a lot about the need for organizational adaptability. What are some of the conclusions you have come to about that?
ED: First of all we have come to, not a surprising conclusion that organizations have to get better and better at it and that it is a capability organizations can develop internally and it involves thinking about change as desirable, inevitable and something that needs to occur naturally, rather than as a result of a change program. What got me interested in it is the high failure rate of organizational change efforts, depending on whose data you look at. In major corporations most change efforts fail.
The question is whether it is 60 per cent, 70 per cent or 90 per cent. You can fight about it, but clearly organizational change is not something that has been very well managed nor handled successfully. I have though about it for a number if years, and having tried a number of changes myself a number of times and failed, it became increasingly obvious to me that organizations are designed not to change, they are designed to operate at a disciplined, consistent and stable way.
Any time you come in with a change program you're facing a very strong uphill struggle to try to get change, so rather than fight, why not think of how you create organizations that are more adaptable and seek change. Basically that is the core of my argument around change.
Certainly one thing to do is to put people in touch with the environment so they understand the reason for the change, the nature of the change and can bring change ideas in from the outside, because they interface with customers, regulators and whoever it is that organizations need to satisfy to be effective. More than that you have to get a lot of the garbage outside of corporations that slows down change, that can be things all the way down from budget, to rigid job descriptions, to leaders and managers who specify what somebody has to do without any sense of what change might be, and of course, to some extent, you sacrifice a little execution. You may not be able to execute in a particular point in time quite as precisely, or as well as you could if you said it is all about execution. It is all about stability.
If you look at the financial results, one of the things we are finding as we are doing company analysis is that companies that are good to change often don't have the spikes of success that companies that aren't good at change have, but they also do not have the spikes of failure, where they are way out of tune with the environment. They tend to be steadier and profit growing. They do not set hairier goals, they set moderate goals, and they worry about adjusting and are willing to spend some resources on adjusting so that if they get a real winner, they do not carry it to quite such high stream up. But then, when that winner runs out, they do not have the collapse you have in a Kodak or somebody where their competitive advantage has disappeared because they did not have a second act. They have a second act but they may not capitalize as much on that second one or whatever the right number is.
KARL MOORE: This has been Karl Moore of the Desautels Faculty of Management at McGill University, Talking Management for the Globe and Mail. Today I've been speaking to Ed Lawler who is a senior professor at the Marshall School at the University of Southern California.