03/03/2011

By Thomas A Stewart

"A system can not understand itself. The transformation requires a view from outside."

So wrote by W. Edwards Deming, the father of quality, whose work in the 1950s helped "Made in Japan" change its meaning from "cheap" to "excellent." It sounds like a justification for hiring consultants (Deming was one, after all), but Deming was actually writing about how to transform a company from within by liberating your mind so you can see with the clarity an outsider—and act with the knowledge of an insider.

Without that profound outsider-insider view, corporate revolutions just don't happen. That's because "corporate revolutions" are mostly led by and imposed on middle-aged people with some sense of responsibility for the consequences of their actions. Terror, which can do dandy things in real revolutions, backfires fast. Its milder analogue—anxiety—also does more harm than good. Anxiety is the enemy of both productivity and creativity. The best-known of Deming's famous 14 Points is #8: "Drive out fear, so that everyone may work effectively for the company."

Last time out, I suggested that wannabe business revolutionaries need to be tough-minded. Tough-minded, though, is not the same as thick-headed.

Here's a real life example of dunderheaded revolutionary rhetoric. I'm paraphrasing an actual change proposal that I saw, one that called for radical reorganization, a huge (more than 30%) cost reduction, and politically sensitive rearrangement of lines and boxes. (It's been edited to protect the guilty.) Making the case to leadership, the change team said revolution was justified because of lack of consolidated strategy and priorities; inadequate capabilities compared to competitors; inefficient spending; internal best practices not shared; long tenure and high cost for most staff, who do not add value commensurate with their costs.

You think I'm strategically sloppy, incapable, inefficient, complacent, and overpaid—and you want me to participate in the change effort, give you my best ideas, and sign up for the revolution? I think I'd better get ready to sign up for unemployment instead.

By contrast, here's the prologue to another document, different case, but calling for roughly the same scale and kind of change:

The drastic cost reduction target opens up a window of opportunity: To design a wholly new, more effective and efficient operating model. Reducing expenditures only by reducing volume of activities would kill the organization. Instead, we can aggregate inefficient activities and create focus. Once the results are clear, we can rescale.

Now, some of this may be Newspeak: Those windows of opportunity will surely be used for defenestration. But, hey, designing a wholly new operating model, creating focus, and planning how to rebuild—I could pitch in for that.

The difference isn't just tone and style: It's substantive. Harvard Business School's Amy Edmondson has written extensively about the importance of 'psychological safety' at work. As she puts it: "Psychological safety describes individuals' perceptions about the consequences of interpersonal risks in their work environment. It consists of taken-for-granted beliefs about how others will respond when one puts oneself on the line, such as by asking a question, seeking feedback, reporting a mistake, or proposing a new idea."

As Amy once told me, there are certain kinds of work environments where fear is a pretty effective management technique-a Roman galley manned by slaves, for example. But without psychological safety, people can't change, and most modern organizations can't succeed without change.

The only rational response to the first proposal I quoted is to circle the wagons, protect the women and children, and tell the change team that they don't know what they're talking about: You become Deming's insider, incapable of transforming. A group on the defensive has all kinds of tools at its disposal, from outright rebellion to-more commonly-becoming a passive aggressive organization, in which everyone agrees, but nothing changes. Management has relatively few options—basically, fire the bastards. The second proposal-equally tough minded-actually invites participation and creativity. The first implies you'll be punished for endurance; the second suggests you'll be rewarded for resilience.

This isn't exactly new information about work or about people. Deming's Out of the Crisis was published in the early 1980s, and more than 200 years before that, Ben Franklin observed that "a spoonful of honey will catch more flies than a gallon of vinegar."

So what is it that makes otherwise sensible business revolutionaries act like thugs? Quarterly earnings? Fear of their own boss? Misplaced machismo? Mistrust of their colleagues? Or, perhaps, their own lack of psychological safely?

Follow Thomas A Stewart on Twitter: @thomasastewart or follow his blog @ www.bnet.com/blog/strategist

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