7. Dying
Unlike individuals, for whom dying is an event that can be pinned to a specific situation and date, organizations tend to come to the end of their lives in ways that make the fact of death less obvious. They get acquired, pieces of them are split off and sold, and it becomes harder and harder to say just when “the organization” ceased to exist. At this stage, organizations may go into Chapter 11 bankruptcy and then reemerge to function in a brief burst of energy, like a dying star, before darkness overtakes them. Even if they operate for a time, with skeleton staffs in little offices over a warehouse somewhere at the edge of the city, they come, sooner or later, to the point where the activities and the identity that once were that organization no longer exist. They have reached the end of the life cycle.
If we want things to stay as they are, things will have to change.
GIUSEPPE DI LAMPEDUSA, ITALIAN NOVELIST
THE ROLE OF TRANSITION IN THE ORGANIZATIONAL LIFE CYCLE
Transitions are the dynamic interludes between one of the seven stages of organizational life and the next. Their function is to close out one phase, reorient and renew people in that time we are calling the neutral zone, and carry people into the new way of doing and being that is the beginning of the next stage. A single transition may not be enough to bring about the complete transformation of the organization and the reorientation of its people; there may instead be a string of transitions, each of which carries the organization a step further along the path of its development. These multi-transition turnings can take years to finish. But however long they take, they make sense to people only in the context of the organization’s development. And transitions will need to make sense to people, for otherwise people will resist them and make it far harder for the organization to grow as it must.4
What is called “innovation” usually represents a new Dream. Mini-mills, which reprocess scrap into new steel, began as such a dream. Existing steel companies held fast to the more expensive and difficult process of making the metal directly out of ore, so for the dream to survive, it had to do so outside of existing organizations. The same thing happened with the dream of using transistors in radios instead of vacuum tubes. The big American electronics companies that were successful using vacuum tubes refused to embrace the new technology, and that dream was left to the Japanese to nurture. Looking at each of these cases as simply “innovation” underestimates the challenge they faced. What innovation’s champions are actually doing is creating a new organization, and to do that they must go back to the start of the life cycle. What we call “an innovation” is really a new Dream.
The organizational world is full of leaders with big dreams, but to convert Dreams into Ventures, leaders have to go through a transition; many of them are not ready to do that. They have to let go of the perfect ideal or the effortless vision that the Dream represented and begin the hard work and the compromises that it takes to launch the Venture. Some who let themselves be pulled into that transition—often with grave misgivings—never manage to emerge from it. They remain wholeheartedly committed to the Dream, but they have found a dozen reasons why they cannot and should not go through the ending that will be necessary if they are to make the transition into the second age of organizational life, turning the Dream into the Venture.
Not everyone finds the transition from the Dream to the Venture so difficult of course, for fortunately there are people who are not as interested in the Dream as they are in creating an actual organization based upon it. They may not really feel comfortable, in fact, with the naked idea. They’d much prefer to have an actual marketing and sales plan and an actual product to deliver to a real, live customer. They are ready to start an actual company.
THE LAWS OF ORGANIZATIONAL DEVELOPMENT
Even at this early point in the organizational life cycle, the First Law of Organizational Development is evident: those who were most at home with the necessary activities and arrangements of one phase are the ones who are the most likely to experience the subsequent phase as a severe personal setback. They will talk about it as a “strategic mistake,” as “dumb,” “unnecessary,” and “too expensive.” They will try to debate it on any other terms they can think of, but what they are really saying is that the transition is forcing them to let go of what they find most meaningful about the undertaking. And those who are well adapted and adjusted to the Venture will say the same things about the next stage, Getting Organized. In each of these cases, people who do not want to go through a transition will object to the change that caused it.
There is no fruit that is not bitter before it is ripe.
PUBLILIUS SYRUS, LATIN WRITER
The Venture stage was exemplified by Hewlett-Packard in the late 1930s, by Apple in the early 1980s, by Amazon in the 1990s, Facebook in the 2000s, and by thousands of lesser endeavors in between. The organization does fine for a while in a literal or figurative garage with a handful of people who are caught up in the founders’ enthusiasm. Roles and routines are vague, and the only thing that matters is to get problems solved whenever and wherever they present themselves. Oh, yes, and the other rule: the worst mistake is to miss an opportunity.
One must be thrust out of a finished cycle in life, and that leap [is] the most difficult to make—to part with one’s faith, one’s love, when one would prefer to renew the faith and recreate the passion.
ANAÏS NIN, AMERICAN DIARIST
The Venture stage demands entrepreneurial hustle. How things are done doesn’t matter much, for in the crisis-driven atmosphere of most ventures, energy, commitment, the ability to interest others in the undertaking, and a pragmatic, flexible approach are more important than careful plans and tested systems. Although there isn’t likely to be much hierarchy in the Venture stage, there is also not much doubt about who has the power. The values are those of the founders, and their personalities define the style of the whole organization. There is no formal decision-making process. The founders decide—or tell someone else to decide. The kind of people who cluster around such founders tend to admire and idealize them, and their loyalty is personal.
As noted earlier, a Venture can last for a long time. But as it grows the people who are best fitted to its needs are likely to become somewhat ambivalent about its success. The success is what they have been trying to create, and it validates their efforts. But success leads to growth—and especially to increasing complexity—that cannot be contained within and rationalized by the earlier forms and the earlier outlook. As the Venture becomes less and less able to manage its own success and Getting Organized becomes more and more obviously necessary, we encounter the Second Law of Organizational Development: the successful outcome of any phase of organizational development triggers its demise by creating challenges that it is not equipped to handle.
The sequence of Dream-to-Venture-to-Getting-Organized is the growth pattern coded into the very DNA of organizational life, but an understanding of the transitions that the sequence requires is not. What you find in a young organization that is trying to get organized is chaos. Most of what made the original core group of employees valuable to the Venture makes them detrimental to the process of Getting Organized. The founder may be one of those assets-turned-liability. The disorganized creativity now blocks plans to bring out a commercially viable product. And the founder’s intuitive way of following opportunities where and when they arise—which, he keeps reminding you, successfully guided the original research and brought in the original funding—is now a huge handicap to the management team, which is now starting to wish it could marginalize the founder.
The important thing is this: to be able at any moment to sacrifice what we are for what we would become.
CHARLES Du BOS, FRENCH CRITIC
So we get the Third Law of Organizational Development: in any significant transition, the thing that the organization needs to let go of is the very thing that got it this far. Discovering that law is painful, especially when you feel that you owe everything
to the people, the culture, the style of management, or the strategy that “got you this far.” And especially when people start saying, “I’ve given all my effort to making this company successful, and now you tell me that I don’t have the right skills anymore! The organization has ‘outgrown’ me, you say? Likely they are thinking that the truth is that they have no gratitude . . . no integrity . . . no decency . . . etc. . . etc.”
Such conflicts are reminders of the Fourth Law of Organizational Development: whenever there is a painful, troubled time in the organization, a developmental transition is probably going on. The terrible morale, the intragroup conflicts, or the sudden drop in productivity that you’re trying to deal with are just symptoms of that transition and the toll it is taking on people. If such troubles are very disruptive, you may try to avoid making the transition.
Yet if you do that, you will run into the Fifth Law of Organizational Development: during the first half of the life cycle, organizations become concerned with their stability through the Making-It stage. Not to make a transition when the time is ripe for one to occur will cause a developmental “retardation” in the organization. Numerical growth may continue for a time, but the conditions for further development will have been aborted by your avoidance of the transition, and in the end the retardation will threaten the very existence of the organization.
There is thus what we might call a “developmental imperative” that drives a company or an institution through the phases of the first half of the organizational life cycle. But after an organization has passed that point, things change. At first, there are few signs that Becoming an Institution is anything more than the next step onward and upward. But gradually people start to notice that form is becoming more important than function. Communication ceases to be a way to get through to others and begins to become a way to demonstrate an acceptable style and manner. People grow less and less likely to communicate directly with those who need to know and more likely to “go through channels.” Efforts that involve doing anything differently are paced very slowly in the hope that doing things gradually will help to “bring everyone on board.” In the institutional phase of their existence, organizations become so concerned with the stability of their own practices and the sanctity of their values that they end up generating the very problems that initiate the transition to the next phase of organizational life: Closing In.
Typically, the crises that bring institutionality to an end and initiate the transition to Closing In are external threats to market position or financial stability, brought on (be it noted) by the behaviors that are the downside of institutionality. Under these external challenges, the institutional concern for rules and policy becomes an obsession with showing that everything has been done properly and that expecting anything other than the unhappy outcome that actually occurred is in itself improper. The emphasis on following the proper channels turns the organization into a warren of organizational tunnels into which requests disappear and from which results and answers never emerge.
Most of the organizations we call bureaucracies are in this phase of their life cycle, but actually there are bureaucratic elements in any complex undertaking that is past the Getting Organized stage. So it is important to remember that the most telling signs of being Closed In are not just that routine squeezes out creativity and even efficiency—though these are actual outcomes. The real hallmark of Closing In is that the organization seals itself off from effective communication with its environment and becomes preoccupied with its own inner workings to the point where operations are ritualized into secret and magical acts.
Let me illustrate the behavior of a Closed In organization with the story of how the U.S. Navy handled the idea of “continuous-aim firing” a century ago.5 Around 1900 an American naval officer named Sims discovered that British sailors had developed a way to compensate for the roll of a ship and to hold steady the barrel of a shipboard cannon that would otherwise be tilting up and down with the action of the waves. He was able to demonstrate that British warships, using the new system, were dozens of times more accurate than their American counterparts. He showed, too, that instead of having to time the firing to moments of relative stability between rolls, British naval gunners could aim and fire continuously.
Sims sent off his findings to the U.S. Bureau of Ordinance and the U.S. Bureau of Navigation, and he waited. And waited. It was only after he began circulating his reports through unofficial channels, in a fashion that his superiors felt to be “improper,” that he even received a reply, which was essentially this:
1.Our equipment is as good as that of the British, so the difference must be in the training of the gunners.
2.The training of gunners is not the responsibility of the bureau you have contacted but of the officers of the ships in question.
3.Therefore, and most importantly, “continuous-aim-firing is impossible.”
In a final and completely shocking demonstration of “impropriety,” Sims broke through the evasions and denial by communicating directly with President Theodore Roosevelt. TR recalled Sims from the unofficial exile in China to which he had been banished by the navy top brass and appointed him inspector of target practice, a post in which he was able to demonstrate the effectiveness of the new techniques. The naval historian Elting Morison described the results. In tests conducted three years before Sims took over the gunnery post,
five ships of the North Atlantic Squadron [had] fired five minutes each at a lightship hulk at the conventional range of 1,600 yards [just under a mile]. After 25 minutes of banging away, two hits had been made on the sails of the elderly vessel. Six years later [i.e., three years into the new Sims system] one naval gunner made 15 hits in one minute at a target 75x25 feet at the same range; half of them hit in a bull’s eye 50 inches square.6
This is more than simply “one of those cases of resistance to change.” It is an example of the normal behavior that one finds in an organization in the Closed In phase of its existence.
ORGANIZATIONAL RENEWAL
Failing to understand the developmental course of organizational life not only confuses issues like the mature organization’s resistance to innovation but also mistakenly suggests that these issues are simply “problems” to be fixed rather than the normal behavior of a stage in the life of the organization. What such an organization needs is not fixing but renewal. Renewal comes about not by changing specific practices or cultural values but by taking the organization back to the start of its life cycle. Renewal—or the recovery of the youthful vigor that the organization had earlier in its life cycle—is in fact wired right into the organizational life cycle. What you have to do is choose, not Closing In, but the Path of Renewal—as shown in this figure.
There is no great invention, from fire to flying, which has not been hailed as an insult to some god.
J. B. S HALDANE, BRITISH SCIENTIST
Figure 6.2 Organizational renewal.
To be sure, saying that you simply have to choose the right path makes it far simpler than the process of organizational renewal actually is. For the whole organizational “immune system” is set up to reject the results of making such a choice. Leaders who would go down this path must have a clear understanding of what they are doing and the resources to carry it off. But organizations as different as General Electric, the U.S. Army, and IBM show that it can be done, and that “old” organizations (well on their way to Dying) can in fact be rejuvenated.
At every single moment of one’s life, one is what one is going to be no less than what one has been.
OSCAR WILDE, BRITISH DRAMATIST
As the figure suggests, renewal always involves finding ways to recapture and reinvigorate the energy of the first three phases of the organizational life cycle.
Redreaming the Dream
Renewal must begin with Redreaming the Dream on which the organization is based. The new Dream might be the idea of becoming a service business (IBM) or reinventing the idea of leadership (the U.S.
Army). It might involve getting into entirely new business areas or simply redefining the organization’s approach to existing ones. But in some significant way, organizational renewal always involves getting a new central idea around which to build the organization’s activities and structures.
Recapturing the Venture Spirit
Next, the organization must Recapture the Venture Spirit; that style was natural to the young and just-launched organization, but now it is locked away in the past. This can be done with the help of new roles and structures (which properly belong to the third step of renewal). But the Venture Spirit is also more likely to be revived when a new cultural emphasis and style of leadership are encouraged, usually with the help of a new leadership development initiative. Anyone who would lead a renewal effort needs to behave like the founder of a new Venture—breaking down the walls between different functions, encouraging a looser and faster-moving decision-making process, and creating much closer linkages to customers.
Getting Reorganized
Renewal must also revisit the Getting Organized stage by remodeling the policies, roles, and structures of the organization to more nearly approximate those of a young organization. This time, of course, you are approaching Getting Organized from the other side, as it were, recovering the elements of a successful organization rather than developing them from scratch. Sometimes this requires that you break up large units into smaller ones and treat the small units as little start-ups-within-the-company. You may need to reinvent the compensation system so that more of people’s pay is tied directly to the results they achieve. You will probably need to move to a new and less qualification-bound kind of hiring, sacrificing certifications and formal experience for clear evidence that a job candidate can do the work that the organization currently needs to be done.
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