Archive for the ‘Organizational Culture’ Category
On the unintended consequences of organisational change
Introduction
Change, as the cliché goes, is the only constant. At any given time, most organisations are either planning or implementing changes of some kind. Perhaps because of its ubiquity, the rationale and results of change are not questioned as deeply as they ought to be. In this post I describe some unintended effects of organisational change, drawing on Barbara Czarniawska’s book, A Theory of Organizing and other sources. I also briefly discuss some ways in which these side effects can be avoided.
I’ll begin with a few words about terminology. In this article planned changes (also referred to as reforms) are changes instituted in order to achieve specific goals. The goals of reforms are referred to as planned effects – that is, planned effects are intended results of change. As I discuss below, although planned effects may eventually be achieved, change initiatives have a host of unforeseen but significant consequences. These are referred to as unplanned, unintended or side effects.
This article is organised as follows: I’ll begin by describing some of the positive and negative side effects of change, following which I’ll discuss why side effects come about and how they can be managed.
Advantageous side effects of change
Although, the term side effect has a negative connotation, some side effects of change can actually be advantageous. These include:
- Questioning of the status quo: In most organisations, processes and structures are taken for granted, rarely is the status quo questioned. Organisational change presents an opportunity to pose those “How can we do this better?” type questions that challenge the way things are done. Such questioning is unplanned in that it generally occurs spontaneously.
- Opportunities for reflection: This is a consequence of the previous point: questioning the status quo can cause people to reflect on how things can be done better. Again, this is an unintended consequence of a reform, not part of its planned goals. Also, it should be noted that although opportunities for reflection arise often, they are generally ignored because of time pressures.
- Spontaneous inventions: Finally, questioning of and reflecting on the status quo can trigger ideas for improvement.
Most people would agree that the above points are indeed Good Things that ought to be encouraged. However, the important point is that people who are in the throes of a planned change seldom have the time or motivation to pursue these opportunities.
Harmful side effects of change
The negative side effects of planned changes are insidious because they tend to occur as a result of inaction – i.e. by not taking corrective actions to counter the detrimental effects of change. The following side effects serve to illustrate this point:
- The aims of reform become cast in stone: The objectives of a change initiative are formulated based on an understanding of a situation as it exists at a particular point in time. Problem is, as time evolves the original objectives maybecome irrelevant or obsolete. Yet, in many (most?) change initiatives, objectives are rarely reviewed and adjusted.
- The means get confused with the ends: Following from the previous point, a change initiative becomes pointless when its objectives are no longer relevant. However, a common reaction in such situations is to continue the initiative, justifying it as a worthwhile end in itself. For example, if the benefits of, say, a restructuring initiative become moot, the restructuring itself becomes the objective rather than the benefits that were supposed to flow from it. This helps save face as the project can be declared a success once the restructuring is completed, regardless of whether or not the promised benefits are realised.
- Improvisations and spontaneous inventions are suppressed: As I have discussed at length in this post, planning and improvisation are complementary but contradictory aspects of organizational work. A negative aspect of planned change initiatives is that they are inimical to improvisations: those responsible for overseeing the change tend to ignore, even suppress any improvisations that arise because they are seen as getting in the way of achieving the objectives of the primary change.
Planned change initiatives are generally implemented through programs or projects. In fact, most major projects in organisations – restructurings, enterprise system implementations etc – are aimed at implementing reforms of some kind. However, although the raison d’etre of such projects is to achieve the planned objectives, many suffer from the negative side effects mentioned above. In her book Czarniawska states, “Planned change rarely, if ever, leads to planned effects.” Although this claim may be a tad exaggerated, the significant proportion of large projects that fail suggests there is at least a whiff of truth about it.
In the next two sections I take a brief look at why planned changes fail and what can be done about it.
The origin of the side effects of change
Most structures and processes within organisations have a complex, path-dependent history. Among other things, they develop in ways that are unique to an organisation and are often deeply intertwined with each other. As a result, it is impossible to be certain about the consequences of changing processes or structures – there are just too many variables and dependencies involved.
There are two related points that flow from this:
Firstly, those who plan changes need to have a good understanding of legacy: the history of the issues that the change aims to fix and those that it may create in the future. The problem is most of the people involved in planning, initiating and executing reforms have little appreciation of such issues.
Secondly, most major changes are conceived by a small number of people who hold positions of authority within organisations. These folks have a tendency to gloss over complexities, and often fail to involve those who have a detailed knowledge of the affected processes and structures. Consequently, their plans overlook dependencies and possible knock-on effects that can arise from them. This results in the negative side effects discussed in the previous section.
..and what can be done about them
Czarniawska recommends the following informal rules for successful change:
- Be willing to modify the objectives of the change and your path to get there as your understanding of it evolves.
- Implement lightweight processes, avoid bureaucratic procedures.
- Be open to improvisations.
This is good advice as it goes, but how exactly does one use it?
In our recently published book, The Heretic’s Guide to Best Practices, Paul Culmsee and I discuss how issues of legacy and lack of inclusiveness can be addressed.
Firstly, we suggest that apart from time, cost and scope (the classic iron triangle), project decision-makers would be well served by considering legacy as a separate variable in projects (also see this post on Paul’s blog for more on this point). More importantly, we describe techniques that can be used to surface hidden assumptions and aspects of history that could have a bearing on the project and those that might cause problems in the future.
Secondly, we discuss how one can work towards creating an environment in which a diverse group of stakeholders can air and reconcile their viewpoints. Such a discussion is a prerequisite to creating a plan that: a) considers as many viewpoints (variables) as possible and b) has the support of all stakeholders. Without this, any implementation is bound to have side-effects because of overlooked variables and/or the actions (or non-actions) of stakeholders who do not support the plan.
Of course, inclusiveness sounds great but it can be difficult in practice, especially in large organisations. What can decision-makers do in such cases? The answer comes from a slightly different, if rather obvious direction.
In his very illuminating book on decision-making, James March notes that organisations face messy and inconsistent environments. Given this, decisions made and implemented at lower levels have a better chance of success than those made in rarefied air of board-rooms. Paraphrasing a statement from his book:
Since knowledge of local conditions and specialized competencies are both essential and more readily found in decentralized units, control over the details of policy implementation and adaptation of general policies to local conditions are [best] delegated to local units. From the standpoint of general management, the strategy is usually seen as one of gaining the informational and motivational advantages of using people with local involvement, [but] at the cost of accentuating problems of central coordination and control.
Indeed, most of the nasty side effects of planned change arise from over-centralisation of coordination and control. The solution is to devolve control and decision-making authority down to the level at which the changes are to be implemented.
Conclusion
Planned change fails to achieve its goals because planners cannot foresee all the consequences of change or even know which factors may be important in determining these. Moreover, individuals will view changes through the lens of their background, biases and interests. Since organisations consist of many individuals with different views, managing change is essentially a wicked problem.
To sum up, those who initiate large-scale changes should keep in mind the law of unintended consequences: any planned action will have consequences that are not intended, or even foreseen. These consequences can be managed by getting a better appreciation of the factors that affect the processes and the structures to be changed. One can gain an understanding of these factors through a consideration of legacy and/or via dialogue involving all those who work with the processes and structures that are to be changed. The simplest way to achieve both is by delegating decision making and implementation authority down to where it belongs – with the people who work at the coalface of the organisation.
Four organisational myths
One of the ways we make sense of the world is by organising our experiences into stories. More often than not our narratives gloss over complexities, emphasising only those aspects or events that we want to. For example, I might tell a tale of my involvement in a successful project, talking up things I did that worked well while ignoring those that didn’t. The message implicitly conveyed by such a story is that my actions were responsible for the success of the project. Many stories in organisations are built on a similar theme: that success is a consequence of reasoned actions. This is an example of the myth of rationality.
In this post I look at a few myths that are common in organisations, highlighting how they mislead because they overlook other important factors. My discussion draws upon a brilliant (and short!) book by James March entitled, The Ambiguities of Experience.
According to March, organisational stories frequently contain one or more of the following mythic themes:
Rationality: This is theme described earlier, that successes are consequences of reasoned actions. Most folks who work in organisations tacitly subscribe to this myth. One can see this myth at work when people are asked to justify why they took certain actions. Their answers are usually framed in terms of rational expectations of the consequences – i.e. that they rationally expected certain outcomes to follow from their actions. This is true regardless of whether the actions were actually thought through or not. Think about it: what was the answer you gave your manager the last time he or she questioned an action you took?
Hierarchy: This refers to the way in which problems and challenges are analysed. Typically problems are assumed to be decomposable into constituent sub-problems. Solving a problem is thus reduced to tackling the sub-problems. In organisations, this scientific-rational approach is more or less taken for granted as being the only way to solve problems. In reality, however, many organizational issues are wicked – they are difficult to define unambiguously, let alone solve. As an example, see this paper by John Camillus which discusses how the formulation of an organisation’s strategy has elements of wickedness. In our recently published book, The Heretic’s Guide to Best Practices, Paul Culmsee and I discuss how such issues can be tackled using a range of collaborative techniques.
Leadership: Another persistent theme in organizational lore is that of the significance of leaders. One indicator of this is the number of hagiographies of successful CEOs in the management section of bookshops. Another is the number of management school case studies that attempt to link the successes of organisations to the actions of their leaders. In truth, although the actions of a CEO may set the overall direction for an organisation, success or failure depends on a host of other factors that executives have no control over, including the actions of many other people internal and external to the organisation.
Historical efficiency: This is the idea that organisations and ideas compete with each other, and those that come out on top are the best. This myth is commonly seen in the literature of vendors who peddle “good” or “best” organisational practices. In many cases, however, the popularity of these practices has more to do with relentless marketing than inherent quality. Other, possibly better practices may not succeed in gaining mindshare simply because they lack the means to get the message out. Similar myths are common in official histories of organisations: those that do well generally tell their stories in terms of their “unique characteristics” that enabled them to do well in the competitive marketplace. This myth also gets a fair bit of airtime in our book.
These myths are so pervasive in management and marketing literature that we accept them unquestioningly. Now that you know them, you will see them crop up in all kinds of places: marketing brochures, management case studies, biographies of business leaders and even on company web sites (the “About us” page is a good place to start). The point is that the stories we tell about ourselves are only a facet of the truth. Reality is always more nuanced and messier than can ever be captured in stories based on myths.
Inexplicit knowledge: what people know, but won’t tell
Introduction
Much of the knowledge that exists in organisations remains unarticulated, in the heads of those who work at the coalface of business activities. Knowledge management professionals know this well, and use the terms explicit and tacit knowledge to distinguish between knowledge that can and can’t be communicated via language. Incidentally, the term tacit knowledge was coined by Michael Polanyi – and it is important to note that he used it in a sense that is very different from what it has come to mean in knowledge management. However, that’s a topic for another post. In the present post I look at a related issue that is common in organisations: the fact that much of what people know can be made explicit, but isn’t. Since the discipline of knowledge management is in dire need of more jargon, I call this inexplicit knowledge. To borrow a phrase from Polanyi, inexplicit knowledge is what people know, but won’t tell. Below, I discuss reasons why potentially explicit knowledge remains inexplicit and what can be done about it.
Why inexplicit knowledge is common
Most people would have encountered work situations in which they chose “not to tell” – remaining silent instead of sharing knowledge that would have been helpful. Common reasons for such behaviour include:
- Fear of loss of ownership of the idea: People are attached to their ideas. One reason for not volunteering their ideas is the worry that someone else in the organisation (a peer or manager) might “steal” the idea. Sometimes such behaviour is institutionalised in the form of an “innovation committee” that solicits ideas, offering monetary incentives for those that are deemed the best (more on incentives below). Like most committee-based solutions, this one is a dud. A better option may be to put in place mechanisms to ensure that those who conceive and volunteer ideas are encouraged to see them through to fruition.
- Fear of loss of face and/or fear of reprisals: In organisational cultures that are competitive, people may fear that their ideas will be ridiculed or put down by others. Closely related to this is the fear of reprisals from management. This happens often enough, particularly when the idea challenges the status quo or those in positions of authority. One of the key responsibilities of management is to foster an environment in which people feel psychologically safe to volunteer ideas, however controversial or threatening the ideas may be.
- Lack of incentives: Some people may be willing to part with their ideas, but only at a price. To address this, organisations may offer extrinsic rewards (i.e. material items such as money, gift vouchers etc) for worthwhile ideas. Interestingly, research has shown that non-monetary extrinsic rewards (meals, gifts etc.) are more effective than monetary ones. This makes sense – financial rewards are more easily forgotten; people are more likely to remember a meal at a top-flight restaurant than a 500$ cheque. That said, it is important to note that extrinsic rewards can also lead to unintended side effects. For example, financial incentives based on quantity of contributions might lead to a glut of low-quality contributions. See the next point for a discussion of another side effect of extrinsic rewards.
- Wrong incentives: As I have discussed at length in my post on motivation in knowledge management projects, people will contribute their hard earned knowledge only if they are truly engaged in their work. Such people are intrinsically motivated (i.e. internally motivated, independent of material rewards); their satisfaction comes from their work (yes, such people do exist!). Consequently they need little or no supervision. Intrinsic rewards are invariably non-material and they cannot be controlled by management. A surprising fact is that, intrinsically motivated people can actually be turned off – even offended – by material rewards.
Psychological safety and incentives are important factors, but there is an even more important issue: the relationships between people who make up the workgroup.
Knowledge sharing and the theory of cooperative action
The work of Elinor Ostrom on collective (or cooperative) action is relevant here because knowledge sharing is a form of cooperation. According to the theory of cooperative action, there are three core relationships that promote cooperation in groups: trust, reciprocity and reputation. Below I take a look at each of these in the context of knowledge sharing:
Trust: In the end, whether we choose to share what we know is largely a matter of trust: if we believe that others will respond positively – be it through acknowledgement or encouragement via tangible or intangible rewards – then the chances are that we will tell what we know. On the other hand, if the response is likely to be negative, we may prefer to remain silent.
Reciprocity: This refers to strategies that are based on treating people in the way we believe they would treat us. We are more likely to share what we know with others if we have reason to believe that they would be just as open with us.
Reputation: This refers to the views we have about the individuals we work with. Although such views may be developed by direct observation of peoples’ behaviours, they are also greatly influenced by opinions of others. The relevance of reputation is that we are more likely to be open with people who have a good reputation.
According to Ostrom, these core relationships can be enhanced by face-to-face communication and organisational rules/ norms that promote openness. See my post on Ostrom’s work and its relevance to project management for more on this.
Summing up
One of the key challenges that organisations face is to get people working together in a cooperative manner. Among other things this includes getting people to share their knowledge; to “tell what they know.” Unfortunately, much of this potentially explicit knowledge remains inexplicit, locked away in peoples’ heads, because there is no incentive to share or, even worse, there are factors that actively discourage people from sharing what they know. These issues can be tackled by offering employees the right incentives and creating the right environment. As important as incentives are, the latter is the more important factor: the key to unlocking inexplicit knowledge lies in creating an environment of trust and openness.
Eight to Late 