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Dos and Don’ts of Organizational Transformation
Dr. Ichak Kalderon Adizes, president of the Adizes® Institute, has received 18 honorary doctorates, is the author of 20 books, and has been a consultant to major corporations worldwide, as well as Prime Ministers and Presidents of eight countries. Here he discusses he’s philosophy on leadership and how organizations can best manage change. Read on:
Tell us about the Adizes Institute. What is your mission?
Our mission is to democratize how organizations are managed and to change the managerial training programs.
What is your leadership philosophy?
No one is perfect. No one can lead an organization to be effective and efficient in the short and long run all by himself or herself. The roles that are necessary to make an organization healthy, i.e. effective and efficient, in both the short and long run are incompatible at any point in time. Thus, there is no perfect leader. What is needed is a complementary leadership, a collaborative leadership, based on mutual trust and respect. For example, picture a healthy marriage where the spouses are different, yet complement each other. Conflict may ensue from the fact that they are opposites of each other. However, the conflict is made to be constructive because there is mutual trust and respect.
What have been some of the most important leadership lessons you’ve learned through the course of your career?
A good leader, to provide collaborative leadership, has to be humble. Know that he or she does not know it all and looks for people who disagree with him or her, and from whom he learns and thus avoids making mistakes. Those mistakes can be unavoidable if he makes all the decisions by himself. He cannot see the big picture and at the same time the necessary details of implementation. He cannot at the same time be ready to act while being sensitive to others whose collaboration he needs for efficient and effective implementation. The leader needs a complementary team for which humility is an absolute necessity.
Why can managing change be so challenging for organizations?
To solve problems we need to change alright, but that change gives birth to a new generation of problems. We need to decide what changes to make and how and there is not always agreement from all those needed for decision making. There is no guarantee that they will agree on what change to make. That means conflict, which can be destructive. Furthermore, whatever change is decided might disturb the common or self-interests of the parties whose collaboration and cooperation we seek.
That means conflict with a big C: we can’t necessarily agree on what to do and whatever we might agree on has repercussions on our self-interest, which generates fear. The conflict can be destructive and the fear of its destructiveness makes people shy away from making changes. As a result, they live with the problems they have and do not change.
How should leaders approach organizational transformation?
To avoid the prospect of having destructive conflict there should be a culture of mutual trust and respect. When there is mutual respect the complementary team learns from each other’s differences and synergy occurs; they make a better decision than they would have made alone. If there is mutual trust, there is faith that common interests exist at least in the long run. Although, in the short run there is most probably conflict of interests. The role of a good leader is to create and nurture a culture of mutual trust and respect in the organization he or she leads. This is what to do. What not to do, is to ignore organizational culture and to focus only on the results the organization produces while ignoring the process of how those results are produced.
You believe that like all other living organisms, organizations also have a lifecycle.
What is the lifecycle of a corporation?
Everything in our universe, including space, is a system. Stars interrelate with rules that enable astronomers to predict their movement and location. All systems have a life cycle: they are born, grow, age and die. Stars, trees and people to mention some. So do organizations. At every stage of the life cycle the system has its typical problems which could be normal, abnormal or fatal.
Normal problems are problems of developing the capability necessary to move to the next stage of the life cycle. Abnormal problems are problems that used to be normal in the previous stage of the life cycle, but were not dealt with successfully. That is why at the next stage they are now abnormal. Abnormal problems that do not get treated will become fatal to the organization in the next location on the life cycle.
In my book, Managing Corporate Lifecycles (Adizes Institute Publications) I outline what the different stages in the life cycle of organizations are, what the normal stages are, what the abnormal and fatal problems at each stage are, and in the subsequent book, In Pursuit of Prime (also published by Adizes Institute publications), I outline what to do at each stage of the life cycle to bring the company to Prime and keep it in Prime. In other words, I show how to grow it in a sustainable, balanced way, and how to avoid aging i.e. bureaucratization.
What do organizations with “healthy” lifecycles have in common?
Every organization is a system. A system by definition is composed of subsystems. A company will have marketing and sales subsytems. It will have the operations subsystem and the financial and human resources subsystem, just to mention a few more. Being healthy means having all subsystems of any system integrated. When there is disintegration, like when there are marketing changes but the sales department does not follow up promptly, accounting is left way behind, and operations cannot catch up, there are gaps and those gaps are manifested in what we call “problems”.
Thus, health is integration and sickness is disintegration. We even express this in our daily expressions. When we are worried about someone’s mental or physical health we say: “He is coming unglued” or “This person or this family or this company or country are falling apart … ..” When we are impressed with some system’s strength we say: “This person, family, company or country, has it all together … .” Integration is a sign of health. Disintegration is a sign of disease.
What seem to be some core beliefs or practice that leaders you encounter have that you would love to be turned on their heads?
Arrogance. Know it all. Fear of conflict. Lack of faith in team members. Focus on results at the expense of the process that produced these results. Lack of trust worthiness. Lack of mutual respect and trust.
Can you share one of your favorite success stories of a struggling organization that was able to change course because of transformation in leadership?
I cannot mention particular names for obvious professional reasons. But there was a company that was losing market share. Its product line and services were outdated. It WAS the leader in its industry and too big to fail … and it fell asleep at the wheel as major changes were happening in the market place. They were captives of past success and wanted to repeat what made them successful in that past. Obviously, it did not work but they were scared to change. This company was a very large organization with 95,000 employees located in over 20 countries. Change was scary to them.
Changing the leader was not the answer. It would have been like changing the driver and expecting the broken car to work just by changing the driver. What was needed was a leader that would lead the process of managing change i.e. diagnosing why the car is broken and how to fix it, to use an analogy. There could be four reasons in general why an organization ages and thus loses its position of leadership in market place:
- The leadership is too content and does not want to make any changes,
- Or, the leadership style is wrong for where the organization is on the life cycle.
At each stage of the life cycle the leadership style has to be somewhat different from other stages on the life cycle. In fact, what makes a leader functional and thus successful at one stage of the life cycle can actually be dysfunctional at other stage of the life cycle.
- A third reason for aging is complacency because of a major market share the company dominates,
- And the fourth, and in my experience the most critical reason for aging, is the fact that the power structure of the company is wrong where the financial people dominate and overrule sales, marketing, and R and D.
In this specific company, leadership was willing and eager to change. Thus, the first factor of aging was absent but all other three were present. The Adizes program for organizational transformation addressed all three causes, in the right sequence and in a participative way, with the key players in the organization. First we redefined what business the company should be in the new market reality. We redefined the market in a way that expanded the definition of their market. It made them now have a minuscule market share and realize how much competition there actually was. This made them energized to compete. Then, we restructured the company, moving power away from finance while empowering marketing, sales and engineering and product development.
Finally, we changed the reward system to be based on performance rather than on seniority and risk aversion. All these changes caused some people to resign rather than be fired, and new entrepreneurial talent came in to replace them. The company was rejuvenated. It regained position in the marketplace and regained leadership within its industry.