Reports from the Knowledge Labs about our recent findings, research topics, and interviews with lifestyle leaders who are creating their own futures.

How to stimulate your own powers of foresight. Consider the following thought provokers. Ask yourself, in these categories what are the brand new trends and forces? Which are the ones growing in importance? Which current forces are loosing their steam? Which have peaked or are reversing themselves? Which are the "wildcards" about to disrupt us in the future? POLITICAL AND TECHNICAL thought for food: Electronics, Materials, Energy, Fossil, Nuclear, Alternative, Other, Manufacturing (techniques), Agriculture, Machinery and Equipment, Distribution, Transportation (Urban, Mass, Personal, Surface, Sea, Subsurface, Space), Communication (Printed, Spoken, Interactive, Media), Computers (Information, Knowledge, Storage & Retrieval, Design, Network Resources), Post-Cold War, Third World, Conflict (Local, Regional, Global), Arms Limitation, Undeclared Wars, Terrorism, Nuclear Proliferation, Weapons of Mass Destruction, Governments (More/Less Power and Larger or Smaller Scale), Taxes, Isms: Nationalism, Regionalism, Protectionism, Populism, Cartels, Multinational Corporations, Balance of Trade, Third Party Payments, Regulations (OSHA, etc.) Environmental Impact, U.S. Prestige Abroad. SOCIAL AND ECONOMIC Food for thought: Labor Movements, Unemployment / Employment Cycles, Recession, Employment Patterns, Work Hours / Schedules, Fringe Benefits, Management Approaches, Accounting Policies, Productivity, Energy Costs, Balance of Payments, Inflation, Taxes, Rates of Real Growth, Distribution of Wealth, Capital Availability and Costs, Reliability of Forecasts, Raw Materials, Availability and Costs, Global versus National Economy, Market versus Planned Economies, Generations: Y, X, Boomers, Elderly, Urban vs. Rural Lifestyles, Affluent vs. Poor, Neighborhoods and Communities, Planned or Organic Growth. Got Knowledge?

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The Journal of 2020 Foresight
Thursday, June 12, 2003  

Restructuring: Shock to Strategy, Structure, and Systems

Chapter Two: The Ridge

By Steve Howard, CKO
The Knowledge Labs

Table of Contents
Chapter One: Basecamp
Chapter Two: The Ridge
Chapter Three: The Outpost
Chapter Four: The Tribal Territories

“The best place to look for the basis of organizational change is in the future business, and the worst place to look is in the current business. The present organization, however, may be a good predictor of what will prevent you from developing the kind of organization you will need.”

Stan Davis and Bill Davidson, 2020 Vision

Journal of 2020 Foresight: Now, let’s turn from Resistance, Revitalization,and Renewal to Restructuring. So far, in response to no change, continuous or sporadic change threats, leaders have adopted committee, cultural or collaborative leadership behaviors. What about in the case of restructuring? Is it as slow?

Trailblazer: Well, remember we’re describing breakpoint strategies responding to discontinuous change. A dramatic restructuring of strategies, structures, and systems can be implemented rather quickly within a few months because it does not attempt to change behavior and skills, nor the organizational learning process.

J2020F: What types of quick restructurings are we talking about?

TB: Organizational restructuring via acquisition, divestment, reorganization, downsizing, and so on is a common way of trying to respond to an external breakpoint.

J2020F: In some ways this path resembles new game revitalization, right?

TB: Correct. If the change force is strong and still growing, only the more radical change associated with restructuring and revitalization will be able to adapt the company to the change force and allow it to adopt the new game strategies.

J2020F: But, revitalization only works with low internal resistance, correct?

TB: Yes. Restructuring will be needed to break the resistance, when the forces of resistance are entrenched and closed to change. In cases where the organization is open to change, the resistance can be reduced gradually to initiate a corporate turning point followed by all-encompassing revitalization.

J2020F: So, restructuring is appropriate when a strong and growing change force confronts strong resistance that is closed to change.

TB: On this path the organization is given a sharp shock to adapt it to the environment.

J2020F: So, unlike revitalization’s emphasis on change throughout the entire organization, in reorganization the scope of the change is highly focused, typically on organizational "hardware" such as strategy, structure, and systems.

TB: This facilitates control of the transition and avoids possible disintegration. Because of the speed of the organizational leap, not enough time is available for a basic change in beliefs and behavior.

J2020F: But, don’t you have to change the basic beliefs and behaviors at some point?

TB: Only if you want the leap is to succeed. Either it will be the first stage in a multi stage intervention process, or beliefs and behavior will have been changing before, in reaction to the crisis created by the resistance to the change force.

J2020f: And if they don’t change.

TB: If behaviors have not changed and appropriate skills have not been learned ahead of time, the reorganization will provide only temporary relief; later on, behavioral aftereffects may undermine the whole change process.

J2020F: If they’re unable to keep up with the pace of change, the firm ultimately would be vulnerable to collapse?

TB: None of these paths represent a final solution. The sporadic reduction of resistance on a path of renewal cannot be sustained in disequilibrium, no matter whether the disequilibrium is on the industry, economy, or societal level.

J2020F: Since the forces are changing rapidly, it is difficult to know exactly what kind of discontinuity is appropriate. What if you pick the wrong one?

TB: Well, putting a company through a breakpoint when the forces of change are still weak and evolving can be very risky.

J2020F: Why?

TB: When Texas Instruments introduced the electronic watch, it decided to move rapidly to mass production so as to be as far as possible down the learning curve before competitors followed.

J2020F: Being first to market meant huge margins for them right?

TB: Not exactly. Big investments were made in new production technology for electronic watches. Unfortunately, the market did not accept the TI watch as a standard.

J2020F: What happened?

TB: Instead of following Tl across the breakpoint, the industry continued with spontaneous product development.

J2020F: What do you mean?

TB: Seiko and others made improvements that soon put the Tl watch out of date. Its huge investment in the related production technology was obsolete.

J2020F: So in effect, it tried to trigger a standardization breakpoint in the industry before the product's development had run its course?

TB: They had to learn a costly lesson the hard way.

J2020F: What about leadership behavior?

TB: The rapid, decisive style of the commander is needed to implement restructuring.

J2020F: And, if the leadership style doesn’t match?

TB: Well, we already know that the all-encompassing, delegating, cultural style fits revitalization. Any attempt to use the commander style on a revitalization path, or the cultural style for restructuring will doom the intervention before it starts.

J2020F: Why?

TB: Coercion may be the only alternative when speed is essential on a restructuring path and when the status quo advocates cannot be converted no matter what else is done.

J2020F: So, in cases calling for the commander or committee style, the threat of sanctions often has to be used to galvanize change.

TB: Exactly. The manager has enough power to force people to accept change by explicitly or implicitly threatening them.

J2020F: With the loss of jobs, promotion possibilities, or by actually firing or transferring them?

TB: Unfortunately, yes. The acid test of motivation is the move into action.

J2020F: And, this is especially so in organizations with strong forces of resistance, right?

TB: For companies coming from behind their competitors to deal with radical change in their environment, the move into action is critical. The activation process is especially important in organizations having little experience with real change.

J2020F: In what way?

TB: Companies facing a breakpoint are often in that situation because they were unable to respond early when the forces of change were weaker.

J2020F: You’d think that they’d want to prevent the total disruption at an earlier time. What keeps them from responding?

TB: For such companies, even with widespread recognition of the need to change, the prospect of the quantum leap may be so foreign to current practice that nothing happens.

J2020F: The emotional commitment is not sufficient to overcome the resistance to change?

TB: Strebel says radical change management consists of 5 percent analysis -- finding out what has to be done-- and 95 percent creating a demand for and executing change.

J2020F: So the analysis of competitive position is one of participation and delegation, giving line managers the tools of competitive analysis such as product portfolio diagrams, product life cycles, and SWOT analysis to analyze their own situation.

TB: Right, but to make things happen, to trigger the organizational breakpoint, the change organization requires objectives with deadlines, responsibilities allocated, and a feedback process with milestones for tracking progress.

J2020F: So, it takes the leadership behavior of a commander to activate the required changes and coercing those that resist?

TB: No matter how well motivated and activated, radical change exposes status quo advocates who cannot be converted. Their interests are directly threatened. For them, yielding to the change pressure is much less attractive than resisting.

J2020F: How does a commander pull it off?

TB: The chief executive plays a dominant and often charismatic role in determining the intervention path and competitive formula, as well as the main organizational and support systems.

J2020F: Wait a minute, what about the other executives? You haven’t mentioned them in this process.

TB: Being unable, unwilling, or insecure, other executives and employees play only a secondary role in the decision-making process.

J2020F: But, the CEO can’t do everything.

TB: On the implementation side, the chief executive's personality and organizational power are central to the implementation process, but his or her involvement is limited.

J2020F: So, once the CEO has told everyone what to do, a lot of employee effort is still needed to translate the decisions into action.

TB: Right. In effect, the CEO eliminated the slow periods on the front end. This approach is the quickest and therefore makes the most sense in crisis situations that demand discontinuous change when the forces are strong and time is short.

J2020F: Now, what about reinvention -- building a core competency with which an organization creates breakpoints to which everyone else must react?

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