The Journal of 2020 Foresight

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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Wednesday, May 28, 2003

From Matrix to Network: Expand Horizons and Drive for Differentiation

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

"Although second phase rules work well in a stable environment, when organizations encounter a third phase environment, they naturally resist change that involves doing things differently. They will resist change regardless of obvious need or changed conditions. The result is that unpredictable modes of failure regularly occur, often where least expected. The organization will not be able to make the vital changes needed for survival and growth. The second phase traps often are so insidious that they are almost invisible."

George Land and Beth Jarman

Journal of 2020 Foresight: Last time you described the evolutionary and then revolutionary periods in the late maturity and declining organization.

Trailblazer: That's right. The pattern goes like this: An overextension of COORDINATION triggers a RED TAPE nightmare that demands COLLABORATION for growth in the next stage.

J2020F: In that phase, if the organization doesn't make it through the red-tape turning point it may go out of business. Why is that?

TB: Well, there are at least 9 reasons.

J2020F: What is the first?

TB: Think of these reasons as unspoken, almost invisible traps. The first is "Measurement Become the Mission." A linear, logical, empirical style of thinking becomes the ruling paradigm. Standard measures provide feedback on performance, so much so that they actually become the mission.

J2020F: What happens to the original entrepreneurial vision?

TB: The founder's focus on meeting a critical need doesn't survive the spreadsheet frenzy. People lose their focus on why they are there, and quality -- solving a customer's problem in a superior way -- suffers.

J2020F: So the original motivation of providing a product or service needed by customers is replaced by short-term bottom line results?

TB: While the core foundational story gets lost, it's ironic that the second reason -- past assumptions go unquestioned -- isn't forgotten.

J2020F: You also mentioned problems with embedded investments earlier.

TB: Right. That's the third trap leading to increased red tape. Over time letting go of the knowledge and expertise that contributed to past success is extremely difficult.

J2020F: Didn't that happen to an entire industry -- the steel industry?

TB: It sure did. That's a great example. They were so mired in their procedures, basic technologies, and past market success -- together with the pressure to make their quarterly numbers -- that they didn't see the consequences of new technologies, foreign competition, or even the rapidly growing demand for new and highly specialized products.

J2020F: By the time they opened their eyes, they didn't have the time or resources to make the change.

TB: The next one, blaming others, blinds organizations to real problems and challenges they need to address. It's much easier to blame the government, the exchange rate, or unfair practices than to look internally to changes they need to make.

J2020F: You started off with measurements as the mission, what about maximizing profits?

TB: That trap, moving away from being product- or service-driven, typically causes the misuse of resources and long-term disaster.

J2020F: What's the sixth trap?

TB: Information filtering. This is like groupthink.

J2020F: How so?

TB: Because repetition of success derived from building on likeness leads to the unconscious selection of like-minded people with similar backgrounds and education.

J2020F: Like the Academic quadrants?

TB: Yes. The ACADEMIC-Agents are hired and promoted. Of course, at this stage, they work several layers removed from operations and direct customer contact. Expertise becomes highly specialized. Research and development functions don't benefit from market feedback and customer requirements.

J2020F: I can see as their experience and body of knowledge grows, they would tend to feel threatened by internal or external challenges.

TB: Which leads to selective attention taking over. Perceptual screens filter out information and ideas that could interfere with rote pattern repetition.

J2020F: So people in the system can't see the changes that are happening in their environment?

TB: Right. This is so insidious that frequently the data that they ignore have to do with factors that could literally drive them out of business.

J2020F: How ironic. These are the specialists who rely on data and analytical thinking.

TB: Especially when you consider the other talent sub-quadrant, the AGENT-Academics. They pursue their own research and development as a think tank based upon original theories and multiple disciplines.

J2020F: Aren't they typically resident in a campus setting at a great distance from the core business?

TB: And, that's a big part of the problem. They become so far removed from the industry, market, and customer base that they don't study the forces threatening the very survival of their organization.

J2020F: So this is a frame-blindness problem imbedded in too many layers of organization, even in a matrix structure?

TB: Yes. It's as if the whole organization shares the same set of mental barriers that shield them from information that does not fit the pattern they have come to know and expect.

J2020F: What's the next trap?

TB: Fear of losing control. Nobody in the organization wants uncertainty, ambiguity, unpredictability or surprises. The pressure for bottom line results creates the search for more certainty and more predictability.

J2020F: So fear, tighter controls, adds to the insular nature of large bureaucracies?

TB: Yes, and the eighth trap compounds the effect.

J2020F: How so?

TB: Internal competition contributes to productivity loss. Separate departments jockey for independent recognition and more resources.

J2020F: What do you mean?

TB: Take that research group. They may come up with a new discovery capable of significant savings. But, if they feel they are in competition with manufacturing or the production department, they won't share it.

J2020F: So, unless they get the credit and the bonuses they feel should accrue to them based on the implementation of their discovery, it won't see the light of day?

TB: Internal competition leads to drops in productivity, while vendor competition shortchanges the organization in terms of higher value and higher margin opportunities.

J2020F: You mean getting suppliers to compete to lower their unit costs?

TB: That's right. Part of Wal-Mart's past success was due to its collaborative relationship with key vendors.

J2020F: How does that help them?

TB: Together they collaborated in product development, packaging, and merchandising. That partnership allowed Wal-Mart to move from merely providing the lowest price to providing superior value.

J2020F: So what you are saying, is when the company's market changes or the primary service/product has matured past its peak, the organizations enters the next phase. If the company has not adapted quickly enough to maintain a level of mature cash flow, then downsizing and delayering result.

TB: In short, decisions please the bureaucracy instead of what's best for customers and company.

J2020F: What if the organization realizes in time what changes are needed to survive the turning point? What is the next management practice to achieve growth?

TB: We return to loose control, COLLABORATION, and an evolved matrix to a network structure.

J2020F: Describe the people dimension

TB: The organization emphasizes strong interpersonal collaboration in an attempt to overcome the red-tape crisis. So there's a real push for participation and involvement for everyone. Problem solving and innovation programs proliferate. Social control and self-discipline replace formal control systems.

J2020F: Is this the time when teamwork is reintroduced?

TB: Right. Actions teams focus on solving problems quickly. They focus process improvement efforts on simplifying formal systems.

J2020F: Earlier you said in two of the organizational stages, organizations should stay away from conventional wisdom that turns out to be counter productive or in some ways delays or hinders progress. Does that hold true for process improvement efforts at this stage?

TB: Yes, it certainly does. So far we?ve described two themes, "Build the Foundation" and "Tighten and Leverage Operations." In this stage the theme is "Expand Horizons and Drive for Differentiation." The practices to STAY AWAY FROM are:

Increase participation in department improvement teams;

Focus your technology on production processes;

Increase hours of training in general-knowledge topics; and

Make education and championing a primary role for the business improvement function.

J2020F: So while most improvement practices produce results that are accumulative, in this stage the organization must adopt new and different practices to advance any further, right?

TB: That's especially true. This is the time to become the "Best of the Best." It's not so much that the old practices hurt, but rather they no longer help the organization move forward. They've outlived their usefulness.

J2020F: What is the focus, then for immediate impact in the first year?

TB: We usually customize a solution based on just under a dozen initiatives to chose from:

Provide customer-relationship training when new employees are first hire;

Emphasize improvement and teamwork when assessing senior management;

Encourage widespread participation in improvement meetings among non-management employees;

Use world-class benchmarking information to identify new products and services;

Increase process simplification and cycle time analysis;

Benchmark marketing and service delivery;

Communicate your customers and suppliers;

Conduct after-sales service to build customer loyalty and to differentiate yourself from your competitors;

Emphasize competitor-comparison measures and customer-satisfaction measures when setting plans;

Emphasize improvement, reliability, and responsiveness as key to your reputation; and

Expand geographically.

J2020F: Now, what about the next set of priorities to sustain impact over 36 months?

TB: Here we're extending our drive for differentiation by:

Empowering employees who interact with customers;

Using supplier suggestions and customer complaint systems to identify new products;

Increasing emphasis on technology capabilities in supplier selection;

Identifying new products from external sources;

Forming strategic partnerships with vendors;

Focusing innovation efforts on ancillary services and products;

Emphasizing performance and adaptability in your product and service base; and

Emphasizing accessibility in performance and adaptability in ancillary services.

J2020F: What about lowering resistance to these new practices? Is it encouraged or discouraged?

TB: Definitely encouraged. Although, as you can imagine, this period is extremely painful and difficult for those experts who created the old systems. Old school line managers feel adrift now, when the formal methods they got used to aren't followed anymore.

J2020F: What happens to the headquarters staff?

TB: They're downsized, reassigned and combined in interdisciplinary teams to consult with, but not to direct field units.

J2020F: So the power shifts to the field units?

TB: Really to a matrix of teams, combined across functions. A matrix and network structure assembles the right teams to address novel problems. Real-time information systems and knowledge bases get integrated into daily decision-making.

J2020F: But, what happens to the rewards and incentive programs?

TB: They focus on team performance above and beyond individual achievement.

J2020F: But, what about setting individual objectives?

TB: That's achieved through mutual goal setting. Educational programs help train managers in behavioral skills for achieving better teamwork and resolving conflict. Key talent groups come together in videoconferences and online forums to address major problem issues.

J2020F: So, next let's talk about the options open to a maturing organization trending rapidly toward decline.

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