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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Sunday, June 01, 2003

Years to Shed Old Habits and Learn New Functional Skills

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 Breakpoint shift from second phase management to third phase Breakpoint leadership is even more difficult than the previous leap from the entrepreneurial to management phase."

George Land & Beth Jarman, "Breakpoint and Beyond"

Journal of 2020 Foresight: Throughout our discussions, we've established that companies must consciously introduce planned structures. The challenge is that those organizational structures are 180 degrees different than what worked in the recent past.

Trailblazer: Not only are these dramatic shifts in people, structure, and process practices solutions to a current crisis, but they must be fitted to the next phase of growth.

J2020F: Tell us a little about strategic change scenarios. These are specific ways to organize for radical change, right?

TB: Yes, essentially competitive strategies reflect the dynamic relationship between resistance and the external forces of change. If enough of an industry's players adopt the same strategy, then they influence the interplay of those very forces.

J2020F: In a way that collective influence makes it easier to anticipate a winning strategy?

TB: Sure. If a company follows both the dominant strategies currently practiced in the industry, and the likely change scenarios being forced upon the industry.

J2020F: What are the options open to a maturing organization trending rapidly toward decline?

TB: Well, Paul Strebel named them "Old Game Strategies," "New Game Strategies," "Turning Point Strategies," and "Breakpoint Strategies."

But, let's put this all into context, first. The four dominant strategies describe corresponding change scenarios ? transition paths companies must take to assimilate or accommodate the competitive threats.

J2020F: What are the change scenarios?

TB: No change, continuous change, sporadic change, discontinuous change, and collapse.

J2020F: So by knowing which of the four strategies the industry follows, a company can choose which competitive path to follow?

TB: Sure. For each scenario we can define the strategic initiative the organization must follow.

J2020F: Each is in response to the scope and pace of change required?

TB: Yes, and we can describe the competence gap the company's approach must close, together with the leadership and management styles appropriate to each.

J2020F: OK, then. What is the first option?

TB: The most obvious is what Stebel calls the "Old Game Strategy."

J2020F: What does he mean by that?

TB: Status quo advocates in the organization dominate, so no change is likely.

J2020F: How do the forces of change and resistance interplay?

TB: Usually a change force in the industry, while strong, declines. So a company can adopt a no change strategy and get away with it for a while. Strebel says their resistance is closed to change in the old game strategy.

J2020F: Is this when an industry bands together and fights a new technology threat in the courts and legislature?

TB: That's right. The record industry suing over copyrights violations brought about by what they call the pirating software of Napster and other peer-to-peer applications.

J2020F: So the legal challenge shores up a barrier to entry.

TB: Now, if the industry is well back from the cliff ? from the time when a discontinuous innovation grows in strength and market acceptance -- each of these change strategies can be used.

J2020F: But, if the closed resistance blinds the industry and the companies in it to what is now a probability, they may be pushed off the cliff and fall into an accelerating decline?

TB: Stebel calls that the collapse scenario, the default for not anticipating the reality of the New Game promoted by change agents, or by underestimating the speed and strength they represent as a viable threat. You may think of it as the Fatal Breakpoint.

J2020F: So in the Old Game Strategy, an organization's response is to resist, so they don't initiate any internal changes. They'll be successful depending upon their ability to contain the change forces?

TB: Yes, and for as long as they are, they won't face the need to close a competence gap.

J2020F: When it's clear that they have to play the New Game, how do they do it?

TB: Two ways. First, they have to lower their resistance in order to adapt. If they can in time, then they pass through a turning point that allows them to take advantage of the change forces as they pick up in strength.

J2020F: If the internal status quo advocates push back too strongly, or hold on too long, what happens?

TB: The train leaves the station without them -- the change forces strengthen before the company has the chance to adapt. To avoid a collapse, they're forced through an abrupt, painful breakpoint just to survive.

J2020F: Once they transition through the disruption, they've eliminated their resistance, anyway?

TB: And if they've learned their lesson, they should be able to adapt more continuously as needed.

J2020F: So, then what is the right management approach?

TB: For what Strebel calls the "Resistance" intervention path -- leadership by committee. We?ll talk about that later in more detail.

J2020F: Leadership by committee is needed because of the high degree of resistance?

TB: With a closed attitude towards change prevalent in the organization, the committee executives have to sell their decisions to the rest of the organization and then implement them in their respective business areas.

J2020F: OK. Let's turn now to the New Game Strategies. You select this option if the forces for change are strong and growing stronger?

TB: And the organization is more open to change. Strebel calls this path "Revitalization."

J2020F: Why revitalization?

TB: Think about the scope and pace of change required to accommodate a radical change force. Revitalization works with enough advanced warning.

J2020F: The executives anticipated what was necessary and began building bridges from one side of the cliff to the other?

TB: Or, since a river eroded the gap in the first place, the executives went upstream to where the crossing was easier. But at any rate, this is a path of ongoing change throughout the entire organization.

J2020F: So, a broad scope transition, but initiated early enough so the pace can be somewhat slower?

TB: If the "Old Gamers" learned new tricks, they continuously adapt. When they become "New Gamers" they make the long-term investment in on-going organizational learning as their approach for closing their competence gap.

J2020F: The pace of change is slower, but continuous and all-encompassing. The company's internal organization is mainly involved, so what is the leadership style, still by committee?

TB: Often, this turns into more of a cultural revolution. Instead of acting like a committee, the leadership style is more consultative. They develop the guidelines, but they delegate the implementation to the frontline managers.

J2020F: How about the third?

TB: Turning point strategies respond to sporadic change forces. With a resistance attitude open to change and strong, but declining change force, the organization's strategic path is renewal.

J2020F: Renewal, how does that differ from revitalization?

TB: Basically, the scope of the change is limited to parts of the company and the pace is sporadic.

J2020F: Does that mean that change unfolds like in river rafting? You can float along enjoying the pace of the current. The next thing you know, you have to paddle furiously to negotiate a set of rapids. Then you return to a calmer section, before the next set of rapids?

TB: Yes, if you add that only parts of the organization are in the boat at any given time. The entire organization doesn't need to change. This is more of a periodic, stepwise change.

J2020F: So the whole organization can assimilate a strong, but weakening radical change by accommodating and limiting dramatic changes to only parts of the organization at any one time?

TB: Correct. So this doesn't require a long-term investment or commitment. This is more of an incremental approach to closing the competence gap over an intermediate period in contrast to the revitalization option.

J2020F: So the leadership style is neither by committee nor by delegation?

TB: Renewal works best through collaborative leadership.

J2020F: How is that leadership style different from the others?

TB: Since, the forces of change are weak, it is not clear in which direction the company should change. The chief executive and his team share ideas and facilitate decision making throughout the organization.

J2020F: Top management can involve the frontline managers in deciding what and how to change?

TB: Sure, the executives encourage them to flush out what the need for change means on their level, or for their activity. We'll describe how this works in more detail, later.

J2020F: Last, but not least, you mentioned breakpoint strategies.

TB: This is the path of discontinuous change. In a reactive mode, these are strategies adopted by players forced to make a discontinuous transition from old to new competitive strategies.

J2020F: They don't have the time?

TB: Yes. If they did, they'd be able to use a turning point strategy in a continuous or stepwise acquisition of the competence needed to play the new game.

J2020F: You said, reactive?

TB: Yes, resistance delays change until increasing force suddenly overwhelms both the status quo advocates and the existing structure, causing a breakpoint in behavior.

J2020F: And, the fifth change option -- the collapse scenario -- results when that reactive breakpoint is fatal?

TB: Correct. Basically the increasing resistance is met by ever increasing force that eventually causes a fatal breakpoint in the form of a structural collapse. The company goes out of business.

J2020F: Is it true, then, that company is truly topflight when it cannot only anticipate or react to, but can also create, competitive discontinuities -- breakpoints?

TB: Yes, This way, it resolves the uncertainty about the direction of the industry. It also relieves the pressure on its own organization ahead of time and maximizes pressure on its rivals, forcing them to change if they want to keep up. But, we'll discuss this later.

J2020F: OK. So, I'm guessing that none of the previous management paths work on breakpoint, discontinuous, change scenarios.

TB: Restructuring, like revitalization, responds to strong and growing change forces. But, like resistance, the organization is closed to change.

J2020F: What are the scope and pace of the change process, then?

TB: This one unfolds as an intense change on a few dimensions, but with a sudden jump. So, it requires a focused investment to close the competence gap over a short period of time.

J2020F: Why is that?

TB: Well in many cases the transition can be accomplished by a dramatic restructuring of strategies, structures and systems.

J2020F: Doesn't that require a lot of time and effort?

TB: Actually, those kinds of changes can be implemented rather quickly -- within a few months. Typically, they don't require an overhaul in behavior, skills, or the organizational learning process.

J2020F: But, whenever old habits have to be thrown away and replaced with new ones, the timeframe lengthens to years instead of months?

TB: That's right. Because of the speed of the organizational leap, not enough time is available for a basic change in beliefs and behavior.

J2020F: Won't they have to be changed, though?

TB: Yes, if 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: Organizational restructuring via acquisition, divestment, reorganization, downsizing, and so on are the common responses?

TB: Yes.

J2020F: What kind of leadership style succeeds in these situations?

TB: The rapid, decisive style of the commander is needed to implement restructuring. For companies coming from behind their competitors to deal with radical change in their environment, the move into action is critical.

J2020F: They excel at applying the power to force the necessary changes?

TB: Yes, as we'll see a little later, 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: Let's examine each of the four options -- resistance, revitalization, renewal or restructuring -- for leaders to mobilize their employees one-by-one.

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