The real canary in the coal mine was intended to signal the presence of methane and/or carbon dioxide gas. Canaries were a sensitive indicator to gas build up and as long as it kept singing the miners could keep working. As soon as it stopped the miners knew to get out before something worse happened. Is disenchantment with work signalling that the canary has stopped singing?

It seems that the France Telecom story can be seen in a much broader context and the article linked in The Economist reiterates some of the points I was making in the previous post. A couple of key points:

Companies need to do more than pay lip service to the human side of management

The solution to the problem, in so far as there is one, lies in the hands of managers and workers rather than governments

I hope you find it interesting.

The recent story on the BBC website about 24 suicides by employees of France Telecom over the past year or so is a dramatic reminder of the human dimension of organisations and the challenges of change. While disturbing, it isn’t that there are suicides at all, because the statistical analysis suggests this is within range for an organisation with an employee population of 100,00. It is rather that it highlights the difficulties people face in adapting to these changes and while the majority don’t suicide, how many are affected in ways that extend far beyond the boundaries of their job into family and society more generally. Likewise, it calls the change process into question and the nature and extent of the changes themselves.

That change is a normal feature of business is a given. It is in the nature of capitalism to evolve through innovation and change affecting both public and private sectors. There is also little doubt that the global business environment is increasingly turbulent from the effects of globalisation, industrialisation, convergence and the near death experience of the “GFC”. All of these provide plenty of opportunities for managers to apply their knowledge and skill in effecting change, however, it is an oft-cited “fact” that 70% of change initiatives can be considered failures and if the research, statistics and anecdotes are anything to go by, there is a real problem with the process and effectiveness of organisational change efforts. While there are any number of books, articles and services to assist and guide the process, yet this number persists in the research and literature. Is this the natural order of things or are we simply handling what should be a normal business activity in an abnormally bad way? Is there any way that we can deal more effectively with these challenges and improve the overall quality of the change process outcomes? Is it the price of Schumpeter’s creative destruction and are these “losses” simply collateral damage?

I suspect the starting point for the problems we experience is that we seem to believe that change is an exception rather than the norm and this is reinforced by the modern mantra “…. don’t waste a good crisis”. Change becomes a project rather than a process and one that has to be endured rather than engaged. There is a sense in which we want predictability and believe that if we just get through this period we can return to that stability. Likewise, managers are often more skilled in managing the status quo than in being able to manage the process of change. In the current context, the real human, organisational and operational costs are generally hidden and seldom, if ever, exposed to any form of accounting. The outcomes of a change initiative that are reported usually appear in purely financial terms but if the balanced scorecard has taught us nothing else, it is that truly successful business performance is evidenced across the other domains of customer relationships, internal processes and learning and development.

The simple truth is that these other performance dimensions are generally glossed over in favour of a number that implies that all is well with the change.

Often, a change initiative will take the form of a restructure that is an urgent and reactive response to changed circumstances. Something has come as a surprise and the only thing to do is downsize and reorganise. Later, who asks the questions “How did we allow ourselves to get so big?” or “How many people do we really need to do the work we have to do?”. “Why were we surprised?” Over time, behaviour might return somewhere close to the way it was and as time moderates the memory of the near death experience a new status quo is established: until the next time. The reality is that this approach to change is unsustainable and there is often a new set of victims (since people are in effect a renewable resource) who live in the blind hope that it won’t happen to them.

Peter Drucker’s wonderfully practical and common sense approach to management is essential here. What often gives rise to the situations in which this reactive change occurs is a change in “The theory of the business” as he put it in his 1994 article in the Harvard Business Review. Having observed many situations in which change was necessary, he observes that an organisation that stumbles often looks to a miracle worker to help them get out of the situation in which they find themselves. Drucker points out that:

To establish, maintain, and restore a theory, however, does not require a Genghis Khan or a Leonardo Da Vinci in the executive suite. It is not genius; it is hard work. It is not being clever; it is being conscientious. It is what CEOs are paid for.

I want to use the next couple of posts to revisit “The theory of the business” and discuss how we might manage the process and challenge of change more effectively.

Technorati Tags: Business, Change, Competencies, Management

I have never had the responsibility of writing a blog before. In fact, I’ve been able to protect what I think from a more general audience for some considerable time but the web offers a double-edged opportunity to offer perspective and receive feedback that can improve and refine those perspectives. That, in a nutshell is what I hope can be achieved through this blog. As my first post I would like to frame my approach to business performance excellence so lets get to the perspective piece.

It may be a little clichéd but nonetheless relevant, to observe that we are presently situated in the “fault-zone” of a number of social and economic tectonic plates which will, in turn, play out politically. We have the emergence of Brazil, Russia, India and China (BRIC) as significant economic forces; we want to transform to a low carbon economy in response to the issue of climate-change; the baby-boomers are retiring; economic competition is becoming more globalised; oh and lets not forget the global financial crisis which probably still has legs and the potential for a few more significant surprises. Still further, I haven’t even touched on the technology developments that make so much of this possible!

Few, if any, organisations have been designed to operate in the turbulent environment in which we find ourselves so how are we to adapt to these challenges? In this context, I have put forward the view that business performance excellence is important because if its relevance to customers, stakeholders and competitiveness. It is, if you like, the foundation on which you are “Built to Last” as James Collins and Jerry Porras put it.

It makes sense to your customers

Firstly, I am firmly of the view that your organisation exists to create and serve customers regardless of being for profit, government or not-for-profit. If you have heard that before its because Peter Drucker said it a long time ago and I don’t think it has lost any of its cogency. Performance excellence matters to customers because through it they gain the value for which they are prepared to pay. Performance Excellence forces you to take an an “outside-in” approach to understand who are your customers, what they value, how you realise that value and who is not going to be a customer. It is ultimately the customer that determines the success or otherwise of any business.

A company’s primary responsibility is to serve its customers. Profit is not the primary goal, but rather an essential condition for the company’s continued existence.

- Peter F. Drucker , The Practice of Management (1954)

It makes sense to your stakeholders

Secondly, you need to be able to create and deliver that value consistently and reliably! However, the value created extends well beyond customers to include the stakeholders to whom I refer: the shareholders, the staff members, the public and government that go to make up the wider community of interest in your business operations. Performance excellence matters to them because it means you are focused on understanding the mechanics of the business and what you can do to continuously improve. It also means you are taking corporate social responsibility seriously to manage and mitigate risk. With this mindset your business is operating sustainably, delivering reliable returns and protecting its long-term interests.

Operational effectiveness and strategy are both essential to superior performance … but they work in very different ways

- Michael Porter, What is Strategy, HBR (1996)

It sustains your competitiveness

Thirdly, I don’t mean to suggest that everything stays the same and is sweetness and light: change is inevitable and pervasive. These changes influence the nature and flow of information, money, sentiment and prosperity in ways that can rarely be predicted with anything approaching accuracy let alone precision. Competition in this environment is increasingly intense and the ability to respond to these changes must become integral to the way our organisations operate. Don’t imagine that this does not apply to an organisation that is in the government or not-for-profit. Competition for the available resources and your reputation for stewardship are realities. It is this turbulence that Joseph Schumpeter described as creative destruction and the effects of these changes will be felt by all of us for a long time to come. We are in the midst of a massive transformation in the way our world, and particularly business world, works.

The opening up of new markets and the organizational development from the craft shop and factory to such concerns as US Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one … [The process] must be seen in its role in the perennial gale of creative destruction; it cannot be understood on the hypothesis that there is a perennial lull.

- Joseph Schumpeter, The Process of Creative Destruction, (1942)

Every organisation needs to be doing the right things and doing them the right way: in short, both efficient and effective in all aspects of its operation. Without this vigilance, a horde of hidden costs will creep in to reduce product and service quality, impact customers, damage staff productivity and eat into margins destroying profitability, brand and reputations. Realistically, it isn’t that we must be perfect in everything. What it does mean is that an organisation’s leaders are focused on the overall performance in all areas of operation, and are able to lead the staff of an organisation to contribute, adapt and improve performance.

I hope this blog will help to create a community of people interested in performance excellence and particularly how the ideas can be embedded in the businesses in which we work. The success of any blog is only as much as it engages its readers with material that is of interest. To that end, I invite you to comment, suggest subjects that need to be addressed and give examples of where you see performance excellence in the business landscape.

Welcome, lets get on.