Research in Organizational Change and Development Vol 19 Research in Organizational Change Development

  RESEARCH IN ORGANIZATIONAL CHANGE AND DEVELOPMENT

  

RESEARCH IN ORGANIZATIONAL

CHANGE AND DEVELOPMENT Series Editors: William A. Pasmore, Abraham B. (Rami) Shani and

  

Richard W. Woodman

Previous Volumes: Volumes 1–18: Research in Organizational Change and

  Development RESEARCH IN ORGANIZATIONAL CHANGE AND DEVELOPMENT

  VOLUME 19 RESEARCH IN ORGANIZATIONAL CHANGE AND DEVELOPMENT EDITED BY

ABRAHAM B. (RAMI) SHANI

  California Polytechnic State University, USA and Politechnico di Milano, Italy

RICHARD W. WOODMAN

  Texas A&M University, USA

WILLIAM A. PASMORE

  Teachers College, Columbia University, USA United Kingdom – North America – Japan Emerald Group Publishing Limited Howard House, Wagon Lane, Bingley BD16 1WA, UK First edition 2011 Copyright r 2011 Emerald Group Publishing Limited Reprints and permission service Contact: booksandseries@emeraldinsight.com

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LIST OF CONTRIBUTORS vii

PREFACE ix DEVELOPING AN EFFECTIVE ORGANIZATION:

  INTERVENTION METHOD, EMPIRICAL EVIDENCE, AND THEORY Michael Beer

  1 STRATEGIC CHANGE AND THE JAZZ MINDSET: EXPLORING PRACTICES THAT ENHANCE

DYNAMIC CAPABILITIES FOR ORGANIZATIONAL

  IMPROVISATION Ethan S. Bernstein and Frank J. Barrett

  55 COMMUNICATION FOR CHANGE: TRANSACTIVE MEMORY SYSTEMS AS DYNAMIC CAPABILITIES Luis Felipe Go´mez and Dawna I. Ballard

  91 DEVELOPING AND SUSTAINING CHANGE CAPABILITY VIA LEARNING MECHANISMS: A LONGITUDINAL PERSPECTIVE ON TRANSFORMATION

  Tobias Fredberg, Flemming Norrgren and 117 Abraham B. (Rami) Shani MAPPING MOMENTUM FLUCTUATIONS DURING ORGANIZATIONAL CHANGE: A MULTISTUDY

  VALIDATION Karen J. Jansen and David A. Hofmann 163 vi CONTENTS TOWARD A DYNAMIC DESCRIPTION OF THE ATTRIBUTES OF ORGANIZATIONAL CHANGE

  Guido Maes and Geert Van Hootegem 191 REVISITING SOCIAL SPACE: RELATIONAL THINKING ABOUT ORGANIZATIONAL CHANGE Victor J. Friedman 233 TIPPING THE BALANCE: OVERCOMING PERSISTENT PROBLEMS IN ORGANIZATIONAL CHANGE William A. Pasmore 259

ABOUT THE CONTRIBUTORS 293

LIST OF CONTRIBUTORS

  Dawna I. Ballard Department of Communication Studies, University of Texas at Austin, Austin, TX, USA Frank J. Barrett Graduate School of Business and Public Policy, Naval Postgraduate School, Monterey, CA, USA

  Michael Beer Harvard Business School, Boston, MA, USA; TruePoint, USA Harvard Business School, Boston, Ethan S. Bernstein

MA, USA

Tobias Fredberg Department of Technology Management and Economics, Chalmers University of Technology, Gothenburg, Sweden; Truepoint, USA Victor J. Friedman Department of Sociology and Anthropology/Department of Behavioral Sciences, Max Stern College of Yezreel Valley, Yezreel Valley, Israel

  Luis Felipe Go´mez Department of Communication Studies, Texas State University, San Marcos, TX, USA David A. Hofmann Department of Management, University of North Carolina, Chapel Hill, NC, USA

  Karen J. Jansen Department of Organizational Behavior and Strategy, University of Virginia, Charlottesville, VA, USA

  

viii LIST OF CONTRIBUTORS

Guido Maes Center for Sociological Research, Katholieke Universiteit Leuven,

  Leuven, Belgium Flemming Norrgren Department of Technology Management and Economics, Chalmers University of Technology, Gothenburg, Sweden; TruePoint, USA William A. Pasmore Teachers College, Columbia University, New York, NY, USA

Abraham B. (Rami) Shani Orfalea College of Business, California Polytechnic State University, San Luis Obispo, CA, USA; Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Milan, Italy Geert Van Hootegem Center for Sociological Research, Katholieke Universiteit Leuven, Leuven, Belgium PREFACE

  Volume 19 of Research in Organizational Change and Development includes chapters by an internationally diverse set of authors including Michael Beer, Victor J. Friedman, Luis Felipe Go´mez and Dawna I. Ballard, Ethan S. Bernstein and Frank J. Barrett, Karen J. Jansen and David A. Hofmann, Guido Maes and Geert Van Hootegem, Tobias Fredberg, Flemming Norrgren and Abraham B. (Rami) Shani, and William A. Pasmore. The ideas expressed by these authors are as diverse as their backgrounds.

  New methodologies are introduced, such as the strategic fitness process developed by Michael Beer and his colleagues for engaging leaders in better understanding the reactions of employees to strategic change efforts. Beer helps us to understand that leaders often operate on incomplete or incorrect information about how their admonitions to change are received because people fear speaking to power. The strategic fitness process overcomes this dynamic by creating a safe space in which handpicked members of an interview team share the results of their findings in a fishbowl that senior leaders observe. With careful facilitation, according to Beer, real break- throughs can be achieved in aligning leaders and their followers.

  For some time now, we have recognized that jazz provides a powerful metaphor for organizational improvisation. Bernstein and Barrett take us beyond the obvious similarities to understand the fundamental principles that guide jazz musicians as they play. Parallels to organization change work are clear and compelling.

  Go´mez and Ballard discuss the importance of transactive memory systems to long-term organizational viability. Since organization environ- ments are dynamic, choices must be made about how to allocate resources to respond to threats and opportunities. Transactive memory systems are the built-in processes that guide these decisions. Understanding how they function and what can be done to influence their operation is key to invoking and sustaining change.

  Along similar lines, Fredberg, Norrgren, and Shani review the results of a five-year study at Ericsson on the nature and use of learning mecha- nisms to support change. While it seems obvious that most change efforts involve learning, few change agents are explicit in their attempt to construct x PREFACE

  forums in and through which organizational members can reflect on their experiences, engage in joint sensemaking, and apply hypotheses to future opportunities. Fredberg, Norrgren, and Shani embellish upon the idea of parallel structures that facilitate change in this informative paper about a long-term change effort.

  Jansen and Hofmann illustrate how to map the flows of momentum during change efforts using two studies: one in the laboratory and another in an actual organization. By paying attention to when these shifts in momentum occur and why, we can learn much more about the obstacles to commitment during change and what is required to sustain ongoing support.

  Maes and Van Hootegem reviewed hundreds of studies of change to understand the different dimensions that can be used to describe change. Usually, change is described in a dichotomous fashion, for example, incremental versus transformational. After their review, Maes and Van Hootegem classify change using eight different dimensions, including control, scope, frequency, stride, time, tempo, goal, and style. Each of these eight dimensions is a continuum unto itself, and the dimensions can be combined together to lend tremendous specificity and richness to how we talk about change.

  Friedman digs deep into the early work of Lewin to explore his concept of social space and its implications for change efforts. Lewin wasn’t crystal clear in describing what he meant by the term ‘‘social space.’’ To clarify the concept, Friedman consults the work of authors Ernst Cassirer and Pierre Bourdieu to learn how they may have influenced Lewin’s thinking and what exactly the critical implications for change efforts could be.

  Finally, Pasmore notes that the current high failure rate of change efforts is a cause for alarm and that more careful attention to the causes of failures could help to tip the balance in favor of success. He explores threats to success associated with four phases of change efforts and offers potential solutions.

  While Research in Organizational Change and Development has been the foremost repository of theoretical ideas, in-depth discussions of the literature and new approaches to intervention and research for over 20 years, authors in this and previous volumes are asked to draw connections between their ideas and practice as well. Volume 19 demonstrates that as academics, we advance the work in our field by both looking forward and looking back. Understanding the origins of our theories and beliefs can be as important as pioneering new ideas and methodologies. As you read Preface xi

  Volume 19, we ask you to consider your own contributions to our field and to contact us to suggest topics for future volumes. We will be excited to hear from you, and to learn about the new directions you propose for our profession.

  Abraham B. (Rami) Shani Richard W. Woodman

  William A. Pasmore Editors

  DEVELOPING AN EFFECTIVE

ORGANIZATION: INTERVENTION

METHOD, EMPIRICAL EVIDENCE,

AND THEORY Michael Beer

  

ABSTRACT

  The field of organization development is fragmented and lacks a coherent and integrated theory and method for developing an effective organization. A 20-year action research program led to the development and evaluation of the Strategic Fitness Process (SFP) – a platform by which senior leaders, with the help of consultants, can have an honest, collective, and public conversation about their organization’s alignment with espoused strategy and values. The research has identified a syndrome of six silent barriers to effectiveness and a dynamic theory of organizational effectiveness. Empirical evidence from the 20-year study demonstrates that SFP always enables truth to speak to power safely, and in a majority of cases enables senior teams to transform silent barriers into strengths, realign their organization’s design and strategic management process with strategy and values, and in a few cases employ SFP as an ongoing learning and governance process. Implications for organization and leadership develop- ment and corporate governance are discussed.

  Research in Organizational Change and Development, Volume 19, 1–54 Copyright r 2011 by Emerald Group Publishing Limited All rights of reproduction in any form reserved

  ISSN: 0897-3016/doi: 10.1108/S0897-3016(2011)0000019004

  

1

2 MICHAEL BEER Science is about describing how the universe works.

  Engineering is about creating something that works. ₁

• – Neil Armstrong, Astronaut

  ‘‘We have great strategy but we cannot implement it. Can you help us become a company capable of implementing strategy?’’ This is the paraphrase of the challenge presented to me in 1990 by the CEO and Vice President of Strategy and Human Resources of Becton Dickinson (BD), a global medical technology company.

  This challenge led to the development of the Strategic Fitness Process (SFP) by Russell Eisenstat and me. It began with the assumption that organization change and development begins with conversations, an assumption that has since been validated by a burgeoning practice and literature on organizational discourse and its role in organizational development ( Oswick, Grant,

Marshak, & Cox, 2010 ; Marshak & Grant, 2008 ; Bushe & Marshak, 2009 ).

Indeed, the problem is that conversations are not always effective. The right people are not involved to ensure engagement and commitment, the right things are not discussed, and the conversations are not open and honest ( Argyris, 1985 ). Consequently, relevant strategic, leadership, organization design, decision rights, and cultural issues remain undiscussable and cannot be addressed. This slows or blocks change. When unintended consequences of change emerge, they too are undiscussable. Cynicism increases, commitment declines, and momentum is lost.

  It is these dynamics that led us to develop a structured process by which a senior team can foster what we have come to call an honest, collective, and public conversation (involving a large circle of organizational members) about organizational and leadership effectiveness ( Beer, 2009 ; Beer &

  

Eisenstat, 1996, 2004 ). It is a platform by which managers, consultants and

  organizational members can collaborate in an inquiry that enables them to learn jointly about the effectiveness of the organization – its alignment with espoused strategy and values. Because SFP breaks organizational silence and reveals valid data – the truth – about the organization to consultants and leaders, it may be thought of as a collaborative research method that enables insights and theory development while at the same time developing commitment to change ( Shani, Morhman, Pasmore, Stymne, & Adler, 2008 ; Adler & Beer, 2008 ; Van de Van, 2007 ; Beer, 2001 ).

  This chapter reports insights obtained from a 20-year action research program that included formal research and participant observation at BD and in over 300 organizational units in approximately 60 other corporations in multiple industries and countries. SFP has been applied at multiple Developing an Effective Organization

  3

  country organizations of global firms, and operating units such as manufacturing plants, hospitals, and restaurants in a retail chain. While in most cases the organizations were for profit businesses, SFP has also been applied in not for profit organizations.

  Twenty years of applying the same inquiry method in a diverse set of organizations offers a unique opportunity to learn about barriers to organizational effectiveness and performance and an opportunity to collect data about the efficacy of SFP across many different organizations. This chapter will discusses:

  The action research program Theory and assumptions that informed the development of SFP The SFP An emergent theory of organizational effectiveness Empirical research findings about the efficacy of SFP Emergent theory and principles for developing an effective organization Implications for practice

  An organization is effective when its leaders are able to realign organiza- tional design, culture, and people (capabilities and commitment) with continuous changes in the competitive and social environment. The problem of organizational alignment, adaption, and learning, which SFP is intended to facilitate, has been a central concern of economists and organizational theorists. Population ecologists and economists have taken the view that all corporations go through a life cycle of birth, development, and ultimate destruction ( Hannan & Freeman, 1975 ). The market is seen as the ultimate arbiter of effectiveness and survival. Essentially, markets ensure organiza- tional effectiveness through the process of ‘‘creative destruction’’ ( Schumpeter,

  

1942 ; Foster & Kaplan, 2001 ). Most organizations ultimately destruct

  because the configuration of management practices developed in periods of success proves difficult to change in response to environmental change ( Miller, 1990a ).

  Indeed, there is substantial evidence that business organizations have a finite life, and if they manage to survive, their creative spark does not and they underperform and then destruct. Of the original Forbes 100 companies named in 1917, 61 ceased to exist by 1987. Of the remaining 39, only 18 stayed in the top 100, and their return was 20% less than the overall market for that period. Of the companies named in the original Standard and Poor (S&P) 500 in 1957, only 74 remained in 1997 and of these, only 12

4 MICHAEL BEER

  These data suggest that the process of developing and sustaining effectiveness is extremely challenging. In a study by Collins of 1,435 companies between 1965 and 1995, only 11 were able to move from simply good performance to great performance, defined as the cumulative stock returns of 6.9 times returns for the general market for a period of 15 years or more, and this after a concerted effort to transform them ( Collins, 2002 ). Since the completion of the, study the performance of approximately half of these companies has declined below the level that qualified them as great companies. The finding that CEO tenure has declined since the early 1990s from 10 years to less than 4 years further suggests that leading a company for sustained success in a rapidly changing environment is extremely difficult and is achieved by only a relatively small number of organizations.

  From the perspective of senior management, however, leading realign- ment and continuous change is essential, regardless of how difficult it may be. Robert Bauman, former CEO of SmithKlein Beecham and an experienced change leader, captured the importance of the capacity for learning and change as the key to competitive advantage when he noted: ‘‘Most important in implementing change in the near term is instilling the capacity for change in the long term. In my view the capacity for ongoing change is the ultimate source of competitive advantage’’ ( Bauman, 1998 ). Academics have framed the challenge as an organizational learning one ( Argyris & Schon, 1996 ; Senge, 1990 ). Creating adaptive organizations has been a subject of considerable academic discourse ( Lawler & Worley, 2006 , 2011; Tushman & O’Reilly, 2002 ; Beer, 2009 ).

  SFP was developed to enable senior teams to lead a process of fundamental realignment and to serve as a learning and governance process that enables continuous learning and change if recycled periodically. SFP enables leadership teams and key people to engage in a mutual learn- ing process about strengths and barriers to achieving the organization’s strategic ad values direction. The core assumption underlying SFP is that it is the inability of organizations to confront inconvenient truths about external and internal realities that is the first-order cause of organizational decline and ultimate downfall ( Miller, 1990b ; Argyris, 1990a; Senge, 1990). The economic meltdown of 2008 and the scandals at companies like Enron in the decade that preceded it are the latest reminder that senior management and boards of directors do not have access to material truths known to people at lower levels ( Beer, 2009 ). SFP’s structure and process are intended to guide leadership teams through a difficult learning and change process that most resist, fail to complete successfully, or sustain Developing an Effective Organization

  5 THE ACTION RESEARCH PROGRAM

  As noted earlier, SFP was designed to meet the difficulties BD was experiencing in implementing its corporate and business unit strategies ( Beer & Williamson, 1991 ). Virtually all of the company’s senior executives, including its CEO, had been strategy consultants in some of the largest and best known management consulting firms before joining the firm. As a strategy consultant 20 years earlier, BD’s CEO introduced ‘‘Strategic Profiling’’ (SP). SP was a structured processes by which senior teams, with the help of a trained facilitator, discuss and answer questions embedded in Michael Porter’s strategic framework ( Porter, 1985 ) and develop their strategy as opposed to more traditional expert consultant models. It is therefore consistent with a broad stream of research on collaborative research and learning ( Docherty & Shani, 2008 ).

  When I was approached about the strategy implementation problem in 1988, SP was institutionalized in the company – a manual existed and line managers around the company had been trained as facilitators. Thus, the stage was set conceptually for the invention of SFP, a parallel process intended to follow SP. We learned later that the cultural underpinnings for honest conversations about difficult organizational issues did not exist at BD, and the process had to be robust enough to enable these conversations.

  Between 1988 and 1995 Russ Eisenstat and I, in collaboration with the Vice President of Human Resources (HR) and his successor, developed SFP and piloted it in three business units. Subsequently, SFP was implemented at the corporate level, in numerous other business units, functional organiza- tions such as quality and human resources, country organizations, and one manufacturing plant. Despite stories about painful feedback in two pilots and resultant resistance, reports of success in a business unit, led by a highly respected and highly potential general manager who became the company’s CEO in 2000, caused senior management to commit to SFP. A manual to guide and train internal resources was written, and internal HR and Strategy professionals were apprenticed to facilitate SFP.

  As noted earlier, from 1990 to the present, SFP has been applied in many organizational units at all levels across many industries – medical technology, high-technology firms, pharmaceuticals, manufacturing, retail, a research consortium, healthcare, privatized government agency, hotels, and leisure – and in several countries/national cultures. The findings discussed in this chapter are, therefore, generalizable across many types of organizations, though as I discuss later, there are boundary conditions that

6 MICHAEL BEER

  As academics with scholar–practitioners orientation, our goal was not just to develop an intervention method but research it and learn about the problem of developing an aligned and effective organization. This chapter summarizes findings and conclusions drawn from several forms of inquiry described later. Given the 20-year period of time, it is important for the reader to understand that assumptions that we started with, the SFP intervention method itself, and the findings and conclusions I discuss in this chapter have evolved over time through the iterative process of intervention, research, reflection, and further action. The reader may wonder how objective the findings and conclusions reported here are, given that consultants were also researchers. The following aspects of our journey should be considered in answering this question:

  We spent time reflecting on and analyzing more and less successful applications of SFP. A large number of cases about organizations that underwent SFP were written by independent researchers. These allowed us to conduct a rigorous post hoc analysis of 12 applications of SFP discussed later. A 20-year period of time enabled us to evaluate and revaluate what we were learning. A good many assumptions about the active ingredients in the SFP process have changed over the years.

ASSUMPTIONS AND THEORY UNDERLYING SFP

  How could we help BD improve its effectiveness in executing strategy and adapting to changing circumstances? We brought to this question several assumptions, rooted in research and theory as well as my experience as an internal organization development (OD) consultant at Corning Glass Works. Acting as social engineers we crafted SFP to reflect our assumptions and used experience over time to reformulate our assumption and reengineer the process.

  The first assumption was that organizations are systems and that multiple factors influence effectiveness ( Katz & Kahn, 1966 ; Beer, 1980 ). A corollary assumption we began with was that effective execution of strategy required organizational alignment with the strategy. That is, multiple facets of the organization, its structure, its people (attitudes, skills, and behavior), its processes and system, its management pattern, leadership, and its culture all Developing an Effective Organization

  7

  and its chosen strategy ( Lawrence & Lorsch, 1967, 1969 ; Miles & Snow,

  

1978 ; Miller, 1986, 1987 , 1990a; Labovitz, 1997 ). Initially, we chose the 7S

  framework developed by McKinsey as the analytic map senior teams could use to diagnose alignment and later developed our own model ( Pascale &

  

Athos, 1981 ). Consistent with contingency theory, we assumed that the

  configuration of the organization, its pattern of alignment, would differ depending on the business strategy ( Lawrence & Lorsch, 1967 ; Miles &

  

Snow, 1978 ; Miller, 1986 ). We also assumed that the problem of alignment

is continuous and therefore organizational learning has to be continuous.

  My OD practice and research at Corning Glass Works in the late 1960s and early 1970s had demonstrated that a planned redesign process that follows these assumptions could dramatically improve effectiveness and perfor- mance ( Beer, 1976 ).

  A second corollary assumption, one that has been reinforced after many applications of SFP, is that seeing the whole system – all facets of the organization and its environment – is essential for total systems change ( Oshry, 2007 ). Managers too often make attributions of causality for problems they face to one presenting symptom – ineffective people, business conditions, or technical problems, for example – and fail to see the multiple factors in interaction. Failing to see the system prevents change in systems. It leads to the fallacy of programmatic change initiatives aimed at one facet of the organization, typically education or training, to enhance knowledge or change attitudes (Beer, Eisenstat, & Spector, 1990). These programs are often simple and easy fixes that protect managers from learning about deeper and more systemic problems including their own leadership. We designed SFP to avoid these simple fixes to complex organizational effectiveness problems.

  A third assumption underlying the design of SFP was that organizational silence and defensive routines prevent senior teams from learning about effectiveness problems in their organization (Argyris, 1990a; Morrison &

  

Milliken, 2000 ; Finkelstein, 2003 ; Detert & Edmondson, 2007 ). Lower levels

  systematically avoid telling bosses the truth about problems of efficacy because they fear negative consequences and/or they believe that no change will occur ( Krish-Gephart et al., 2009 ). They are overprotective of higher- ups to protect themselves emotionally and materially (Argyris, 1990a). Moreover, we assumed that by enabling truth to speak to power, all parties to the process will see the data as valid, thus reducing doubt and cynicism and their corrosive effects on trust and internal commitment ( Argyris, 1970 ).

  A fourth corollary assumption underlying SFP was that in order to overcome organizational silence, a fact-based dialogue that incorporates

8 MICHAEL BEER

  developed ( Argyris & Schon, 1996 ; Senge, 2006 ). We concluded that teaching managers dialogue skills in concurrent advocacy and inquiry (Argyris, 1990b), while essential in the long run, would take years. We had to find a way to break the silence and motivate an honest conversation that did not depend on deep changes in skills and culture. Beckhard (1976) had demonstrated that a structured process for surfacing difficult issues could work. We purposely eschewed surveys as means of data collection because they limit what is learned to known problems and do not reveal complexity and interaction between multiple facets of the system.

  A fifth set of assumption underlying the design of SFP is that the process consultation model is the best way to help managers cope with the challenges they face ( Schein, 1999 ). These assumptions are:

  The client does not fully understand the root causes of their problems and need help in diagnosis and action taking. Beyond a solution to the problem, clients should be left with a capability to learn the truth about their organization, diagnose problems, and take action in the future. Only the client knows what will work and not work in their organization. Using expert knowledge based on research as well as practical experience, the consultant can present alternatives, but it is the client who must make choices. In effect, SFP is a process by which senior teams can self-design their organizations with the help from a scholar–practitioner ( Cummings &

  

Mohrman, 1989 ). The challenges of this role will become apparent in the

  discussion that follows and have been discussed extensively in a 2009 issue of the Journal of Applied Behavioral Science (Vol. 45, No. 1).

  A sixth corollary assumption is that participation, consultation, and engagement by as wide a group of employees as practical enhances the quality of diagnosis, solutions, and commitment. It develops community and participant capabilities, in effect changing mutual expectations and culture ( Vroom & Yetton, 1973 ; Macy, Schneider, Barbera, & Young,

  

2009 ). For these reasons we chose a task force of employees to research the

  organization. Participation, it was assumed, would also develop those involved in the process ( Vroom & Jago, 1988 ).

  Seventh, we thought of SFP as collaborative research between senior management, the larger organization, and consultants (Shani, Mohrman, Pasmore, Stymne, & Adler, 2007). It is a type of engaged scholarship for studying complex social problems. It enabled us to learn with our clients Developing an Effective Organization

  9

  greater effectiveness while developing commitment to act on findings ( Van de Van, 2007 ).

  Eighth, we assumed that developing an effective corporation require changes at multiple levels and units – functional units, operating units, and geographic entities, for example ( Beer et al., 1990 ). SFP at the top is a tool for redesigning the larger organizational context and the role of the top team, but we thought of SFP as a leadership platform for developing organizational effectiveness in the corporation’s multiple subunits. Over time, we came to see it as a process for improving the quality of leadership and management throughout a company’s multiple units.

THE SFP PROCESS

  The design of the SFP process was based on the assumptions outlined above. It is a multilevel process that involves the senior team, a task force of approximately eight employees, one to two levels below the senior team and approximately 100 key people inside and a fewer number outside the organization (customers, suppliers, partners, and other key constituencies as appropriate). They are interviewed about organizational strengths and barriers to achieving the organization’s strategic intent. We have found that 100 interviews are sufficient to offer a comprehensive picture of the organization regardless of its size. Interviews are at the top three levels or so, given the strategic nature of the inquiry.

  The archetypical process has nine steps depicted in Fig. 1 . As mentioned earlier, the process can and has been applied at multiple organizational levels, but always with the leader and the senior team at the center of the process. Contracting with the general manager or CEO is framed in performance and values terms. What is the performance gap he/she is trying to close? What is the strategy that the business needs to execute in order to close the performance gap? What are the values by which leaders would like to govern the organization?

  Having contracted for an inquiry that will uncover organizational strengths and barriers, the consultant meets with the senior team to describe the process and develop consensus to pursue SFP. Senior teams are not only told about the steps in the process but also about its underlying assumptions and the generic barriers we have found typically arise. If commitment is developed, the rest of the organization – typically the three to four layers

10 MICHAEL BEER Fig. 1 . The Strategic Fitness Process.

  SFP and the senior team’s plans to communicate what they heard, their diagnosis, and action plans to the whole organization.

  The first step in the process is a one-day senior team meeting to develop a statement of organizational direction – performance goals, strategy, and values. A two-page statement is drafted and becomes the basis of the inquiry. At that meeting the senior team commissions a task force of eight of their best people who will conduct the inquiry. These must be the best people, and ones who will be believed when they return with their feedback.

  The task force is prepared to conduct the inquiry in a one-day training session led by consultants. The general manager/CEO starts the day by explaining the statement of direction and asking for unvarnished feedback about barriers to execution. The task force is then trained to conduct interviews. They, not the senior team, select the people they will interview. They interview outside of their function, business, or geography. Consultants, not the task force, interview the senior team.

  When interviews are completed – usually in three weeks – the task force meets for a day to analyze their interviews and identify themes – strengths and barriers – and give their feedback to the senior team. As I will show below, these themes are potentially threatening because they are about the efficacy of the organization and their leadership team.

  Task force feedback, diagnosis by the senior team, and plans for changing the system occur in a three-day Fitness Meeting – the main catalytic SFP event. To enable truth to speak to power, a fishbowl method is employed Developing an Effective Organization

  11 Fig. 2 . The ‘‘Fishbowl’’ – Enabling Truth to Speak to Power.

  from interviews, while the senior team, guided by ground rules, listens nondefensively. Diagnosis and action planning occur on the second and third day without the task force.

  Having developed an action plan, the senior team meets with the task force to tell them what they heard, their diagnosis, and their action plan. Task force members meet alone to discuss the quality of the action plan and its implementability. They then meet with the senior team to offer their critique of the plan. As I will show later, this is a very important step in the process.

  To mobilize the organization for change, a meeting with the 100 employees who were interviewed plus other key employees takes place. The senior team, ideally with participation of the task force, communicates what they heard from the task force, their diagnosis, and action plan for change. Participants are then engaged in further discussion and feedback to the senior team.

  The elapsed time for the process is typically six to eight weeks. Consultants – external and/or internal – play two roles. They facilitate the process, ensuring that it retains essential conditions for success and act as subject matter resources in diagnostic and change planning discussions. An appendix at the end of this chapter provides more detail about each SFP step. An SFP manual provides details about the total process from beginning to end ( Eisenstat & Beer, 1998 ).

  SFP is a powerful episode. OD is a process that takes years. Senior teams

12 MICHAEL BEER

  transformation and to institutionalize SFP as a regular learning and governance process. If they have been able to establish a helping relationship with the senior team, consultants become thought partners to the leader and senior team throughout the transformation – a period that can be as long as several years. If SFP is recycled periodically, the three-day Fitness Meeting offers a perfect opportunity to collaborate with senior team in assessing progress and discussing further interventions. Having developed internal capability to orchestrate the SFP process, the senior team of one business unit asked its consultant to come every year to participate in the three-day Fitness Meeting to hear from the task force and participate in the development of a response.

  Honest collective conversations about the system as a whole are powerful ways to begin the process of OD. Beyond the development fostered by participation in the process, and this can be substantial, deeper development of organizational, team, or individual capabilities is typically needed. This is something that may require further intervention and learning. A variety of learning mechanisms and interventions will have to be designed to enable this deeper learning in particular organizational domains that the senior team has targeted for change ( Beer, 1980 ; Shani & Docherty, 2003; Docherty & Shani, 2008 ). A chapter in this volume by Fredberg, Norrgren, and Shani

  

(2011) illustrates how cognitive, structural, and procedural learning mechan-

  isms designed into SFP and following it were employed to build organiza- tional capabilities. Our experience suggests that there is variability in how much help senior teams require to do this work.

  Each application of SFP has varied somewhat depending on the situation and the consultant, but the essential features of honest, collective, and public conversations intended to realign the organization with the leadership team’s espoused direction have been constant.

  

AN EMERGENT THEORY OF ORGANIZATIONAL

EFFECTIVENESS

  Multiple applications of SFP offered the opportunity to analyze the content of task force findings in many different organizations. We first conducted a content analysis of what ten task forces at BD had reported to senior management and found that six barriers to effective strategy execution were consistently reported ( Beer & Eisenstat, 1996 ). Subsequent SFPs in many

  Developing an Effective Organization

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  original analysis ( Beer & Eisenstat, 2000 ). Analysis of a written case about an underperforming and low-commitment business unit at Corning Glass Works, written a decade and a half before the current action research program began, confirmed that the same barriers existed there and that they explained quite well underperformance and low commitment in that business ( Beer, 1976 ).

  Because we were consultants who were directly involved in helping these organizations, we were able to make sense of how the barriers reported below interacted to undermine organizational effectiveness. And because we could follow-up and learn how the organization had changed as a result of SFP, we were able to learn if SFP had materially affected the barriers. This allowed us to form a dynamic theory of organizational effectiveness and development.

  We have called the barriers silent killers because like hypertension and cholesterol in humans the six barriers cause severe damage to an organization and are ‘‘unknown’’ to the senior team and the organization at large ( Beer & Eisenstat, 2000 ). By unknown I mean that the barriers, though known to most key people in the organization and to senior management, they were undiscussable and therefore were not subject to action, a point also made by Marshak (2006) .

  It is important to note that in most instances task forces reported that people in the organization – their dedication and commitment – were perceived as a strength. While these organizations had some under- performing people, the message was that the organizational context defined by the six barriers discussed below was the first-order cause of ineffective- ness, undermining the capabilities and motivation employees brought to their work. This finding echoes Deming’s findings that the system, not the people, are the cause of ineffectiveness and poor quality ( Deming, 1986 ).

  The Silent Killers: Syndrome of Barriers to Effectiveness While task forces found a variety of ways to describe what stood in the way of greater effectiveness, our content analysis identified the following six barriers:

  1. Unclear strategy, values, and conflicting priorities

  2. An ineffective senior team

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  4. Poor coordination and communication across functions, business, or geographic entities

  5. Inadequate leadership development and leadership resources below the top

  6. Poor vertical communication – down and up These barriers should not be surprising to anyone who has worked in organizations or consulted them. When I have presented them to manage- ment audiences, they are immediately recognized by many as present in their own organization.

  Considerable research has identified the six barriers as problems in organizations. For example, Hambrick has identified the pervasiveness of ineffective senior teams and their effects ( Hambrick, 1998 ). Wageman and her associates have shown that a vast majority of senior teams they studied were perceived to be ineffective, and they cite a variety of factors ( Wageman,

  

Nunes, Burruss, & Hackman, 2008 ). For example, senior team members

  vary widely in their understanding of who is or is not on the senior team as well as the purpose and role of the senior team. Eisenhardt has shown that top team effectiveness is related to organizational performance ( Eisenhardt & Schoonhoven, 1990 ). Others have shown that coordination and collaboration across differentiated functions and activities as well as cultural characteristics such as conflict resolution modes are critical in uncertain environments ( Lawrence & Lorsch, 1967 ). The importance of downward communication in leading change has been widely acknowledged ( Kotter, 1996 ). And hierarchy and defensive routines have been documented and shown to reduce voice and the capacity of honest and open–fact based problem solving ( Argyris, 1985 , 1990; Detert & Edmondson, 2007 ). OD practice has targeted some of these barriers for intervention. Team building and intergroup interventions, for example, have been standard interventions methods since the 1960s and 1970s ( Beer, 1980 ).

  Our findings not only confirm previous research but also provide insights into the relationship between these six silent barriers and how they under- mine organizational effectiveness. Because these barriers typically existed together in the organizations we studied, we came to see them as a syndrome of mutually reinforcing and self-sealing ( Beer & Eisenstat, 2000 ). In all the organizations we studied, the silent killers blocked three fundamental organizational capabilities essential for organizational effec- tiveness. These are:

  1. The capacity to develop a high-quality organizational direction –

  Developing an Effective Organization

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  2. The capacity to execute the direction

  3. The capacity of the organization to learn from enacting:

  a. That the strategy needs modification and/or

  b. The organization’s design and culture require change

Fig. 3 illustrates how the barriers interact to erode these three capabilities.

The first three barriers, an ineffective senior team, top-down or laissez fair leadership, and unclear organizational direction and conflicting priorities, mutually reinforce each other. They prevent senior teams from developing a high-quality direction. An ineffective senior team cannot have the dialogue necessary to create a high-quality direction, and the lack of a common direction prevents the group from working together effectively. The group may be ineffective because of the leaders top-down or laissez faire style or that style may be the leader’s response to an ineffective team. He/she stops trying to work through the team.

  Poor execution of the senior team’s direction, according to task forces, is a function of poor coordination and the paucity of down the line leaders available to lead strategic initiatives. These barriers are a direct result of an ineffective senior team and poor downward communication. Ineffective teams are often beset by power struggles and do not share common values. Such teams find it difficult to confront changes in organization

  

Fig. 3 . The Dynamics of an Ineffective Organization.

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  design – roles, responsibilities, relationships, and decision rights – needed to improve integration. Ineffectiveness also makes it difficult for teams to define a common set of values, making it in turn impossible to develop a collaborative culture.

  Similarly, ineffective senior teams do not share a common view about what constitutes good managerial performance and potential, making it impossible for them to agree on high-potential people and how to develop them. They are also reluctant to see people as a shared resource to be jointly evaluated and developed through assignments in different parts of the organization. ‘‘Our business unit leaders refuse requests for their best people and transfer their poorest performers,’’ reported a task force to a CEO and his senior team concerned about why the company was not developing managers.

  Poor downward communication undermines execution. If senior teams do not engage lower level people in a dialogue about strategy and values, understanding and commitment suffer. People in differentiated departments are less prone to work together to execute the strategy. It becomes easier for siloed departments to maintain different priorities.