Is the rise and fall of organizations unavoidable?

by Didier Marlier on Friday April 28th, 2017

“Now starts the most critical moment of our existence!” said the Board member while his people were celebrating their newly awarded World No1 status, “At this very hour somewhere at Headquarters, there must already be people paving our way to Hell with processes and procedures!” Six months later, he had left the company which was sold to a competitor a few years later. He had lost his battle against bureaucracy and “complicatedness” as Yves Morieux likes to call this defence mechanism.

The boiled frog syndrome

To that respect, I like the clip here below from Bain & Company:

 

James Allen’s message is clear: Organizations drift from “Insurgency to Incumbency” and lose their edge (which he calls Founder’s Mentality) to bureaucracy. Back in 1990, Peter Senge, in “The Fifth Discipline”, named the phenomenon described by Allen, “boiled Frog Syndrom”: If you wish to kill a frog, throw it into cold water and slowly turn the heat up until it is boiled. The nervous system of the animal is too slow to notice the change in its environment and the frog dies… happy.

So why are organizations condemning themselves to slowly die, asphyxiated by procedures, “complicatedness” and bureaucracy?

From Heaven to Illusion

Nick van Heck and Paul Verdin (see our blogpost the wake-up call) in their revolutionary VC2 Matrix provide us with a first psychological reason:

Once an organization is praised by its customers and recognized as “market-driving”, the temptation is high to become arrogant and pretend that “we know better than our customers what their needs are”… And little by little, we drift from the top right box (High Value Creation & High Value Capture) to the bottom right. This move is insidious since, just like the frog (and to the exception of a few whistle blowers), nobody waves the red flag of customer obsession since the financial numbers comfort us with the idea that we are doing it right.

Fear of losing

In 2011, I wrote a post (How Loss Aversion may unconsciously impact our strategic thinking) explaining the research of Nobel Prize of Economy Daniel Kahneman on the fact that Risk Aversion is an extremely powerful and unconscious defense mechanism in humans and that it strongly influences our strategic decisions. Could it be that the “incumbent reflex” (ie. play safe and hope that adding layers of procedures will prevent mistakes) is a consequence of our fear of losing?

Power Distance

Many plane crashes find their root cause in the fear that subordinates have to challenge their leader although he ignores facts and consequently takes the wrong decision… When an organization is successful and that Risk Aversion takes over, leaders will promptly edict rules and procedures in the hope of keeping the organization at the top. When there is fear, when the Power Distance is high, those who see on the ground that such procedures will further remove us from our customers, will sadly think job safety first and comply with the procedure…

Assumed usefulness

When organizations and humans enter in a state of anxiety (which is often the case shortly after reaching the No1 spot, or when a crisis is looming), they drift from a High Energy/High Self-Assurance mindset (also called “Purposeful state”) to one of High Energy/Low Self-Assurance (called “Anxious state”). Yes there is energy but it is a nervous, almost desperate one (see my blog post “Three lessons in team dynamics that business could teach sports”).

What do humans tend to do when they are anxious? Since the age of time, they tend to follow rituals, look for the providential savior and do human sacrifices. Today this has become setting procedures, look for a new providential leader and lay people-off. When organizations and people are anxious, they forget the core of their strategy (the customer), revert to procedures and comply to orders. This is called “Assumed Usefulness”.

So what can we do?

Whether we wish to maintain our No1 status (being in Heaven) or go back to it (as we fell in the Purgatory of Illusion), what can we do as leaders? There are three things we see “sustainable leaders” (the “good to Great” of Collins) and turnaround leaders do:

  • They don’t go back to…, they move forward:  We have entered a strong and violent “Disruption Era”, comparable to none before. Technological progress revolutionizes our ways of working. “Going back” to something we were before will increasingly sound like a useless defense mechanism. Moving forward and integrating technological revolutions in our ways of thinking and working will be a better choice. No organization will revert back to what it was. Co-creating clarity about where our World, our organization and our people go will be critical for sustainable and turn around leaders.
  • They will “act their way into a new way of thinking”: “Trust will be the new currency” and leaders, in order to be credible and inspire their people, will need to act and behave in ways that are coherent with their desire to become a simpler, customer obsessed organization. Those leaders will need to have the courage to spectacularly deconstruct what they allowed their organization to construct.
  • They will “Speak to their followers’ hearts so that their minds and souls will follow”: Theodore Roosevelt referred to another part of our masculine anatomy (using the verb get) but this would get us back to compliance. Disruptive leaders understand that what will move people away from Loss Aversion, fear, procedures and other “assumed usefulness” will not be more fear and more constraints but emotions and passion, profound sense of Purpose.

Too often, inspired leaders seeing that the “edge” of their organization needs sharpening, believe that a new strategy, a reorg’ or a motivational boost will be sufficient to get them back to Heaven. We advise and accompany leaders on their own and their organization’s Transformational Journey. Getting back to the top starts with our own behavioural change as leaders.

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One Response to “Is the rise and fall of organizations unavoidable?”

  1. Thanks for sharing Didier – excellent reflection and timely concept for us.
    Best,
    Paulo

    Reply

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