Achieving a Highly Effective Organizationby Glen D. Hoffherr and
Robert P. Reid
We need ever-better ways of coping with
assimilating change into our organizations.
During the last decade,
U.S. business desperately rushed to implement business-improvement methodologies
to restore its leadership in world markets. U.S. business has used total quality
management, continuous improvement, reengineering and other flavor-of-the-week
ideas to reform our cultures, improve our work processes and focus on customers
in an effort to rekindle the profits and growth of the past.
implementations have succeeded, at least in the short term. More have failed
after decimating the ranks of once-healthy businesses and terrorizing employees
at all levels. The downsizing that seems to accompany most methodologies leaves
the trust and the risk taking that produces new ideas at an all-time low. Has
the gain been worth the price? Only the future will tell the whole story, but we
know that to stop now will mean disaster.
The rate of change in
communications, the global marketplace and new technologies is not slowing.
Instead of stabilization, we need ever-better ways of coping with and
assimilating change into our organizations and even our lives. We need ways to
assimilate what we know and what we do in the reality of continuous
It is imperative that individuals understand their own context
within which they work in their organization. This contextual understanding
provides the basis for change. It provides the flexibility to meet customers'
changing needs and integrate the dynamic growth of technology. Organizations
must also become flexible to meet the needs of their individuals, their
customers and their own existence.
Organizations change for three basic
reasons: entropy, chance and planning. Those organizations that choose entropy
have made an unconscious decision to go out of business at some time in the
future. Those organizations that have decided to change through chance have made
an unconscious decision to exist in a chaotic state. Those that have chosen to
plan their change have begun their first step to long-term
Organizations undergo four basic types of change: incremental,
redesign, transformation and revolutionary. Since revolutionary changes are so
all-encompassing that the organization is no longer recognizable, we will not
address them. Figure 1 shows the other three types of change. Incremental
changes are process-focused. These are most often associated with total quality
management and continuous improvement. Individually, these changes are small,
but when added together, they provide a significant boost to the efficiency of
your service. When these efforts are customer-focused, they also improve the
Redesign changes focus on the
organization's critical systems. They are most often associated with redesign or
reengineering efforts. These system changes most often are adaptive in nature
and provide a factorial change in how the organization delivers its service.
When these efforts also include the customer, they integrate appropriate new
technologies into the organization's service-delivery
Transformational changes occur only rarely. They result in
the organization moving in a new direction. This new direction will be one of
culture, mind-set, service to be delivered, organizational structure or similar
significant change. These transformations tend to be very creative and manifest
themselves in different ways. An example of a transformed organization is IBM,
which has undergone two significant transformations in the last 40 years. The
first was when they changed their service focus from mechanical devices such as
typewriters and keypunches to computers. The second transformational change was
a culture change when Louis Gerstner Jr. became their leader.
critical that individuals and management do not expect change greater than the
effort that they are expending.
In many instances, management expects
redesign or transformation but only provides the resources and commitment to
complete incremental changes. When the redesign or transformation doesn't occur,
the process that was used is dismantled and someone is found to receive the
blame for the failure. Organizations must quit looking for where to place the
blame and instead look to find out what they were trying to do vs. what they
were actually doing.
Work as it is accomplished can be broken down into
two major categories: value-added and nonvalue-added (see Figure 2).
Nonvalue-added work most often becomes the target of incremental organizational
changes. In our experience, management frequently espouses empowerment,
self-direction and teamwork yet expects radical redesign or transformational
changes. They expect this even though those involved in the change have little
ability to affect the organization's direction or value-added work methodologies
for the long term. When employees fail to meet these unrealistic expectations,
management must find something to blame for the failure. Those involved or the
program itself becomes the guilty party. Management fixes blame and then moves
on to the next program of the month.
Organizational redesign has become
quite popular as organizations realize that many of their value-added processes
can be done differently. In an effort to use less resources, organizations
attack their business value-added processes such as training and first-line
management in an effort to slash costs. Figure 3 shows these business
value-added processes and their relationship to work.
value-added processes often are perceived to have large amounts of
nonvalue-added work embedded in them because when compared to other processes,
they require more perceived effort. This may be an illusion. Every organization
exists within its own context. During the organization's development into its
current gestalt, it has built appropriate structures, methodologies and
processes to deal with its normal business pace. These structures, methodologies
and processes should be examined for redesign within the organization's values,
culture and needs. They should not be retained without examination; however,
equally important, they should not be dismantled
Transformational changes may address either value-added or
nonvalue-added areas with limited success. Such changes should focus on what
work people accomplish and what work they should accomplish in the future.
Transformation often requires "killing the cash cow" to move to new services. It
is not concerned with being more efficient, effective or adaptive. It requires
creativity and an understanding of the context of the organization and its
customers, suppliers, employees, stakeholders, work methodologies, culture,
language and the music it creates. Transformation requires leadership,
innovation, creativity and stamina. Transformational change may include
incremental changes and redesign of business processes, but it also transcends
these changes and impacts the entire organization.
Figure 4 shows
transformation in relation to the business value-added work that an organization
currently performs. Business value-added work tends to expand to utilize all
available resources. An example of business value-added tasks going out of
control in this manner can be found in any bureaucracy. For instance, in a
recent study of school districts, it was found that the ratio of dollars
directly spent in the classroom nationwide has dropped to an average of less
than 50 percent. In the early 1950s, the average was more than 66 percent.
Despite this tremendous increase in administration, scoring on standardized
tests has plummeted. At a minimum, these business value-added processes must be
redesigned. Transformation may be desirable at least in some school
Failure to make significant changes may result in
revolutionary changes like those the health-care industry is
Organizational change is about work and how we do it. This
basic premise requires complete, fundamental, creative rethinking-including
radical redesign of the organizational process to achieve dramatic improvements
in critical contemporary measures of performances such as cost, service and
speed. The organization may have to undergo transformation just to
We as the human race have a long history of change-the very
nature of man's history on the planet is one of change. Figure 5 illustrates the
progress of the human race and shows the path of change in the basic nature of
work. The past is a prologue. Our culture shapes us, but we are not obligated to
Only those organizations that have planned for change can
expect to change in an effective manner over the long term. While short-term
changes can be left to chance, they will eventually overcome the organization's
ability to change. As the nature of work changes from the assembly line to
information exchange, organizations are changing to structures that simulate
neural networks. The context of work within these networks must be recognized
and structures developed to control them to the point that they result in
meaningful output. In addition, the individuals that operate within the network
become more critical to the organization's success, while the old structures
they operated within become less meaningful. Technology drives this change. Just
as moveable type drove the change from farming to the factory age, moveable
information is driving the global marketplace from the fact age to the freelance
age. Where these changes will lead is beyond anyone's ability to predict at this
The basic types of structures that will become prevalent in the
future as we evolve from the fact to the freelance society include the status
quo of hierarchical management. Two other key structures will be the
self-directed work team and the self-directed individual. Self-directed work
teams are natural work groups that take on more of the day-to-day operations and
self-management tasks. Self-directed individuals operate in ad-hoc teams, on
individual projects and as independent consultants.
develop resource data banks of these self-directed individuals, including those
who may or may not work for the organization. These individuals will become much
more involved in individual service delivery. Because of their technical
expertise and ability to work without direct supervision, they will be shifted
between projects, problems and organizations as required.
The formula for
organizational survival can be stated simply as E2CA/C. The first E stands for
efficiency, the second for effectiveness. Creativity and adaptability complete
the numerator of this equation. The context for each individual, how the
individual impacts the overall organization, and the operational environment
complete the equation.
As the context of work evolves into the next
century and age of man, the individual's ability to contribute must be
maximized. Today's organizational structures will no longer be robust enough to
support the required dynamic changes beyond the freelance era.
authors . . .
Glen D. Hoffherr is vice president for operations at
Markon Inc. and an associate of the Organizational Effectiveness Institute of
Johns Hopkins Whiting School of Engineering. He has more than 25 years'
experience as a manager, author, speaker and organizational developer. He has
written extensively in the areas of organizational change management, creative
thinking, systems design and interpersonal relationships.
recent book, co-authored with Gerald Nadler and John Moran, is titled
Breakthrough Thinking in Total Quality Management. His next book, Paving Your
Success Path, co-authored with Robert Reid, will be out at the end of 1995.
Hoffherr can be reached at (603) 898-3919, fax (603) 894-5770.
Reid is co-founder of the Organizational Effectiveness Institute of Johns
Hopkins Whiting School of Engineering. He has more than 25 years' experience as
an educator, author, speaker and organizational developer. Reid has written
extensively in the areas of organizational change management, creative thinking
and systems design, and conducts courses and seminars at 17 colleges and
Reid's most recent book, co-authored with Howard Scott, is
titled Change From Within: People Make the Difference. He can be reached at
(609) 589-6406, fax (609) 582-3906.
© 1995 Glen D. Hoffherr and Robert P.
Reid. All rights reserved.