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It’s become a real cliché these days to say that “Change is the only constant”. But this is not a new revelation. As long ago as 500 years BC Heraclitus noted that, like the water in a river, everything is in a state of flux. I won’t deny though that the pace of life in our modern world is rather faster than it was two and half thousand years ago!
When do we hear the words “Change is the only constant” most frequently? Almost certainly when management wants to shake up the organisational structure. And why do they want to change the structure? Sometimes for good reasons such as the organisation is underperforming and the existing structure is ill-suited to its corporate objectives. However, how often do we see radical change being introduced for no apparent reason followed by an equally radical U-turn shortly thereafter? Too often I hear you say.
Why is this the case? Partly it’s down to a change in top management. The new boss wants to put his or her own stamp on the organisation. And partly, I think it’s because of the inherent tensions in an organisation. I used to work for a multinational company and over the years I saw an ebb and flow between the desire by Head Office to control, plan and integrate on the one hand and their desire to encourage delegation, opportunism and localisation on the other. This led in turn to a pendulum swing between the centralisation and decentralisation of structures and decision making.
My view is that managers inflict more change on their long suffering employees than is warranted. Sure some change is needed but is it always necessary to introduce revolutionary change? Why does the pendulum have to swing so far from one extreme to another? And what can be done to avoid it?
Some form of matrix seems to be part of the solution yet as Professor Paul Evans of INSEAD noted:-
“In multinational enterprises, the formal tools of organization (structure and systems) cannot cope alone with dilemmas such as the opposing pulls of centralization and decentralization. Many firms have tried, for example, devising matrix structures. As Davis and Lawrence (1977) saw it, matrix offers the promise of a release from the dilemma, of the flexibility of both centralization and decentralization, specialization and integration. Yet when the two-dimensional matrix of product by geography becomes a four- to six-dimensional matrix (product, geography, customer/industry segment, supplier segment, core competence, and functional competence), even the most stalwart advocate of matrix structure is forced to acknowledge its limits. And when speed in implementation becomes a competitive success factor in the shape of “time to market” and transfer of know-how, we find that the formal organization always lags behind. Matrix becomes not so much a question of structure but more one of management development. How can one create a matrix in the mind of managers, and build a matrix of needed relationships (Bartlett and Ghoshal, 1990)?”
Evans, Paul A. L.. “Management development as glue technology. (integration of subsidiary firms).” Human Resource Planning. Human Resource Planning Society. 1992.
This human glue that Evans describes requires management to have a global mindset and to be able to adapt to cultural differences.
Poor execution is one reason organisations change so much. A McKinsey study on why change programmes don’t produce change came up with the following analysis:-
Unclear or wrong goals or vision 25%
Insufficient communication or motivation 35%
Inability to sustain change and implementation 40%
So if three quarters of all failed change programmes are due to poor execution there’s a massive opportunity for improvement. If more CEOs saw these statistics perhaps they’d pay more attention to the implementation. It’s simply no good hiring a consultant to write a report, sending out an email announcing the new set up and then turning one’s attention to more pressing matters. It might help to engage the consultant in the implementation phase but the absolute key is the visibility of the CEO throughout the bedding-in process.
Better execution would mean less need to change, which in turn would result in better continuity.
How does this all relate to the IPA community? Well, I don’t know how things are in your IPA but those that I’ve had dealings with have certainly exhibited some of these characteristics. For instance, the swing of the pendulum between geographic and sector based structures, the integration or disintegration of trade and investment functions, the tension between centralised control of overseas operations and the need for nimble and culturally attuned service on the ground. The dimensions of an IPA’s matrix are pretty complex too. IPAs have multiple products to sell; there’s clearly geography since we all want to attract investors from around the world; you can segment investors by industry or by size; and we all generate leads through different supply chains and we each have different competences. And finally I doubt many of us would award our own organisations 10 out of 10 when it comes to implementing change programmes.
So if that’s the case we have work to do. Change may be unavoidable but let’s avoid that pendulum swing and let’s try to create that organisational glue that Prof. Evans talks about; let’s be better at implementing change and then we can have a bit more good old fashioned continuity. Your staff are going to respond to evolutionary change far better than revolutionary change and the client experience is likely to be far better too. All in all a virtuous circle. And talking of circles, that brings me on to the circular view of time in Asia and cross-cultural experience in general, which I touched on above… but that is the subject of a future blog.