Transforming the Enterprise is Transforming the System

Several degrees

There are several degrees of enterprise transformation. Those degrees could be named 'maturity levels' even if this term was largely used by 'standards' the companies were supposed to apply to be better.

Four degrees in changing the corporate system

1. Changing the Organization

The first degree of enterprise transformation is changing the organization. Changing the organization cannot be considered as a real company change because most of the time, it is hiding a more profound change yet to be done. In reality, organization change is very often a way to simulate the change and to address some of the following issues:

• Please the top level management;
• Show that we're doing something about the problems everyone in the company knows about;
• Treat a specific person problem with an organization change (i.e. punish someone or reduce his nuisance power by reorganization the whole thing around him/her);
• Gain time to explain to the company why problems are not solved for a long time (you hadn't the proper organization before and so the problems were there, and now you're putting together the new organization together which explains the continuation of issues).

For sure, reorganization is not the panacea, and for sure it is not a mean that one can use in an isolated manner because, as the company is a system, sole organization change rarely has a deep impact on the way things are done.

The are some counterexamples however which makes reorganization a credible way. When the hierarchy is strong and reorganizing means implicitly to adapt the teams to the new 'management model', then, the reorganization can be successful. In some organizations, some organization trees show strong technical and managerial practices and so, reorganizing under the same director can mean adapt to this strong culture. But, this is more than reorganization, for sure.

In most of the cases, when the reorganization occurs on its own, it is just a way to present differently the teams but not to change the working processes.

2. Changing the job descriptions

A category of managers likes to address the job descriptions as a complementary mean to change the company. This practice can be useful if it is a part of a change management process. But otherwise, this practice is rather confusing. Indeed, it is not easy to go and see your teams and give them unnegotiated new job descriptions that they should 'apply' from day one.

This approach testifies that management understood that the company is a system and that, probably, the corporate change means something at the job description level. Often, the managers using this technique will try to build a kind of global system where the job descriptions are synchronized with the new organization they want to put in place.

The problems can pop up in several situations:

• The job descriptions proposed are a theoretical exercise which is not adapted to the current job of the teams nor to their future; teams will most certainly protests and/or not apply any of the new job description stuff; the result will be the continuation of old practices - and the known fact in teams that management is incompetent (i.e. doesn't understand the teams' daily work);
• The job descriptions are requiring new competences that the teams do not have; without any training, the teams will end up doing what they were used to do in the previous organization - possibly with added bitterness in discovering they could have gained something in the transformation and the occasion was lost;
• The reorganization was triggered by a special issue that is not solved in the 'new organization + job descriptions' proposed; quite often, managers loose their first objective due to fear of top level management ad other personal concerns; teams will wonder why they have to change their daily work while the core issue is not solved; they will end up doing as before, more reluctantly perhaps.

Job descriptions cannot be used as a stand alone tool to solve core issues of the organization. If it is, teams will reject it more or less openly depending on the political context: in some companies, teams will express themselves openly while in others they will nod and do nothing. This can be aggravated by culture specifics.

Very often, if managers are writing job descriptions in a centralized way in the context of a big reorganization, their teams will discover how bad their knowledge is of the daily work. Using job description modification during the reorganization process should imply teams but also should be a part of a larger change management process (a subproject in itself).

3. Changing the processes

Changing the process is a step beyond basic organization change with or without job description changes. This approach aims to change the working practices by analyzing the practices as they are and forecasting what they will be after the change. They generally involve several teams and departments and can even impact a large part of the company.

Process change can lead to real change because it is seen more globally and consider the organization change as its output, not its starting point. However, this task is a real job and needs a lot of preparation, project management, and team work.

Process change has a fundamental different intention than organization or job profile changes: the idea is not to make the structure or the practices evolve "to be better" or "to please the top level management", etc., but to work better as a group whatever the organizations involved in the process. When a change of process is initiated, it can end up proposing non obvious solutions (non obvious reorganization, evolutions of job profiles and required associated trainings, abandoning some activities and focusing on others, etc.).

Back to the Deming conception, there are a huge number of cases where process improvement ideas first come from the teams because the consequences of malfunction are first seen by the teams in their daily work life. The real role of management is to get those crucial inputs and to consider them at a bigger scale in order to determine what can be done to correct the process. Once a modification is identified, the piloting of this modification is a change management process and its effects must be assessed over a large period of time (PDCA can be a good tool for that).

Process change is not securing thing for bad managers because of the following dimensions:

• Process change brings malfunctions in the spotlight; the management may be at stake in this process, especially if they hid some important facts;
• Process change implies a certain dose of bottom-up approach while too often organization or job description approaches are too top-down; the teams are allowed to collaborate (they must absolutely not drive), to incept the changes by spotting the low-level malfunctions that are clues for more important process malfunctions for the management to solve;
• The top-down actions are secondary in the process change: managers are acting after the teams worked; everyone is expected to play his role in a bottom-up top-down loop;
• The organization output is not obvious, especially it is generally not easy to use it for personal or political concerns; consequently, every organization can discover in the process they should work differently.

Process change must be done in a change management process (which should be a project). If it is not, it's not process change but it will turn into useless top-down statements that the process must be changed. Even if trainings are provided, process change can be ineffective if the definition of the new process is not addressing real concerns and malfunctions and was done by managers only to address top level management requirements.

Process change is not yet a systems thinking approach but it widens the perspective compared to simple one shot intervention on organization or job profiles.

4. Changing the System

In the corporate system, all processes are intertwined. Acting over a process may be considered as a 'solution' but may have many side effects. Side effects may be worse that the solution.

Understanding the side effects is a typical task of management. Elements are raised quite often by the teams and the correlation of those elements should lead the management to identify the side effects of some decisions. The fact is: intelligent decisions can lead to disastrous consequences if side effects are neglected.

Consequently, changing the system needs to try to build a global vision of the system and leads to spot the process issues more globally than it is generally done.

Organizational compensation units

Let's take an example. Most companies have 'internal hidden clearing houses'. The non identification of those clearing houses is a huge issue because those organizational units are compensating for other teams malfunctions. Changing a process in those conditions and willing to correct the practices can have massive side effects because the change in process can impact the compensation teams making them not able to compensate anymore.

This can be true even in the case of best practices applications. Indeed, every best practice is not easily applicable because in some companies it can generate very dangerous side effects.

Clearing houses are hard to find in companies because:

• To identify the clearing houses, you have to have a comparison point about how things should be if there were no compensation chamber;
• It is necessary to overcome the fact that malfunctions are generally considered as 'normal' by a large part of teams and management; sometimes, just the top level management considers there is a problem (generally because no one never succeeded in explaining why there was a specific malfunction);
• It is required to sort out the various viewpoints explaining different representations of reality;
• Most often, the considered company understands differently the business vocabulary than the other corporates in the same business; these are semantic distortions hiding the real nature of systemic problems;
• It is important to analyze why the scapegoat organizations are pointed out and why their very existence is convenient for everyone;
• It is required to understand what the company produces really: experts, heroes, politicians, friends, accomplices, etc.

Indeed, it is rather complex to detect compensation entities. When it is done, it is possible to forecast the bad reactions of the system if the compensating entities are touched (on purpose or not) by some kind of process change.

Identifying organizational entities that compensate other deficiencies is one of the beginning of systems thinking approach. For sure, this example is not the only dimension that should be examined but it demonstrates how hidden structures can generate unpredictable side effects that can turn a logical decision into a bigger problem.

Systems Thinking once again

The Fifth Discipline, from Peter Senge, illustrates much more cases and patterns where the organization cannot react to its own problems without taking into account the side effects (which are generally counter effects).

Thinking in systems begins with the formalization of the system behavior, most often with 'concept diagrams'. Those exercises are not easy and it is very uneasy to exploit them in order to create a change policy aware of the side effects and the possible leveraging dimensions.

Deming et le "System of Profound Knowledge"

Nous parlerons dans ce blog beaucoup de Deming, en tentant d'en conserver l'esprit original un esprit somme tout mal connu et qui s'illustre dans le livre mythique Out of the Crisis.

Deming est très connu pour la "roue de la qualité", le fameux "Plan Do Check Act".

Symbole de la pensée systémique de Deming, cette définition opérationnelle d'une politique d'amélioration continue n'est pourtant pas au centre de la pensée de Deming.

Au centre de sa pensée, se trouve le "System of Profound Knowledge" [1] qui est sa définition des quatre qualités manageriales indispensables à tous les managers :

• Appreciation of a system (compréhension du système) : compréhension de tous les grands processus impliquant les fournisseurs, les entités de production, les clients ou les destinataires des biens et services ;
• Knowledge of variation (connaissance de la variation) : les intervalles et les causes des variations en qualité et et l'utilisation d'échantillonnage statistique dans les mesures ;
• Theory of knowledge (théorie de la connaissance) : les concepts expliquant ce qui qui peut être connu ainsi que les limites de ce qui peut être connu ;
• Knowledge of psychology (connaissance de la psychologie): les concepts de la nature humaine.

Ces quatre outils sont fondamentaux à plus d'un titre.

La compréhension du système

La compréhension du système définit le cadre de pensée et d'action manageriaux par une pensée systémique. Tout acteur, en particulier le manager, fait partie du système entreprise et chacune de ses décisions a des impacts sur le système, certains impacts étant voulus, d'autres étant non voulus (notion de "side effect").

La compréhension du système est fondamentale à la réussite des actions entreprises. Si les actions entreprises sont pertinentes mais en inadéquation avec le système, les effets pervers peuvent être nombreux.

Une illustration concrète de ce principe, probablement vécue par chaque lecteur de ce blog une fois dans sa vie professionnelle est l'arrivée d'un nouveau manager voulant appliquer des principes venant d'une autre compagnie. Si cette volonté d'application est immédiatement mise en œuvre sans apprécier le système entreprise dans lequel il se trouve, la plupart du temps, le système "réagit" en générant des "side effects" (dont le rejet plus ou moins explicite). On peut trouver ce genre de problèmes notamment dans les passages de managers du privé au public ou au para-public (entreprises d'Etat).

Il est donc fondamental pour le manager de pouvoir apprécier le système entreprise dans sa globalité. Cela dépasse évidemment les données financières de l'entreprise, même si ces dernières sont fondamentales, une grande partie des caractéristiques du système étant cachées (nous reviendrons sur ce point dans d'autres billets).

C'est encore plus vrai et difficile pour le consultant qui doit choisir entre deux voies : celle d'appliquer des modèles la plupart du temps non pertinents au cas de l'entreprise concernée, ou celle de tenter de comprendre le système entreprise singulier sur lequel il a des préconisations à faire.

La connaissance de la variation

La connaissance de la variation mène à identifier les véritables leviers du changement ("leverage").

Le système peut être sensible à d'infimes changements non réellement mesurables (par exemple la motivation des collaborateurs ou leur implication) ou il peut générer une "réponse inverse" (feedback du système) proportionnelle à l'énergie initiale visant à le modifier.

Généralement, dans les grandes entreprises, cette connaissance de la variation est quasiment impossible à avoir pour le top level management sans un système qualité interne et un bon fonctionnement de la chaîne de commandement top down et bottom up.

Cette connaissance est fondamentale dans tout chantier de transformation de l'entreprise. La raison pour laquelle la certains chantiers de transformation sont des échecs peut s'expliquer par une méconnaissance du système et des leviers de transformation du système. En couplant les bonnes intentions et les mauvais leviers, la transformation mène souvent à une situation pire que la situation initiale.

La théorie de la connaissance

Beaucoup de managers considèrent implicitement qu'ils connaissent (suffisamment) leur entreprise ; ils n'ont donc pas à connaître le système entreprise car le système, du moins dans leur domaine de responsabilité, doit leur "obéir". Il y a donc généralement une préférence pour la représentation mentale que pour la vérité du système et notamment sa complexité humaine et technique.

"Cette entreprise est remarquable : on dirait qu'elle tourne toute seule." Je cite les mots d'un executive reconnaissant les limites de sa connaissance du système.

La théorie de la connaissance est une façon de savoir ce que l'on peut connaître et ce que l'on ne peut pas connaître. Il est fondamental pour un manager de savoir ce qu'il connaît et de comprendre les limites de sa connaissance. Dans cette zone non connue figurent des zones de potentielle connaissance et des zones que l'on ne pourra probablement jamais connaître. Or, reconnaître que l'on ne sait pas n'est pas particulièrement bien vu dans le management "traditionnel" français.

Pourtant, avoir une connaissance intime de ses limites ouvre la voie à l'apprentissage continu.

La connaissance de la psychologie

La connaissance de la psychologie des gens est bien entendu fondamentale pour tout manager, que ce soit au niveau caractéristiques psychologiques, interactions, motivation, etc. La psychologie des collaborateurs fait souvent beaucoup plus qu'on ne veut le reconnaître. C'est le paramètre qui fait que la collaboration est soit supérieure à la sommes des talents ou très nettement inférieure. Il faut dire que le "management by objectives" ne reconnaît que peu de choses à la dimension psychologique du système.

Prenons ne serait-ce que la motivation. Abimer même involontairement la motivation des gens se traduit par généralement par une destruction lente des assets de l'entreprise. En effet, le fait d'être consciencieux dépend, chez nombre de collaborateurs, de l'importance d'être consciencieux pour le système entreprise. Si le système  n'est pas vertueux, les collaborateurs ne le seront pas non plus. S'ils ne le sont pas, ils ne prendront pas à cœur de défendre les assets de l'entreprise et laisseront s'éroder la valeur de ces assets. Si l'on ajoute à ce phénomène des "effets retard", on peut anticiper, parfois des années avant l'événement, des crises majeures pour l'entreprise rien que par le mépris structurel de la psychologie des gens.

Un autre exemple plus brûlant dans l'actualité est celui du comportement des acteurs économiques : la fiscalité appliquée à ces acteurs devenant confiscatoire, leur comportement change (exode fiscal).


Nous reviendrons sur ces quatre points largement dans ce blog.

---

[1] Edward Deming,  Hors de la crise, Economica 2002.
Edward Deming, Out of the Crisis, MIT Press 2000.