If an organization’s transformational efforts are going to work, they eventually must alter all of the organization's bedrock elements, both those that are inside its formal boundaries and those that are outside them. Organization transformations (OT) are intricate inside/outside efforts, essentially for just one reason; to be successful, they have to produce four complex, comprehensive, integrated results:
- Recast and rebuild the organization's strategic vision, its basic structure, and its operational processes.
- Reframe and reintegrate the organization's stakeholder networks, especially those that legitimize, control, and supply it.
- Recognize, respect, and support the organization's constructive and destructive change dynamics.
- Recognize and catalyze the short, medium, and long-term mindset and Order of Consciousness shifts that the organization's key leaders, stakeholders, and employees must make.
Here at TLO we’ve been working hard for the past five years trying to learn how to produce this collection of transformational results. We're not there yet, but, we’re close. Most importantly, we’re confident that we've learned enough from reviewing our twenty-plus years of consulting, our expertise in experiential learning, and the research we’ve recently completed to finally publish and vouchsafe the organization transformation model we're now using in all our OT Thought Partnering, coaching, and consulting.
OT's Early Days
During the early part of the 20th Century, American managers were enthralled with Scientific Management. Fredrick Taylor, Scientific Management’s creator, had firmly established it as modern management’s most popular philosophy by advocating the use of time and motion studies as the best available way of improving employee productivity and organizational profitability. Managers, he said, should break down their departments' tasks into simple, well-defined chunks, and then work out the best way for their employees to execute these chunks. Once this was decided, all their employees had to do was exactly what they were told to do.
In 1920, at the request of managers in charge of Western Electric's Hawthorne plant, Elton Mayo and Fritz Roethlisberger were invited to study the impact of Taylor's approach on their plant's employees and its productivity. The social and relational insights that Mayo and Roethlisberger discovered through this study were eye opening, and became the earliest catalyst for what today has morphed into the field of Organization Transformation.
By the 1950s, Mayo and Roethlisberger's "Hawthorne" discoveries had sparked the development of a variety of discrete, single element OT interventions. Through their study, Mayo and Roethlisberger had discovered that good human relationships create positive impacts on employee satisfaction and small group productivity. By 1980, these insights were being embedded in any number of small-scale, tightly focused interventions designed to improve an individual employee’s satisfaction with their job, or a small work group’s productivity.
By the end of the 80's, these small-scale, single-element job satisfaction experiments had evolved to the point where reasonably large-scale shop floor improvement initiatives were being designed and experimented with. These were interventions that today we here at TLO see as "single element" OT interventions. We define them as single-element interventions because each of these experiments was focused on transforming only one specific aspect of an organization, e.g., the design of a job, an organization's hierarchical structure, or the nature of a department's workflow.
Our research has identified at least eight single-element OT interventions:
- Job Design Interventions
- Workflow Design Interventions
- Employee Satisfaction, Employee Empowerment, & Employee Engagement Interventions
- Employee Commitment Interventions
- Kaizan, Quality Circles, First Time Quality, & Total Quality Control Interventions
- Lean & Lean Six Sigma Interventions
- High Performance Team Interventions
- Service Profit Chain Interventions
By the end of the 20th Century, research done on these single-element interventions was showing that, while they did produce localized satisfaction and some noteworthy productive improvements, these single element interventions and the results they were producing, for the most part, were hard to sustain. It was almost impossible to extend them beyond their first site to other sites in the rest of the organization.
The reason for these difficulties?
Each of these single-element interventions tended to be focused on just one aspect of their organization. Usually this focus was one specific location in the organization’s operational value chain. In fact all eight of the single-element interventions listed above were, and still are, value chain interventions.
To either sustain the effectiveness of these single-element interventions over time, or expand them throughout an organization, research has shown that the host organization must expand the focus of their change efforts if they're going to effectively transform other bedrock elements of its infrastructure. For instance, a department would have to transform its value chain's supervisory processes from a unilateral command and control system to a collaborative, positive expectations management system. Or, it would have to transform the value chain's employee competency profiles by adding complex problem solving skills or small group learning skills to all their employee's skill profiles. In short, the research shows that single-element improvement interventions, while useful when focused on radically altering a specific part of the organization's value chains, were actually self-sealing. To effectively support any single-element change over time, or generalize their results to other parts of the system, the host organization eventually had to expand its focus to other elements of the system. Transforming one single-factor element eventually demanded the transformation of several other single-element factors.
TLO’s New ot Model
Today, there’s overwhelming evidence that no organization can transform itself unless its change leaders are aware of and work on transforming their organization’s pivotal elements. This discovery has prompted research aimed at discovering exactly what must be seen as a “pivotal transformational element.” Today, this research is pointing at a number of key elements and components. For example, an organization's structural elements, it's operational process elements, and its external network elements. While we're not ready to say we've identified and fully understand all the pivotal elements in a modern organization that must be transformed, we do believe we've made a good start at identifying and defining them.
We're calling this new organization transformation model, "TLO's 8-Element, 2-Loop, 3-Horizon Model of Organization Transformation." What follows below is a summary description of this model's basic elements. This summary provides the background you need to comprehend the issues and challenges that each of these three components presents, and some suggestions about what’s involved in pursuing all three of them simultaneously.
As the title suggests, we’re proposing for your consideration an approach to OT that integrates these three components into one cogent model that we believe must be a central part of any effective organization transformation effort;
- 8 Organization Design Elements,
- 2 Transformational Change Loops, and
- 3 Time Horizons.
Let’s start by describing an organization transformation's 8 design elements.
TLO's 8-Element OT Design Model
Here's our best take on the eight key elements an organization must radically alter:
1. The Organization's "Organizing Principle" is the fundamental presupposition from which its senior leaders derive their strategic imperatives.
2. The Organization's "Business Model" is the tool senior leaders typically use to amplify their company's organizing principle into an appropriate business strategy, relevant operating principles, and essential performance obligations.
3. The Organization's "Modes and Methods of Coordination" are the structures, systems, roles, and policies used by the company's executives, managers, and supervisors to control and orchestrate their organization’s performance.
4. The Organization's "Means of Production" are the various business processes the organization uses to create products and services.
5. The Organization's "Competency Platforms" are the knowledge bases, technologies, and essential skill sets that the organization uses in combination to realize and develop its core competencies.
6. The Organization's "Demographic Structure" are those sets of professional employees a company needs to produce its goods and services.
7. The Organization's "Culture" is that set of identities, stories, values, and symbols used to define systemic ethos and fundamental purposes.
8. The Organization's Partnership Networks" are the linkages a company uses to tie itself to its suppliers, customers, competitors, and regulators.
At this point, our hypothesis here is that, to bring about a full-scale organizational transformation, each one of these eight elements must be revolutionized. Change leaders can start with any one of the eight. But, no matter which one you choose, starting with any one very quickly leads you to the need to substantially alter the remaining seven. We don’t have the experience to prove this, but we believe that eventually radically changing any one of the eight pivotal elements identified just above will force you to change all eight. Any one element that remains unchanged or is not in the process of being transformed becomes a heavy anchor to the organization's overall transformation effort.
TLO'S 2-Loop OT Model
The 2-Loop Theory of Organizational Change is a model that Meg Wheatley and Deborah Frieze first describe in their paper, “Using Emergence to Take Social Innovation to Scale.” In this paper, Wheatley and Frieze suggest that change emerges in human systems out of a spontaneous set of local actions emerging throughout an organization. They say these local actions can link either organically, or purposefully in ways that facilitate the development of integrated networks of relationships that become aligned in the pursuit of mutual interests and goals.
Most importantly, Wheatley and Frieze's article is significant because it suggests something about organization transformation that few practitioners have ever said out loud: Organizations in the midst of transforming themselves are inevitably in the paradoxical process of simultaneously living and dying.
Coaches and consultants familiar with this 2-Loop Model use the graphic just below to describe the simultaneous living and dying processes that Wheatley and Freize point to as the paradoxical heart of organization transformation. Anyone who's worked in an organization will be familiar with the "living" half of their model, i.e., the proposition that all organizations can be understood by thinking about them from within a birth, innovation, and growth framework. But, before Wheatley and Frieze, few recognized that the growth side of a transformational process also had to have its death side. It wasn’t until Wheatley and Frieze added their second loop to the picture that we realized that organizational deaths are a necessary part of the OT equation.
This is what the 2-Loop visual seen below points at: It’s saying that any effort to transform a human system, especially a purposeful one like a modern business organization, will automatically and spontaneously activate both the growth side of the "organization's life cycle" (i.e. Germination, innovation, maturation, and rejuvenation) and the death side (i.e. Stagnation, disintegration, and decomposition). Even a simple "single element" change effort, no matter how small and seemingly self-contained, does this.
The Two Loop Model of Organization Transformation
This is why, in its Organization Transformation work, TLO insists on explicitly addressing with our Thought Partners both sides of the " 2 Loop Process." So far, our experience with this 2 Loop Theory of Organization Transformation has taught us five lessons about working with organization transformations:
- Whether we know it or not, whether we like it or not, whether we want it or not, organization transformations are two-sided coins; they are complicatedly and paradoxically simultaneous life and death experiences.
- Whether or not we acknowledge it, we have to pay close attention to both the living and the dying sides of transformation if we want to launch and finish a successful transformational effort. We must support the germination cycle and the disintegration cycle, especially if we want to create for the people who are caught up in both, the kinds of events and processes that they can receive and perceive in positive, developmental ways.
- From the very first, change leaders must recognize that successful organization transformations are going to clearly and explicitly ask people to transform their personal precepts and basic identities (both individual and organizational), as well as their old modes of thinking, feeling and acting.
- Organization transformations that succeed in asking for these types of contributions will create deep-seated anxiety.
- Consequently, from the start, we must bring to our OT work the ability to demonstrate what Carl Rodgers called "unconditional regard." At base, this means that those leading and facilitating an organization transformation effort must, in demonstrable ways, believe that every one involved in the transformation that their launching is a human being who is well intentioned, trustworthy, and deserves to be treated with respect and dignity.
TLO’s 3-Horizon OT Model
The 3-Horizons model first emerged in 1999. Mehrdad Baghai, Steven Coley, and David White published their book, The Alchemy of Growth: Practical Insight for Building Enduring Enterprises. In every sense, The Alchemy of Growth was a business book. The authors' basic premise was that, at this point in history, to be successful a corporation's senior leaders had to see their business issues and competitive challenges in terms of multiple strategic horizons. Short term profits, mid-range innovations, and long-term growth all depend on their metacognitive ability to perceive multiple futures.
In 2008, Andrew Curry and Anthony Hodgson published an article in the Journal of Future Studies that made Baghai, et al.'s assertion clear;
"This paper describes a futures method called the "Three Horizons," which enables different strategic futures and methods to be integrated as and when appropriate...One of the gaps in futures work, at least from a practitioner's perspective, is between the work of scenario builders in constructing a range of plausible and coherent futures, and that of the vision- builders in helping organizations identify a preferable future, based on a set of preferred values, and to act on that preference." ...We outline the use of a futures technique, "Three Horizons", which connects the present with desired...futures...In doing so, it enables the futures analysis to be connected to underlying systems and structures, to the different speeds of change..., and...to tools and processes that facilitate strategic analysis..."
In particular, this graphic suggests how, over time, leaders in every modern corporation will need to know how to perceive, interpret, and respond to the three distinctly different strategic challenges it portrays:
- Horizon 1, which is concerned with improving the core businesses that the company is currently focused on through its daily operation. This horizon emphasizes those challenges and opportunities that provide the corporation its greatest profits and cash flow. Strategic focus must be on improving performance to maximize shareholder value.
- Horizon 2, which encompasses two main strategic issues: First, those emerging competitive positioning and investment opportunities that are likely to generate substantial profits in the future, but that could require considerable investment now; and second, the emerging innovations and entrepreneurial competitors with new business models that potentially could be viable threats in the immediate and mid-range futures.
- Horizon 3, which contains ideas for profitable growth down the road that must be nurtured now; i.e., small ventures such as research projects, pilot programs, or minority stakes in new businesses.
Since its emergence in 1999, Baghai, et al.'s Three Horizons framework has evolved in significant ways. But, even through all the thought leaders who've been shepherding its evolution, Bashai’s 3 Horizon model has never lost its original imprint; it was and is a framework devised to help corporate executives learn how to increase their bottom line, react to emergent disruptions, and find ways over the long-term to sustain their competitive position.
TLO's 3-Horizon model accepts this three-tiered focus, and it also moves this approach one giant step ahead. Instead of only asking questions about an organization's 3 Horizon business issues and challenges, TLO’s 3-Horizon model suggests it’s also crucial to ask mindset and Order of Consciousness questions as well. Our hypothesis is that senior leaders, if they’re ever going to learn how to do what Baghai, et al. are advocating, are first going to have to learn how to challenge the conceptual foundations of their existing 3-Horizon mindsets. Most particularly, TLO's 3-Horizon model highlights the need for everyone involved in an organization transformation to be conscious of and informed about all the "known," "partially known," and "as of yet unknown" stereotypes, heuristics, presuppositions, belief systems, and mindsets that are controlling and guiding them as they launch their organization's transformation efforts, projects, and programs.
TLO’s approach to the 3-Horizon model is as an “antecedent effort” to the work that Baghai et al. have been calling for. Instead of focusing our attention on 3 Horizon business questions, TLO's 3-Horizon approach focuses on what, in OT terms, individuals and small groups all over the organization must learn to think about in order to become the prescient participants in their organization’s transformation they need to be. TLO's 3-Horizons model focuses attention on the three different perceptual universes – i.e., the Known, the Partially Known, and the Unknown – that are always part of every successful organization transformation.
Take a look at the visual we showed you several paragraphs back, but this time, think about what it's suggesting in terms of the 3-Horizon mindset and worldview issues that it's pointing you towards.
For TLO, looking at this visual through mindset and worldview eyes offers up three OT type hypotheses that are worth considering:
- TLO's First Horizon encourages you to discover your current mindsets, their habitual modes of perceiving and processing reality. It points you toward an effort aimed at discovering and examining the cause and effect assumptions that anchor your every day decisions and behaviors. This TLO horizon asks you to question the implicit stereotypes and cognitive heuristics you’re currently using to identify and define the problems you’re choosing to see.
- TLO's Second Horizon encourages you to reach a little deeper. It asks you to examine the modes of thinking your using to understand the most confusing and threatening aspects of your world. This TLO horizon asks you to look at what you’re aware of through the background aspects of your consciousness that's either exciting or troublesome for you.
- TLO's Third Horizon asks you to examine all of the strange new disruptive phenomena that are active on the fringes of your consciousness, to bring these issues forward to see what they're saying to you that are worth listening to. And, in particular, TLO’s 3rd Horizon is suggesting we need to ponder what we don’t know we know about what’s hanging out on the fringes of our consciousness that has key things to say to us about our First Horizon assumptions.
Elsewhere, we've said "TLO's 8-Element, 2-Loop, 3-Horizon model of organization transformation is the conceptual framework we've developed...to help us make sense of...our twenty plus years worth of...OT consulting assignments." Now, at the end of this thought paper, we can highlight the essential premise of this model: All three of the components identified in our model – the 8 Elements, the 2 Loops, and the 3 Horizons – are interdependent pieces. No one of them will ever really produce sustainable transformational results on its own. Each component is essentially useless without the other two.
In every 21st Century organization, all of its structural and process elements are closely integrated. Consequently, to transform the organization, all of its key elements need to be radically and irreversibly altered in one coherent, comprehensive, and more or less simultaneous way. When it comes to an effective system-wide transformation, TLO’s key hypothesis is “Everything all together simultaneously.”
Once you've launched and implemented a number of organization transformation efforts of your own, we think you, like us, will come to three tough-to-absorb conclusions:
- Organization Transformations always involve dynamics that are complicated, paradoxical, and contradictory.
- Organization Transformations always have dozens if not hundreds of moving parts and changing elements, and thus a dizzying array of complexity.
- Organization Transformations always take a long time to complete; decades are the right time frame to think in.
This is why, in every organization transformation, knowing up front that there are 8 Elements involved, 2 Loops to attended to, and 3 Horizons of Change to engage with and keep in mind makes the task of preparing for, launching, and then orchestrating an organization transformation effort more easily understood.