The Project Effect
by Ole Hinz
There are about 3,500 management consultants in Denmark and during last summer the newspapers and business magazines were filled with discussions about consultant management and consultancy concepts, with Balanced Scorecard, Total Quality Management, Shareholder Value and Business Excellence as the most frequent. The P. A. Consulting Group, among others, has carried out an investigation which surprisingly shows that companies which started such projects had not achieved very much.
Such discussions are very useful and here I present my own point of view on some of the issues involved. It is noteworthy that most of what I have read has concentrated on the four concepts referred to - and four is not many! One explanation could be that a certain technological stage, a particular time, a certain spirit of the age, or special economic circumstances call for specific tools. But that is hardly the whole explanation, because what would be common for the medium-sized business, Royal Mail, a small sawmill and P&O?
A more likely explanation probably lies in something you could call consultants’ psychology. I am not going to pursue this trail further - I am a management consultant myself after all - but just want to mention that the tools in question are very few compared to the very complex phenomena we meet in business life. If I have only got a hammer, I will tend to see the world as nails.
I therefore feel compelled to look a little at the hammer called Balanced Scorecard and to begin with Kaplan and Norton's (1) book on that subject.
Three traits are very conspicuous:
1. The project design involves only senior executives. The employees cannot be found (well, I found them once under the name of “shop floor”).
2. A vital subconcept is "implementation".
3. Another vital subconcept is "cause-effect relations".
Against this background I think that one shouldn't be so surprised that the realisation of the projects is slow.
Top-down projects throw gold on the street
It is often shown that global top-down projects have very little positive effect. Ralph Stacey (2) sums it up:
Global programmes aiming at changing the whole company's culture in a planned top-down process do not work.
The most effective change programmes are those that start in a number of small peripheral functions and gradually spread out through the organisation.
Changes in formal structures, systems and procedures arise at the end of successful change periods, not at the beginning. Effective cultural change focuses on the employees’ work tasks in single departments, and the change will spread not because top management controls the process, but because it creates the right environment.
Top-down projects will nearly always create quite a lot of resistance to change. We all know the NIH-effect (Not Invented Here): "others’ ideas are hardly as good as my own.” Often the employees think that when top management is yet again launching a new consultancy approach or a new world-saving idea, "this will probably vanish after some time like the projects we have already seen. So maybe it will be wise just to keep our heads down and wait."
More often than not the top-down projects are rationally designed. There is not much attention to the employees’ feelings, feelings such as pride in doing a good job, having ideas which others find valuable, responsibility, willingness to help, jealousy, desire for power, individual preferences, anxiety or low self-esteem. As a consultant I know from experience that one of the greatest desires of employees and supervisors is the wish to be listened to and be taken seriously. And honestly, why should the employee listen to the consultant, if the consultant is not motivated to listen to the employee?
But it is in this whole register of feelings that the energy and creativity of people is housed. By trying to shape managers, supervisors and employees according to certain concepts and measuring methods which contain ever so many rational points of view, you may overlook this energy potential, and you can have a great deal of the potential mobilised against you. That is why many projects nowadays are more often building on a village model offering the locals rich opportunities to shape the change processes against the background of their own local culture and circumstances.
Implementation means problems
Implementation means that someone (in this case top management, but it might as well be a development department or the external consultant) designs and plans, after which the plan is supposed to be "sold" to others, who are going to realise the targets of the plan within the framework of the plan.
Yes, but this model has been shot down for 25 years! It must be as early as in the seventies that Edgar Schein listed three change models:
a. Salesman / buyer model: the client - meaning top management - knows his or her problem and buys a solution.
b. Doctor / patient model: the client has a problem and seeks an expert who can make the diagnosis and prescribe the medicine.
c. The process / consultation model: as b, but diagnosis, planning and realisation are carried out by employees, management and consultant together, meaning that those who are going to carry out activities are active co- designers.
In the a and b methods the consultant is an expert who delivers his or her expert solution to some people and in some connections he knows in very varying degrees. In certain instances you could talk about a pronounced delivery situation, e.g. in the form of a report with recommendations. The view of organisations and human beings hiding behind the a and b models can best be compared with having your car tested on a test station and afterwards receiving the report: the organisation is a machine and the employee is part of that machine. You can of course not rule out the possibility that projects of this kind will work in vital areas such as logistics, distribution channels, layout, IT solutions, and, as I will show in a little while, you can never rule out any possibility at all.
The process consultation model has several advantages: As cognitions are common, there is no resistance. As you work together in a running learning spiral, there is no sharp border between planning and implementation, and there are not different actors in the two functions. This realisation was a genuine part of organisation development (OD) which has had a great impact on, for example, research methods (action research) and concepts for change programmes (action learning, systemic therapy and now the learning organisation) but it is 25 years of stored knowledge. Really vintage!
Cause-effect romantics
Let us now take a closer look at the cause-effect hypothesis.
We all know how reliable the prognoses of the economists are, and how precise the wise guys on the stock exchange are: the models break down, and there is no predictability in the coffee powder of the witch and it provides great amusement to witness how, on the day after the stock exchange crashes were registered, the wise guys can explain why it had to go precisely as it did (but if you are so damned clever why aren't you rich yourself?) Exactly as chaotic is the life of the company. There is a very small connection between the here-and-now and the long-term destiny of the company.
As Stacey states: "Causal connections between specific actions and specific organisational effects in the long-term disappear in the complexity which is created by interaction between people in the company and over the company’s limits to other companies."
Chaos theory tells us that even small unnoticed differences in the original situation sometimes will lead to - and it is not possible to say when and under what conditions - quite unpredictable and often enormous consequences (you were 15 seconds late for the train, therefore you were an hour late for the meeting, therefore you missed the order). We all know: if everything is so mechanical then take a look at these questions which I found in Gleick (4):
How fast will a cup of coffee get cold?
Does the wind have a speed?
Is there such a thing as a climate?
These questions look very innocent, but they are difficult to answer. We may know what temperature the coffee will have in four hours, but we do not know what temperature it will have in 10 minutes, because we have no exact knowledge about the turbulence. The speed of the wind can be pondered over for a long time, especially by cyclists and sailors. These people know that the wind is lumpy and that the funniest things can happen without warning. So precisely which wind has precisely which speed precisely when?
As for the climate, the word climate means that you have lasting stable conditions around average measured results, e.g. temperature, moisture and wind speed. But the world is skewed and rough, and everything moves a little all the time, so there may not be any average condition. Even if the cause-effect relations should exist, they would be uninteresting, because uncertainty in the measuring processes and noise is much stronger than the scientists of the 19th century could imagine. And moreover research in the nuclear field was already, in the beginning of the 20th century, strongly questioning the universal validity of the cause-effect principle. Sometimes things can happen spontaneously, unpredictably and in jumps.
It is very nice that we constantly try to hit the nails down into the world to keep it steady so that we can breathe easily and say "now we can manage". But as one of the chaos researchers so beautifully says: "if you feel you can manage everything, you are moving to slowly."
Some time ago the wife of one of my friends felt sick and went to her GP several times. The doctor took urine and blood tests and some time went by before the result came. But one day the telephone rang, my friend answered it and the doctor could happily say that nothing was wrong with my friend's wife. She was completely well! OK my friend said, then I can tell you that she in the National Hospital suffering from advanced cancer. Half a year later my friend's wife was dead. Let’s face it, you can't control your way to quality and you can't have security by measuring. At best you can cover your back and reduce the need for nerve pills.
Professor Tor Bak, with the Niels Bohr Institute in Denmark, has in his thought-provoking book How Nature Works (3) investigated a heap of gravel. You start sprinkling some sand on a table, and you continue grain after grain after grain. This goes well for a time; the heap grows predictably and takes the shape of a cone. You can give pretty precise guesses about how far the single grain will move down hill before stopping, but at some time something that nobody can manage will happen: when the heap has grown to a certain height there will be an avalanche. No-one can predict when it will come or the shape or the size. The single grain was the entity in the beginning of the experiment. Now the heap has become an organism acting as an entity - and unpredictably. So much for a heap of gravel, the weather and the coffee. How do you think things are when it comes to people, companies and society?
I tend to maintain the attitude that those who postulate cause-effect relations in company and organisation development have a heavy burden of proof to lift before they can start selling solutions. It is as if the old Newtonian way of thinking, which in natural sciences was shaken very much in the beginning of the twentieth century by among others Einstein, Heisenberg and Bohr, is still looming heavily over the social sciences' paradigms and practices.
Einstein put forward his special relativity theory in 1905. Then time, space and substance became relative. In 1913 Bohr formulated his atomic theory and thereby broke the principle of cause-effect. In 1927 Werner Heisenberg put forward his uncertainty principle which demonstrated that the uncertainty by measuring can never be 0. Is it too optimistic to hope that these realisations will be integrated and utilised in the management consultant work on the 100 year anniversary of those respective breakthroughs in the natural sciences?
And now there will be no recipe
There is nothing wrong with measuring. But there is very much wrong with only measuring. There is also nothing wrong with top management creating concepts. But it is not wise for top management to be the only authors of concepts. Surely we should know that the employees’ hearts and brains are the parameters for competition. Therefore the employees’ subjective experience of their own situation is often a more important truth than objective measuring of a selected dimension.
Imagine that the result of measuring á-la-Balanced Scorecard is made the focus of discussion among the employees themselves and between employees and managers, for example in project teams or large meetings. So here you have ordinary people as employees and the results of measurements being put forward in a fixed number with levels of abstraction which makes the material inaccessible for the people who are supposed to work hard for the healthy development of the company and the department. The price of incomprehension is very high: distance. How well do we know Mr. Smith's picture of the world or view of life, or the distance of his real life from abstract statistics?
The way forward is probably to invite the employees to come up with their pictures of life, of what should be changed, and of what should be done to reach the goals that have been agreed upon. Managers have to do the same and the pictures must be made to match or complement each other. This calls for dialogue at eye level. And then you have to act and learn together in an ongoing process. Luckily there are no short cuts!
Conclusion
We can then predict that change projects that are run top-down, that have a defined implementation phase, and that have a cause-effect relationship, cannot be carried through. And even if they could, they would not have the desired effect. But of course you never know!
It is my belief that projects must build on the village model, dialogue, subjectivity, and feelings. People don't act because there is a cause, but because they have a reason, and the reason will normally be that to act subjectively gives meaning. And that is quite reassuring, isn't it?
Ole Hinz is Director of KIO A/S, Management Partnership International, Copenhagen, Denmark.
References
(1) Kaplan, R. S. and Norton, D. P. (1996) The Balanced Scorecard. President and Fellows of Harvard College, USA.
(2) Stacey, R. D. (1993, 1996) Strategic Management and Organisational Dynamics. Second edition. London: Pitman Publishing.
(3) Bak, T. A. (1997) How Nature Works. Oxford University Press.
(4) Gleick, J. (1993) Kaos: En ny videnskabs tilbliven. Munksgaard.
Supplementary literature
Stacey, R. D. (1996) Complexity and Creativity in Organisations. San Francisco: Berett-Koehler Publishers Inc.
Colding-Jørgensen, M. (1998) Kaos og ikke-elefanter. København: Fremad.
Wheatley, M. J. (1992) Leadership and the New Science. San Francisco: Berett-Koehler Publishers Inc.
