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Design a car that is inexpensive but not cheap. This maxim captured the team's expectations for the evolution of automobile design; instead of requiring




By Richard T. Pascale

    Many firms have adopted one or more “radical” management remedies in a quest for breakthroughs in performance. But their goal of “discontinuous” improvements usually has an unspoken stipulation: change that causes breakdowns is not acceptable. A few innovative companies have found, however, that process and offering breakthroughs can’t occur without carefully orchestrated management system conflict and breakdowns.

Planning Review May/June 1994 12

    dramatizing breakdowns (instead of applying a A succession of managerial remedies temporary fix) is the best way to stamp out the has dominated the corporate agenda in recent underlying cause permanently. years for example, companies have used Another Japanese manufacturing practice is improved cycle time to redesign product to remove all in-process inventory, an approach development, Total Quality Management to to production called Just-in-Time (or Kanban). reshape operations, and business process Managerial breakdowns are like a behavioral reengineering to reinvent systems flow. Each of Kanban system. As with the Kanban system, by these methodologies, and many others in which design the existing system is overloaded so that corporations have invested heavily, has merit. the organization can no longer practice business Yet after implementing one or more of these new as usual. management concepts, many managers are left At Europcar (until recently Europe’s number with considerable disappointment over promises one rental car company), a managerial unfulfilled and potentials unrealized. breakdown was generated by design through the Firms that adopted one or more of the implementation of a massive overhaul of its management remedies were searching for information system in an impossibly short time. breakthroughs in performance. But despite their Managers felt taxed to the breaking point and professed desire for “discontinuous” complained loudly that the system might crash, improvements in quality, cost or cycle time, the invoicing might be delayed, counter staff context in which these aims are pursued is overloaded. The conventional wisdom in the face usually constrained by an unspoken precondition: of such dire warning would be to slow the no breakdowns. The goals must be reached by a process down, avoid overloading the system, run secure and predictable process with no untoward the old and new systems in parallel and thereby surprises and minimal conflict. The problem with dampen the complaints. But when authentic such a precondition is, breakthroughs rarely breakthroughs are sought, this traditional view is occur without breakdowns. In seeking an violated on purpose! The theory is, by loading authentic breakthrough, it is essential to strip so much work on an organization it can’t cope in away the “frail-safe” mechanisms and make it a business-as-usual manner. Unfreezing occurs. “safe-to-fail.” New forms of behavior and fresh ways of thing The word “breakdown” is used here instead of can take hold. “problem” to signal the need for a particular understanding of the unsettling developments Intentional Conflict that accompany discontinuous change. The

    word “problem” carries all sorts of baggage.

    “Problems” are bad; their emergence usually According to an obscure tenet of cybernetics, triggers an attempt to eliminate them as quickly the Law of Requisite Variety: “Any system must as possible and, often, to blame someone for encourage and incorporate variety internally if it 2them. But what if the difficulties themselves is to cope with variety externally.” In other words, contain the essential sparks for learning and it takes variety to manage variety. But how does insight? Organizations often gain more insight variety show up in organizations? It usually into themselves from the trip toward a goal than occurs in the form of deviant behavior, siphoning from its achievement. This is a learning-through-off scarce resources from main stream activities adversity model; the experience of adversity can to support unauthorized experiments, be an opportunity to recognize the need to disagreements at meetings, and so forth. Distill it change. In a few companies, breakdowns are down to one word and all these forms of mischief designed to occur as part of the process of add up to “conflict.” What the law of requisite change.variety tells us is that an organization must not 1 Rather than suppressing and avoiding only tolerate but cultivate conflict internally if it is them, breakdowns are regarded as a desirable to cope effectively when conflict comes from means of revealing previously ignored or competitors, customers and suppliers. concealed patters of behavior that must be Many managers strive to avoid dissension at altered if quantum change is to take place. all costs, but conflict is what jump-starts the Let’s look at some situations where creative process. When organizations seek a breakdowns are part of established practice. creative breakthrough, they often assemble Japanese manufacturing plants employ several individuals from different functional disciplines. traditions that generate breakdowns for By extending participation to divergent example, stopping an entire assembly line when stakeholders those with different technical any operator spots any defect. From one backgrounds and outlooks, who control critical vantage point, this approach seems extreme: resources, who hold entrenched positions, or one defect can cost thousands of units of lost who have been burned by past attempts at production as an entire line grinds to a halt. Why change conflicts are certain to erupt. not keep the line moving and address

    deficiencies later? The Japanese answer:

    Richard T. Pascale, an internationally known consultant and lecturer located in San Francisco, is the author of Managing on the Edge: How the Smartest Companies Use Conflict to Stay Ahead (New York: Simon and Schuster, 1990). Pascale recently published “The Re-invention Roller Coaster,” with Tracy Goss and Anthony Athos, Harvard Business Review, November/December 1993; he received the McKinsey Award in Planning Review May/June 1994 13 1978 for the best article in HBR that year.

     Indeed, these collisions between opposing Some Western corporations have philosophies and approaches are highly desirable; incorporated constructive conflict into their the sparks can ignite valuable innovation. processes with this trade-off in mind. The highly

    successful national department store chain, There are proven ways to harness conflict Nordstrom, is an excellent example [see case without unleashing destructive behavior. At study, "Nordstrom: Respond to Unreasonable Intel and Motorola, for example, conflict is Customer Requests!"]. Not surprisingly, openly cultivated and is regarded as an Nordstrom employees report higher tension essential element in maintaining their levels at work. As one executive says, “It’s wrong performance edge. to think of Nordstrom as a happier place. But the tensions tend to be productive and yield higher Disagree Without performance."

     Being Disagreeable

     Effective “Visions” Channel According to Massachusets Institue of Conflict Technology professor Peter Senge, people with high levels of mastery can live with high levels of 3 A well-known truth in the field of conflict creative tension. In fact, they relish it. Learning management is that a new win/win approach to associate healthy levels of tension with high toward a dispute is most likely to be offered and performance is an important skill needed by high accepted when overall opportunity is increasing performance teams. Participants learn not to rather than diminishing. This is why an effective shun conflict but to generate it and ultimately corporate vision (which truly resonates with employ it. employees and provides an opportunity-rich and The common denominator in most companies compelling future) is so valuable in moving from that have undergone a transformation (such as breakdowns to breakthroughs. Such a vision British Airways and Ford Motor Company) or who generates expanding horizons that can lead to have a track record of continuous breakthroughs 6give-and-take. (for example, Honda, Intel, Motorola, and For example, British Airways' vision of "Being Goldman Sachs) is that they have consciously the World's Favorite Airline" captured the cultivated and utilized high levels of contention. imagination of many employees (even though in Successful Japanese corporations have 1982, when this ambitious vision was unveiled, perfected the art of conflict by design. This British Airways ranked with Aeroflot as one of the conclusion will surprise many business people worst carriers in the world). Drawn by its new who are accustomed to thinking of the Japanese compelling vision, parts of the organization, once culture as intentionally avoiding conflict. With trapped in petty bickering, began to focus on a their concern for face saving and emphasis on common agenda of service excellence. consensus, it would seem to the naive observer Employees initially benefitted both from improved that conflict would be proscribed. But this is an self respect and, when the transformation was erroneous impression. The Japanese managers evident from improved sales, from monetary have learned to "disagree without being bonuses. disagreeable" and thus to harness conflict in a A vision provides a larger view of the future wide variety of ingenious ways.

    and enables organizational stakeholders to One of their fundamental principles of

    postpone gratification and endure near-term organizational design is redundancy-overlapping

    sacrifices and concessions. Contrast this with the charters, business activities, and managerial

    more typical situation where management calls assignments; duplicative data bases and lines of 4for breakthroughs, asks for sacrifices, and inquiry. Westerners are quick to judge such imposes hardships-but does so in a context arrangements as "counterproductive" or where its vision of the future is seen by "wasteful" - easy targets for elimination in a employees as phony or uninspiring. business process reengineering purge. To At IBM, for example, when the organization's Western observers, with our mental model of vision of what was possible boiled down merely organizations as machines, all this overlap to defending what it had, it should be no surprise seems both inelegant and costly. that there was a lot of win/lose jockeying for However, to Japanese management, position instead of heroic acts of sacrifice. This redundancy spurs tension, and tension can and other conflicts are always shaped by context. promote frequent dialogue and communication. Productive conflict and a powerful vision of the Tension also generates internal competition, future go hand in hand. particularly when parallel paths are pursued in new product development. Yes, a human and organizational cost is incurred through conflict.

    But conflict is also an essential fuel to self A Marathon in Half-mile Sprints: 5 questioning and revitalization.The Breakthrough Project Planning Review May/June 1994 14

     nothing could be further from my intent. Instead, A key ingredient to harnessing conflict and in a strategic and carefully considered fashion, achieving dramatic shifts in performance is the the executive team needs to identify the core Breakthrough Project. These are demanding yet competencies they wish to build, the soft spots in tangible milestones that stretch an organization existing capabilities, and the projects which, if to achieve unprecedented results. Breakthrough undertaken, will build new "muscles." Projects are like running a twenty-six-mile 7It might seem that the easiest way to succeed marathon in half-mile sprints. The undertakings at such breakthrough projects is to protect them must be concrete tasks with a tight deadline. by organizational separateness-skunkworks, For example, in 1978 Honda initiated a entrepreneurial subsidiaries, and the like. But as “Breakthrough Project” to find a design that would C. K. Prahalad and Gary Hamel have noted, stem the erosion of its mid-size automotive 8while the hot-house atmosphere of such market in Japan. A new product development not-in-the real-world projects may let "one team of young engineers and designers was thousand flowers bloom," they tend to assembled (the average age was 27). Top 12compartmentalize creativity, initiative, and management gave the team two and only two desirable conflict from the mainstream parameters: At the end of the day, the greenhouse offers little

    headroom for its experimental successes to grow ? The product concept must be

    tall and flourish, and what is spawned in a fundamentally different from anything laboratory atmosphere is likely to remain there. Honda has ever built before. Inevitably, the best ideas are eventually ? Design a car that is inexpensive but not appropriated by entrepreneurs who leave to start cheap. their own companies. As Hamel and Prahalad observe, "Behind Such challenging ground rules are typical of a skunkworks lies the nihilistic assumption that the breakthrough project charter. But next, project organization is so hidebound that the only way to team leader. Hiro Watanabe, introduced the save it from itself is to hide people away in a dark context shift that characterize most successful room ....Often, the systems [of the parent breakthrough projects. He asked his team the organization] so tightly constrain the range of question: "If an automobile was an organism, 9available means that innovation remains an hoes would it evolve?" At first, his question 13isolated activity." The failures of Xerox Park and seemed an engineer's version of a Zen Koan-like Bell Labs to infuse significant market contemplating the sound of one hand clapping. opportunities into their sprawling parent But as team members debated and reflected on bureaucracies is evidence of this point. what Watanabe's question might mean, they As the following cases show, conflict that is an generated a concept: man-maximum; integral part of the daily corporate experience is a machine-minimum. healthy, invigorating process that drives This maxim captured the team's expectations continuing learning. for the evolution of automobile design; instead of requiring passengers to conform to machine

    constraints, the machine would be designed as The Honey Pot: an extension of the human form, one that A Lesson in Constructive provided comfort and mobility. The subsequent

    Contention revolutionary styling and engineering of the

    Honda Civic made it a tremendous success. It inaugurated a whole new approach to design and This account of constructive contention in action led to the new generation of cars. was told to me by someone familiar with the Watanabe's cryptic question, which seems operations of one of the small electric utility silly to most Western readers, was in fact highly companies located in the Cascade Mountain effective in stimulating the design team to region of the Pacific Northwest. describe their vision of the future. Standing in Ice storms in the fall and spring regularly their newly discovered future, where automobiles cause problems for utilities in the Pacific have become an evolving organism, enabled the Northwest. The storms deposit a significant ice design team to begin to understand how they load on power transmission lines and clearing it could make the future happen. Thus emboldened, off was a dangerous job for linemen. But if the they discarded the old design parameters and ice is not removed, it keeps accumulating until it constraints that were limiting their imagination. overstresses and finally snaps the power lines. The hardest thing to grasp about The method the utility used to remove the ice Breakthrough Projects is that they need to be was to send linemen out into the field to climb carefully selected for the kind of breakdowns an the icy towers and shake the lines with long 10organization wishes to generate.hooked poles. Linemen hated the job. It entailed I am not long treks in the woods, climbing to precarious proposing that randomly provoking breakdowns, 11heights, and shaking the lines under extremely conflict, and chaos is a good thing. In fact,

    Planning Review May/June 1994 15

unpleasant conditions. A number of workers had the down wash be powerful enough to knock

    been hurt in falls from the utility structures. the ice off?"

     The operations division had conducted a This time there was no laughter just silence.

    number of brainstorming sessions on possible Valuing diversity and tolerating conflicting

    alternative solutions to the problem with no viewpoints had produced a breakthrough.

    positive results. Finally, they fumed to an outside Today, the utility uses helicopters to fly

    consultant to organize another try. He suggested over the power lines after ice storms to clear the

    that a group be assembled with diverse lines. But if they hadn't tolerated sufficient

    experiences and related jobs in order to conflict to buck the norms and detour from the

    generate conflicting viewpoints and jostle the agenda to debate the honey pot approach, they

    thought process. The brainstorming session might never have found that the real solution

    included linemen, supervisors, accountants, was helicopters.

    secretaries, and mailroom clerks.

     Several hours into the session it seemed that

    this effort would turn out to be as unproductive REFERENCES as previous ones. Then, during one of the coffee

    breaks, the facilitator overheard two of the 1. For a discussion of the concept of linemen talking. "There has got to be a better breakdowns, see Fernando Flores and Terry

    way to skin this cat," said one. "I really hate this Winograd, Understanding Computers and job," said the other. "Last week I was chased by Cognition (Reading, Mass: Addison-Wesley, a bear. I could have been badly hurt." 1986). Also see Richard T. Pascale, Managing

     Trying to stimulate the group, the facilitator on the Edge (New York: Simon & Schuster, retold this tale when the session reconvened. 1991).

    The anecdote of the bear was about to be 2. W. R. Ashby. An Introduction to Cybernetics disregarded as an insignificant aside, when a (New York: John Wiley & Sons, 1956); also see participant asked, "Why don't we train the Ludwig von Bertalanffy, General Systems Theory bears to climb the poles? Their weight would (New York: Braziller, 1968). oscillate the poles enough to shake the wires 3. Peter M. Senge, The Fifth Discipline (New and knock the ice off." York: Doubleday, 1992).

     After the laughter subsided, an informal 4. This point is well developed by Ikujiro

    leader in the group refuted the idea on a Nonaka, "The Knowledge Creating Company,"

    number of obvious grounds and pressed his Harvard Business Review, November-December colleagues to get back to business. But another 1991, pp. 102-103; and by Richard T. Pascale, lineman spoke up and suggested that the real Managing on the Edge, op. cit., Chapter 3. problem was getting the bears to comb each 5. Constructive contention is found in natural pole sequentially, so you had to offer them systems. See Murray Gell-Mann, on complex

    something to make the effort worthwhile. How adaptive systems in Emerging Syntheses in about putting pots of honey on the tops of the Science (Reading, Mass.: Addison-Wesley, poles as a lure? 1988). Contention is the central focus of Pascale, More objections followed, centering on the Managing on the Edge, op. cit., which identifies fact that the bears might choose to empty the the major domains in which contention arises in

    honey pots in fair not foul weather, or that organizations and suggests how it can be har-

    they'd lose their interest in honey, or that other nessed constructively.

    scavengers, like raccoons, would raid the pots. 6. The importance of a compelling future is

    Tension began to rise in the room as a few developed by Tracy Goss, Richard T. Pascale

    people persisted with the idea while the and Anthony Athos in, "The Reinvention Roller

    majority were itching to explore more practical Coaster: Risking the Present for a Powerful

    alternatives and call it a day. Future," Harvard Business Review,

     Then one of the more senior, and sarcastic, November-December 1993, pp. 97-108.

    linemen suggested, "How about expropriating 7. Gary Hamel and C. K. Prahalad in

    the executive helicopters that the fat cats fly "Strategic Intent," Harvard Business Review, around in? We could use them to put the May-June 1989, p. 67.

    honey pots on top of each pole right after an 8. Nonaka, op cit., p. 100.

    ice storm." 9. Ibid, p. 100.

     At this point, one of the secretaries spoke up 10. Tracy Goss, "Organizational Re-Invention

    for the first time. "I was a nurse's aide in at Paramount," unpublished lectures.

    Vietnam," she said. "Injured soldiers were flown 11. See for example, Thomas J. Peters,

    into the field hospitals by helicopter, and the Thriving on Chaos (New York: Random House, down wash from the helicopter blades was 1991).

    amazing. What if we just flew the helicopters 12. Hamel and Prahalad, "Corporate

    over the power lines at a low altitude? Would Imagination and Expeditionary Marketing,

    Planning Review May/June 1994 16

Harvard Business Review, JulyAugust, 1991, pp.


    13. [bid, p. 83.

    Planning Review May/June 1994 17

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