Once upon a time, an engineering consulting company hit a speed bump. Revenue was falling so fast that staff attrition couldn't keep up with the contraction. So management leapt into action, declaring a salary freeze.
But there was a carrot — if the company met its revenue target, everyone would get a bonus. In consulting, revenue equates roughly to billable hours, so the engineers did their best to help Marketing find business. Trouble was, there wasn't enough business.
With less than a month to go before the CEO's annual state-of-the-company address, Management announced a buy-out for people close to retirement. After his address, in Q&A, a bright engineer asked him, "Since so many are taking the buy-out, we won't have enough billable hours left to meet the bonus target. Does this mean there's no bonus?"
Jacques, the CEO, was blind-sided, but he was no dummy. He knew that if he said yes, he could expect an exodus of his best engineers. So he replied, "I'll have to get back to you on that." Back in the calm of his office, Jacques and his team worked out the right answer: "We'll lower the bonus target proportionately."
So they issued a memo, and everyone relaxed some. But Jacques had been embarrassed at a time when he needed to show strong leadership. He probably wasn't ready for that question because it involved an intersection of two unrelated policies. Since there are so many policies in any company of even moderate size, the number of such intersections is large, and it's difficult to anticipate which intersections cause problems.
The executive team goofed, as most do now and then. Yet, even though we test our products thoroughly, we rarely test organizational changes before we "roll them out." It's a high-risk practice, because we end up testing our change plans using the company itself. To limit that risk, we must discover defects in change efforts before we execute them, and one approach that works well is the simulation.
Even though we test
our products thoroughly,
we rarely test organizational
changes before we
"roll them out"Simulations — sometimes called "games" — parallel reality. They're especially valuable when the event being simulated is high-risk. That's why the military runs war games, and why US presidential candidates run mock debates.
Simulations do require planning to ensure that they're faithful to reality, and you do need a skilled facilitator. But you can use simulations to test almost any organizational effort — process designs, project plans, test plans, reorganizations, mergers and acquisitions, marriage proposals — anything. Simulations can be off-site and small-scale, and you can use stand-ins for the actual players if security is an issue.
Next time you have that queasy feeling about your plans, look before you leap — simulate. Top
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Related articles
More articles on Organizational Change:
Comfortable Ignorance
- When we suddenly realize that what we've believed is wrong, or that what we've been doing won't work,
our fear and discomfort can cause us to persevere in our illusions. If we can get better at accepting
reality and dealing with it, we can make faster progress toward real achievement.
The Expectation-Disruption Connection
- In technology-dependent organizations, we usually invest in infrastructure as a means of providing new
capability. But mitigating the risk of disruption is a more powerful justification for infrastructure
investment, if we understand the Expectation-Disruption Connection.
What Keeps Things the Way They Are
- Changing processes can be challenging. Sometimes the difficulty arises from our tendency to overlook
other processes that work to keep things the way they are. If we begin by changing those "regulator
processes" the difficulty can sometimes vanish.
Cyber Rumors in Organizations
- Rumor management practices in organizations haven't kept up with rumor propagation technology. Rumors
that propagate by digital means — cyber rumors — have longer lifetimes, spread faster, are
more credible, and are better able to reinforce each other.
When Your Boss Leaves Before You Do
- At some point in your career, your supervisor will leave his or her position and you'll end up reporting
to someone else. It can be a harrowing experience, even if you prepare. Nevertheless, preparation usually
produces a better outcome than winging it.
See also Organizational Change and Organizational Change for more related articles.
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Coming June 4: White-Collar Contractor Sabotage
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