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:
Pick-Up Sticks and the Change Game
- When we change organizational culture, we often stumble over unexpected obstacles. Sometimes the tangle
can be so frustrating that we want to start the company over again. Here are some tips for managing
large-scale cultural change.
The Ties that Bind
- Changing anything in an organization reveals how it's connected to its people, to its processes, to
its facilities, and to the overall context. Usually, these connections reach out much further into the
organization than we imagine.
Piling Change Upon Change: Management Credibility
- When leaders want to change organizational directions, processes, or structures, some questions arise:
How much change is too much change? Here's a look at one constraint: the risk to management credibility.
Learning-Averse Organizations
- A learning-averse organization is one that seems constitutionally unwilling, if not unable, to learn
new and better ways of conducting its operations. Given the rapid pace of change in modern markets,
one wonders how they survive. Here's how.
Way Too Much to Do
- You're good at your job — when you have enough time to do it. The problem is that so much comes
your way that you can't possibly attend to it all. Some things inevitably are missed or get short shrift.
If you don't change something soon, trouble is sure to arrive.
See also Organizational Change and Organizational Change for more related articles.
Forthcoming issues of Point Lookout
Coming May 14: Working with the Overconfident
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And on May 21: Mismanaging Project Managers
- Most organizations hold project managers accountable for project performance. But they don't grant those project managers control of needed resources. Nor do they hold project sponsors or other senior managers accountable for the consequences of their actions when they interfere with project work. Here's a catalog of behaviors worth looking at. Available here and by RSS on May 21.
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