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:
Plenty of Blame to Go Around
- You may have heard the phrase "plenty of blame to go around," or maybe you've even used it
yourself. Although it sometimes does bring an end to immediate finger pointing, it also validates blame
as a general approach. Here's how to end the blaming by looking ahead.
When Fear Takes Hold
- Leading an organization through a rough patch, we sometimes devise solutions that are elegant, but counterintuitive
or difficult to explain. Even when they would almost certainly work, a simpler fix might be more effective.
Letting Go of the Status Quo: the Debate
- Before we can change, we must want to change, or at least accept that we must change. And somewhere
in there, we must let go of some part of what is now in place — the status quo. In organizations,
the decision to let go involves debate.
Obstacles to Finding the Reasons Why
- When we investigate what went wrong, we sometimes encounter obstacles. Interviewing witnesses and participants
doesn't always uncover the reasons why. What are these obstacles?
The Restructuring-Fear Cycle: II
- When enterprises restructure, reorganize, downsize, outsource, lay off, or make other organizational
adjustments, they usually focus on financial health. Here's Part II of an exploration of how the fear
induced by these changes can lead to the need for further restructuring.
See also Organizational Change for more related articles.
Forthcoming issues of Point Lookout
Coming April 21: Choice-Supportive Bias
- Choice-supportive bias is a cognitive bias that causes us to evaluate our past choices as more fitting than they actually were. The erroneous judgments it produces can be especially costly to organizations interested in improving decision processes. Available here and by RSS on April 21.
And on April 28: The Self-Explanation Effect
- In the learning context, self-explanation is the act of explaining to oneself what one is learning. Self-explanation has been shown to increase the rate of acquiring mastery. The mystery is why we don't structure knowledge work to exploit this phenomenon. Available here and by RSS on April 28.
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- A recording of a program presented June 29, 2017, Monthly
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- Bullet Points: Mastery or Madness?
Decis
ion-makers in modern organizations commonly demand briefings in the form of bullet points or a series of series of bullet points. But this form of presentation has limited value for complex decisions. We need something more. We actually need to think. Briefers who combine the bullet-point format with a variety of persuasion techniques can mislead decision-makers, guiding them into making poor decisions. Read more about this program.
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- A recording of a program presented June 24, 2020, Monthly
Webinar, sponsored by Technobility
Webinar Series. PMI members can earn 1.0 Category 'A' PDU by viewing this program. View this program now.
- A recording of a program presented June 24, 2020, Monthly
Webinar, sponsored by Technobility
Webinar Series. PMI members can earn 1.0 Category 'A' PDU by viewing this program. View this program now.
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