Learn Change Leadership From Two Great Teachers

By Michael Maccoby

Research Technology Management; Vol. 53, No. 2 March-April 2010 pp. 68-69.

If you need to change your organization, to make it more efficient and effective, I advise you to first get acquainted with the thinking of W. Edwards Deming (1900-1993) and Russell Ackoff (1919-2009). I had the very good fortune to learn directly from both of these theorists who have contributed so much to our most advanced understanding of change leadership.

During 1990-93, Deming invited me to meet with him regularly to discuss leadership and change. Ackoff and I worked together for more than 20 years at workshops and on change projects.

After World War II, Deming’s teachings helped Japanese industry produce high-quality products and drive waste out of the system. In the 1980s, Ford improved quality by using his methods which evolved into the Six Sigma approach that has made America products globally competitive.

Although both thinkers came from technical backgrounds—Deming from statistics, Ackoff from architecture and operations research—both combined technical and psychological factors in their systems thinking. Both emphasized the importance of the human side. Although you can apply Deming's philosophy to any managerial challenge, his teachings about quality improvement, with emphasis on reducing variation, are mainly useful for designing processes for manufacturing products so they fit specifications, less so to organizing technical service and knowledge work.

For example, Florida Power and Light applied the Deming principles to technical service and became the first non-Japanese company to win the Deming Prize. But after a few years, it had to backtrack and undo many of the prize-winning processes. I learned the reason from a FPL service technician who was made by the Deming experts to follow strict repair processes. Previously, service technicians had kept notebooks for different ways of dealing with service problems in different parts of Florida, such as large urban buildings, suburban houses, swampy rural areas. Once required to follow the quality processes and get rid of variation, they put their notebooks in their lockers. The result was to lower productivity and increase cost. A new CEO ended the program.

What Would Deming Think?

I learned about the FPL story after Deming’s death, so I don’t know how he would have responded to it. In one of our conversations, I did question the applicability of statistical process control to knowledge work I was observing in my consulting, but Deming did not comment. In his nineties, he was interested in clarifying his theories, not revising them. However, he always emphasized that if errors were made in production, management should find out if they were symptoms of a faulty system rather than, as so often happened, immediately blaming the worker. Furthermore, because he believed that employees worked best when their intrinsic motivation was engaged, when they most enjoyed their work, he would have had to recognize that the quality processes were dampening the motivation of the FPL service techs.

Social vs. Mechanical/Organic Systems

Ackoff’s theories helped me to understand how to design organizations with the built-in variability and interactivity of knowledge work. Ackoff describes organizations where professionals produce new ideas and solutions for customers as social systems, contrasting them to mechanical and organic systems. He defines a system as a collection of interacting parts with a purpose. Each part should be evaluated according to how well it furthers the system’s purpose, and the system itself can be evaluated according to how well it fits larger systems.

Ackoff liked to give the example of trying to build a car with the best car parts in the world, collected from different makes. Of course, you would have a pile of junk, since the parts were not designed to fit together. He would then point out that people in companies typically try to make their departments—engineering, finance, research, HR, marketing, design—the best in the world rather than the best in terms of serving their company’s organizational system.

Improving one part of a system does not necessarily make that system better and may make it worse. Ackoff conceded that it might be difficult to manage the interactions, but it would be better to do the right thing wrong and learn from your mistakes than continue doing the wrong thing right

To improve a system, you have to make the parts interact better to achieve the system’s purpose. Engineers can design and build a mechanical system, like a car, so that the parts better serve the system’s purpose: transportation for people with certain values in a particular environment. The parts of an organic system, like the human body, are genetically designed to serve the system’s purpose of sustainable life. You may be able to improve them by exercise, eating and living well. However, the parts of a social system—people--have their own purposes and a major challenge of leadership is to motivate the people you lead to work interactively to achieve a common purpose.

Ackoff’s ideal leader of change is an organizational architect who creates a setting where people can participate in designing a system so they have a stake in its outcome and a say in how they will work together. For Ackoff, change leaders should combine knowledge of systems and processes with aesthetic sensibility.

Change Takes Backward Planning

An Ackoffian change process involves interactive backward planning. You design what the organizational system should be to achieve its purpose. You use your own terms to define results. Then you engage people in moving the organization toward that ideal.

In the 1990s, I introduced backward planning to leaders of change at the MITRE Corporation and ABB of Canada. In both companies, leaders recognized that for the company to succeed, its purpose had to change from just producing products to collaborating with customers to produce results. For example, Cominco, a large metal and mining company, no longer wanted to buy electric equipment like power transformers, but offered to be ABB’s customer if it could produce cleaner and cheaper energy. To do so, ABB had to change its organization to become more interactive, both between departments and with the customer. Using backward planning, ABB’s managers designed an ideal future and transformed the way they worked.

Managers at MITRE had to change a system where the purpose was producing high-quality technical products which were, as some customers put it, “thrown over the wall” at them to one in which the purpose was providing solutions for military, national security and air traffic control customers. In the old system, managers were promoted solely on the basis of technical excellence. In the new system, because managers needed to be able to work collaboratively with customers and facilitate cross–functional teamwork, MITRE designed new managerial roles. Instead of just evaluating and promoting technical staff on technical ability alone, managers now had to also demonstrate marketing and leadership skills.

Companies like IBM, Nestle, Cisco and others that are wrapping technology in solutions have moved toward Ackoffian systems-thinking about organizational change. But both Deming and Ackoff were frustrated by the tendency of companies to latch on to quick fixes, resisting systems thinking. The two theorists also believed that without systems thinking and deep knowledge of psychology and statistics, national problems of education, health care, transportation and energy would not be solved. However, both theorists shared the view that good leadership can inspire people to great achievement. I once asked Deming whether his contribution to Japanese industry was statistical process control. “Not that,” he said. “It was making them believe they could be the best in the world.”

Ackoff believed that good teachers did not merely teach, but sparked the student’s motivation to learn. And good leaders did not merely lead but recruited collaborators to a shared purpose and provided the stage on which they could give a great performance.

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