Built to Change

published in 1994. But surviving is hardly the same as thriving. About half of the companies featured in Built to Last have fallen from grace since the book appeared. The same fate befell many of the companies featured in 1982's In Search of Excellence. The disquieting truth is that very, very few companies (including Procter & Gamble, Johnson & Johnson, Toyota and a handful of others) manage to sustain high performance over long periods.
The problem, argue Profs Lawler and Worley, is that we continue to design organisations with stability in mind. Executives need to think about building companies not only to last but also to change, in the sense of responding to the competitive environment without going through the trauma of planned change.
The message is not entirely new. Management writers such as Tom Peters and Rosabeth Moss Kanter first took issue with the planned change paradigm more than 20 years ago. They argued instead for corporate cultures that rewarded innovation and let change bubble up from below. More recently, managers have been urged to draw inspiration from complex adaptive systems found in nature by creating organisations that operate "on the edge of chaos". Alternatively, they have been told to make their bureaucracies more like markets by introducing internal competition for ideas, capital and labour. Enron, the energy trader, you may recall, was a standard-bearer for many of these trendy ideas before it became a byword for malfeasance.
What makes Built to Change worth reading is its careful attention to the unglamorous stuff of management - organisational design, decision-making processes, measurement and reward systems, recruitment criteria and so on. Yes, corporate culture is important. Yes, internal market mechanisms may work sometimes. But of more immediate concern are the policies and processes that underpin day-to-day work.
If we want our company to be more responsive to changing circumstances, how should we organise ourselves? (Answer: in self-managing teams and small close-to-the-customer business units.) What kind of people should we hire? (Normal folk will do just fine.) How should we appraise individual performance? (Do not exempt top management, measure outcomes as well as behaviour, avoid forced ranking.)
The ultimate Built to Change company? Profs Lawler and Worley offer nothing so gauche as a league table. My vote goes to Toyota, which has over the years shifted its source of competitive advantage from low price to high quality to sharp market segmentation and eco-friendly technology.
All in all, this is classic Ed Lawler. A serious student of organisations before many of today's chief executives were born, he has collected more detailed data about the management practices of more companies over a longer period than almost any other researcher. His writing is research-based, relevant, long on insight and short on extravagant claims. For the record, Built to Change is his 38th book.
My only quibble is with the notion that the average person will always embrace change if the organisational context is correct. Personal experience tells me that change - even voluntary change - always involves fear, uncertainty and elements of loss. I will devote next week's column, my last after 15 years as an Financial Times journalist, to this piquant topic. (The Financial Times Limited, 22 February 2006)
 
"...bold, fascinating..." (getAbstract, August 2006)