Information ‘tells’ us more about the situation. Something that we did not know for example. Information can also confirm whether our assumptions are correct or not. Then we can decide to take action with the intent to manage towards the desired situation.
I knew there was a party tonight, but after I heard that my favorite band is playing, I decided to go. To go or not go, to do or not to do; they are simple choices. Decision-making is often more complicated.
By Mr. Leo Kerklaan, associate partner Passionned Group
Information quickly became not enough
We usually have a choice from more than two options. Besides going to the party that evening, I could also go to an interesting lecture or a sports game. Or ‘just’ watch TV of course, if there is something special on. But I need to know when and where these alternatives take place. Information quickly became not enough. But in organizations, we are also faced with an overload of information. Information deficit and information overload; both should prompt us to provide the correct Business Intelligence requirements.
But do we also do that?
Suppose an organization wants to improve the quality of production, provide more service, or work with a more customer focus. Now it’s more difficult because the number of alternatives will rapidly increase. The alternatives are not obvious; we have to develop them ourselves. And we need more information for that. So there is an information deficit. New information flows in already developing.
Soon, we can no longer see the forest through the trees. Consciously, we leave all that information for what it is. At the same time, there is an information gap, from a technical standpoint, in order to decide optimally. Our laziness, often described as “bounded rationality”, stops us from searching for more information. At a certain time, we find that it’s already happened.
PDCA circles: problem solving in line
Smart organizations recognize that people constantly choose sub optimal solutions. They have a remedy for this: they install PDCA circles. In these circles, decision-making is linked with learning experiences. Going through the circles leads towards the optimal solution. Practical problems are presented to those who are actually responsible for the performance to be delivered. This is ‘problem solving in the line’, especially in the workplace.
Going through circle corridors = learning
But PDCA also works elsewhere in the organization, such as in staff departments. PDCA circles are run through in short cycle times in which a problem resolution is developed. Only one variable is deliberately changed at a time. If an improvement occurs in a short period of time, the improvement is included in the existing working method. When running through a subsequent circle, an improvement can be found that builds on this. The learning effects are attributed to increased awareness as more information becomes available when there are more completed circle corridors.
Not only insight into the possibilities but also the effects
Information provides not only insight into the possibilities, but also insight into the effects. The latter adds real knowledge; the organization learns. Deming has continuously further developed this PDCA method and shifted it from ‘deciding’ to ‘changing’. Insight (information) is needed for change, but cooperation (readiness) is decisive. As a formula: Change = Insight x Cooperation.
Suppose that an organization has PDCA circles at every level. Then, each level can solve its own problems and change. Going one step further: PDCA allows everyone to actively participate based on information in order to implement the strategy. That’s smart because the management load then drastically decreases.
Three ways to change
What are the methods for trying to change organizations? There are three methods for this:
- Change the mindset of the employees
- Change the systems of the organization
- Change the mindset of management
Many change managers opt for the first approach. They want to change the attitudes and behavior of employees. Do they get ‘cooperation’ with this? No, people don’t let themselves be changed. Once ‘change management’ pops up, it’s the beginning of failure. The managers make a basic mistake even though insight is really in order (dashboard with KPIs, operational measurement system, and progress reports with the push of a button).
Approach 1 (from behavior change to performance improvement) is rarely successful. We can better turn it around. The management steers primarily on organizational performance. When the responsibilities are hereby made clear (delegation), it can lead to behavioral changes (e.g. taking responsibility). Or even a cultural change, for example: customer focus.
The three change approaches are not separate from each other
Managers often first try to change the mindset of their people and then the systems; from approach 1 to approach 2. And what about approach 3? “That will come later” is the response. But approach 1 is nothing more than changing the people themselves. That’s unlikely, if not hopeless, as we’ve seen. In practice, approaches 2 and 3 then continue to stay out of the picture. The resources needed to really change people are scarce: touching deep emotions, giving space to adjust and experiment, and reinforce and reward desired behavior. This requires managers with exceptional leadership qualities (= approach 3).
Changing systems is focused on managing the result of processes to better performance. It can result in organizational changes and the standardization of work (or procedures). Information provides insight into the expected effects. But these will only be achieved if people are cooperative. This means that they accept the system changes or even develop along with them. PDCA circles provide the setting hereby. Smart managers recognize that PDCA circles are the basis of a “co-operative system” that elicits and supports changes.
KPIs as a pitfall
Changing organizations therefore starts with management who first dare to change themselves, i.e. approach 3. Like other people, managers can only change themselves. Even that has its limits even though the benefit is obvious. David Maister has convincingly described this in the “fat smoker”. The fat smoker knows full well what he is doing wrong. But that does not mean he will change his behavior. We must therefore look for ways in which people start to think about themselves and their behavior.
Only when it’s really going bad do people realize that radical change is needed
A crises speeds up the insight, just as with the fat smoker. Only when things are really going bad does management realizes that radical change is required. The insight hits home that personal interests do not often run together with the organizational interests. A fundamental is raised here: the “us vs. them contradiction”. Due to the actual balance of power, hierarchical thinking always wins against thinking in terms of employee growth and development. Employee growth and development is a condition for growth and development of the organization. Organizations are not served by an unanimated and uncritical implementation of plans.
The “command and control approach” does not work anymore
The use of KPIs in that matter is a pitfall. The organization does not become in control by only imposing targets. Nevertheless KPIs are vital for nurturing a cooperative system. In a cooperative system, employees at all levels make independent decisions based on information. They learn on the basis of “try and test” – two words that express the idea behind an information-driven cooperative system nicely. If that works well, those responsible have already discovered the problems themselves, and they are working on the solution. Information is only information if it leads to change and smart organizations realize this better than anyone!