What we need here is a bigger hammer!
I'm rereading Peter M. Senge's book The Fifth Discipline 
. It is dedicated to the learning organisation and advocates (besides other virtues) System Thinking spearheaded by the System Dynamics Group at the MIT. The Laws of the Fifth Discipline (in chapter 4) highlight many of the structural issues we face in business and society at large.
In business that is obsessed with " quick fixes" (at least in this part of the world) there are valuable insights to be gained seing the world as a system with feedback loops. Two aspects are worth highlighting: " compensating feedback" and " cause and effect disconnection" (I'll probably cover other aspects in later posts). Every system has an inbuild inertia. This will lead to compensating feedback to any action taken that is only addressing symptoms rather than causes. Compensating feedback will void any actions taken so the the status quo is preserved.
One of my favourite examples: A retailer has a problem with customer loyalty. The consultant (who's name and company shall not be named) suggested to implement a customer loyalty program. Clear cut: the problem is loyalty, so a loyalty program will fix it. The loyalty program did cost a lot of money, gained a lot of members, took all the attention of marketing and managers but failed to stem the loss of customers after a short while (things get better before they get worse). The root cause, who nobody wanted to touch, because it was difficult to fix however was: slipping quality of products and services. So instead of beating a dead horse, looking for the system at work will be more efficient and sustainable.
When you decide to achieve true mastery of a subject, you will experience a 10,000 hour delay until you get there. And that is just one skill for one person. There is a, typically larger than expected, delay between action and result. In a time of the constant strive for instant gratification managers often neglect and ignore the real result of their actions. More often than not executives have moved on before the impact of their actions can be felt.
A typical example: A new CEO orders a radical cost-cutting program. It includes freezing of IT investment, outsourcing of back office functions and a massive lay-off of employees. In the short term things look really good. Revenue per employee is up (the staff now working for the outsourcers doesn't count in the balance sheet) and profits return for the moment. However morale is down, so most of the employees are scared to the bone to stick their head out. The internal improvement program all but dies. Capable employees jump ship (getting replaced by cheap but less productive newbies). In social circles the opinion is formed: Acme Inc is not a place where you want to work, so talented entries into the workforce don't apply. Of course our "Le Costcutter" CEO moves on after 2 years, his job " saving the company" has been achieved after all. Five years later the company is history. Everybody concludes that this is due to the constant reinvention of business.
Another example: You join the gym. You train hard, but you don't see any results after a month, so you give up. Knowing about the delay you would have carried on for 3 month you be in awe about the personal transformation your started (get good advise on food and training to make it work).
Of course this is just a brief summary. Go Read the book yourself!
. It is dedicated to the learning organisation and advocates (besides other virtues) System Thinking spearheaded by the System Dynamics Group at the MIT. The Laws of the Fifth Discipline (in chapter 4) highlight many of the structural issues we face in business and society at large.
In business that is obsessed with " quick fixes" (at least in this part of the world) there are valuable insights to be gained seing the world as a system with feedback loops. Two aspects are worth highlighting: " compensating feedback" and " cause and effect disconnection" (I'll probably cover other aspects in later posts). Every system has an inbuild inertia. This will lead to compensating feedback to any action taken that is only addressing symptoms rather than causes. Compensating feedback will void any actions taken so the the status quo is preserved.
One of my favourite examples: A retailer has a problem with customer loyalty. The consultant (who's name and company shall not be named) suggested to implement a customer loyalty program. Clear cut: the problem is loyalty, so a loyalty program will fix it. The loyalty program did cost a lot of money, gained a lot of members, took all the attention of marketing and managers but failed to stem the loss of customers after a short while (things get better before they get worse). The root cause, who nobody wanted to touch, because it was difficult to fix however was: slipping quality of products and services. So instead of beating a dead horse, looking for the system at work will be more efficient and sustainable.
When you decide to achieve true mastery of a subject, you will experience a 10,000 hour delay until you get there. And that is just one skill for one person. There is a, typically larger than expected, delay between action and result. In a time of the constant strive for instant gratification managers often neglect and ignore the real result of their actions. More often than not executives have moved on before the impact of their actions can be felt.
A typical example: A new CEO orders a radical cost-cutting program. It includes freezing of IT investment, outsourcing of back office functions and a massive lay-off of employees. In the short term things look really good. Revenue per employee is up (the staff now working for the outsourcers doesn't count in the balance sheet) and profits return for the moment. However morale is down, so most of the employees are scared to the bone to stick their head out. The internal improvement program all but dies. Capable employees jump ship (getting replaced by cheap but less productive newbies). In social circles the opinion is formed: Acme Inc is not a place where you want to work, so talented entries into the workforce don't apply. Of course our "Le Costcutter" CEO moves on after 2 years, his job " saving the company" has been achieved after all. Five years later the company is history. Everybody concludes that this is due to the constant reinvention of business.
Another example: You join the gym. You train hard, but you don't see any results after a month, so you give up. Knowing about the delay you would have carried on for 3 month you be in awe about the personal transformation your started (get good advise on food and training to make it work).
Of course this is just a brief summary. Go Read the book yourself!
Posted by Stephan H Wissel on 08 May 2011 | Comments (3) | categories: After hours Business
