We must remain open to change by building flexibility into our organizational structures and interactions. The more rigid we become, the less access we have to the reality of the system, and thus, the less able we are to shift as the environment demands.
—Julie Roberts Ph.D., Principal of ChangeWorks
For the last several decades, organizations have dealt with economic shifts using change management. Based on the new science, there are two major flaws with this approach. First, the word change implies an event with an ending. Second, it implies that change can be managed. In a world of economic volatility, this approach is no longer viable. The continuous climate of uncertainty and volatility demands another view, one that supports adaptability and resilience.
The Shifting Paradigm
Risk management’s inability to adapt to the changing business landscape played a large role in the global financial meltdown.
—Daniel Tu, PricewaterhouseCoopers
An adaptable organization is one that self-organizes. Most organizations appear to have order. But order is not the same as organization. Organization involves differentiation and specialization.
To understand the basic reasons for the resistance to evolve, it is instructive to trace the roots of our traditional business models. The organizational model that serves as the foundation for most companies has its origins in Newtonian physics, which states that all “individual or system behavior is knowable, predictable, and controllable.” It operates like a machine “with each part acting on the other part with precise linear laws of cause and effect.”
This structure brings with it many aspects of mechanistic thinking, some of which are useful. But in a highly volatile economy, most aspects of this model are inefficient. For example, most companies have rigid organizational structures with centralized command and control. Their business intelligence systems are linear and unidirectional. They utilize rigorous analysis and measurement to limit variation and drive efficiency, and, in the event of an unpredicted outcome, they search for root causes.
They tend to be highly mechanized companies with highly specialized workers who receive extensive instructions. This model is useful in stable environments, such as operating rooms or highly specialized factories, where systems are closed, change is slow, and variability is low.
Over the next few weeks we will examine adaptability,comparing the traditional methods with a shift in paradigm.