Chapter 17: Treating Organizations On The Typical Path: A Contingency Approach

Treating Infancy

What does happen and what should happen during Infancy? Organizations focus their energies on results, and creativity takes a back seat. During that period, founders are susceptible to losing their excitement and enthusiasm for their enterprises. Aside from the pride of ownership, they feel that they are gaining little for all their work. At best, during Infancy, they feel they are in control.

For Infant organizations, I strongly recommend internal, rather than external, boards of directors. Founders of Infant companies need plenty of emotional support. While it's true that Infant organizations most definitely need legal and financial advice, they can easily buy that from the outside. What is crucial, however, and not for sale, is emotional support. Lawyers and accountants who serve on boards of directors are likely to demand far too much reality. And they will test and enforce it with their votes, flattening founders' enthusiasm so efficiently, that they cause the Infant to abort innovative projects. They make founders feel they have lost control. Lawyers and accountants should participate only as paid advisors.

Infant organizations need constant and close supervision. They need attention, nurturing, support, and protection from exposure. Because Infant organizations lack systems, it's easy for them to get into trouble. Then, all their needs must be met almost simultaneously.

Organizational symbergists™ must perform at least two functions for Infant organizations. First, they must give them a sense of reality; and second, they must help the organizations secure the resources they need to make that reality happen. It is the job of such therapists to make reality-oriented cash-flow projections. Additionally, they ought to protect founders from hiring mediocre people and keep them from sharing stock prematurely. Infant organizations need to be aware of how they can grow and how to develop realistic expectations. They are inexperienced, and they often make unrealistic commitments. Because their resources are slim, they are often over- worked. They lose the grand view, and their expectations of the possi- ble are circumscribed by the limited world to which they are exposed. Because Infant organizations so often overcommit to the insignificant and the unfruitful, they squander their resources on the trivial. And the resources of Infant organizations are slim. They live a hand-to- mouth existence. Frequently, they run out of working capital. Organizational therapists need to hold their hands and help them overcome each crisis. At the same time, and equally important, symbergists™ should help them see what they should not do.

Consultants often counsel Infant organizations to analyze the environment, plan future cash-flow needs, and forecast sales, production, and staffing needs. While it is indispensable to do those things, those young enterprises shouldn't get too rigid about such assignments, though. Attempts to transform an Infant organization into a highly structured and predictable organization are usually harmful. The executives of most Infant organizations must do all the work themselves. Why spend time on standard operating procedures that would reduce organizational flexibility and productivity and endanger the organization's ability to survive in a highly competitive environment?

Some Infant organizations spend inordinate amounts of time trying to develop systems or buying computer systems that far exceed their needs. Others set up expensive and lavish headquarters long before they can afford such luxury. I know of a founder who, in his company's earliest days, bought fancy systems, leased beautiful office space in a prime location, and established such rigid organizational routines, that there was no room left for improvisation. The organization couldn't support the expense, and it lost its original strengths, which included flexibility and adaptability.

Organizational symbergists™ should give Infant organizations assignments designed to lead them to predict, analyze, and schedule. Infants aren't big enough to afford teamwork; therefore, individuals take responsibility for those assignments. The deadlines need to be flexible because everyone in these organizations is overworked, and as long as the companies are on the right track, there is no real need to exert time pressure.

Some Infant organizations fail to develop their capacity for E because their founders burn out. In such cases, the organizations find themselves in the Lone Ranger's trap, which can become a graveyard. The companies last only until their owners die or grow under new management.

For a company to advance to Go-Go, the leadership style should be PaEi, and the role of the symbergist™ is to facilitate style or, if not possible, leadership change.

Owners of Infant companies should be careful not to give away ownership and lose control. They should consider interlocking companies or using legal structures that allow them to control the top level of a hierarchy. Many people can join a hierarchy, becoming owners at different levels, but the owner need not lose control.

Because Infant organizations are short of cash, I suggest they prepare rolling sixteen-week cash-flow projections, and they should monitor them weekly. Profit-and-loss statements based on accrual do not provide adequate control because they ignore loss of liquidity to accounts receivable and inventory. It's crucial, therefore, for Infant organizations to keep close watch on inventory turnover and receivables. Again, it is the role of the leader of change, whether that is the CEO or the symbergist™, to see to it that these threshold A systems get implemented for healthy in/out growth.

Treating Go-Go

What kind of therapies is appropriate for companies in Go-Go? E is high. CAPI is high. The company is doing fine and the Go-Go orga- nization feels it can tackle anything at any time. Of course that's how Go-Gos get into trouble. They make decisions and commitments they should never have made, and they get involved in activities about which they know nothing or very little.

What managers of a Go-Go organization must always keep in mind is that they are continually teetering on the brink of disaster. They should be preparing for the forthcoming move to Adolescence. They must get ready to institutionalize E and CAPI.

It is desirable during Go-Go to start developing teamwork. The organization must develop Integration to create an environment that will require fewer rules when they get organized later on. If they build I, they can reduce their need for administrative systems. The Integrative forces-the teamwork-act as a substitute for techno- cratic, bureaucratic, and administrative solutions; that is, they institu- tionalize the decision-making process in Adolescence.

The appropriate symbergetic™ intervention for Go-Go organizations is to help them realize what not to do. This is necessary because Go-Gas spread themselves too thin, tackling too many fron- tiers at once. Here's the first assignment a symbergist™ should give a Go-Go organization: Have management list all projects in the process of completion-those underway, those just being started, and those being contemplated. The next step is to have management estimate the resources and time necessary to accomplish each project. Most Go-Gas are shocked to discover that they are planning to complete a lifetime of projects in one year. The sooner the Go-Go realizes the necessity for setting priorities, the faster it will focus and become more efficient. The organization must learn, experience, and accept that resources are limited and that in a world of limited resources, the law of opportunity-costs prevails. Doing one thing means one cannot do something else; and the cost of doing one thing is the price of not doing another.

This simple law of economics, known as the law of butter or guns, was popularized by Paul Samuelson. 1 It usually comes as an unpleasant revelation to the Go-Go organization, whose members want to have both butter and guns.

After a Go-Go organization sets priorities, it needs to establish detailed objectives and guidelines. The organizational symbergist™ must do a lot of hand-holding in order to facilitate implementation of the organization's plans. The therapist must constantly watch to see how new assignments are added and make the organization realize when it violates its own priorities. Go-Gas are usually restless and jumpy.

Go-Go organizations don't like being handled, and they are always threatening to drop their therapists. Go-Go people do notTreating Organizations on the Typical Path 351 appreciate having to take time away from the firing line to think things through. Clearly, these organizations need to mature. Their people are so excited with their results and their ideas that they have no patience for doomsday prophecies about the price they will pay tomorrow for today's mess.

The members of Go-Go organizations are simply too busy to spend time getting organized, and they see no short-term benefits to investing time in such activities. Most Go-Go organizations reward performers, are contemptuous of administrative tendencies, and show little, if any, desire to have external facilitators implement change. One simply must wait for such organizations to grow at their own pace. If, however, they fail to get themselves organized and still don't call for help from the outside, they can fall into the founder's trap.

The symbergists™ form Go-Go teams to complete their assignments, small teams of two to three people. The therapist spends lots of time assigning many small tasks in succession because people in Go-Go organizations have no patience for delayed gratification. All the assignments are short and quickly completed. If they see no immediate relevance and benefit, Go-Gos quickly lose interest and discontinue treatment.

Getting Out of the Founder's or Family Trap - Institutionalizing E and CAPI

The difference between Go-Go and Prime is that in Go-Go, E and CAPI are personalized, while in Prime, they are institutionalized in the structure and the management process. In other words, in Prime they are systematized. If Go-Gos develop a culture that fosters cooperation, self-discipline, mutual trust, and respect, they can avoid the troubles of Adolescence.

Another point. Every organization has four subsystems: Client interface, E; transformation, P; human factors, I; and financial factors, A. Each subsystem has a developmental e and a maintenance p component.

The E function is reflected in marketing, process engineering, human resources development, and finance.

The problem with Go-Go organizations-and what can set the founder's trap-is that their leaders monopolize E. They monopolize all responsibility for making marketing, technology, financial, and human-resource decisions. The founders may be geniuses in one or more fields, but they are rarely brilliant in all four subsystems.

Finance Figure 17-1: The Four Subsystems of Any Organization

If the founders, for instance, consider themselves marketing whiz kids, they don't allow anyone else to make financial, top management, human-resource, or technological decisions or changes. All of those realms are related to E, which they monopolize. Although they excel only in one E subsystem, they won't allow anyone else to have any discretion over other E decisions.

In Infancy, such monopolization and unification make perfect sense. The marketing, technology, finance, and human factors are deeply interwoven. At that stage, they are nearly identical. Making a decision in one of those areas has instantaneous impact on the others. In Infancy, founders experiment, trying to identify, articulate, and formulate success. The monopolization of the four areas is normal, to be expected, and even desirable. Later, from Go-Go on, in order to institutionalize E, organizations need to separate those four areas and transfer them from a person into a structure-into marketing, engineering, finance, and HRD departments. That must happen even though founders resist delegation of authority for fear of losing control.

A symbergist™, as a therapist or a CEO, has to lead this trans- formation. It should start by identifying problems, making diagnoses, and forming a plan of action. The group agrees on the organization's location on the lifecycle and that it's time to institutionalize E and CAPI.

In the next therapeutic session, the group defines mission and form, agreeing on organizational priorities and what the organization will and will not do. During this process, the group clears com- munication, and mutual trust and respect should grow. This is the time to initiate the organization's restructuring.

First, the Performance functions-sales and production-are structured to reflect geography and product lines. The E areas are not touched until P is fully stabilized. Then the four E functions are legitimized. The founder takes charge of all P and E departments. But, it doesn't take long for it to become clear that there is too much for one person to do. He can delegate either P or E. Most choose to delegate P. When a founder refuses to delegate, he must be encouraged to do so. If he still resists, the symbergist™ should not proceed. The founder may be allowed to manage P until he develops trust in his subordinates. When he is finally willing to delegate P, a chief operating officer is appointed to run the P functions, and the E functions will continue reporting to the E person for a while longer.

Before E is delegated, the organization must institutionalize its Administrative function. Accounting, quality control, legal, and data processing, which serve to control P, should be separated from P and E as a separate division. Unification of A structurally is desirable in Go-Go but undesirable after Prime. It is desirable in Go-Go because it needs to counterbalance the power of E.

So far, the founder remains completely in charge of E. Later, when we work to develop an accountability control system, the founder will develop trust in P and A, and after that, we will be pre- pared to go to the heart of the problem: decentralization of E.

Figure 17-2: Go-Go Treatment, Bringing in the Chief Operating Officer

Figure 17-3: Balancing P, A, and E

The first E department we work to establish is the one in which the founder has the least interest. If the founder is most excited about marketing, engineering, or product development, we focus on finance. We then turn our attention to the next area that doesn't interest him, and progressing through the organization, we form departments that decentralize activities. Despite the decentralization, all departments still report to the founder. And the founder has not lost control because the A function-as a process delivered by a structure-has already been established.

The next step in this therapy is to create and institutionalize the corporate executive committee comprising the chief operating officer, chief administrative officer, and four E department heads. The president presides, and we draw up a calendar for the whole year to ensure that meetings do take place. The symbergist™ should work with management to establish agendas, and the group agrees to a rule to avoid promiscuous on-the-run decision-making: No decision is a decision until it is in writing. Minutes are taken at every meeting, and assignments are given. For every project, the committee determines the why, what, when, who, and how. This looks mundane, but it is important. Es make decisions on the fly. Often people do not know if there is a decision or not. Maybe it was just an idea. To avoid the confusion, it is established that decisions are in writing so all talk is just talk. After Prime you have to reverse the rule. Too much is in writing. They worship the written word. This rule should be abolished.

The symbergist™ should teach the executive committee members the Adizes process of making decisions as a team. In this way they develop institutionalized CAPI and relatively emancipate the E departments from exclusive dependency on the founder. The committee learns to legitimize and functionally channel contentions and conflicts. Next, they will apply team process to develop budgets, control systems, and strategic plans, freeing the organization from exclusive dependency on the founder. Management then turns its attentions to articulating and establishing a system of incentives. By the time the structure is right and the people are working as a team with plans, controls, and incentives, both E and CAPI are institutionalized, the company is in Prime, and the founder is off the hook. And he hasn't lost his company.

The Problem of Premature Delegation in a Go-Go

How many times have you heard people complaining that the problem with their company's founder is that he refuses to delegate. During Go-Go, founders who don't delegate will fall into the founder's trap. The treatment for this common problem is not easily applied. For organizations in Infancy, during which founders work even harder than they do in the Go-Go stage, delegation is not only unpalatable to the founders, it is dangerous to the health of their organizations.

In Infancy, delegation is contraindicated. It is their limitless dedication to their creations that keeps founders going. At this early stage of organizational life, asking founders to delegate responsibility might threaten and alienate them from their organizations, reducing their commitment. Furthermore, consider how difficult it is to delegate nonprogrammed decisions: The decisions that will serve as precedents are only now being created without systems of controls. Delegating decision-making is equivalent to decentralizing, and in Infant organizations that means passing control from the founders to someone else. That is nearly impossible because organizations in Infancy have no managerial depth. If a consultant recommends del- egating authority, it's no wonder that most founders respond with irritation, "Delegate? Fine! To whom?"

Founders should start to delegate functions during the advanced stages of Go-Go when there is too much for them to do.

They shouldn't feel that by delegating they are yielding all the fun (control). Furthermore, as Go-Gos approach Adolescence, they should be planning administrative systems and programming. Healthy Go-Gos need to make policies about what not to do. That is tantamount to decision programming. The more programmed the decisions, the easier it is to delegate without losing control.

So, it's important for the busy managers of small, young companies to assess the validity of recommendations to delegate. They should analyze their choices in light of their organizations' location on the lifecycle. Timing, as always, is crucial if the treatment is to succeed.

Treating Adolescence

The way to avoid the abnormal-potentially pathological-development of premature aging is to institutionalize E, to build it into the organizational structure as A grows. In that way, E will not disappear, and the organization will not age prematurely. If E remains personalized, however, the incompatibility of E and A can easily bring about premature aging. Management should spend time defining an organization chart. It should determine a corporate mission- not only what else it's going to do, but also what it's not going to do- that the organization supports. Furthermore, management needs to develop training programs, salary administration systems, and incen- tive systems. If this is done proactively, reorganization can avoid such future problems as haphazard salary administration, recruiting, and hiring. By consciously institutionalizing E, at the same time that A develops, a company does not have to lose E.

It's critical to increase A at just the right time. In Infancy and Go-Go, organizations become addicted to P. In Infancy, a worker who does not produce is fired. Companies need a functional orien- tation if they want to survive. Consequently, the big producers get the big promotions. In the Go-Go stage, companies focus on growth in terms of sales and market share. Again the big producers get the big emotional and financial rewards.

By the time companies reach their Adolescence, they are turn- ing inward, needing more systems and order. It's time to change who receives recognition and appreciation. It isn't easy to switch from a sales orientation to a profit orientation. Those who are internally- oriented and those who are externally-oriented find themselves at loggerheads. It doesn't take much for people to start calling one another bureaucrats or Lone Rangers.

A company can achieve a timely move to Adolescence if management consciously determines when the organization is doing well and chooses that period to turn inward and organize. Of course, such conscious self-discipline is rare. Those who are blessed with it are the real winners. When times are good, few people think about taking challenging steps. More often, the Administrative orientation emerges when companies are in trouble, losing money in the advanced stages of Go-Go. Such crises prompt movement to the Adolescent stage.

Let's consider families as analogous to other organizations. Some parents believe that they will keep their children out of trouble if they introduce strict rules when their kids become teenagers. In fact, those new rules cause the adolescents to rebel. Children who have enjoyed permissiveness throughout their early years don't take kindly to restrictions on their bids for independence. Had the parents maintained low levels of A and I when their children were still small and growing, the children would understand the boundaries, and they would feel a strong sense of family identity. The stronger the family identity, affinity, rituals, and sense of belonging-I-the less need there will be to impose mechanistic rules-A-when the children start showing independence as adolescents.

Back in the 1980s, Jim Miscole, executive vice president at Bank of America, told me that whenever his teenage sons went on dates, his wife would say to them, "Just remember who you are and whom you represent." Extra rules and controls are necessary only for those who lack a system of values to support them. The higher the Integration, the lower the need for Administration. By the same token, the more Administration we use, the less Integration we will have. Note that I will not emerge unless threshold A exists, and A mushrooms if there is no I.

A higher Integration element mitigates the pain of children's transitions from dependency on family to independence as individuals.

Significance of Structure

Adolescence is a difficult stage. The focus on better versus more changes, and the struggle between form and function is significant. The driving and driven forces exchange places. Through Go-Go, organizations structure themselves around people. People get appointed to roles on an ad hoc basis: Every job is temporary. Over time, the system becomes a tangled mess. When it reaches Adolescence, the organization switches the driven and the driving forces. Instead of allowing the organization to structure around people, people should structure around the organization's needs. Instead of sacrificing the needs of the organization to accommodate people, people now have to accommodate the needs of the organization.

That goal is more easily described than accomplished. Remember, if you are part of a picture, you can't see it. Consider my case. As an organizational therapist, I have structured companies with as many as 150,000 employees. I have even restructured governments. The one organization I can't seem to structure, bring out of Go-Go, and release from the founder's trap is my own company. But that is not a rare phenomenon. No surgeon performs surgery on his or her own child, and no lawyer represents himself or herself in a serious court case. Reorganizing is very serious business. Personal bias always interferes. An outsider should work with the company's leadership.

How do we handle Adolescence? Consider what's happening during this stage. Certain difficulties are compounded: Entrepreneurship and CAPI are in transition. Form and function are competing, and form is winning. There is the dangerous possibility that the founders might divorce themselves from their organizations, leaving them bereft of E and aging prematurely.

What are the appropriate therapies during Adolescence? First of all, it's essential to follow a correct sequence of therapy. Otherwise, it is almost always unsuccessful. First, after the initial steps described above, it is obvious that we must start team building in order to free organizations from their founders. Organizations have to work to free themselves from a tremendously powerful dependency syndrome. We want founders and employees to feel that, "we can work together, and we can make decisions together." Furthermore, employees should learn that they are not exclusively dependent on their companies' founders.

Once people feel more comfortable together, and they are making decentralized decisions, they need to define the organizational mission. Where is our organization going? In many cases, only the founder knows, and if he bothered to write it down, it's on the back of an envelope. The rest of the organization needs to under- stand and share that dream. Some founders haven't really defined their mission, or they are simply unable to articulate it. They operate with an intuitive sense that they cannot spell out. Furthermore, most Go-Gos are beset by divergent thinking. They are going in countless directions simultaneously. That tendency is enabled by their central- ized decision-making, but it means that everyone depends on the founder, the only person who knows the right direction at any point in time.

After building a team and a climate of trust and respect, the mission needs articulation. When the team members know where the organization is heading, they can restructure the organization. Since A is the endangered role, they must build a strong A structure. Appointing a vice president of administration and shaping the CEO role is their next goal. Then they must work to institutionalize E. Up to this stage, most founders have been monopolizing E-marketing, technology, finance, and human-resource decisions.

By and large, however, founders are unlikely to be competent or even interested in all of those realms. They simply want complete control of strategic and discretionary decisions. Led by a symbergist™, the team institutionalizes E structurally by establishing organizational units in those four areas, starting with the area that the founder finds least interesting. If the founder is a marketing whiz kid with little interest in finance, the team should start by establishing a finance unit and hiring a chief financial officer. The team should let the area the founder most enjoys report to him.

Now the team has teamwork, a mission, and structure to protect E. It can transfer the E from the founder downward, and make the founder chairman of the board or chief executive officer. At this point, the team can bring in a new leader with the title of chief operating officer.

During Adolescence, organizations must transfer leadership from a PE to an AE, and it's important to make sure the timing and the sequence are right. If the company imports A before it has a structure and a mission, the new leader will be as irritating as a pebble in a shoe. Any time the organization moves, the A says, "No." And no one understands why.

Everyone goes to the founder, whining, "He's messing it up, he does not know our organization or our way of doing things."

"I knew it," the founder says. "Nobody can do right. They need me!" And, of course, he fires the A. It's crucial that the organization not introduce the A until it knows where it is going and has articulated its mission. Everyone must already know the company's direction, and there must be a structure. By then, because there is teamwork and relative independence from the founder, a new leader will be able to relate to the founder.

Next, the organization should change its information system. Why? Go-Go information systems are almost always ad hoc systems. Constructed and modified over time, they are the results of random people and situations. Rarely does a Go-Go's information system reflect where the organization is going. Instead, it is a shadow of what the organization has been. Nor does it support the information needs of the roles in the new organization chart. If organizations don't change their information structures at this time, their restructuring will erode.

Why? The structure, which is authority, power, and influence, acts in response to information.

If people don't have information, the organization has no power or authority to decide.

Eventually the new organizational structure will be jettisoned. Symbergists™, therefore, refuse to restructure companies unless they can work on who reports to whom, about what, and for what. The last what refers to incentive systems. Organizations must address all the three subsystems in order to change structure. Ather- apist might change the mission, the responsibility structure, the information system, and incentives. The treatment is similar-but not identical-to that used for advanced Go-Go.

Adolescent organizations are somewhat schizophrenic. They want stability because they yearn to escape the mess of development, the superficiality of projects, and the despair of getting involved in useless, expensive investments. They therefore seek to establish policies, routines, standards, and systems. At the same time, however, they want to keep the freedom of irresponsibility, of trying out untested methods.

Such organizations catch therapists in a double bind. If a thera- pist facilitates stabilization and systemization, some members are resentful. If the therapist fails to systematize, other members are resentful. Hardly anything the outsider does will be accepted gracefully by the whole organization. Adolescent organizations are a pain in the neck, and therapists must have enormous patience. They need to maintain the very delicate balance between flexibility and systemization, changing direction and assignments rapidly and with good timing.

For example, a symbergist™ might follow an assignment about future planning with an assignment about the system necessary to implement future planning. While maintaining optimum tension between structure and process, symbergists™ should help organiza- tions focus on the desired results and on the process for achieving them. Thus, the schizophrenia of the Adolescent organization is, in a sense, resolved by treating the process and the desired outcomes simultaneously.

When the Adolescent organization clearly accomplishes the above, it becomes a Prime organization. Adolescents, incapable of such transformation, become Arsonists or turn very rigid. They become Arsonists when they lose all interest in systemization. They get involved in too many projects, and end up fizzling out. Those that lose E become rigid and, because they can't adapt and produce results, they disappear.

Prime

What do we do in Prime? Rarely do Prime organizations ask for external treatment. In their collective consciousness, managers do not sense a need. They feel they are doing fine. If this sensation creates complacency, it could be the beginning of the end. If the com- pany is declining, nobody notices. In Prime, everyone feels as arrogant as in Go-Go. In this case, of course, people have good reason to feel confident. Everything is fine. They are doing very well. Profitability is good. Market penetration is good. They are the best. Why should they change? Prime is the stage where the decline can begin. In this stage, management must take proactive, preventive measures or, eventually, there will be call for reactive measures. It's much cheaper to act sooner than later. Figure 17-4: Spin-Offs for Prime

What should Primes do? They should worry about losing E. Primes must not allow form to take precedence over function. Form and function should be of equal importance.

A Prime organization can nurture E by decentralizing, spinning off satellites, and creating new lifecycle curves. By continuously creating spinoffs-experiencing continuous rebirths-Primes do not allow their organizations to enter the Fall.

What happens to an organization with decentralization? Look at the figure below.

Figure 17-5: The Impact of Decentralization

Picture a modern organization as a triangle structured in layers. The Ps, at the base of the pyramid, are the people who produce the results for which the organization exists. The administrative process A, in the middle, is the role of those who supervise and insure that the organization achieves desired results. This function systematizes and watches for deficiencies. At the top of the pyramid, E, are those who set the direction. Discretionary powers are concentrated at the top of the organization. When such an organization decentralizes, what happens to the line separating E from A? That line is pushed down, and the Administrators of yesterday must become the Entrepreneurs of tomorrow. They need to convert As into Es.

Decentralization is different from delegation. Delegation is the process of transferring a task that has been articulated and systematized to someone else. Decentralization is more than just simple delegation; it includes the transfer of discretionary powers.

The more decentralization, the more the organization stimulates entrepreneurial spirit.

Prime is the right time to decentralize. For Go-Gos, because they have yet to develop good control systems and articulated mis- sions, decentralization can be dangerous, even generating out-of- control disasters. Decentralization can begin in Prime when people know what they're doing, have some control over it, and have struc- ture to make sure it happens correctly. Decentralization is a proac- tive vehicle for retarding aging through stimulation of E.

The symbergists'™ assignments should call for identifying boundaries for decentralization. That includes simulating the new organizational structure (so that individuals feel comfortable about the new system) and training management (so that it can perform the new tasks). The groups charged with those assignments consist of the people who will most likely lead the new profit centers. The deadlines for the completion of the assignments are neither stringent nor lenient.

Prime organizations rarely have problems with managerial transplants. Because the pie is continually growing, employees welcome newcomers. Organizations in Prime are therefore the best can- didates to acquire other companies or to be acquired.

If Prime organizations don't decentralize, they slip into the Fall. This can happen as management grows older, market share grows larger, and the structure becomes more complex. The Prime organization simply becomes too heavy.

Decentralizing and Avoiding Organizational Colonialism

As I explained in my discussion covering organizational analysis, decentralization and acquisition efforts often create a problem called organizational colonialism. Infant and Go-Go companies end up reporting to an Aristocratic company.

17-6: Organizational Colonialism

The demands of the parental units are not functional in terms of the offspring's capabilities. Aristocracy expects a return on investment from Go-Go, while Go-Go wants to invest for increased market share. The Infant wants cash, which Go-Go limits in response to the Infant's inability to get as much market share as its Go-Go par- ent. Through these dysfunctional demands, the Aristocratic company destroys the growth potential of the Go-Go and those of Infant organizations.

The Organizational Family

An effective organizational structure should look more like an extended family. If we were to snap a photo of the extended family, the grandparents would be in the middle, their children in the back, and all the little kids would be gathered in front. According to that model, the Prime or the Aristocracy ought to be in the middle, with the Go-Go not under the Aristocracy but adjacent to it. Infants and Prime units would have the same independent but interdependent relationship. By not superimposing the demands of one on the other, it's possible to protect the individuality of the organizational units. The goals are different for each unit. The Prime creates new Infants; the Aristocracy finances the Infants; and the Go-Go finances itself. Now, there is a family.

Figure 17-7: The Organizational Family

What do I mean when I say "family"? In a functional family, everybody has his own goals, and there is an interdependency among the members. Prime creates new ventures; Aristocracy finances those ventures; and the Go-Go organizations grow on their own. Eventually, the Infant becomes a Go-Go, the Go-Go becomes a Prime, and the Prime becomes an Aristocracy. Each unit is aging, but the whole does not.

The organization exists as a portfolio of units similar to a port- folio of products or stocks. A healthy organization should comprise a portfolio of business units, each at a different stage of the lifecycle. As some age, others are born, and an interdependency keeps the whole family functional.

What style of leadership should head this kind of family and each unit?

The style of the leader and the unit's place on the lifecycle should match. An Infant organization requires managers who are strong Ps and Es. As the organization moves from Infancy to Go-Go, it need not change leadership. The same style should be able to take it from Infancy to Go-Go up to Adolescence. Adolescence will call for a PA and then AE style of leadership.

Aristocracy is a different story. The organization has reached the point where it needs a PA type to milk it for growth capital, which will support the younger offspring. I say that assuming we're dealing with an Aristocracy that is already dysfunctional or aging for the marketplace. If it needs rejuvenation, a PE rather than a PA style is called for.

A Prime unit needs a big E and a big I to lead it, and because the total family of units is also at Prime, the EI style for the totality is called for, too.

With a portfolio of companies and a portfolio of leaders, the Prime has a stable of horses and jockeys to ride them in different races. There is somebody to take an organization from Infancy to Go-Go and, when it reaches Adolescence, he will either change his style or transfer the organization to a different type of leader, stopping only long enough to pick up another Infant. Somebody else will take the organization from Adolescence to Prime, and when that person gets it there, he will either transfer it to another leader, or change his style.

A large organization needs different leaders for different units. That's why a large, well-structured, and competently-staffed company with many different leadership styles can do better than a small company. With only one style and a single profit center, a small company is vulnerable.

Not only should the family structure include companies at different stages of the lifecycle, each of those units should also have different goals to deliver. An Infant should be aiming to break even; a Go-Go should be striving for market penetration; and an Aristocracy should deliver a return on investment. The goal of a company in Prime should be to produce new Infants.

The organization should reward the various activities differently and motivate each leadership style differently. I call this organizational pluralism. Good organizations are pluralistic.

They allow the E not just to survive, but to thrive.

Time and again, I have seen organizations choose the wrong people to lead them. Although it is undesirable, many organizations select their leaders from Aristocracy, the most established unit. When that happens, the organization has an identity problem. The leader's style introduces functional-not structural-colonialism. Although we changed to a family structure, in terms of behavior and expectations, the organization will not operate as designed. Despite the structure, the Aristocracy can still dominate through the leader- ship's behavior. Because the leader must integrate and direct the pluralistic structure, the organization needs someone with a big EI at the top; bigger even than in Prime.

Figure 17-8: Leadership in the Organizaational Family Structure

In structural pluralism, where each unit has its distinctive goals and leadership styles to thrive, the pluralistic organization should avoid the dysfunctionality of an Aristocratic culture. Aristocracies expect everybody to behave alike, and they dress up their little babies as if they are grown-ups, ready to go to a funeral. A baby is supposed to act like a baby. Adults shouldn't be expected to behave like babies, and babies shouldn't be expected to behave like adults.

The leadership must recognize and legitimize the various behaviors in terms of predictability of outcomes, functionality of rules, and how strictly the organization is expected to adhere to those rules.

Additionally, the organization must differentiate among the kinds of leadership within the structure. The organization should reward each individual and style according to its unique definition. Because each unit should perform and achieve differently, the reward system should reflect those differences. Colonialism's danger is that it recognizes but one rule, one style, one behavior, and one incentive system.

Sameness creates bureaucratization.

Treating the Fall l1rganization (PAel)

What is the correct therapy for the Fall? In Prime, the organization decentralized. In the Fall, the organization should undergo the therapy we apply to Aristocracy. The difference is that the therapy should not exert so much time pressure. The Fall is the beginning of the end, but the problems are not so pronounced as in Aristocracy. The symbergist™ should feel less pressure to conduct fast interventions.

In the Fall, it's important to be aware of whether form is growing stronger than function. Is how becoming more important than what? Does the organization seem to emphasize how people appear, dress, and talk? Is how they do things more important than what they do? Note that the entrepreneurial spirit is starting to decline, and CAPI is being questioned, but these symptoms are all still mild and on the surface. What should be done?

The Fall organization needs to focus on raising its consciousness. Its members must realize by themselves and for themselves that E has declined.

The symbergists'™ assignments call for facilitating the organization, forecasting its future, analyzing the environment, foreseeing both threats and opportunities, and stretching when setting goals. Once the members of the Fall organization recapture a panoramic view of the future, it's important to move quickly to decentralize the company. Decentralization will stimulate and stabilize E. If E can grow without disturbing I or affecting A, then a PAEI organization can be achieved. This maneuver has to be periodically repeated because the organization will get out of balance again and again, due to change.

In the Fall organization, a large multidisciplinary group of people undertakes assignments, and the members must meet the stringent deadlines the symbergist™ facilitates in order to wake them up to the coming of age. The goal is to obtain E.

For the Fall organization and other organizations at the later stages in the lifecycle, management transplantation becomes a problem. The Fall organization is so set in its ways that a new style of management might be too trying. The older an organization becomes, the more it resents different managerial styles. The Fall organization needs a capacity for E. If the organization imports a paEi manager, she will likely experience difficulties because she is different. The difficulties, however, are not so great as to preclude integration.

In getting to the Fall, the factors that could be causing E to decline are: mental age, perceived relative market share, leadership style, and structure.

If the cause for aging-and the loss of E-is mental age, we recommend restaffing top management positions with people who are mentally younger.

If the cause is perceived relative market share, the solution lies in redefining mission. If the organization has 35 percent of a certain market, the organization needs to redefine its market scope. By redefining its markets more broadly, the company will suddenly own only 3 percent of the market and find itself facing an energizing challenge. When a climber gets to the top of a mountain, he should focus on the next ridge, identifying the next peak of another mountain. When he descends the mountain he's just climbed, he's not going down permanently. He climbs down only so that he can again be climbing to the top. If the Fall company is in the paint business with 35 percent of that market, it could redefine itself as being in the wall- protection-and-decorative services market. Now the company has 3 percent of a market that now includes wallpaper.

The nature of a business is such that it must be continually redefined, and the horizon must always be moving.

If functionality of the organizational structure is the cause of the Fall company's aging, the organization must restructure to strengthen E. The company should decentralize into new profit cen- ters and structure the staff units correctly.

Treating the Aristocratic Organization

Treatment of Aristocratic organizations can involve difficulties we don't find in other stages of the lifecycle. Aristocratic organizations need to be awakened from the Finzi-Contini syndrome. The symbergist™ should start with a group diagnostic session, using a methodology of synergetic participative diagnosis. This diagnosis is a deep consciousness-raising session at which all participants talk about the company's problems. Viewed in this context, the problems seem truly overpowering, and the need for change is clear and obvious. It's necessary to conduct diagnoses at many levels of the company in order to make everyone aware of the present state of the organiza- tion and how different that is from the desired state. The symbergist™ must continually call attention to manifestations of the Finzi- Contini syndrome.

Most consultants, when they are working with Aristocratic organizations, start by saying, "First, let's define your goals." People who try to define goals while feeling hopeless about their ability to achieve them are engaging in an exercise in futility. First, they must feel confident that they can introduce change; they must feel they can work together; and they must say, "Yes, we are potent." Only then can they work on defining where they want to go.

Go-Go organizations already have so much energy that a diagnosis could be counterproductive. In an Aristocracy, however, everyone is mild, relatively passive, and complacent. When people bring all the problems out for discussion, they legitimize the need to change and that creates energy. Once they establish a strong commitment for change, the company can move promptly toward resolving the abnormal problems.

Mission definition is essential for Aristocracies because it identifies new horizons. The mission definition must be a team process, focusing on divergent thinking. The company can do much more than it is doing, and there are more opportunities than it is currently exploring. The members of the organization are not really stuck. They can affect their future. This process helps the group members analyze the organization's technological, political, economic, legal, social, and physical environments. It teaches them how to analyze their markets, product scope, and values. All of that enables them to identify the opportunities and threats that face the organization.

Identifying what they want the future to be forces them to design a structure through which they can realize that future. They design a decentralized organizational structure to implement the strategies discovered in their mission. The organization extracts any and all potential Infants and Go-Gos that are hidden in the Aristocracy and restructures horizontally as a family structure rather than the typical colonial structure.

Once they complete the structure, they turn to the redesign of information systems that support decentralized accountability. This is followed by resource allocation and redesign of the incentive systems to promote profitability and return to an achievement orientation.

It may be that the Aristocracy also needs a change in the leadership. However, it's a mistake to import a large E prematurely into an Aristocratic organization. The members of such an organization constitute a mutual admiration society in which detail and mainte- nance-not growth-are the major attractions. In such a setting, a predominantly E person will have trouble expressing himself and exercising creative leadership. There is a greater chance that such a transplant will succeed if the organization waits until after restruc- turing is complete.

If E must be brought in before the restructure is finished, or if E is required for the restructure, the symbergist™ must use a bypass system. People in Aristocratic organizations discourage the style of any newcomer whose style alienates them. The A rejects the E because the latter injects turbulence that A cannot control. In the end, the organization either rejects or absorbs E as a benign substance. In that case, E loses effectiveness. In other words, Aristocratic organizations develop immunities to odd, strange, or different substances. They reject pluralism that is significant and functional for their growth and survival.

To integrate E into an Aristocratic organization, the symbergist™ first searches the organization for anyone with an active E. Such people are easy to find: They are the people who are complaining. Coincidentally, they are also people the organization is trying to dump. The symbergist™ should insist that they be retained a while longer. In a sense, this stops the bleeding of E.

Next, the symbergist™ should establish a task force comprising the "organizational deviants" and recommends that the newly hired E lead the group. The group's assignment is a development project- a new product, market, or system-it can complete within a short period of time. Because the task force includes Es from several disciplines and levels of the organization, it constitutes a bypass of the organization's A channels-the people who have already developed organizational arteriosclerosis. When the "deviants" accomplish their task, P is created, and that somewhat rejuvenates the organization. As several such teams are established, the outsider E soon begins to feel comfortable, the structure changes, power centers shift, and expectations to produce results increase.

When Salem City happens, the task becomes much more difficult. The E has been replaced by 0, and the organization either total- ly rejects and resents change or begs for it and is willing to pay any price to get it. (That, incidentally, is how dictators come to power.) The organization is on the brink of bankruptcy. Surgery-a change of management-may be the only viable alternative for such an organization. However, surgery in itself is not sufficient. Recuperation and rehabilitation-organizational therapy-is needed later on.

Treating Salem City (pAei)

The backbiting that characterizes Salem City requires prompt surgical treatment. There is no alternative to replacing the several people whose attitudes are negative, who poison the climate, or who are totally ineffective. But surgery should be conducted only once and very sparingly. If there are several surgical interventions in succes- sion, fear might paralyze the organization. Management's suspicion and paranoia-already strong in this stage of the lifecycle-could overcome the organization. In that case, the treatment reinforces the neurosis, rather than treating it.

Management should sell unprofitable units, stop the negative cash flow, and focus on survival. For that, CAPI must be together, usually in a single individual. In Aristocracy and the Fall, because there is time for teams, CAPI is centered around teams. In Salem City, there is no time. One individual must bite the bullet and cut the company down to its profitable essence. The organization must follow the same prescription we give an Infant organization: It must prepare rolling sixteen-week cash-flow projections, conduct cost accounting to identify the real leaks in profitability, and file weekly reports on inventory turnover and accounts receivable.

After surgery, the therapeutic treatment prescribed for an Aristocracy is applied, at much higher doses. The company must cut down the how and pump up the what.

Treating Bureaucracy (000A) and Dead (0000)

Organizations More often than not, Bureaucratic organizations turn to computer consultants and auditors to increase the A that is already overwhelming their organizations and to solve their managerial problems. It is not difficult to see that more or different A is not what the organization needs. Such organizations probably need a type of bypass surgery to add E, followed by a long period of rehabilitation. Getting the organization to accept E will involve overcoming considerable resistance.

Rehabilitation is necessary in order to bring P back into action. Shock treatments-threats of firing, unrealistic demands, and so on-are inadvisable. They only scare people, who respond by per- forming their tasks frantically and ineffectively. Their results will be short-lived, and before long, the organization will fall back into apathy. In fact, a series of such treatments might spur the remaining good managers to leave, forcing the organization into a coma.

Under such circumstances, the recommended therapy requires multiple, simultaneous implementations of all aspects of the therapy applied throughout the workplace, from top management down. The symbergist™, should, of course, closely monitor the integration of the interventions.

As for restoring dead organizations to life, that is a therapy reserved for saints.

Ill-Timed and Unnecessary Surgery

Surgery-replacing top management-is the fastest way to produce change, but it is also the most painful and dangerous treatment. Companies resort to that solution because it can be done in a short time. What's more, it is highly lucrative for the executive search firms. Unfortunately, few organizational surgeons stay long enough to see the results of their work, and they accept no responsibility for post-surgical complications.

What makes a successful surgeon is not how fast she cuts, but how well she monitors the post-surgical complications that occur in weak and vulnerable bodies. Many consultants suggest a new orga- nization chart, help locate people to fill the boxes, collect their fees, and consider their task done: But they have not completed the job. After the new structure is imposed, the organization starts to feel the real pain of adaptation. Although the pain may be acute, managers hesitate to complain publicly about their problems. They fear their complaints might occasion another surgical treatment. They would rather suffer quietly than subject themselves to another round of surgery.

While organizational change is indispensable for long-run success, changes induced as cures at the wrong time may produce almost permanent relapse. The organization may refuse to submit. If surgery has been painful, ineffective, and applied exclusively as a cure, the organization may refuse surgery for preventive purposes-especially when a problem is not yet evident. Often, for example, in Salem City, reorganization is attempted only when there is a crisis. At that stage surgery is inevitable. The treatment would have been less painful during the Prime stage of the organization's lifecycle when the organizational climate was conducive to change. Due to growth and positive expectations for the future, the perceived threats from change were much smaller and could have been minimized. In Salem City, when economic results are bad and the atmosphere is already poisoned by suspicion, change reinforces fears rather than removing them.

If the organization is an Aristocracy, I recommend a no firing policy. Many Es act like As in order to survive. After six months of change, the organizational climate will start to reflect opportunities for external growth, and the Es will surface. There is no need to hire new E people. The Es are already there.

Can an Internal Consultant Do the Job?

It has become fashionable for large organizations to develop their own consulting departments-organizational development (OD) departments.

Such departments can be functional during the early stages of the organizationallifecycle. However, older organizations-the Fall organizations and their successors-will have less success with OD departments. In a young organization, A and I are the necessary ingredients. It's easy enough to provide those from within the organization, and the internal consultants would have no fear of losing their own jobs. However, as an organization approaches its zenith, it demands more E, and internal consultants might be unwilling or unable to make the waves necessary to create the consciousness and desire for change.

Organizational development specialists appear to have been trained for and inclined to perform only the I role. Most frequently they are 000Is. At best, they are paels. Such styles are of no use to an organization that requires serious therapy and rejuvenation. A paei or 000I style only maintains what exists. Some OD specialists are establishment agents who make the existing fare seem palatable. They are not agents of change who create the necessary new dish.

The symbergistsTM should train and develop internal integrators to act as agents of change. For at least the beginning stages of therapy, I have found that external pacing is necessary to create the impetus and direction for change and to buffer any negative short- term organizational reactions. For organizations at or beyond the Fall stage, a more potent medication than simple advice is needed, and, in most cases, that must be administered externally.

For more detail on this subject, I refer readers to my other books, The Pursuit of Prime and Mastering Change.