Conversation 15: The Adizes Program for Organizational Transformation
Introduction to Systemic Organizational Therapy (Transformation)
Mutual Trust and Respect can predict whether a company, or for that matter, any system, will be successful, in any way you might want to define success.
Sounds intriguing.
DIAGRAMA
I remember you did mention this earlier, but please explain it again.
No system operates in a vacuum. It operates in an environment that interacts with it, impacts it, and is impacted by it.
To be externally integrated means to have a functionally beneficial interdependence. For a company it is measured by market share, by repeated sales.
How does a company integrate externally? It does strategic planning and marketing planning. The common denominator in this effort is to analyze the changing opportunities “out there” and try to match organizational capabilities to those opportunities, preferably better than the competition can.
In personal life, external integration is often called career planning, and the process is the same: What am I good at, what are the opportunities “out there,” and how do I match my capabilities to those opportunities?
Match capabilities to opportunities, preferably better than the competition can.
On a macro level, external integration is called economic policy, trade policy, or industrial policy, and is measured by a country’s trade balance.
Internal DISintegration is measured by wasted energy. One way to understand it is with an analogy. If you are trained as a mechanical engineer you learn to design a machine with minimal moving parts. The more moving parts, the more chances for wear and tear. Thus, the machine should be designed with maximum pressure and minimum friction. Friction wastes energy that could be used for activating the machine.
We know from physics that at any point in time energy is fixed. What I have discovered is that, within organizations, this fixed energy is allocated in a predictable way. First it is dedicated to dealing with internal disintegration, and the remainder is then dedicated to external integration. Thus, all success is from the inside out, not from the outside in.
Too many companies believe the secret of success is in their strategic planning. Wrong. If they are falling apart internally, no strategic plan will be implemented. At least not quickly.
To minimize internal disintegration we need to build a culture of Mutual Trust and Respect.
The Adizes program for organizational transformation is aimed at doing that: It aims to create and nurture a sustainable culture of minimum wasted energy inside the organization, and to build Mutual Trust and Respect. We have discussed the four factors that determine whether there is Mutual Trust and Respect in a company.
They are: common vision and values, a (PAEI) diversified organizational structure, a collaborative decision-making process, and people who command and grant respect and trust. But how do you go about creating or making those four factors happen in a company, and why do you call it “Systemic Organizational Therapy?”
It is systemic because it has predictable steps and a prescribed road map describing what to do when, with whom, and how. The Adizes program of eleven workshops, which we call phases, is designed to impact those four factors.
Do you have proof that it works?
Yes, I do. Companies produce exceptional financial results. Many of them receive awards for being the most well-managed company in their industry, etc.
We are now starting to run questionnaires to measure morale, but we already have evidence that employee turnover has been reduced. Employees have been offered higher salaries to move to other companies and they have refused.
What is the program?
The first workshop is numbered zero because the therapy has not yet started. We just present the theory. We check that the values system, upon which this methodology is based, is acceptable to the company. Do not forget we are “selling” Mutual Trust and Respect. Some leaders do not care about company culture. They want fast results. We direct them to consulting companies that do that—fire, cut costs, etc. That is not what we do.
Wait, are you against cutting costs?
Not at all. But we do not cut fat. We convert fat into muscle. Instead of cutting costs, how about increasing revenues?
Interesting. Go on, please.
The therapy starts with phase one, called a Syndag™. The group we are working with, up to thirty people, learns how to auto-diagnose the problems of the organization.
To discuss problems openly is quite a change. Do people open up?
It is a well-regulated workshop. We teach them rules for how to handle the meeting, how to advance from defreeze to accumulate, deliberate, etc., in a respectful way, so that they learn from each other. They learn rules for Mutual Trust and Respect in this phase. From the beginning they learn the hard rules of who speaks, when, and how, and about coming on time to meetings.
We do not talk about Mutual Trust and Respect after phase zero. From then on, all work-shops are designed for the participants to learn experientially how to behave in a way that manifests trust and respect.
And that works?
Every workshop increases the burden, by introducing increasingly difficult subjects for respect and trust. It is like lifting weights.
In phase one, Syndag, they learn how to discuss and analyze their problems without destructive conflict.
This is incredible. You mean to tell me you take, say, thirty top executives, put them in a room for three days to discuss company problems, and they do not kill each other? Instead they leave the three-day meeting with consensus on what the problems are, their causes, and what the plan of action should be?
Yes. It took years to perfect the system. It works.
I trust you, but to be honest, I would like to see this in action.
We have records at the Institute of thousands of companies that have done it.
The second phase is to teach them how to solve problems. We pick low-hanging fruit first: simple problems from a subsystem, not systemic problems. For example, we’ll address an inventory or collection problem, and teach the group how to compose capi and how to lead the process from accumulation to finalization, at the end of which there is a solution that they promptly implement.
I see. They are building trust in their own capabilities.
First they learned how to diagnose, then how to solve subsystem problems. The next phase is how to lead upwards.
What does that mean?
There are many, many courses in the world on how to lead subordinates. We focus on how to solve a problem when you are responsible, but the authority is somewhere above you in the organizational hierarchy. This phase teaches people to move problem solving to where the authority is, not where the responsibility is.
Phases one, two, and three teach how to analyze and solve problems, coalescing capi downwards, sideways, and upwards. The organization is starting to build confidence. They see results. They can discuss problems without accusing each other, without a witch-hunt. They can solve problems as a team, not through the frustrating process of management by committee.
Now we are ready to address some systemic issues. Overall issues. In phase four we teach and practice how to define a corporate mission that is particular to the organization at that point in time.
But all companies have a mission. What is new here?
Most mission statements I have seen are generic in nature and could apply to any organization at any time. For example, “Our mission is to satisfy our clients and our owners, and be responsible to society,” or something similar.
We are proud of every client we lose.
We want to know what the driving force for a particular company is at that specific point in time. It is usually driven by where they are on the lifecycle. The mission is how to move to the next desirable location on the lifecycle, towards Prime.
Phase five is designing the organizational structure of responsibility following the (PAEI) roles. If we are going to have a complementary team we need to have a complementary structure in which the (PAEI) roles can be performed.
Phase six is to change the budgeting system to reflect the new structure.
Phases four, five, and six deal with the organizational architecture. Now that the capi group of the company is aligned with their mission, they have a structure to deliver that mission, and responsibilities and authority have been defined (in phases five and six), we move to transfer the Adizes technology to the company. We train and certify Adizes change leaders in the company, and they then cascade the Adizes program throughout the company. We provide the help desk, the manuals, the training, and professional supervision.
Our goal is to eventually free the client from our intervention. They should know how to maintain the culture of Mutual Trust and Respect, how to make decisions as a team, how to define their mission annually, and how to restructure the company as needed, without outside help.
In other words we are proud of every client we lose.
See Adizes, Managing Corporate Lifecycles
What? Are you a nonprofit organization?
We are for-profit, and we are profitable, but that is not our goal. We are like therapists: Our goal is to have the client be healthy. Just imagine a psychologist who is very proud to have a patient for life. Where is the healing?
Once the trained group knows how to diagnose problems and solve problems as a team, now that each person clearly knows his role in the organizational structure and has the au- thority to dispense his responsibility, the next phase is to teach them how to stretch the orga- nization to peak performance. Now the whole organization cooperates and stretches to be the best it can be.
In phase nine, we teach them, as a team, how to do strategic planning.
Why is strategic planning so late? Is it not a crucial component of organizational transformation, or what you call therapy?
What use is it to do strategic planning if there is no Mutual Trust and Respect? If people are fighting and they cannot solve simple problems, how are they going to implement strategic disruptive changes?
We do strategic planning when the culture of cooperation and willingness to change has been established, and the company has stretched to its peak performance. Now strategic plans, strategic changes, have a raison d’être because the company has achieved its peak performance in its present form. Then we can discuss how to disrupt it for even better results.
In other words, you first plow the land, and bring water and fertilizers, and only then, when the land is ready, do you plant the trees.
Right on. What use is it to plant outstanding seeds in frozen ground? That is what many consulting firms do. The company is not culturally ready for change but they recommend it anyway.
What are the remaining phases?
Phase ten is to create parallel channels of management: top-down is for command and control of the implementation of decisions; bottom-up flow is for deciding what changes to make so the company is constantly changing.
Phase eleven, the last workshop, is to design a reward system that rewards cooperation and peak performance.
Does the program end here?
No, the eleven phases are for eleven months of the year. The goal is to do one phase per month, then rest for the month of December. Come January, it starts all over again: new diagnosis, new Syndag, new problem solving, etc.
So the company is constantly changing. Right?
Exactly. In delivering those eleven phases the company develops common vision and values, designs and implements an organizational structure that delivers the (PAEI) roles, is correctly decentralized, learns how to make decisions as a team, and, as a result of the program, a culture of MT&R has been established. People change and start behaving with MT&R, and energy that was stuck in internal fights is emancipated to fight competition.
What about those who do not change, who cannot work in a team?
They leave, and that is fine. We do not want individual geniuses—arrogant, self-centered, autocratic leaders—anyway.
This was a tour de force—lots of new information.
This was just the beginning. Now you should really start studying.
What book would you recommend I read next?
First, I would recommend that you read The Ideal Executive: Why You Cannot Be One and What to Do About It. Next, read Managing Corporate Lifecycles: How Organizations Grow, Age, and Die. Then, if you want to continue your studies, read Management and Mismanagement Styles, followed by Leading the Leaders.
If you still have interest, the companion book to Managing Corporate Lifecycles is Pursuit of Prime.
However, this is my strongest recommendation: Whenever you finish reading, read this book again. Having read the end, you will better understand the beginning.
I will! Thank you for your time.
Thank you for asking me to share my knowledge. What use is it to have knowledge if it is not shared?
Goodbye.
Goodbye, my friend.
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About the Adizes Institute
For the past forty years, the Adizes Institute has been committed to equipping visionary leaders, management teams, and agents of change to become champions of their industries and markets. These leaders have successfully established a collaborative organizational culture by using Adizes’ pragmatic tools and concepts to achieve peak performance.
Adizes specializes in guiding leaders of organizations (CEOs, top management teams, boards, owners) to quickly and effectively resolve such issues as:
• Difficulties in executing good decisions.
• Making the transition from entrepreneurship to professional management.
• Difficulties in aligning the structure of the organization to achieve its strategic intent. • Bureaucratizing—the organization is getting out of touch with its markets and beginning to lose entrepreneurial vitality.
• Conflicts among founders, owners, board members, partners, and family members. • Internal management team conflicts and “politics” severe enough to inhibit the success of the business.
• Growing pains.
• Culture clashes between companies undergoing mergers or acquisitions.
Adizes also offers comprehensive training and certification for change leaders who wish to incorporate into their practice the Adizes Methodologies for managing change.
Adizes is the primary sponsor of the Adizes Graduate School, a non-profit teaching organization that offers Master’s and Ph.D. programs for the Study of Leadership and Change.
For more information about these and other programs, please visit www.adizes.com.
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