Profitably Healthy Companies by W. Warner Burke and Michael O'Malley (chapter 1)

PROFITABLY HEALTHY COMPANIES

Principles of Organizational Growth and Development

W. Warner Burke and

Michael O’Malley

chapter one

Organization Development Basics

EVERYBODY BELONGS TO an organization of some sort. Those who work within these organizations are responsible for making sure these organizations run smoothly and achieve their goals. The efforts of groups, however, frequently fall far short of expectations. Even in the best of circumstances when group members are full of goodwill and best intentions, results do not always turn out as hoped.

Groups often are weighed down by ambiguous objectives, poor communications, internal dissention, suspect decision-making procedures, and subpar execution. Slowly, group members’ enthusiasm dissolves into frustration, fatigue, and despair. The embattled casualties of ruinous group dynamics either drop out or become discouraged, aloof observers. All but the mightiest and most resilient remain actively engaged and soldier on.

These tragically familiar outcomes of group processes are unfortunate because overcoming challenges and succeeding as a team can be an exhilarating experience. Exceptional group results do not arise easily, but they do occur. They occur in the arts, in sports, in charitable organizations, and in businesses. They should occur more frequently.

The purpose of this book is to ensure that they do occur . . . in your organization.

Our way forward relies on a compilation of concepts, tools, and techniques that together comprise organization development (OD). OD is a summary term that includes both the approach to, and realization of, organizational improvements. Think of it this way: say you want to remodel your kitchen. The contractor you hire for the work will begin with an idea of what makes kitchens practical, functional, and aesthetically pleasing. They will start their work with an overall conception of design that includes an understanding of kitchen layouts and materials, and how foundational elements such as structural supports, electrical wiring, gas lines, and plumbing influence the configuration of the space and eventual build-out. Equipped with the appropriate diagnostic gear and tools, carpenters, electricians, and plumbers implement the design according to the detailed blueprints and project plan. OD encompasses each of these phases from concept design, through the procedures followed, to the instrumentation and tools required to transform ideas into reality. It is a big undertaking that applies to organizations as large as multinational companies and as small as work groups.

This book offers a practical guide to what you can do to make the organization in which you work or consult more successful. Our focus is on action: on helping you as an organizational educator, adviser, team member, or leader realize the potential of the group. We will not encumber you with theory or esoteric distinctions among concepts argued over by academics. Rather, we will stick to the main path and provide you with what you need to make the changes you want. In the process, we will take a few illustrious excursions to highlight our points through exhibits, historical references, and case studies.

WHAT IS ORGANIZATION DEVELOPMENT?

The OD label stretches back to the mid- to late 1950s; however, the inception of OD predates that period by about twenty-five years. For aficionados of history, the OD term has been traced to work on group processes at Esso’s Bayway Refinery and to culture change at General Mills under the direction of OD pioneers Herbert Shepard, Robert Blake, Douglas McGregor, and Richard Beckhard.1 Nevertheless, once a name was affixed to the compendium of practices

that became known as organization development, academics and practitioners tried to squeeze out the essence of OD by offering an assortment of definitions, despite the problems of shoehorning an immense field into a few words.

Not everyone completely agrees on the contours of OD. When you read the definitions in box 1.1, however, you can see that there are commonalities among them.2 Despite variations in emphases, then, these snippets provide a good feel of what OD is all about. We have extracted a few of the key concepts and offer these as the basic tenants of OD, without asserting that we have at long last settled all differ ences of opinion. We have highlighted words from our summation that serve as the headings to the ensuing sections where we say more about each. This is not a survey chapter. Those of you who are box 1.1 Sample Definitions of Organization Development

OD is . . .

. . . a planned, organization-wide intervention managed from the top and designed to increase an organization’s effectiveness and health. R. Beckhard

. . . a complex educational strategy intended to change beliefs, attitudes, values and structures of organizations so that they can better adapt to new technologies, markets, and challenges . . . W. Bennis

. . . a process of fundamental change in an organization’s culture. W. W. Burke

. . . a systematic process for applying behavioral science principles and practices in organizations to increase individual and organization performance. W. French and C. Bell

. . . a body of concepts, tools, and techniques used in improving organizational effectiveness and ability to cope with change. N. Margulies and A. P. Raia

. . . about building and maintaining the health of the organization as a total system. E. Schein

conversant in the field will have to have faith that the people and topics that you might have expected to encounter in an opening chapter will appear elsewhere in this book.

OD is:

•a planned, • collaborative method of

• organization change that is •designed to enhance the health of the organization •through the application of behavioral principles

Importantly, OD is a theory-governed, evidenced-based discipline. OD is the distillation of science into practical organizational actions involving the agreeable merger between town and gown.

Before we dissect our definition further, one matter demands some clarification. The tidiness of our description does not convey the true messiness of change. Plans and projections always look lovely on paper where progress marches uninterruptedly onward from the starting line to the goal. Substantive organizational improvements never work like that. People who you thought would support change, do not, and vice versa. Ideas you thought would work, do not; ideas that you thought would not work, do. And so on. In any creative endeavor you will feel, on occasion, like you are going in circles like those loop de loops shown in figure 1.1. The process can be extremely frustrating to those unacquainted with weighty change initiatives that seem like they are going nowhere. The practitioner’s responsibility is to sensitize participants to the inevitable doubts that arise during a change effort and to ensure that temporary setbacks are natural parts of the process. Indeed, occasional setbacks and encounters with obstacles are the sine qua nons for innovation and progress.

PLANNED

In a sense, all change is planned in that it is goal-directed and intentional. Planned, in the hands of an OD practitioner, means having a holistic conception of a problem and an associated approach to change. “Planned” does not imply that all contingencies can be known in advance nor does it annul the fact that important changes

can spontaneously arise from the shop floor. Rather, planned means that when OD is called upon to intervene, it enters with a particular value orientation, understandings (e.g., of group processes), and perspective.

H. L. Mencken is said to have remarked that for every complex problem there is a solution that is quick, simple, and wrong. This adage is true because the right solution is seldom the one right next to the problem or because the solution creates new, unexpected problems. For example, societies may decide to reduce drug usage by effectively controlling the inflow of drugs into their countries; a successful program may reduce drug usage but the higher priced drugs resulting from scarcity may drive up users’ need for cash and, consequently, crime rates. Incentivizing the recycling of plastics lowers costs, which in turn generates more plastics. Similarly, a pay-for-performance program may increase the desired productivity but also reduce quality and adherence to safety protocols given people’s quest to hit quantitative goals. These results occur because most everything is connected to something else and disturbances in one place have effects in another.

Time to goal

Progress toward goal Start of intervention

Goal state

Figure 1.1 The ups and downs of change: two steps forward, one step back.

For example, when two power lines failed in Oregon, eleven U.S. states and two Canadian providences—and seven million customers— subsequently lost electricity for sixteen hours.3 If everything was simple, we would have found solutions to everything by now.

To plan interventions, an OD practitioner needs the equivalent of a global positioning satellite for guidance. In the case of organizations, the map used to navigate through problems to a resolution is a little fuzzy because it is ever changing: not so much in flux that the way forward is unrecognizable, but enough to remind us that we are not dealing with a static system. And “system” is the operative word. In contrast to mechanistic views of organizations in which pulling a problem-lever invariably, in gear-like fashion, leads straight to a solutionsolved response, OD consultants’ plans and approaches are based on the well-founded premise that organizations are complex systems.

A system is an interconnected set of elements that sensibly combine to perform a function or fulfill a purpose. Box 1.2 provides the kinds of questions that systems’ thinking invites.4 Look around and you will see systems everywhere. A city is a system with transit, residences, parks, businesses, schools, and arts centers organized to make it an attractive place to work, live, and play. The local football team is a system with people organized in a way to maximize its own team’s points and minimize the points of an opponent. Organizations are systems in which structures, such as functional units, are linked together through internal processes. Our bodies, too, are systems.

Our bodies are composed of many components, or elements, each performing a unique function that, taken together, make us the living creatures that we are. The system falters when a part goes bad because of its intimate ties to other parts. The human body is a perfect example of a highly connected system because we have few internal parts that we can do without. For example, removing a problematic heart without a replacement is not a good option. Moreover, fixing a part may not be the solution because the real problem may lie elsewhere in the system. For example, an organization may attribute unusually high turnover rates to compensation that is too low but find that increased wages do not thwart turnover because the real causes have more to do with management styles and poor opportunities for employee growth.

We have provided a prototypical depiction of a system in figure 1.2. The illustration shows that systems have interconnected parts that are embedded in environments from which the system gives and takes. These exchanges with the external world may be things such as

box 1.2

Questions to Ask for Systems Thinking

1. What external forces affect the system of interest?

2. What does the system require to remain vital and operationally effective?

3. How are inflows into the system controlled?

4. What feedback mechanisms are in place to let you know if, for example, you are moving too fast (slow) or producing too much (little)?

5. Are the people and technologies well aligned?

6. Are internal connections among different parts of the organization weak or strong?

7. Is the way you are operating having any unexpected or unintended consequences?

8. How do you exchange materials, information, and goods with other systems?

9. What are the system’s key outputs?

10. What aspects of the system are most vulnerable to breakdown, failure, and disruption?

A system is a set of connected parts working together to form a complex whole. For most systems to function properly, its interdependent mechanisms must be able to adjust to changes in the environment that envelops the system

Processes

Figure 1.2 Basic elements of a system. Gap analyses often produce misleading information because they focus on a part of the system to the exclusion of the whole.

information, raw materials, and manufactured goods. We will explore several aspects of systems throughout the book, but the following principles are worthy of early mention.

• The whole is greater than the sum of the parts: This axiom means that something qualitatively different emerges when all the parts are combined. The whole behaves nothing like the individual parts themselves. Therefore, it is difficult to infer the essence of the whole by examining individual parts. We can liken this property of systems to the tale of the six blind men who are asked to describe an elephant only by touching one of its parts (e.g., tusk, trunk, leg). Naturally, the blind men disagree on what the elephant looks like. OD consultants, therefore, contemplate the whole of an entity and recognize that its effective operation depends on organizational parts, such as functions or departments, performing in a coordinated manner.

• Systems can be open or closed: An open system relates to its environment. It takes in information, energy, and materials and then transforms these inputs and returns them to the environment (usually to customers in the case of organizations) as useful outputs. Systems that are open change their behavior to regulate the balance between inflows and outflows based on the all-important guidance of feedback, as shown in figure 1.3. In contrast, closed Inflows

Figure 1.3 Simple model of system flows. Water levels in the tank are regulated by expanding or compressing inflows, or by expanding or compressing outflows based on feedback on water levels in the tank and barrel.

Ou lows Feedback

systems are not affected by influences outside of themselves. The system is relatively unresponsive to the environment because of the lack of communication. An uncommunicative system that is insensitive to changes in the environment cannot survive unless an external source, such as a benevolent government agency or good-hearted donor, are true believers in lost causes. The distinction between open and closed systems has been likened to throwing a lump of coal versus a live bird, even if the latter had identical chemistry and weight as the former. The trajectory of the coal is determined by its initial conditions, whereas the bird has an internal apparatus that will respond to external conditions once in flight.5 Most organizations (systems) are never completely open or closed although, as Alan Turing observed a half century ago, new complex behavioral patterns will emerge only in systems that are knocked out of their equilibrium (i.e., are open).6 Indeed, organizations will only be able to chart new directions when they have due appreciation of external realities and are aware of the necessities of change.

• System solutions are indeterminate: The general systems’ literature calls this aspect of systems “equifinality.” It means that there is more than one way to skin a cat and many roads that lead to Rome. More directly, complex problems have many possible solutions, several of which could reasonably qualify as “correct.” The sorts of problems that have multiple, viable pathways to their resolution are called “wicked.”

In the 1960s, following NASA’s technical triumph of landing an astronaut on the moon, the University of California–Berkeley sponsored a seminar series that explored whether technology could be transferred and applied to resolve social issues such as the major urban disturbances that were occurring at the time. One professor, Horst Rittel, explained that certain kinds of problems are altogether different and unrelatable. Some, like a moon shot, follow a direct, predictable path to a destination that one could conclude is right or wrong or true or false: Did the astronauts land on the moon? In contrast, many large social problems, such as alleviating civil unrest, have no clear problem formulation without considerable deliberation and agreement, are open to several feasible routes of execution, and have no standard for right or wrong answers (just good or bad, better or worse).

Additionally, solutions to these wicked problems typically create new problems: in fact, some systems’ experts would argue that every problem is the result of a solution.7 The automobile helped to solve our need for accessible transportation at the turn of the twentieth century, but the decision to use gas versus alternative fuel sources (e.g., steam) contributed to the deleterious buildup of greenhouse gases in our atmosphere—a problem we were smart enough to create but have not been smart enough to fix. Most problems in organizations are wicked problems, and OD practitioners are looking for ways to make systems better rather than futilely searching for the one perfect mixture of a system’s chemistry that will yield the optimal system-level results, now and for always.

• Systems will not grow indefinitely: Managers in organizations, analysts, and pundits speak about organizations as if they will go on forever, but systems reach capacities or limits beyond which the system becomes fallible (unless checked by a self-correcting mechanism as when we sweat to cool down when our bodies get too hot). Take a city, for example. If the most desirable city in the world attracted an unprecedented number of people, the beguiling elements of that system would start to lose their value because the increases in population may, for example, overload services, such as public transportation, and create new unforeseen problems, such as frustratingly scarce tickets at local attractions and events. Systems create their own limits if growth is unrestrained. Similar results occur in the natural ecosystem when, for example, the Canadian Lynx decimate the snowshoe hare population and then starve (the hares then return, and the cycle continues). Organizations, therefore, will sometimes set their own limits as W. L. Gore, a global manufacturer of polymer-based products, does; they believe that businesses become unduly bureaucratic when they reach a certain size and, therefore, break up units that become too large. Indeed, some think that unduly large organizations are fertile grounds for toxic bosses, personal indignities, internecine warfare, operational complacency, and strategic dogma. Therefore, growth can seed companies’ decline.8 Miller likens the dangers confronted by onetime high-flying companies to the fall of Icarus whose cleverly crafted wax and feather wings were both his salvation (from being imprisoned) and his demise

when he flew too close to the sun and the wax on his wings melted. (This decline following a rise to preeminence is called the Icarus paradox.)

• Systems exist within systems within systems: The graphic in figure 1.3 omits an important feature of systems. Systems are nested within other systems. People are systems who belong to families; these families live in neighborhoods, towns, states, countries, and so on to the ends of the universe. There is no limit to how small or how large systems can be. You have to draw the line and establish a boundary somewhere, however, for your intervention. The nature of the issue and associated change effort likely will dictate the logical contours of the problem.

Organizations also have systems that overlay one another. Just as the human body has multiple systems (e.g., circulatory, endocrine), organizations have multiple systems as well. OD is concerned specifically with two major systems: the social and technical systems of organizations.9 The social system consists of the people of the organization: what they know and can do, the relationships they have, and the culture they work within. The technical system is made up of those features of the organization that are associated with flows involving the tools, techniques, technologies, and processes that are used to store and transport goods and information.

The ideas behind sociotechnical systems, the combination of the two systems, had their origin in the coal mines of the United Kingdom. New automation involving longwall methods of mining (blocks of coal are cut and put on conveyor belts) were introduced that allowed work to be disaggregated and reconfigured. This automation provided researchers (Eric Trist and others) a chance to experiment with work arrangements that were more consistent with the new processes being introduced.10

Traditionally, work in the mines was highly specialized with each miner performing a certain task. Trist reorganized the work in a manner that we would describe today as autonomous work teams. This involved transferring decision-making authority for tasks, assignments, and schedules to newly formed units that became responsible for meeting production quotas. The central aim was to structure the work in a way that was responsive to the underlying technology and afforded miners the discretion to organize work and the flexibility to adjust routines and team roles in the manner they thought best.

The experiment was a success. Results showed increases in both productivity and worker satisfaction. These outcomes were replicated two decades later at the Rushton coal mine, a small, privately held mine located in central Pennsylvania.11

A goal of OD is to ensure that the social and technical systems of an organization are jointly optimized: they mix in a manner that satisfies human needs and delivers the best, workable organizational results. An illustration of incongruence between the social and technical systems is nicely portrayed in the famous chocolate scene from I Love Lucy in which a conveyor belt of chocolates exceeds Lucy’s and Ethel’s ability to keep pace in wrapping the candies.12 The results would have been better—but less funny—if the plant had slowed the conveyor belt to levels that accommodated the number and skills of the people on the line. This scenario highlights another important point about systems. The best organizational results under given conditions are not necessarily achieved through the optimization of each individual system. Superior outcomes at the organization (system) level are products of the sober alignment of social and technical systems and not their separate and individual optimization.

Although the topic is outside the purview of this book, OD practitioners and policy makers increasingly will have to contend with the effects of automation on the labor for ce. Technology introduces new opportunities into the workplace, but it eliminates others. A recent analysis showed that of seven hundred jobs examined, almost half will be outdated within twenty years and be supplanted by automated systems.13 The atrophying of skills coupled with increased automation may partly be responsible for a dwindling eligible labor pool. Currently, 37 percent of people sixteen years old and older in the United States have exited the workforce and are not looking for work. This withdrawal has been most acute among prime work-age individuals, twentyfive to fifty-four, especially men without college educations. Indeed, the decline in workforce participation over the past twenty years has been the steepest in the United States when comparing all member countries of the Organization for Economic Cooperation and Development.14 Economists offer other reasons for the decline in addition to changes in automation, such as dramatically falling real wages and failing or unstable marriages that reduce familial incentives for work. Nevertheless, educational systems and organizations will need a cogent response to the persistent decrease of a skilled workforce.

Profitably Healthy Companies enables executives to focus on what the organization needs to do well in order to build and sustain success while equipping them with a good understanding of the principles underpinning the process. It belongs on the executive’s bookshelf. W. Warner Burke and Michael O’Malley have made great strides in bridging the gap between academic education in organization development and the challenges of applying the subject matter in the field.”

—DAVID SWINFORD, PRESIDENT AND CEO, PEARL MEYER

“Burke and O’Malley offer a fresh and actionable perspective on which interventions work and why. Whether you are a leader, manager, or organization development and change practitioner, this book provides the practical guidance you need to make a difference.”

—ALLAN

CHURCH, SENIOR VICE PRESIDENT, GLOBAL TALENT MANAGEMENT, PEPSICO

“Burke and O’Malley have done the impossible—they’ve produced a textbook on organization development that is genuinely interesting to read and useful to practitioners to boot! I predict that Profitably Healthy Companies will be a modern OD classic. Aside from being well organized and useful, it is perhaps the most well-written textbook I’ve seen. Brilliant piece of work.”

—THOMAS

“

A. KOLDITZ, FOUNDING DIRECTOR, DOERR INSTITUTE FOR NEW LEADERS AT RICE UNIVERSITY

Profitably Healthy Companies is a masterpiece of fresh, practical thought anchored in smart analysis. It shows how the capacity to learn, grow, change, and evolve must be in the DNA of enterprise. Burke and O’Malley provide the blueprint for internalization of continual leading through structures and processes.”

—JEFFREY

A. SONNENFELD, SENIOR ASSOCIATE DEAN FOR LEADERSHIP STUDIES AND LESTER CROWN PROFESSOR IN THE PRACTICE OF MANAGEMENT, YALE SCHOOL OF MANAGEMENT

W. WARNER BURKE is professor of psychology and education at Teachers College, Columbia University. He has written and edited more than twenty books, most recently Organization Change: Theory and Practice (fifth edition, 2018). He has also worked as a consultant for a wide range of organizations.

MICHAEL O’MALLEY is a lecturer at the Yale School of Medicine. He was previously managing director at the consultancy Pearl Meyer and chief executive officer of Promontory Human Capital Solutions, among other leadership roles. He is coauthor of Organizations for People: Caring Cultures, Basic Needs, and Better Lives (2019).

COLUMBIA UNIVERSITY PRESS / NEW YORK CUP COLUMBIA EDU

Cover design: Noah Arlow