| thepowerofpain.com :: the pain papers :: newsletter #19 |
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——————————————————————————————————- How Pain Acts as a Catalyst for Change and Innovation ——————————————————————————————————- The Pain Papers ——————————————————————————————————- SHARE THE WEALTH. FORWARD THIS NEWSLETTER. Any other unauthorized publication, excerpting, or duplication of the contents without the permission of Christopher K. O'Leary is a violation of copyright law. For past issues of The Pain Papers, see... To subscribe to The Pain Papers, please send a message
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——————————————————————————————————- PAIN AND 9/11 I don't know what's going on in your corner of the World, but what's going on in the States is a discussion about 9/11 and why the U.S. authorities failed to determine that something was going on, despite the presence of a number of clues. What intrigued me and made me think about this event in light of my book was something FBI director Robert Mueller said today. In answer to a question, Mueller said something to the effect of "Good news flows to the top, and bad news does not." As it turns out, I address the issue of why this happens and why it is problematic in a chapter called "Bureaucrathesia." I have included a draft of that chapter below. ——————————————————————————————————- BUREAUCRATHESIA Rule 7: Listen to everyone in you company. And figure out ways to get them talking. The folks on the front lines - the ones who actually talk to the customer - are the only ones who really know what's going on out there. You'd better find out what they know. - Sam Walton
What happens when an organization cannot sense pain? One of my children's favorites stories is The Princess and the Pea, which tells the story of a prince who travels the world looking for a princess to marry. While he meets many, he always finds something that makes him doubt whether each is a real princess. So he returns home disappointed. One night a storm rolls in and, in the middle of it, a soaking wet princess knocks at the door. The royal family takes her in and decides to test whether she is really a princess. Knowing that real princesses are incredibly fragile and sensitive, they place a pea in the middle of a mattress, place twenty more mattresses on top of that pea, and place twenty blankets on top of those twenty mattresses. Then they show the princess to her room. In the morning the family asks the princess how she slept. She replies she hardly slept at all because there was something hard and round in the bed. Hearing this, the royal family rejoices because they knew that only a princess could be so sensitive. The prince and princess are married and live happily ever after. THE CHALLENGES OF GROWTH The story of The Princess and the Pea provides an excellent framework for understanding why companies are unable to either detect or alleviate the pain that is being felt by their customers. STARTING OUT When a company is just starting out, the pain that is being felt by its customers (represented by the pea in the story) isn't hard to either detect or alleviate. In most cases, the organization's hierarchy (represented by the mattresses) is flat enough and its processes (represented by the blankets) are simple enough, that it is relatively easy for the person who holds The Power, and can get things done, to understand The Pain and know what needs doing. The Pain may be disguised by the presence of a blanket or two, but both its presence and its cause can be quickly understood. THE MATURE ORGANIZATION As companies grow, things get more complicated. Layers of management are put in place. Formal processes are created. Bureaucracy develops. On the one hand, this bureaucracy is valuable. It allows the organization to deal with problems in a structured and consistent manner. On the other hand, this bureaucracy is problematic. It tends to either attenuate pain signals as they travel up through the organization or prevent them from flowing entirely. As a result, as organizations grow it often becomes harder and harder for the person who holds The Power to do anything about The Pain. In most cases they don't understand it or may not even know that it exists. As a result, many larger organizations gradually lose touch with the marketplace. This leaves them vulnerable to falling victim to a disease called Bureaucrathesia. BUREAUCRATHESIA Bureaucrathesia is a disease that sets in when the person or people who hold The Power in an organization become disconnected from The Pain that is being felt by customers. This inability to sense pain renders the organization oblivious to what is going on in the marketplace. The resulting inability to know when changes are necessary leaves the organization vulnerable to attack by unseen enemies. Bureaucrathesia generally afflicts large and growing organizations, although smaller, older organizations are also vulnerable. "TELEPHONE" As was mentioned previously, the causes of Bureaucrathesia are the very mechanisms that are put in place to manage the growth from startup to established organization: layers of management and formal processes. The difficulty that organizations inflicted with Bureaucrathesia face is that as these layers of management and formal processes accumulate, the transmission of pain signals upward through the organization either slows to a crawl or stops entirely. How and why this happens can best be explained using another story. When I was a child, one of my favorite games was "Telephone." For those of you who are not familiar with this game, "Telephone" is played by lining up 20 or 30 people (usually children). The leader starts the game by whispering an unusual word or phrase — like "rutabaga" — in the first child's ear. This child then whispers the word or phrase in the next child's ear. This process continues on until the last child in line receives the message. They then tell the class what they heard. Usually, the word that the last child hears is very different than the word that the Leader told the first child. This game points out several things. First of all, messages don't just lose intensity but often get distorted as they pass from person to person. Second, each person who passed on the message believed that what they were passing on was what they heard. This process is similar to what happens inside of large organizations. Instead of the people with The Pain speaking directly to the people with The Power, pain messages are instead relayed from person to person. The problem is that this process of relaying messages is not neutral. Instead, as happens during a game of telephone, with each hand-off a message is subtly transformed and sometimes even dropped. Noise may also be introduced into the signal and its intensity level may be attenuated. As these handoffs accumulate, the people who hold The Power gradually become insulated, deliberately or inadvertently, from The Pain. BUREAUCRATHESIA 1. Bureaucracy-induced anesthesia. 2. A disease, caused by excessive layers of process and/or management (aka. Bureaucracy), that renders an organization unable to feel the pain being felt by customers and to know what changes need to be made. Synonyms: Oblivious Head Disease, Corporate Leprosy. Etymology: Bureaucracy + Anesthesia. BUREAUCRATHESIA IN ACTION Numerous examples — ranging from military fiascos like the surprise attack upon Pearl Harbor, to the flawed decision to launch the space shuttle Challenger, to the failure of the FBI to detect the terrorist plot to attack the World Trade Center on September 11, 2001 — exist of organizations and institutions falling victim to the ravages of Bureaucrathesia. A prototypical example is the experience of the U.S. auto industry during the late 1970s and early 1980s. During the late 1970s time, Japanese automakers like Honda, Toyota, and Datsun (now Nissan) began to develop and produce increasingly capable and high-quality cars. However, the managers of most U.S. car companies did not detect or understand the magnitude of the attack until they had lost tens of market share points. What happened? Simply put, the people who held The Power in these companies lived and worked in cocoons that left them unable to detect The Pain. They worked together at the top floors of their buildings and reached those floors using executive elevators. They ate together in executive dining rooms. They drove or were driven around in company cars that were the top of the line and that were maintained on a daily basis in executive garages. Their needs were catered to by entourages of company employees. As a result of these isolating measures, these executives lost touch with the realities of the marketplace. Like a person with Leprosy, their companies lost the ability to sense the changes that were occurring in the marketplace and became increasingly vulnerable to attack. REMEDIES What can companies do to prevent the onset of Bureaucrathesia or cure themselves if it has already set in? As it turns out, two strategies that have been shown to work. THE INFORMED HEAD One option is to create an organization that follows an Informed Head strategy. Such organizations are usually run by strong, involved, visionary leaders and focus on ensuring that the people at the top of the organization who hold The Power also have a deep understanding of The Pain that exists in the marketplace. Wal-Mart provides an excellent example of a company that follows the Informed Head strategy. In his biography Sam Walton: Made in America, Sam Walton describes how, when Wal-Mart first started out, he would travel by car to each Wal-Mart. The purpose of these trips was to keep his finger on the pulse of what was going on the field. As the number of stores grew and they became more widely dispersed, Sam bought a plane. This allowed him to keep in touch with his increasingly far-flung network or stores. After Sam retired, Wal-Mart changed the implementation of this strategy but not the goal. Now, Wal-Mart regional managers spend Monday through Thursday in the field making observations. They then spend Friday writing up their findings and present them to all of the other regional managers each Saturday. An individual who believed in the Informed Head strategy was Kelly Johnson, head of Lockheed's famous Skunk Works. The F-104 Starfighter, the "Missile With a Man in it," resulted from Johnson's tour of Korea in 1952. During the war, Johnson and his team flew more than 23,000 miles and visited 15 air bases, interviewing pilots soon after they climbed out of their aircraft. When asked what they wanted most in an airplane, they replied "speed" and "altitude," because the chief problem that they faced came from "High-altitude Charlie," an enemy aircraft that could evade the Americans by flying higher. The result was a design for an aircraft that flew higher and faster than any that existed. Johnson was then able to sell his idea to the Pentagon based on his research. The Informed Head strategy also points out the logic and wisdom of what in the 1980s was referred to as "Managing by Wandering Around" or MBWA. Essentially, the purpose of MBWA is to ensure that the head of the organization understands what is going on in the rest of the organization. Only by wandering around the organization can an executive see what is really happening. The benefits of the head of an organization understanding what is going on in the field have also been recognized throughout history. At the beginning of WWII, Winston Churchill set up the Central Statistical Office. The goal was to ensure the coherence of statistical information. The problem was that, up to that time, Churchill found that he was unable to rely upon the information that he received from the field. Abraham Lincoln was also a believer in this approach. During his presidency, Lincoln devoted a great deal of time to receiving and listening to the petitions, complaints, and grievances of citizens. His goal was to understand the problems that were being faced by ordinary people. Of course, the chief weakness of the Informed Head strategy is that it doesn't scale very well; the head of the organization can quickly become a bottleneck. As long as all ideas must flow out of this person, then the innovativeness of the total organization is limited by their range of experiences. As a result, a different strategy works better once an organization has reached a certain size. THE EMPOWERED FIELD An alternative, and more effective, solution to the problem of Bureaucrathesia is to create an organization that follows an Empowered Field strategy. Companies that follow the Empowered Field strategy are typically strong believers in the importance of pushing power down into lowest levels of the organization where The Pain is most clearly being felt. Enterprise Rent-a-Car is the largest rental and leasing company in the world, and has attained this level of success because of a strong belief in pushing power down through the organization. Enterprise maintains an extremely flat organization with a particularly small corporate office. Instead, the majority of the power of the organization exists at the Regional Manager level. Enterprise Regional Managers effectively run their own companies. Instead of ideas flowing down from "Corporate," at Enterprise most ideas flow up from the bottom of the organization. This includes the customer pick-up strategy as well as product extensions like van rental. This idea flow is facilitated by frequent meetings that are attended by all of the Regional Managers. One of the main purposes of these meetings is provide Enterprise Regional Managers with a forum for exchanging ideas about new ideas. GE is another company that follows the Empowered Field model. As part of the effort to facilitate the process of getting things done at the local level, Jack Welch developed the Work-Out process. The goal of this effort is to bring out frustrations and quickly deal with them. This is done by bringing together in a structured environment both the people who hold The Power and the people who feel The Pain. The Work-Out process achieves its goals by ensuring that the holders of The Power are reachable by and accountable to those who understand The Pain. ——————————————————————————————————- Please send all comments or feedback to chris@thepowerofpain.com SHARE THE WEALTH. FORWARD THIS NEWSLETTER. Any other unauthorized publication, excerpting, or duplication of the contents without the permission of Christopher K. O'Leary is a violation of copyright law. 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