Keeping a Strategic Dialogue Moving, page 3
ACT II: Steering a Dialogue Off the Rails
... Heilbroner once remarked that when forecasts based on economic theory fail, he and his colleagues take to telling stories -- about Japanese managers, about the Zurich "snake," about the Bank of England's determination to keep sterling from falling. ...businessmen and bankers (like men of affairs of all ages) guide their decisions by just such stories -- even when a workable theory is available. These narratives, once acted out, "make" events and "make" history.
Jerome Bruner, Actual Minds, Possible Worlds 5
Frank and Ian, like the economists Heilbroner knows, tell stories to account for what's wrong at Elite. Their stories -- and those of their colleagues -- form an uninterrupted stream of organizational dialogue through which they define problems and decide what to do. This is an unsettling thought, because the pattern of dialogue that trapped Frank and Ian -- this "symphony of dysfunction" 6 -- goes on all the time and goes on everywhere, taking its toll in frustration, regretted choices, and lost competitiveness. So the question is: Why does it persist? If it incurs such costs, why haven't we changed it? Because, as Alice said to the Red Queen in Alice in Wonderland, naming something isn't the same as explaining it. It is one thing to see something's wrong; it is quite another to see and understand the mechanisms that make it so pervasive and persistent.
The mechanisms that steer organizational dialogue. Organizational dialogue doesn't take place in a vacuum. It takes place within the context of three structures that continuously shape and reshape one another. 7 The first and most obvious are the formal structures, systems, and processes you consciously design to achieve your unit's or your firm's goals. The second and least obvious are the interpersonal structures you spontaneously form as you come together with others to define and solve problems. The third and most difficult to alter are the cultural structures which emerge out of -- and eventually constrain -- both formal and interpersonal structures (Figure 1: Organizational Steering Mechanisms). 8
It is within the context of these structures that you notice, interpret, and decide with others what to do about changes in your firm's environment, about organizational actions taken and not taken, and about the results your organization produces. Put differently, these are the mechanisms through which you and everyone else in your organization learns. When this learning is strategic in nature, it is targeted at one of three direction-setting levels. At the most simple level, you might correct errors or improvise improvements at a local level, adjusting or modifying tactics or business unit focus. At a more complex and usually controversial level, you might reconsider and reset your strategic course, repositioning your firm relative to your competitors and/or your customers. And at the most fundamental and difficult level, you might re-examine and redefine your firm's goals or basic aspects of its identity. Of course, in real life, you can never really separate these three levels of strategic learning, because they so influence each other. Just as your firm's identity constrains the strategic choices and tactics most readily available to you, so can changes at the tactical and business unit level cause your corporate strategy to drift in a new direction, eventually remolding your firm's identity if and when it drifts far enough. 9 By looking at Elite from this perspective, it is possible to see how each steering mechanism works, and how together they conspire to steer a dialogue -- and a firm's direction -- off the rails.
Formal structures. Frank and Ian wouldn't even be having their conversation if it were not for dramatic structural changes that took place several months earlier when Elite's CEO, Abel, decided to tear down the firm's functional silos. This organizational change, directed at the firm's formal structures, was designed to bring people together who had been separated and to organize them around product lines and customer groups. At the same time, it was aimed at pushing the decision-making down the organization so that people would be free to take initiatives that improved performance. At the highest level of the organization, this included creating a highly inclusive, non-hierarchical management team.
These changes, while welcome on the one hand, were met with skepticism and dread on the other. "A lot of the barriers have been removed," one person told me six months into the change. "I really give a lot of credit to Abel for shaking this place loose." Yet another person wondered: "Now that the tall towers are gone, can sales and operations and finance sit down and talk with one another?" And yet another worried: "Abel's letting us fumble around and work it out among ourselves. But we've got fundamentally different views about the world on this team, and unless Abel comes in and says, 'This is the way it's going to be,' I'm not sure anything's ever going to get resolved."
No longer able to send their conflicts up the hierarchy, yet no more able to resolve them than they ever were, the group spent most of its time engaged in -- or trying to avoid -- the polite "point-counter-point" arguments in which Ian and Frank got caught. Aware that these conversations were unproductive yet unaware of what to do about them, many people took the only recourse they could see: they started lobbying Abel privately. Although committed to the redesign, Abel felt compelled to step in and impose decisions on issues he considered urgent. While understandable, these intermittent decisions, taken behind closed doors, made matters infinitely worse. People now secretly wondered whether Abel himself was committed to the new design or trustworthy in his dealings with them. "Many decisions get made in the old way," one person told me, "and that just reinforces the view that things haven't really changed." Within a year the new structures began to revert back to the old, because two other structures, more difficult to see and to change -- were left untouched. 10
Cultural structures."Culture is an extremely powerful force," someone told me early on. "Most of the people who leave Elite, leave because the culture got 'em." Yet Elite's culture is also what brings most people to it. Its concern for people and its commitment to design excellence are the cornerstones of a value system that distinguish it from the other firms in its industry.
This suggests that cultures -- like the people who create and re-create them -- have many faces and that these faces have many expressions. 11 When you enter a culture, you learn to distinguish these faces and to read their many expressions. Because no manuals or charts exist to guide your way, you must learn from experience -- not direct experience, but experience mediated by seasoned natives who teach you in the ways of the culture by example, by sanctioning or affirming your behavior, by offering cautionary tales, and by regaling you with myths about the firm's history, its founders, and the values people hold most dear. Over time, you come to internalize the culture's available stock of knowledge, combining it with what you've learned from your local work culture and your own unique way of seeing, in order to make sense of organizational events and to figure out how to interact with others.
In this respect, culture is a powerful force. But it is not a monolithic one. Cultures are fraught with inconsistencies, contradictions, and conflicts, especially around those themes that define a firm's core identity. At Elite, for example, two themes are central to its identity: the power of design and the importance of caring for people. Around these themes, conflicts are ever present, flaring up in dialogues like the one between Ian and Frank. For example:
- The Power of Design. When Elite's performance deteriorated and Abel re-organized the firm, cultural enclaves with little clout found a seat at the table with members of the dominant culture. This surfaced previously peripheral conflicts around the dominant culture's belief that the strength of a well-designed "product will automatically create the market opportunity for you." All of a sudden, everything associated with this belief was up for grabs: Should we change the design criteria that drive product complexity and costs? Should we shift our focus from innovating our products to innovating our distribution system? Should we be more market-driven than product-driven? These questions preoccupied everyone, and the stands taken on them reflected the beliefs of different cultural enclaves.
If you listen closely, you can hear echoes of these controversies in Ian's and Frank's dialogue. When Ian says to Frank: "I can grow, if what I'm offering is strong enough," he reflects a highly shared belief in the power of design. And when Frank appeals to a market study, alludes to less complicated products, and calls for innovation in how products are distributed -- he represents a fundamentally different view shared by members of an important cultural enclave. Now notice what happens when these two views collide. Ian asks: "Do we want to fight with the people down there, or not?" And then he adds before the question is answered: "Most of us have already decided in our own mind what the answers to those questions are [my emphasis]." This answer sends an important signal to Frank: "We are of one mind here," it implicitly cautions, "you are on your own." What's important about this signal is that it not only says something about Ian, it says something about how a dominant culture closes its ranks and discourages dissenting views when under threat. - Caring for People. This brings us to a second theme around which conflict is ever present. Unlike the one you just saw, this conflict resides between cultural levels instead of groups. On a surface level, facing outward toward the public, the firm's physical surroundings, its founding myths, and the look and feel of its written materials -- all express the importance of caring for people by creating an environment of connection and openness in which people can value differences, learn from one another, and develop to their full potential. Yet at a deeper level facing inward -- where it is less obvious to the outsider but all too obvious to the insider -- unwritten norms sanction mistakes and stifle open conflict, while tales of attribution assume the worst of people who violate either.
My own introduction to the culture provides some of the best data on these tensions. Just after I arrived in the role of a consultant-researcher, a second generation veteran politely corrected me when I called something a mistake, advising me not to use the word "mistake" because it would mean I was placing a value on it. Seemingly unaware of the contradiction, he went on to complicate matters further by explaining that this would be wrong, because all forms of judgments are bad. In another conversation, someone told me a chilling tale of failure and ostracism followed by the dilemma-making moral: "Offering help is a strength, but asking for it is a weakness." And in yet another conversation, I was tutored in the ways of disagreeing: "It's not really polite to disagree. Now you can disagree after the fact in the hallways, but not in a public official formal meeting."
My most poignant lesson, however, came from an executive who ended up leaving the firm some months later. The lesson came in the form of a story about how conflicting views, pursued longer than "appropriate," fall prey to nasty interpretations: "Abel came up to me after one meeting recently and asked me if I thought Frank had an attitude problem because he disagreed so adamantly, and I said I didn't, that I thought he really wanted to do the right thing. And so he then said, 'Well, maybe it's about territory.' But I know these people. I've worked with them a lot. I've spent days and evenings with them. I might not always agree, but I don't buy that this guy is only looking out for his own good. I just don't buy it." Shaking his head, he then bemoaned the story's sad paradox: "All these assumptions about who's open and who's not -- all it does is shut down the conversation."
If you look closely, you can find traces of these cultural contradictions in Frank's and Ian's dialogue. Notice how they each take care to talk with care about their disagreement. Ian says: "Not that your [approach] is wrong -- that's one way," while Frank declares toward the end, "I'm not trying to pass judgment." And although their disagreement is out in the open, it is also short-lived. After 10 minutes, Frank withdraws, even though nothing is resolved and no course of action for reaching a resolution is identified. Meanwhile, others at the table take on the role of unresponsive bystanders who, I later discover, are waiting for the authority to intervene.12 In the end, they bring the disagreement to a close by cracking a joke and then changing the subject -- a sequence that repeated itself again and again.
The dialogue between Frank and Ian takes place along cultural fault lines fraught with tensions that lie just below the surface. This is why the dialogue is so critical. It brings to the surface two tensions -- one between cultural factions, the other between cultural levels. While the former begs for resolution, the second makes it impossible.
Interpersonal Structures. Even more important than the dialogue between Ian and Frank is the relationship in which it occurs. For better or for worse, this relationship is the immediate context in which tensions around the firm's identity surface and play out, making it an important arena for resolving the issues that keep Elite stuck. If you look closely, you can see that this relationship has a structure to it that is as powerful as the formal structures that bring Frank and Ian together and the cultural structures that contain their disagreements. This structure is what makes it possible for Ian to say: "One of the problems is that we've been through these conversations before, so we already know what the other guy's going to say." Although the structure of their relationship reveals patterns that go beyond Frank and Ian, it also has a character of its own. This character is a product of the contexts in which they work and their own unique models of the world. Through these dual lenses they spontaneously understand and figure out how to interact with one another in the heat of the moment. A structure emerges when these spontaneous ways of understanding and acting reinforce each other, creating a predictable cycle that can be either vicious or virtuous (see Figure 2: An Interpersonal Structure). To illustrate:
- Contexts: Ian's and Frank's contexts could not be more different. Not only are they members of different sub-cultures, they face fundamentally different organizational tasks. Ian is charged with turning around a business that has built an unwieldy and cumbersome machine around a belief in products that no longer command either the respect or the profits they once deserved. In other words, Ian is at the helm of the proverbial tanker. In contrast, Frank is at the wheel of a Ferrari. Although his subsidiary is both leveraged and constrained by the parent company, it is a world apart in its smaller but growing size, in its focused approach, in its results-oriented culture, and in its "tremendous" financial performance. The cord that binds these two worlds is wound with tensions that revolve around who gets credit for the subsidiary's success, how the subsidiary and the "parent" ought to relate, and how the two ought to interface with the market. Around these issues, members of the core business and the subsidiary feel misunderstood, unappreciated, and unfairly treated.
- Models: When Ian and Frank's worlds overlap, as they do when they are brought together by Abel, they view this world through models with different sensibilities, values, wants, and appreciations. What fascinates Frank leaves Ian untouched, and what sparks Ian's interest leaves Frank exasperated. Frank is "fascinated" by the possibility of exploiting advances in technology to deliver simpler products to segments that are growing. That's what he wants to do. He has no interest in segments that are already saturated. Nor does he want to get dragged down into the morass, as he once referred to the core business. He wants a world that is as logical, as simple, and as fast-paced as possible. Segment attractiveness, however, is in the eye of the beholder. Ian doesn't want to fight with the people down market. What excites him is the possibility of going after the middle and the high end of the market with a strong offering. He prizes complexity of product and perspective, even when he sees its downsides. He'd rather figure out how to harness complexity or carefully whittle it down than arbitrarily lop it off by moving quickly or presuming more simplicity than exists. 13
Whereas the differences between Frank's and Ian's models lead them to view Elite differently, their similarities lead them to take a similarly tenacious approach to it. They share the same theory of knowledge -- a kind of epistemology of practice that leads them to confuse fact and inference, to assume that "facts" speak for themselves, to take the role of an omniscient observer, and to view self-interests as separate considerations. - Framing and acting in a particular situation. Whenever you combine these similarities with different sensibilities, you have a recipe for disaster when it comes to understanding the same situation. First, each of them acts as if he views himself as a reasonable advocate of the right answer and the other as a self-interested obstacle to be overcome. This then leads both of them to frame their purpose in the situation accordingly: Get my reasoned view to prevail over the other's narrow self-interest.
Second, with this framing in mind, they then act in ways that trigger the worst fears and behaviors of the other. Frank starts in a characteristically logical, simple, and frank way. He enthusiastically cites market studies, projected growth data, and strategy concepts, and he then advocates that these make logical and clear the need to change course. This rankles Ian who thinks it's more complex than that: facts alone can't decide, and decisions must be made carefully. So he not only rejects Frank's argument, he rejects the very basis upon which it is made, and he does so in a characteristically complex, value-laden, and indirect way. He asks rhetorical questions about wants and preferences that imply answers that are obviously more complex than either facts can capture or Frank can appreciate. This only irritates Frank, who responds by upping the ante within his frame of reference: He calls for more "thought, work, and study" -- which, to Ian, is simply more of the same. So Ian rebuffs the idea by upping the ante from his frame of reference: He poses another value-laden question (do we want to go down there?); he insinuates the answer is already known; he points to the complexity of interpreting a past so many would view differently -- and so on and so on, until they're stuck in a vicious cycle.
Interpersonal structures, like the one you see here, form whenever people with different models and contexts come together. This is to say they form all the time. But some relationships will become the arena in which wider organizational issues get surfaced and addressed. When this happens, as it does with Frank and Ian, it becomes necessary to focus on that relationship and to transform the structure underlying it. This is not only because the relationship itself will stall progress, but because it will help set the stage for how the controversy is understood in the organization. Whenever relationships surface core tensions, those nearby watch them closely. They listen to how the people involved talk with each other. They search for cues about what values are at stake. They cast their own views in relation to theirs. They make observations about what's appropriate to pursue and what's not. Eventually they tell stories about what they see and hear, shaping the way others come to understand and approach the issues. In this way, interpersonal structures become the stuff that cultures are made of.
The plot thickens. One reason dialogues like this persist is that their causes are redundant and people think they're not. 14 Each piece of dialogue can be explained by processes of the mind that confuse fact and inference, by formal structures that constrain and liberate, by cultural structures that both give and take away meaning, and by interpersonal structures that offer solace and cause frustration. All of these are at play. Understanding these mechanisms and how they affect each other becomes critical when it comes to asking and answering the question: What's to be done?