Reversing The Corporate Ageing Process
by Tom FitzGerald
The Company Just Felt Old. It was under twenty but it felt old. That was our first impression. It felt cold too. Nothing you could put your finger on. But there was no excitement in the faces of the people we saw.
Ron was the CEO. We talked with him about his challenges. They were frustrations mostly. He spoke of the past. He had founded RIB nineteen years before. And for the first few years there was innovation, growth, exhilaration, and sheer excitement for everyone who worked there. And strong roots penetrating the industry it served.
But the last few years were different: Growth had slowed; there had been few new products and they were really me-too copies of the competition’s; profits were still OK. But the company was no longer the darling of the analysts. The people who had grown with the company were still there. But their fire had gone out. There was no trouble that he could see. But something was not right. He wanted a vibrant company again.
He had tried everything he knew. Management and leadership courses. Team building sessions. Counseling with psychologists. Expensive reengineering that never showed on the bottom line. Strategic planning too. He talked of stepping down. Would a new CEO make a difference? One of his outside board members had raised the subject, very tactfully. But the message was clear. The company had plateaued, maybe had lost its way. Certainly it had lost its drive.
We asked how badly he wanted the company to flourish again. And listened to his manner and his tone more than his words. For not all managing officers who believe they want resurgence, really do. There can be a narcotic comfort in the familiar, especially if there is no immediate financial pain. And renewal brings uncertainty. But he wanted renewal. We could hear it. He would be able to look into the soul of his company and not blink.
A week later his managers and supervisors got a questionnaire. It asked their opinions on all sorts of issues. Some unexpected, some puzzling, some disturbing.
Two weeks after that he called his management team together, off site. And together they faced their answers and the answers of their subordinates. A bright mirror was being held so that they could not look away. And in it they saw their company, they saw their divisions, they saw themselves, as they really were. And, in one way or another, they said: "This is who we are! God help us!" . Then their work began.
Quenching The Spirit
There are many reasons why the fighting spirit of a company can be quenched besides the obvious ones like a protected marketplace, continued reversals, a maturing industry. One way or another, they result in an ageing company. And that, more than anything else, dims, extinguishes its competitive fire. And it slows.
But companies, unlike people, can be immortal - or nearly so. Can stop and reverse the ageing process. And chronological age of companies can differ from competitive age. And the youth or senescence, vigor or lethargy, of these companies has little connection with years.
This ageing manifests itself in a number of ways. Bureaucracy, boredom, introversion, timidity, sloth and stiff formality, are some. But corporate sclerosis is the result. And lack of fire.
The Challenge For Management becomes the periodic reversal of ageing, the rekindling of the fighting spirit of the company. The turning around, preferably before it is necessary, of the business.
But, to change anything as fundamental as psychological age, as the way a company sees and responds to the world, something fundamental within it must change. Its very spirit must change. Must catch fire. Must renew.
And as surely as a person has a spirit, something that is more than personality, so does a company. And it is this spirit which must catch fire.
What the spirit of a company is does not really matter. What matters is that is can be touched and changed and ignited. Very directly and very easily.
The Spirit Of The Company, its fighting spirit, resides mostly within the senior management of the company and especially in the RELATIONSHIPS between the senior managers. It exists when these managers, as a group, as a team, act as the organization's essential core. And it exists whether they know it or not, whether the team is aware of itself as the core or not and whether anyone admits there is a spirit or not. And this spirit expresses itself in the emotional drive, world view, philosophy, attitude, performance of the managers and the company.
One way to change this spirit is to change the management team, starting with the CEO, and hoping the new team will have the drive and fire that is needed. This is what is usually attempted in a crisis driven turnaround. But, short of a major catastrophe, changing the people is seldom necessary.
But there is another other way to change the spirit of the company: change the RELATIONSHIPS within the team and the team's relationship with the company. Done properly, the company is renewed, the fighting spirit is reignited. And the company catches fire.
Fortunately, changing relationships is easy under the right circumstances. But only if the managing officer leads; it cannot be done by a subordinate. And a crisis is not needed nor is charisma. The only prerequisite is a CEO who is ambitious for his company and will make his people face the truth.
For rekindling to take place, just seven things need to happen:
1) The members of the management team (or what is supposed to be the management team) must become in fact the spirit, the soul, the essential center of the company. And must become self aware, conscious of itself as that. And must believe in and acknowledge its authority as that soul.
2) The management team, now a true Team, must see and acknowledge the company and themselves exactly as it is, exactly as they are. Especially the corporate and human (emotional) drivers of performance. They must do this both as the soul of the company and as individuals.
3) The Team must generate a real, visceral revulsion against those factors within the company that it does not like. Individuals must share in this. A catharsis happens. Energy for change, for a new beginning is released.
4) The Team must define for the company, for itself, a new and detailed Business Blueprint. A blueprint that defines not just the usual strategies, tactics goals and objectives, but also the spirit of the company. The team here defines itself in terms as much different and greater than “culture” as the human soul is different and greater than psychology.
5) From the energy of catharsis, always great, always intense, the Team must create within itself a powerful emotional investment in this new future, in this new blueprint. Detail by detail. Corporate and emotional driver by corporate and emotional driver.
6) Again, with that same energy, the Team must commit, viscerally and emotionally, both as the soul of the company and as individuals, to explicit actions to achieve each and every element of the business blueprint. And commit to full accountability.
7) Then, implementation and follow-up must begin immediately. No time lost.
Ron began the process for RIBS by arranging for a detailed, in-depth, diagnostic of the company, its divisions and its departments. He hired a business Catalysts and a questionnaire was prepared. The questionnaire was designed specifically to be answered by managers, supervisors and senior key staff, not workers. It addressed some 150 factors that underlie, cause and predict the performance of companies. Some obvious and traditional, some dealing with the soul, the essence of the company. All recipients were told of the importance of the instrument and strongly “encouraged” to respond. This would be a 360 appraisal of the company, from within, through the eyes of those who were responsible. Through the eyes of those who would be responsible for the future.
The Catalyst and the CEO made the first diagnostic cut. It was immediately obvious that the company was in trouble.
A high performing, world class company, sure of its power and its potency will find some 30 items it does not like about itself. And perhaps one or two “gut” issues that must be dealt with in and through the emotional life of the company if they are to transform, to release the energy of renewal. RIBS found some seventy. Four or five were gut issues. Twenty or so were “three star”. There was no doubt: The company was an accident waiting to happen.
What had to change was clear. What had to be done was clear. But, for the transformation of the company to actually happen, without firing half or more of the senior management, the Team had to come into existence and that Team would have to do all the rest. And there was no team. That showed in twelve different ways and everyone in management knew. Even Ron! And yes, the company was ageing fast: The Psychological Age Index was high.
There was no report generated. That was part of the agreement. (Reports get shelved, especially uncomfortable reports. And this process would not give them the option of shelving anything.). And Ron would not leak the results either. They, his managers, would do the analysis, would face the reality of the company, cold. And in the process come together with him to form the soul of the company.
They met off site in a darkened room that had no tables. Just an arc of straight-backed chairs facing two overhead projector screens. There they would see their own answers and the answers of their subordinates. And in that room they would wrestle with the meaning of those answers. And the impact of what they saw on the performance of the company, on the performance of themselves. They would be in the deep end and nowhere to go but through. Being brave is easier when there is no option.
After the necessary learning on the junior slopes, the intensity mounted. The three star issues were dealt with frontally. Later, the “Gut” issues. And, piece by piece, a business blueprint developed. The Catalyst held the mirror so they could not slide off. After a little while they would not slide off.
Time after time, Ron asked: “What’s the real answer?”. The average or the mean did not matter. Real was what they agreed it was. They held the mirror for each other; helped each other see. And, just in case, the Catalyst wore the black hat and brooked no easy denial. They answered. And it was the cold truth. The whole truth. Time after time, the Catalyst triggering catharsis, releasing energy into the room.
Time after time, Ron asked: “OK, What must it be in two years? I ask you, ........!” He had borrowed John McLaughlin’s mannerisms just for the occasion.
They again they answered. And their words appeared before their eyes, dominating their field of view. And, piece by piece, a business blueprint developed. And, piece by piece, they committed. Emotionally! Viscerally! Ritually! The Catalyst triggering the investment of the energy, keeping the pace up. Momentum now played a major part of the process.
Soon a clear, appealing picture of the future developed that attracted and excited their interest, their involvement, their commitment. Soon they passed beyond their embarrassments, their revulsions, and were actively hunting for, lobbying for, their picture of the future. Committing. Demanding commitment of each other. Ron too. He loved it.
Time after time, he asked:
“What’s the action?” They told him!.
“Who’ll do it?” They told him!
“When’ll it be done?. They told him!
“OK! Can I review on....?” They agreed!
And everything they said appeared before their eyes, dominated their field of view. Was transferred to their LAN as an on-line action plan for all to see.
And they pledged achievement. Before their boss. Before their peers. Before subordinates. Before the very soul of their company.
And they delivered! It would have been be impossible not to. They had not left themselves the option of failure. Emotionally, they had burned their boats.
One year later, four old products were phasing out, five new products were being developed, one actively being sold. Growth was up.
Once again, there was fire in the corporate belly.
Tom FitzGerald is a bottom-line oriented, consulting management engineer,
who specializes in effecting major improvements in profitability, performance
and growth. He
For additional information on the concepts mentioned above, see: Fire In The Corporate Belly, The Preemptive Turnaround, The Company: Living Entity or Machine? and Corporate Retrenchment or Corporate Renewal? These are available through the publications page of http://managementconsultants.com.