Process vs innovation, rational thought vs cognitive patterns

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For a very limited time, McKinsey has The McKinsey Quarterly: The adaptable corporation available to read and download for readers of their Strategy newsletter.  It’s a good piece, and highlights some key points that many modern organisations are not just failing at, but actively obstructing themselves.

Any business faces two basic demands: it must execute its current activities to survive today’s challenges and adapt those activities to survive tomorrow’s…The evidence suggests that most companies are far better at the executing half of the dialectic than at the adapting half.

One of the symptoms of this, that I went on record in Personnel Today with recently, is the great enthusiasm and dependence on various quality programs – Six Sigma, ISO9001 etc.  While these can be beneficial, they are all focused on embedding current processes in stone and ensuring that everyone follows them.  And by fixing them in their current format, there is an implicit message that there will never be a better way of doing this.

It has been argued that these processes are always open to be updated and improved, but let’s be real for a second.  Introducing new ideas and processes in any organisation is challenge enough in its own right – having to convince the Quality tsars of the value of the changes presents even larger obstacles.  You have to be both convinced of your innovation and seriously committed to the organisation to be willing to pursue it.

Another focus of the article that is crucial to understanding organisational cultures and behaviours is its discussion of mental models – or cognitive patterns.

Why is it that people sometimes "just don’t get
it," even in the face of overwhelming evidence?…Mental models become more rigid, more locked in, and more averse to novelty as we gain experience…The answer may lie in the way we learn and categorize information in our mental models...Our environment
gives us feedback about which do and don’t work. Over time we tend to
give more weight to those that have worked in the past.

The disadvantage is that we are
less likely to respond correctly in unfamiliar situations.

As we gain experience…our mental models grow into
complex structures of categories, interlinked rules, and weightings. We
become less likely to perceive experiences as totally new and instead
try to relate them to previous ones, which we group into existing
categories…Mental models tend to settle over time, and
bigger and bigger shocks are needed to shake them up.

Yet when the environment changes significantly, such individuals may
have difficulty recognizing the change and then, once they do, may draw
too heavily on what has worked in the past. This kind of inertia helps
to explain the
hero-rogue syndrome:
a CEO executes successfully in one environment, is lauded by the press
and investors, and then falls off a cliff when the environment changes.
It also helps to explain why many turnarounds involve wholesale changes
in top management: it is often easier and faster to change which people
occupy the executive suite than to change their mental models.

The other drawback is not just that the mental models are difficult to change but, given that we tend to see what we expect to see, people will lever conflicting information into current mental models until long after the models themselves are outdated.

Companies have two ways of overcoming these barriers. One is what Jack
Welch called the "hardware" of an organization (its structure and
processes), the other the "software" (norms and culture). The two sides
must be consistent and mutually reinforcing to create a coherent social

…An organization’s norms are "should" or "ought" statements about what
it regards as the right, appropriate, or expected thing to do in a
given situation. Taken together, norms create an organizational
culture. Just as Tolstoy famously said, "All happy families resemble
one another, but each unhappy family is unhappy in its own way," the
norms of companies that are both high performing and adaptive have a
family resemblance.

Great article.  Useful thinking.

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