Today I noticed a post on HBR from Eric Schmidt, the CEO of Google. He said that there was one HBR article–from 12 years ago no less–that still guides Google as they grow and develop today. Obviously, this is an article I need to read. Actually, I was kind of hoping I’d already read it, but back in 2000 I was recently out of the conflict resolution field and doing diversity training, so I wasn’t yet reading HBR (shame on me!).

The article is from Clay Christenesen and Michael Overdorf, and it’s titled “Meeting the Challenge of Disruptive Change.” This caught my attention because (a) I know Christensen is super smart (author of the Innovator’s Dilemma), and (b) I feel like our book Humanize is ultimately about supporting organizations in better dealing with disruption. The article is great. It discusses three areas of “capabilities” within organizations: resources, processes, and culture. Resources (both human and otherwise) get a lot of attention when it comes to what an organization can do or not do, but the authors point out that among the three areas, resources is actually the easiest to get your head around. Processes and culture can be stickier, particularly if they need to change. This is the quote that hit me the most:

Hence, the factors that define an organization’s capabilities and disabilities evolve over time–they start in resources; then move to visible, articulated processes and values, and migrate finally to culture. As long as the organization continues to face the same sorts of problems that its process and values were designed to address, managing the organization can be straightforward.

Organizations evolve by solving critical problems well, perhaps starting with the very basic problem of meeting a need in the marketplace or creating just the right value for customers or members. As they grow, they amass resources, create processes, and develop a culture that works at solving the problems that they face in meeting that need or generating that value. Successful companies solve problems more quickly, effectively, and efficiently than the competitors. And as the bolded sentence indicates, as long as you face the same sorts of problems, then you probably have the right kind of capabilities in place.

But when things change, your capabilities can become disabilities. They provide the example of (dust off your history books, folks!) Digital Equipment Corporation’s demise. Digital made “minicomputers” from the 1960s to the 1980s, and while they probably should have been poised to rock the emerging PC market, they didn’t. The authors argue that the capabilities Digital developed to be great at minicomputers simply didn’t help do the work of PC making, so they couldn’t succeed. If you want to repair you computer then you should visit to pcrevive.org website, you can find out more information about PC repairing here.

Interestingly, in devising a solution to this problem, the authors suggest three courses of action. When faced with disruption, you can:

1. change structure and process internally
2. create a new organization that will have new processes and structures
3. acquire a new company that already has the processes and structures you want.

Oh, and the first option really only works when the change is already consistent with your values (i.e., only a process fix is required). If the challenge is to the values, then you need to create or acquire a new company.

Hmmm. So what I’m hearing is, at MOST, management is something that can be tweaked. If you need significant change to management, you kind of need to start from scratch.

That bugs me.

Granted, the article is specifically for “big” companies (where spinning off a new company probably isn’t as big a deal as I think it is).  I admit I think more of smaller enterprises when it comes to this blog, since that’s where I’ve done nearly all my work. In a smaller enterprise, there’s probably more room for internal change to solve the problems, before thinking about starting a new company. But I keep thinking about that bolded statement above: as long as things haven’t changed, then managing is pretty straightforward. Maybe that is what’s bugging me.

I think it’s a myth that managing has ever been straightforward. We certainly view it that way. We create processes and cultures that support our successful business ventures, right? But that’s all within our mechanical approach to management. And that’s why we continue to do strategic planning despite solid research that indicates its ineffectiveness. That’s why we are blind to radical innovation to management (like Morningstar, where there are literally no managers and all employees have nearly unlimited purchasing authority)–it doesn’t make sense to us to try a new management approach if there is not some kind of business model disruption going on (Morningstar processes tomatoes, for goodness sake–not really an industry that’s being decimated by disruption!).

Our focus is on disruption to our business models, and changing our management approach in response. That is certainly important, but I think we’re missing an important point: there has always been value to be gained by innovating management, regardless of our business model stability. Just because we declared management to be “straightforward,” doesn’t mean it is. Companies like Morningstar, W.L. Gore, and Whole Foods have long since figured this out–and have the profits to show for it. And when management innovation is made more of a priority and made more “normal” (and made more human, I would argue), you’ve effectively built the capacity to deal with business model disruption as well.

I don’t think we have to wait for disruption and then change management, particularly given the speed of today’s environment.

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