Larry Rosenstrauch asks:
" Phillip Capper (LO3326) talks about performance going down for three
years after a major change at a manufacturer then rising to the top
echelons of the industry by year eight. Here's a question...can you
attribute this to the organizational change? In other words, where would
the manufacturer have been if the CEO had done nothing but strive for
improvement using his original organizational structures & processes.
Would he have been out of business?"
I think the question is excellent. Systems theory cautions us against
facile cause and effect conclusions. However complexity models suggest
that change takes place in bursts following periods of relative stability.
I think that CEO's contemplating radical change need to form the ab initio
question:
"What would we expect to observe that is different as a consequence of
this proposed change, and how might we best determine the proper
attribution of observed change?"
If the answer to this question is simply related to financial performance
then neither part of the question will be adequately answered.
However if a proxy measure series is devised to answer the first part -
using such indicators as reject product rates, inadvertant environmental
discharge rates, staff satisfaction levels, absenteeism, inventory levels,
on time delivery rates and so on, then one begins to identify improved
performance indications BEFORE the benefits show up in financial
performance. It is this phenomenon which sustained the CEO I described.
In respect of the second part of my suggested question - concerning causal
attribution:
(a) indicators of the type I have suggested produce internal benchmarks
when a time series is maintained. However in order to try and separate out
other possible explanations for the phenomena observed it is also
necessary to....
(b) use external benchmarking. If the performance of my firm is improving
not just absolutely, but also relative to competitors, then it is
reasonable to suppose that internal factors are significant. In a cyclic
downturn success if internal change may even be indicated by DECLINING
financial performance, but that which is less dramatic than the declines
being experienced by the industry as a whole.
-- Phillip Capper WEB Research Wellington New Zealand