Several readers have asked why I haven’t posted for a while. Rather than admit simply that I had nothing to say, I claimed to be busy with class notes and my draft manuscripts. I was aroused to pen this when I heard a babble head doll on a business program going on about the need to accelerate management change in US industry. This brought back memories of the golden age of change management during my consulting days. The note is drawn in part from the draft chapter on Nature vs. Nurture that Jim and I are working on for the business economics book.
The Pygmalion Syndrome describes change management theories and related efforts to create designer corporations. Formal change management efforts rarely succeed and often destroy more value than they create. These efforts are typically the product of management hubris, a shallow understanding of the evolutionary co-development of organizations with their environment, and a lack of respect for the learning and experience embodied in a firm’s routines. Routines comprise the practices and know-how that define how the firm converts inputs into something of value that it offers to the market. A firm, especially an established firm, is the result of an evolutionary process of adaptation and environmental adoption. The firm’s routines, which environmental economists Nelson and Winter liken to genes because they are replicable, persistent, and selectable define the firm and the products that it offers to the environment for selection. It is the routines that make the product possible that are selected; just as it is the cheetah’s genes that make it faster than some gazelles, not the speed per se, that are selected. In this sense, the firm has been changing from birth and has survived because the environment has selected its routines from among the many rival offerings. This is a joint process involving both nurture and nature; man nurtures a firm or set of routines by seeking advantage relative to rivals and alignment with the environment or nature which makes the final decision.
One of management’s most important jobs is of course to guide the creation and adaptation of routines to align better with the environment. The problems come when management tries to impose a design (complex of routines) dramatically different from the existing structure of routine and out of harmony with the environment. These are often vanity organization designs intended to shape the firm to reflect better the chief executive’s tastes or pretentions. The failures that result are yet more evidence of man’s limits in dealing imperiously with natural forces of which we have a long literary history from which to learn. In Ovid’s Metamorphoses (Transformations), the sculptor Pygmalion fell in love with the statue of a beautiful woman that he had carved of pure white ivory. In his effort to change the statue into his lover, Pygmalion violated just about every community standard of decency by fondling, kissing, dressing, undressing, and taking his statue to bed with him only to be frustrated by her cold inanimate nature. Fortunately goddesses are endowed with change management skills denied us mortals and Venus solved Pygmalion’s problem by granting life to the statue who then married Pygmalion and bore him a son. Now that’s transformational change that even Gary Hamel could believe in! George Bernard Shaw’s version of the story, Pygmalion, involves a pompous phonetics professor, Henry Higgins, as the change manager who transforms Eliza Doolittle, a Cockney flower girl, into a faux Duchess. Eliza however retains her essential character; she asserts herself and rebels against Henry’s clinical approach to her by threatening to leave and marry another. Henry then realizes how shallow are his changes to Eliza but how profound her affect on him has been. In the play’s later musical stage and movie adaptation, My Fair Lady, the story line is very similar but when the professor accepts finally Eliza’s natural character he recognizes his love for her more emphatically than in Shaw’s original version (“I’ve Grown Accustomed to Her Face”), prompting her to return and it seems likely that they will, like Ovid’s original pair, marry. Shaw had it right; most of the changes that can be applied in an ordinary change management program are superficial. BP was never “Beyond Petroleum” and its sunny solar logo and green posturing couldn’t offset its failure to create more effective operational routines consistent with producing in a still unfamiliar deepwater environment.
Kafka’s most famous novel, usually titled in English as Metamorphosis, shares its title with Ovid’s poem but has a very different story line than either Metamorphoses or Pygmalion. Gregor Samsa, a traveling salesman, wakes up one morning at home and finds that he has been transformed into a giant insect. His family is at first alarmed by his new form but eventually they become resigned and then resentful and finally happy when he dies. Samsa’s failed transformation is consistent with the evolutionary evidence that most biological mutations result in less fit organisms and quickly die out. This is consistent also with the experience of most change management programs. Efforts to transform utilities into energy services companies typically created overweight creatures that didn’t fit their environment.
Business change is evolutionary and its speed is determined within the system. Revolutionary rates of change rarely if ever occur because almost all of the change is incremental and internal to the system. The rare but dramatic changes in biological evolution such as the asteroid that probably lead to the extinction of the dinosaurs have no useful parallel in business or economic evolution. The rate of business change is governed primarily by two factors: the entrepreneurial capacity of the firms involved and the environmental selection process. The environment comprises all of the rival firms, their customers, and the collateral social and political systems that influence selection. Environmental selection operates by sorting and sifting through the variety of products and routines submitted by firms; it can select only from what is offered. Entrepreneurs seek continually to offer new products and routines for evaluation and, hopefully, selection. Individual entrepreneurs are human and thus limited in the variety that they can offer the environment but so long as there are many entrepreneurs there is a good chance that some will offer a product and routines aligned with the environment’s characteristics. The sort of unprecedented and accelerated change proclaimed by Hamel and others to be disruptive is the product of the system and not some external threat to it. (It’s also not nearly as unprecedented as he makes out – consider electricity or, before that, steam power.) Some firms will fail to adapt but unless some succeed, positive change can’t occur.
Submitted by Bob