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Friday, December 28, 2012

Diagnosis: Organizational Alzheimer's

A deliveryman carrying a bouquet of flowers walks up and knocks on the door of a small home. When the lady of the house answers he says, "Are you the Widow Jones?"
The lady says, "Well, my name's Jones, but I'm no widow."
The deliveryman says, "Oh Yeah, just wait till you read the card!"

Ba dum dum crash!

As a business consultant, sometimes I feel like the guy delivering the flowers. I know the bad news (and the good) well before the intended recipient. And like the deliveryman, sometimes I have to repeat the bad news several times with ever decreasing levels of subtlety. I used to think the need for repetition was a communication issue -- perhaps I was unclear in my description of the root causes of the organization's problems.

My views are evolving though. I'm starting to think that the inability to process information that threatens the status quo is a root cause of root causes. Chris Argyris (1985) covered the topic of defensive routines beautifully in his book Strategy, Change, and Defensive Routines, but it was Daniel Hardman who coined the term Organizational Alzheimer's to describe an organization that loses the ability to learn and adapt to a changing environment (see http://codecraft.co/2012/10/12/coping-with-organizational-alzheimers/).

Organizational Alzheimer's is a disease that progresses in three distinct stages.

In stage one, the symptoms are localized and target centers of corporate memory and innovation with budget cuts. Departments such as research, training, and strategic planning are often the hardest to defend and the first to suffer budget cuts. The strange thing about the progression of the disease at stage one is that the organization immediately forgets that these departments are at a reduced capacity due to budget cuts. Reduced capacity leads to reduced performance, and reduced performance becomes the justification for further budget cuts.

In stage two, the symptoms become widespread and start to permeate the organization.
. Customers complain with increasing frequency.
. Leadership routinely disregards inconvenient policy, earlier decisions, and plans.
. Strategic plans are lost or begin to wander.
. Departments begin to provide information or reports that are designed to hide the real problems.
. Managers have difficulty performing critical tasks such as staying within budget.
. Executives become moody or withdrawn when problems surface.
. Most everyone starts to exhibit personality abnormalities such as suspiciousness and paranoia.

In the third stage of this organizational disease, the wheels start to come off.
. There is a brain drain as employees with talent seek other opportunities.
. As the good employees leave, corporate memory and tribal knowledge plummet.
. Without a strong corporate memory, mistakes and errors explode.
. Management turns mean.
. Talent flees.
. The whole cycle repeats.

The good news is that Organizational Alzheimer's can be treated. The whole process can be reversed with a few simple steps.

Step 1, and this is a hard one, is to honestly discuss the undiscussables.
. Why does every department pad its budget submissions?
. Why do some customers get "hook-ups" based on personal relationships with employees?
. Why do we reward people for pretending to be successful with faulty measures?
. Why don't people want to work here anymore?

Step 2, organizational leadership must demonstrate a commitment to learning, planning, and innovation by funding these as first priorities.

Step 3, organizational leadership must demonstrate a certain ruthlessness in adjusting course. Change must be forced. Elements within the organization that resist change must be recalibrated or removed.

Ouch. The treatment sounds as bad as the disease. The underlying problem here is that mistakes in organizations are generally not self-correcting; they are self-reinforcing. Unless energy is constantly applied to counter the momentum of self-reinforcing mistakes, organizations have a natural tendency toward decay and decline. Organizational learning takes effort.