The Change Codes

by Joe Flower


International Copyright 1995 Joe Flower All Rights Reserved
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The Change Codes are distilled from our observations of hundreds of organizations, communities, and families going through change. They seem to remain valid at different scales and in different contexts. Test them in your environment, and tell us what you find.

1 Stay grounded

Never change for the sake of change. Never stay still for fear of change. When you move, move whole-heartedly. This helps keep the organization, the family, the relationship, clear and unconfused.

2 Face forward

Change is a one-way gate. You can't "go back to the way things were" any more than you can unscramble eggs. Even changes that seem cyclical or circular (the company lays people off, hires them back, lays them off; you break off a relationship, start a new one) actually work more like a spiral: you may be on the same side of the curve again, but it's not quite the same - every time is different.

3 Expect change

It is in the nature of complex adaptive systems to change. (You are a complex adaptive system. So is your organization. So is your family, and your relationship.)

4 Expect a bumpy ride

The most common rhythm of change is what paleontologists call "punctuated equilibrium" - long periods of what seems to be "business as usual" punctuated by rapid, chaotic change.

5 Look for change at each scale

Changes can happen between the organization and other organizations, between the parts of an organization, between individuals, or within individuals - and each change causes other changes at the higher and lower levels.

6 Expect change to evolve

Changes work together, like an eco-system. Each change makes a whole series of other changes possible - and shuts off still other changes before they can get started. Mr. Ford's invention of the mass-produced automobile precipitated myriad changes in roads, the oil industry, the law, the nature of war and the social structure of Burma, among other things - at the same time that it stopped the development of buggies.

7 Expect the unexpectable

Even when there is no particular outside influence to cause it, look for the paradoxical or strange result: add capacity and production falls. Lose a client, gain two others as a result. Solve the communications problem between finance and design, and the motor pool slows down. Simple causes, interacting over and over, can produce complex and surprising effects. Simple, "linear" changes in input can produce shockingly "non-linear" outputs. We see this all the time in organizations. But we tend to attribute the weird outcomes to outside influences, or to hidden factors that had escaped our notice. In reality the system itself, even a seemingly simple one, can produce very strange "emergent" outcomes. If we understand this and search for them, we are more likely to be ready for paradoxical, non-linear, strange behaviors.

8 Tell the truth

Information is the fiber of self-organizing adaptive systems. Tight control of information - which is normal in organizations and families - stymies successful adaptation. Information flowing upward allows the organization to evolve. Information flowing downward keeps the organization focused. Information flowing side-to-side keeps the organization coherent. Much of the atherosclerosis of organizations and relationships comes from blocks to the free flow of information. Without good information, people get paranoid. They build their fortresses higher. Tell the truth about everything, as far as is possible within the law and privacy concerns.

9 Increase communications

If you are going through changes, you need everyone on board. Increase not only the volume but the types and directions of communications. Make sure they are not only one-to-many, but also many-to-one and many-to-many. This is as true of a family or relationship as it is of an organization.

10 Listen actively, avidly

You need to know what your customers really think, what your subordinates really think, even what your suppliers, neighbors, competitors, and union stewards think. You may or may not enjoy hearing it, but it is vital to you. Do it formally, with surveys and focus groups, or informally in bull sessions and casual conversations, but do it. If you do it just enough to seem like a caring boss, a sensitive mate, or an involved parent, you will soon engender bitterness in those you are pretending to hear. You must do it with your whole self, and you must act on what you hear.

11 Notice the feedback your system gets

The organization, in its collective mind, has a model of "the world out there." It anticipates the future situation in that world and makes predictions about what will work: "If we make make the cars bigger, people will buy more of them." Or: "People will gladly pay more for better service." Then it looks for feedback: did it work? Is that what "the world out there" is really like? What sort of feedback is your organization getting? How does it get that feedback?

12 Notice how your system anticipates the future

Notice this in the way it is put together, the decisions it makes, the direction it moves. Every system positions itself to deal with what it really believes is about to happen. If it isn't organizing itself the way you think it should, chances are that (correctly or not) it doesn't believe in the same future that you do. How are you organized? How is your family organized?

13 Widen your environmental scanning

Go beyond "competitive intelligence," the art of scoping out what the other guy is doing. Ask what technical or organizational achievement could put you both out of business. How could your customers be satisfied so much better, easier, faster, or cheaper that you could not compete? If you are a video store, what happens when people can download any movie they want on demand over the cable lines? What might the equivalent be in your business? How could you pre-empt the competition?

14 Don't rely too much on forecasts

They are an important part of your environmental scanning, but they can be fatally flawed by lack of information, faulty assumptions, or the appearance of major new factors outside the range of the forecast. No one can see the future.

15 Lay out a vision of a future that works

We all deal better with change if we have somewhere important to go. We can't see the future, but we can envision a future that is both attractive and possible. This future must be expressed freely throughout the system. Each part of an organization must be asked for its own image of how that vision becomes real. A couple must work out a vision of a common future, and express that vision freely and frequently to each other. So must a family, or a community. A compelling vision guides us to changes that are appropriate, and results in a "future pull."

16 Make up what you are doing

Make it up as close to the action as possible. Organizations are run by "rule sets" - rules of thumb, conscious or unexpressed, that guide how the organization and the people in it, are expected to behave. Imported "rule sets" (such as benchmarking, or zero-based budgeting, or a directive from the board) may embody great wisdom, but if they are to work they must be adapted to the local reality. One example: in 1985, when Disney imported a crack financial team from Marriott, the new team's "rule set" had to be changed significantly to deal with Disney's creative film-making and theme-park business. For "rule sets" to be consistent with the integrity of the organization, they must come from leadership, from the top down. But for them to be effective, useful, and lively, they must come from the bottom up - they must be informed by what works.

17 Watch behavior, not structure

What your organization actually does, and how it does it, is more important than how it is put together - and the behavior can change much more swiftly than the structure. Structure can mislead us. The board's ultimate power, for instance, is only important if the board is inclined to use it. On the other hand, the power of workers to help, to hinder, and even indirectly to influence the direction of the organization is often greater than their position on the "wiring diagram" would admit.

18 Avoid the "Daddy Syndrome"

Too often, confronted with a difficult change, we refer upwards, to what "they" ought to do: the government ought to, the CEO ought to, headquarters ought to. Or we refer to the past: this should have been in the contract, we should have gotten into this earlier, our parents should have raised us differently. This is the "Daddy Syndrome," and it is a key way to be completely right (your perceptions may well be dead accurate) and still do yourself no good at all.

19 Use what you have

Ask, "What can we do here? At this level? With what we've got? What resources do we have? How quickly and easily can we get more? Who can help us do this? What resources do we have that we aren't using, that we haven't thought of, that didn't seem to apply?"

20 Find the feedback loops

Organizations are rich in both positive and negative feedback loops. The interaction of these loops, one pulling toward stasis, toward the "normal" situation, the other kicking the situation in some new direction, largely determine the behavior of any complex adaptive system - such as your organization. Sketch these feedback loops in your organization.

21 Expect everyone to do what is best for them

Count on each person in the organization, and each piece of the organization, in the long run, to do what seems in their best interest given the information that they have.

22 Don't penalize mistakes

Skip the blame. Punishing someone because they bet on the wrong horse does not teach them to bet on the right horse. It teaches them to avoid betting, to stick out no neck that might be their own. This diminishes their nimbleness. Skip the blame even if you are right.

23 Make the system a learning organism

Whatever it does, whether it makes computer chips, builds dams, raises children, fills out letters of credit, or plays Stravinsky's "Sacre du Printemps," it must become a learning organism, or it will become rigid. It must do this top to bottom. Learning is for everyone. Learning is not peripheral to your organization's goals, it is central.

24 Let people discover what works

Ask them to notice it in detail, and get them to pass it on. The people who work individual processes, if asked and allowed, will discover it faster than any outsiders, including you.

25 Be at least as willing to fire leaders as followers

Relatively few of the problems in an organization are due to "bad apples," gross incompetence, or venality. Most are due to systemic problems. All "bad apples" should be removed, if possible, or isolated if they cannot be removed. Low in the organization, however, "bad apples" have little scope, and affect only a few customers or subordinates. Higher up, they can affect the whole organization, destroying people's livelihoods, disrupting the organization's mission, and interfering with the organization's ability to change.

26 Push decision-making downward

Put people in charge of their jobs. Put the power of decisions about each process in the hands of the people who perform the process. This builds flexibility. Do this informally, by delegation, or formally, through benchmarking, quality improvement teams, or any of the several forms of corporate democracy.

27 Push decision-making outwards

Import information, export control. Strengthen your links to your customers and suppliers so that they have real, timely say in your decisions. Do this informally, through constant conversation, or formally, through contracts and advisory boards. Strengthen your links to your mate so that you make decisions together truly, not in form only.

28 Flatten and crosslink the organization

If marketing can only communicate to manufacturing through headquarters, up and down six layers of management, marketing will not spend much effort talking to manufacturing, and will not have the information it needs. Instead, make cross-functional teams a basic, normal way of doing business.

29 Market share, not profits - quality, not size

Size and profit grow from quality and market share. Profit is momentary, a relationship between costs and market prices that can easily disappear. Size can actually be a problem if it is not well-integrated. Quality and market share translate into things that can be very useful when the the winds of change howl down your valley, things like reputation, name recognition, and the trust of your customers, suppliers, and investors.

30 Do what you are good at

Build on your core competencies. This gives you guidance when you can or must move quickly to deal with change. If you are a hospital, what business are you in: managing a large, hotel-like complex with operating rooms and laboratories attached? Or fostering the health of a population? Nintendo is very clear that it is in the business of providing a certain type of entertainment, not of providing a platform for any other type of entertainment. Sears stumbled when it misunderstood its basic competence in providing reliable, low-cost retail access, and expanded into financial services, real estate, consumer credit, and other businesses.

31 Walk a mile in their shoes

You spend serious time looking at your competitors, your subordinates, your suppliers, and your customers. Flip it over: spend some serious time looking at yourself from their point of view as well as from the point of view of non-customers, potential competitors, possible strategic partners. Take their view seriously; adopt it, at least for a moment. If you don't know their point of view, find it out. Go to the center of the forces of change that are coming at you, and look at yourself from there. It will give you unique information.

32 Increase your speed

Cutting your "cycle times" - the time it takes your organization to move an idea to market, or to complete any particular process - gives you both strategic advantages and greater flexibility. Speed trains your organization in nimbleness.

33 Be prepared to sign up

When change happens, there comes a time when the bus is on your block. Get on. You cannot ignore it. If you try, the time and manner in which you join will be picked for you, in a way that you will least expect. Every change carries something that you can use. Pick your moment, and go with it.

34 Let go

Whatever ship you steer, use all your skill and experience. But you and the ship will do better if you recognize the limits of what you control. There are ports you are too big to enter. There are storms from which it is better to run.

35 Be mindful

Notice. Trust your gut. Listen. Feel. It makes a difference

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