Introduction
The "Titanic syndrome"
How organizations change over time
>>Succumbing to the "Titanic syndrome"
The roots of the evolutionary organization
Principles of the evolutionary organization
The evolutionary organization-- an operational perspective
The evolutionary organization-- a management perspective
The evolutionary organization-- a new science perspective
A practical experience in building an evolutionary organization
Summary

(continued from How organizations change over time)

Succumbing to the "Titanic syndrome"

As we further explore Figure 1 we can readily understand how management minds become set, and how traumatic revolutionary corporate and personal upheaval will almost always be a feature of the life of even exemplar KROs [21]. We think it is useful to frame this topic in terms of "mindsets" rather than "mental models" since this term better represents the fixed defensive nature of much management thinking with regard to change [11], other than during the organization’s formative phase.

Ironically, it is at point A1 that the KRO comes closest to the desirable entrepreneurial features espoused for today’s turbulent markets [7,22,23]. For example, the formative KRO exhibits an open, inquiring culture; it freely explores mental models; it displays the intention to "create its own future"; its tacit-explicit adaptive-generative knowledge is continuously refreshed; and, it generates and esteems intellectual capital.

Of course, the formative KRO is a chaotic place to work. The need for administrators and accountants seems logical to its managers, and business lore is replete with lessons concerning organizations that did not move quickly enough from the formative to the normative mode. Since organizations which continue to do business successfully in a highly entrepreneurial fashion do not fall within the KRO paradigm, start-up approaches do not seem to be explored as models by KRO managements [24,25]. That an organization (the EVO) could be designed to exist in the disequilibrium between the formative and normative stages, leveraging the "best of both worlds", has not been considered in the literature to the best of our knowledge.

As we move on from point A1, most firms enter the normative period of stability and success [26]. Unfortunately, the alignment so often sought by the normative KROs is based first on conformity and then on indifference, becoming a "psychic trap" [27]. This is where the issue of mindsets emerges. It is again ironic that in its most profitable phase, the KRO is sealing its own fate as we will illustrate. Pedlar et al. [19] call this "doubling", whereby an organizational strength becomes a debit. We expect people to perceive their world objectively, but they do not [28,29]. The KRO creates a paradigm based on its own success. However, "a paradigm is both a blessing and a curse; a blessing when it allows a large and varied group to work harmoniously together; a curse when it creates a perpetual and pervasive conceptual inertia that blinds them to the need for change" [16].

As the KRO continues to prosper, norms and rituals are taken for granted. "Espoused" knowledge is made explicit in manuals, procedures, and broad statements of mission and values. In contrast, the important day-to-day operational knowledge and "in-use" mindsets [14] are made more and more tacit, as shown in Figure 1. During this period important progressive initiatives are attempted by the organization [30]. However, such initiatives are founded on type 1 learning [14] and are related to "doing things right" rather than type 2 learning [14], related to "doing the right things". In other words, re-arranging those deckchairs rather than reconsidering course and speed. The organization becomes increasingly dependent on "learning only from its own operating manuals" [13]. As Raymond Smith, Bell Atlantic CEO, recounted, "The organization adopts an implementation mentality. It is run not by business managers who are held accountable for end results but by ‘maintenance managers’ who are held accountable for improvements in a process or a practice exactly as written. Ways we were accustomed to operating impeded our ability to achieve our goals" [31].

An organization’s culture helps it simplify and make meaning of its internal and external environment, and results from the mutually reinforcing mindsets of its employees. The organization’s dilemma is to maintain an open and refreshed culture as its employees seek constancy. In the normative KRO the process of seeking stability becomes a vicious cycle. Its culture becomes increasingly inward focused, more and more entrenched, politicized and bureaucratic, and management mindsets become more and more inflexible and closed. Boisot [32] talks of "convergence" in these conditions, where individuals come to acquire similar characteristics and become more alike.

This is productive when the collective mindsets are in line with reality. Unfortunately, this does not long remain the case, as Schrage [33] says, in quoting Janis [34], "the well intentioned well educated hardworking sorts that tend to run large organizations end up mutually reinforcing their biases all the way to self destruction." Hammer and Champy [35] come to similar conclusions: "Executives think their companies are equipped with change-sensing radar, but most of them aren’t. Mostly what they detect are the changes they expect… the changes that will put a company out of business happen outside the light of its current expectations, and that is the source of most change in today’s business environment."

As we have said, culture is the accumulated shared learnings of a given group, covering behavioural, cognitive and emotional elements of the group’s psychological functioning. The group’s mindsets and shared assumptions derive their power from the fact that they operate outside awareness [36]. Humans get locked into believing their own seamless web of unconscious beliefs and subtly moulded perceptions. Once such patterns have been learned, anxiety alone is enough to keep them going [12]. Argyris has presented a comprehensive review of such managerial defensive mechanisms [11]. It is helpful to regard these processes of perception as acting basically like a conditioned reflex. It takes time to build up the memory-based readings, but once this is done, the responses are so fast that it is difficult to see their mechanical nature [36].

It has been shown time and again that a clear, strong organizational identity is not necessarily good for business in the long term [27]. Organizational culture that lacks adaptive/generative values at its core ultimately undermines performance [24] and at the same time limits and biases capacity to perceive and understand a new vision [12]. Culture becomes an integral element of organizational capability through the power of the mindset to define what is knowable and actionable. The roots of disaster are sown as the organization’s collective mindsets grind a cultural lens through which to view their seemingly narrow, featureless business world.

We now live in an age of "punctuated equilibria" [37] where events often outstrip the projections of even the most knowledgeable experts [17] and businesses are especially exposed to discontinuous change [38]. Zuboff [39] notes that "The rigid separation of mental and material work characteristic of the industrial division of labour and vital to the preservation of a distinct managerial group… becomes not merely outmoded, but perilously dysfunctional". Donaldson and Lorsch [40] state that managers often do not discuss corporate survival at all, although they do tacitly include it in their planning. These authors also conclude that top management’s freedom to set strategic direction in the mature industrial organization is significantly constrained. In any event, the KRO meets its crisis precisely at the time when there will be the least spirit, leadership and explicit adaptive-generative knowledge in the organization to sustain the creative and innovative initiatives required [12].

Given the influence that the Titanic syndrome exerts over KRO managers, it is no surprise that they continue to behave in obviously ineffective ways, even when these behaviours threaten the survival of their organization. Typically, management responds to serious environmental impacts by reorganizing only those internal features required to preserve its current autonomy, i.e. the deckchairs.

At point C1 in Figure 1, the obsolete KRO has two choices: abandon ship and lose everything, or "right quick" come up with a new plan. Unfortunately, "Little is known or understood about the process of reorganization and rebirth" [12]. In other words, it is best to avoid this situation altogether, and only a fool would be caught in this predicament more than once.

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The Saint-Onge Toolkit www.saint-ongetoolkit.com was released on November 1, 2001. It is an online learning platform containing rich media Powerpoint Presentations, a monthly seminar and Discussion Group that focuses on the core ideas of Hubert Saint-Onge's Knowledge Assets Strategy. $200US for a three-month subscription. It can be customized for a CKO's corporate knowledge strategy implementation.