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Weekly UpdatesEXECUTIVE SUMMARY
It's easy to fall into the trap of looking for answers "out there." But the real solutions to improved business performance are inside your very organization. Get the management team in touch with its own wisdom and find a way to draw it out.
Organizations continue their struggle to manage in chaotic and turbulent environments as the need for change increases the pace and pressure on business. The only apparent constant in this picture is the need to stay competitive. Managers continuously search for outside techniques and programs that will allow them to improve performance.
We refer to these traditional responses to performance improvement as outside-in programs. Simply put, outside-in techniques are externally driven programs that have been developed to show managers new and better ways of performing. The programs are typically presented by outside experts, and managers are required to attend the sessions.
Unfortunately, the approaches taught often exit with the expert and become known as the management flavor of the month. At best, they have short lives in the organization. Our experience is that these programs fail not because of a lack of competence on the part of the expert or the managers but because the expert attempts to effect change from the outside-in.
Our observation and experience is that true and sustained improvement starts from the inside. Whether applied to an individual or a large organization, the ability to change and create performance improvement can come only from within the person or organization itself. This is a fundamental principle of change and a readily observable fact of organizational life.
Although all organizations can benefit from external expertise and training, our observation is that successful organizations are able to integrate this information into internally based performance choices--choices based on deep-rooted and understood needs that drive the organization to effective change.
How people see things and what makes sense to each of us is an inside-out process. Motivation for and ownership of change are the observable behaviors involved in performance improvement. We call this internalized process managing from the inside out.
As an internal process, managing from the inside out begins like inside-out thinking. The central tenet of the inside-out process is that management is the source of its own improvement. Only after management reexamines how and why it is managing and has taken rational steps for improvement can it even consider outside-in programs. Management's use of its own knowledge in this way is the first stage of change, which we refer to as organizational awareness. Outside-in programs are informational and sometimes supportive; while they may facilitate change, they will not produce or sustain it. Managing from the inside out is an adaptive process that produces and sustains performance improvement without management losing operational control.
Our intent here is to highlight the principles involved in this process so they may be more pragmatically applied to improve your organization's performance.
We have discerned five basic principles of the inside-out process (see "Difference Approaches"). It should be noted that, as a process, each principle of managing from the inside out evolves from the previous principle.
Although all of the principles are important, we cannot overemphasize the importance of the principle that sustained improvement requires sustained change. Often, after management's efforts yield positive results, energy and the will for change are lost.
One way to describe this tendency is the bagpipe effect. Bagpipers start to play music by pumping a billow under one arm. Organizations also start pumping up to improve performance. The difference is that bagpipers fully understand that to continue playing they must continue pumping. As soon as some organizations hear the music of a small success, they lose focus on the change effort required to produce it.
Principles in action
A manufacturer in the Gulf area of Texas had a problem. It was no longer competitive in an industry where only low-cost producers would survive in the long run. To be profitable and remain in business, cost reduction and improved productivity were essential: Something had to change. They tried experts with outside-in approaches and although initially the staff was enthusiastic about the new thinking, nothing really changed. Cost remained high and productivity remained low.
Almost by accident, the general manager started working with an external consultant who had an inside-out approach. The program was a simple one. The management team met one evening in a series of management meetings facilitated by the external consultant.
The team's first task was to develop a shared and accurate view of their present situation and determine what level of performance was required to survive. During the first hour or two of the meeting, the group got sidetracked and tossed accusations back and forth. The facilitator steered them back to reality: They were all in the same boat and they had to figure out what to change to keep the company afloat. To do that, they would have to agree where they were starting from and where they were going to go. The facilitator was clear that he was committed to help them be successful, but it was their problem requiring their solution.
Principle: Management is the center of its own awareness and knowledge.
Finally, the team got down to business and agreed that the gap was significant between their present performance and what was needed for survival. In terms of cost, it required a challenging (but not insurmountable) reduction of about 25 percent.
The next afternoon the team analyzed the current issues, the impact on costs, and the business ramifications. Finger pointing continued. Repeatedly, the facilitator brought them back to the issues at hand and challenges ahead. As the days passed, the meetings became more efficient partly because the group got tired of the long meetings and partly because they learned how to manage their meetings and their approach.
Day by day, the team grew noticeably more open and less resistant to the ideas on the table. The managers better understood their problems and more practical solutions presented themselves. Even previously unconsidered solutions that required cooperation between departments were openly considered on their merit.
Principle: The solution to every problem lies in the problem.
The group also agreed that just reducing cost without improving performance and quality would only achieve short-term success and not long-term survival. Consequently, the difficult process continued to identify methods of improving performance and quality in harmony with standard and creative cost reduction opportunities. To the general manager's joy, the team was becoming more effective as it progressed with its new profit improvement action plan.
Principle: Developmental change is a function of the process.
Armed with an aggressive but pragmatic action plan and team commitment, the team started implementing the actions required. Progress over the first 60 days was outstanding--a 14 percent annual reduction in cost and increased productivity. The next 60 days were more difficult--increasingly aggressive steps had to be taken and come to fruition, but another 5 percent annual reduction in cost was gleaned.
Principle: Common-sense solutions are easier to implement and sustain.
It was evident at the regular weekly issues meetings that the team was beginning to plateau at a 19 percent annual cost reduction and flat productivity levels. In concert with the external facilitator, the general manager wisely held another management session to give the team new momentum by analyzing what had worked, what had failed, and what the team had learned in the process.
Principle: Sustained improvement requires sustained change.
Summary
It is our observation that the process of managing from the inside out encourages a high degree of group ownership, pragmatic application of solutions, and a high amount of sustained improvements. The process, founded on long-understood behavioral and organizational concepts, is practically observed as a virtual truism within successful organizations.
It is critically important to remember that management is the source of its own improvement. Only after management reexamines how and why it is managing and has taken rational steps for improvement can it even consider outside-in programs. Be more like the bagpiper.
BE A GOOD MEETING FACILITATOR
1. Prepare the group: Before the meeting, communicate the purpose and agenda; at the start of the meeting, restate the purpose and desired outcome, then review the agenda. Agree to ground rules (such as confidentiality and no interrupting others).
2. Encourage opinions: Demonstrate that you value participation by thanking people for contributing and then paraphrasing their key ideas. Ask open-ended questions and solicit different points of view. Record ideas and decisions on a flipchart or whiteboard.
3. Keep them moving: Pay attention to the flow and timing of the meeting: Reign in participants who monopolize the meeting and bring everyone back to the agenda when necessary.
Periodically summarize key points and remind the team where they are in the process.
4. Plan action items: Assign tasks throughout the meeting, recording them as you go and reviewing them at the end. Direct the group to outline their next steps. Conclude by summarizing accomplishments and outlining how progress will be monitored.
Source: "Facilitating for Results," Zenger Miller, 2000
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