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Prosperity without Growth

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Readers of this blog might recall the ‘secret sauce’ proposed in The Mindset for talking about Agile with executives:

Success, however, depends on a certain kind of mindset of the executive you are talking to.  This mindset is nicely described in H. Thomas Johnson‘s article Manage a Living System, Not a Ledger:

…a business organization cannot improve its long-run financial results by working to improve its financial results. But the only way to ensure satisfactory and stable long-term financial results is to work on improving the system from which those results emerge.

In a perceptive CQI  article on the recently reported problems at Toyota,  Johnson offers the following analysis:

Toyota avoided this fate until the last decade because it did not regard results as outcomes that a business achieves by requiring managers to drive people to meet financial targets. It saw that results emerge from a process in which people carefully nurture a web of relationships. These relationships, strikingly enough, emulate the behaviour in natural living systems.

The reversal of Toyota’s fortunes in the past decade suggests that many of its top managers lost the habit of thought that had previously shaped the company’s policies and actions. They lost the habit of thought that caused the company, perhaps unconsciously, to act like a living system. Toyota adopted the finance-oriented mechanistic thinking that had spawned the inferior management practices and the poor performance shown by most of its competitors after the 1970s. And because it abandoned living-system thinking for mechanistic thinking, Toyota began to embrace a virtual world of finance, not a concrete world of humans in cooperative relationships.

Johnson concludes his analysis with a broad warning:

Efforts of companies to reduce that waste by “going green” are not likely to be any more effective than efforts to improve performance by “going lean”. In neither case do these efforts change the thinking that produces excess growth. The efforts might reduce the rate of growth for a time, but they will never reverse it as long as companies adhere to the conventional wisdom from the virtual world of finance that says prosperity is not possible without growth. [Highlights by IG]

The hazards of the virtual world of finance have been conclusively demonstrated during the macro-economic crisis of 2008-2009. One must wonder what it would take to learn the applicable lessons at the micro level of individual companies.

The Mindset

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In her recent post Stop Drinking the Kool-aid – Eat the Cereal!, colleague and friend Jean Tabaka gives an interesting metaphor for iteracting with executives about Agile:

Talking about Agile to executives can be like feeding turkey to your family on Thanksgiving; it puts everyone into a sleepy stupor.

Jean goes on to recommend Lean as a way to get the message across. To quote her:

Through Lean, I am able to tap into discussions about waste versus value. I can engage the executive team into looking at their entire organization. And, these “seeing the whole” discussions help them then understand why they should care about an engineering groups adoption of Agile.

Working the Lean angle the way Jean recommends could most certainly open the discussion and enrich it. Success, however, depends on a certain kind of mindset of the executive you are talking to.  This mindset is nicely described in H. Thomas Johnson‘s article Manage a Living System, Not a Ledger:

…a business organization cannot improve its long-run financial results by working to improve its financial results. But the only way to ensure satisfactory and stable long-term financial results is to work on improving the system from which those results emerge.

If you accept the premise expressed by Johnson, you need to consider two kinds of possible dialogs to get your Agile message across:

  • Agile focused dialog about the what, why, how and when of Agile. You do this kind of dialog when your counterpart is already at the point of looking for sustainable value generation, not for a magic bullet.
  • Recipe for success dialog. This kind of dialog establishes the foundation required for the first dialog when the executive is not quite ready yet for Agile. Give the executive the opportunity to think deeply on his algorithm for success. It may take a few conversations until the algorithm is spelled out. Once it is, you can start working with the executive on what Agile is and how it might fit into his algorithm for success.

An extremely important point to keep in mind is that mindsets evolve. The set of business circumstances under which an executive is operating can lead to a certain mindset. The mindset can be quite different at another point in time due to change in strategy, priorities and constraints. A good fit for Agile may not exist today, but it might exist tomorrow.

Written by israelgat

January 26, 2009 at 9:51 pm