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Can BAU companies innovate?

January 30, 2013

What’s 170 years old is now new.   Hawthorne’s “The Birth-Mark”, one of those easy-going, laugh a minute, Victorian novels, had an interesting take-away: perfection is not a natural state; being alive means being imperfect and continually changing as circumstances dictate.  While this was first published in March 1843, in the ensuing 170 years we have over-focused on designing perfect organizations and processes and then becoming comfortable with the static state, terming them BAU, Business As Usual; carved in stone, predictable, definable, trainable, easy to control – as if business never changes over time. Except for companies looking to move the needle and dominate an emerging market.

Most companies are very happy to operate consistently, on a daily basis, setting customer expectations fairly low and then marvelously delivering to expectation.  After a recent trip, my wife and I were at Newark Airport where an airline took 45 minutes to retrieve a plane load’s worth of luggage.  200 people milling around the conveyor and no one really surprised this recently merged airline delivered to mediocrity. Just another BAU day for a company whose preflight CEO video stressed their new Ops Center, designed to let them know the status of everything, everywhere.  Never mind my wife had to walk over and inform their Baggage Office of the delay.  Yes, most airlines are pretty low grade these days, but that also leads to commoditization and price erosion.

Wikipedia describes BAU as possessing the ability to remain in place ‘in contradistinction to external events which may have the effect of unsettling or distracting those inside an organization.’  As Mancur Olsen cited for failed empires, organizations over time become sclerotic, bureaucratic and unable to sense change around them.  BAU organizations deny the need for change, which is fine for that part of an organization where BUA culture meets a BAU workforce and a BUA marketplace/customer expectation level.  But what happens when an organization tires to innovate but does it without thinking it through end to end?

We recently saw how an innovation initiative threw the larger organization for a loop when new market demands required speed, agility and a breaking of current sequential product development and launch processes.  As was their norm, the operating model reflected and was driven by their matrix culture, where every meeting had 20 or more attendees, followed by minutes, review sessions, re-review sessions and multiple signoffs. It was Management by Outlook Calendar – if a meeting was scheduled for 30 minutes, attendees ended it on time and scheduled another to continue talking rather than continue until they had a decision or result.  Progress/Status meetings took place 3 or more times a week, often rehashing the same issues with the same attendees.   It went beyond information transfer and agreement (necessary), to CYA (probably even more necessary).  In one instance, although the end-customer was in Asia, the project was conceived on the East Coast, managed in NY and in the Mid-West and the in Southeast, developed in India and tested in India and Asia. Reflecting the matrix organization and culture, there were multiple PMO’s, each improperly structured, without real power to execute, but with a focus on status reporting, often developing the ‘One Report’ which would help bring everything under control, as elusive as is the search for the unified theory physics.  Each PMO’s main focus was to nag-report-escalate-report-nag, and the best counter strategy was to tell them what they wanted to hear.   Thus, management made date commitments to their customers based on information accumulated under a “here’s some dates, now leave me alone” basis.  At almost every trouble point, everyone agreed the end of BAU was required, to the point where that pronouncement became part of BAU.  In the end, the programs were late and seriously over budget, with internal and external customers dissatisfied.

So can BAU companies innovate?  First, they have to want to innovate, which implies they are willing to admit life has changed, and their BAU is not always applicable.  What kind of new passionate and curious organization replaces the existing organization? Does pulling people out of their day-jobs suddenly make them great innovators?  First of all, BAU people are more attuned toward passive-professionalism than passion and curiosity.  People who function well under BAU are easily managed, to the point of potentially becoming (as a friend called it) ‘process lemmings’.  They build resilient organizations, able to resist change, deny the need entirely, or incorporate just a bit into the existing daily run of the mill.  These organizations only appear to be strong – they are actually incredibly fragile, and so when a game changer comes along, they collapse.  Organizations recruit and retain people who fit into the prevailing culture, so re-purposing the same people is usually a dead-end.

What we need is innovation initiatives with a new,’ Antifragile’ culture and employees.  Taleb, an NYU professor and author of ‘The Black Swan’, recently published ‘Antifragile: Things That Gain From Disorder’, where he argues for an organization that upon sensing the need for change, does not resist, but actually gets better (he also wrote a great Op-Ed piece for the NY Times about this, dealing at the nation-state level).  Market disruptions actually helps this type of organization, it does not threaten  BAU processes while flummoxing employees.  Clearly, innovation groups have to be ‘Antifragile’.

What are the characteristics?

First, they must be self-contained groups, standalone, from conception to execution.  In the example mentioned above, much grief would have been eliminated if the IT organization had carved out a group to work with, and be integrated into, the innovation group.  Borrowing key personnel on an as-needed basis posed both a scheduling and availability conflict.  It also created a culture clash blowback, where threatened middle managers spent more time reporting and documenting their actions than leading progress.

This leads to the second most important element – a single, small, centrally empowered and accountable leadership team for each initiative, breaking the typical big-company matrix.  Not just the typical Steering Committee participants, these should be line managers with budget and delivery responsibility. Let them have skin in the outcome.  Underlying and supporting the empowered leadership is a PMO with teeth, acting as an engagement manager, not simply focused on their reporting responsibility.  No magic report will save a troubled project when the basic delivery organization is more BAU that Innovator.  All it will do is explain why they are missing their repeatedly restated (and ever later) dates, costs and revenue targets. In the best case, the Engagement Manger oriented PMO will control paying for deliverables (just as any Systems Integrator or General Contractor does) as money equals power in most organizations.

Thirdly, and perhaps the most critical, is being able to hire, reward and retain functional level innovators.  Case in point – an organization with a well-articulated strategy of becoming a leader in mobile applications and digital products could pay their way into attracting some very solid innovative senior talent.  However, when the newly hired innovator met the BAU culture, they tended to stay from anywhere for 6 weeks to 6 months. The key is not to hire a select group of very senior leaders and then have them figure out how to make the organization more flexible, it’s hiring a core group of non-BAU functional level personnel capable of living, and thriving under, continual uncertainty as well as attracting similar new employees.  To paraphrase Thomas Friedman, functional level innovators possess not only high IQ’s (no organization, including BAU, hires dummies), but, in addition, they hire for high PQ (Passion Quotient) and a high CQ (Curiosity Quotient).  Let them create the innovation sub-culture.  Once you have these people in place, a key executive of similar orientation can be attracted and retained.

Forth is co-location.  Many manufacturing companies have Innovation Centers safely tucked far away from HQ. Co-location allows for effective communication, immediate problem solving and direct accountability. While we all love technology, no measure of video conferencing, email, IM’ing and conference calls will forge the bond and speed necessary for innovation to succeed.

Finally, innovation groups must use a different project management engagement model, more akin to a Prime Contractor/System Integration model than a typical PMBOK/PMP structure and focus.  Bring them in early into all planning and brainstorming sessions, including actively participating in the budgeting and proposal/program initiation process. Then, let them have budget/paying for results, and not just reporting/oversight responsibilities. In poker, if you’re not sure who’s the patsy in a game, it’s probably you.  In innovation, if the Program and Project Managers are not as smart, as passionate, as empowered and as line responsible for results delivery (and accountable) as you are, then you’re the patsy here as well.

If typical PMOs are used by BAU organizations to drive innovation, is it any surprise the common statistic is 25% of PMOs fail in their first year of existence, 50% by the second year and 75% by Year 4? Are they the canary in the innovation coalmine?

Richard Eichen is the Founder and Managing Principal of Return on Efficiency, LLC, http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program Rescue and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT/Systems Integration and key initiatives. Return on Efficiency, LLC specializes in those companies and initiatives where technology is the primary means of service delivery and revenue creation.  He can be reached at richard.eichen@growroe.com

 

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