How to Create a Transformation of Mindset in Companies, Government & Academics

Good Morning Innovation Pioneers, I'm in Wichita Kansas - getting ready for an Innovation Engineering Leadership Institute.  I wrote this on the plane trip out.  It details what I've been thinking about for the past week. 

The Problem

At least 85%+ of USA Companies, Government programs, Colleges and Universities do not have sustainable business or success models.

The leadership of these companies, government agencies, colleges and universities are reactively cost cutting their way to  a certain death.   A Governor I met with last week said without hesitation that his state was at 9 - near death on the Life Cycle curve.

Sadly, the leadership of organizations - for profit, non profit, government or academic has no idea how to recreate their organizations.   They’ve never done it - never experienced - never been taught.  This Video of Dr. Deming says it clearly.

A Transformation Is Mindset is Needed

This past week I met with Clare Crawford-Mason the producer of the NBC White Paper “If Japan Can Why Can’t We?” that set off the quality/Deming revolution.  Clare, like Bill Conway expressed grave concern about the direction that things are going.

When I offered new ways of working she stopped me and said, We need more than methods.  We need a complete TRANSFORMATION of mindset” 

Note: the boldface and caps are mine - in reference to the fact that she said Transformation to me about 25 times in the next 1.5 hours - to make sure I understood the scope of the challenge.

We need to return to the mindset that Creates Startup Companies, that Created the Fortune 500 and  that Recreated Japan after World War II.  A mindset of Constancy of Purpose, Daily Learning, Cooperation both inside and outside the organization, fact based decision making, empowerment of those close to the work and leaders that have first hand understanding of how the work of the company actually is done. How Transformation of Mindset Occurs With Start Ups

Transformation of mindset is easy with a start up - as there are no egos to get in the way of learning, cooperation and experimentation.  There is only the purpose to be accomplished.  The current offerings - be they educational offerings from a new college, government programs from a new department to the products and services of a company - continuously change.   A never ending search for offerings that are meaningful - offerings that no one else is offering us the mindset.

As companies age - the mindset becomes one of preservation not recreating - cost cutting versus growth - managing versus leading.   Those with the entrepreneurial spirits of the founders are told “calm down, be realistic, things are ok, relax it’s not as bad as you think.”

As the companies age - they soon die. From 1999 to 2009 almost 50% of the Fortune 500 said goodbye. How Transformation of Mindset Occurred in Japan

Transformation of mindset was much easier in Japan after World War II.  It was easier because General MacArthur removed the 1,937 top leaders in 154 large companies in Japan - and replaced them with newly promoted leaders.  These new company leaders were very open to learning.  They were open because many didn’t know what to do.  N.I. Fisher in his paper Homer Sarasohn and American involvement in the evolution of Quality in Japan 1945 - 1950 quoted Sarasohn’s description of the challenges this way.

Supervisors and managers had to be chosen, some almost at random, and put in place. Most of them were strangers to their jobs. They came with little or no managerial experience. In their previous positions, they essentially had been conduits for the flow of instructions between their superiors on one side, and the workers on the other. They were not business planners. They were not leaders nor decision makers. They were more accustomed to following orders, rather than giving direction. They had little understanding of industrial strategy or policy. They were confused, lacking in self-confidence and uncomfortable in the positions into which they had been force-fit. They had to be instructed on a day-to-day basis how to set up, run, and manage a mass production system. And, that is what we in CCS did.

Initial seminars were given by the Civil Communications Section (CCS) - later ones were given by Dr. Deming and others.  In the book Quality or Else...by Clare Crawford-Mason and Lloyd Dobyns they describe the scene this way.

The CCS management seminar lasted eight hours a day, four days a week, for eight weeks. "And the people who attended were the senior executives, a president, a chief executive .... They were required to attend; they could not send deputies." American occupation forces could require what they liked, and while Sarasohn says he believes in democracy and individual rights, "at that time, in that position, with our charge to revive the Japanese economy, I became a dictator." Those he wanted to attend were simply ordered to be there. Some of Japan's leading industrialists now were Sarasohn's and Protzman's students then - whether they wanted to be or not.

His first question to the students was, "Why is your company in business?" No one had an answer. "And that was the starting point for my argument that there has to be a purpose, there has to be a reason for a company to be in business. A company cannot be merely a money-making machine; it had to have a purpose that went beyond mere profit." Like building good ships.

 

How to transform Mindset of existing leaders in an established company without firing all of the company leadership as General MacArthur did in Japan. 

I don’t know how to transform the mindset of existing leaders in existing companies.  And Dr. Deming’s frustrations and yes failure to transform USA Manufacturing indicates that he never found a way to change existing leaders of existing companies.   I say failure because it’s clear that clearly USA Manufacturing did not learn Dr. Deming’s #1 principle -- Constancy of Purpose.  That it that the job of leadership is to ensure that the company offers the products, services, customers and markets that will maintain jobs and grow sales and profits.

Based on many experiments, reading, interviews here is the Innovation Engineering Alpha version .3 ---  plan for cultural transformation.

Step 1: Accelerate Meaningful, Unquestionable Success.   This involves immersing a small team of volunteers in the Structures and Processes that make up the new Innovation Engineering Mindset.  The success needs to be clear and significant.  It doesn’t need to involve final sales figures (as this can take years in some cases) however it does need to be dramatic when the story of this success travels the hallways from employee to employee.   It needs to be of such an impact that it makes those that are willing stop and reconsider their current way of working.

Senior management MUST be a part of this process.  To be successful they need to spend at least 20% of their time working on learning and coaching the new mindset.  And, the process can take 6 months to two years.  It also may require a series of successes to create the sense that this new mindset is an unquestionable success.  It’s coached by an Innovation Engineering Black Belt from the outside with the support of Green Belts on the inside of the company.

Step 2: Educate in the New Mindset.  In step one proactive volunteers (The 15% that are Innovators or Early Adopters)  lead the change of mindset.  They supported the transformation because of their preexisting mindset, their urgency for change, their belief in the system or simply their sense of adventure.   In step 2 the Early Majority (34%) engage in the process based on the success of the Early adopters and what they learn when they are educated.

The CEO and direct reports need to spend at least 50% of their time in educating and supporting the new mindset (According to Bill Conway).

The education goes beyond those inside the company.  Suppliers, customers and possible Innovation partners are also educated as the organization builds an Innovation Supply Chain.  The initial education is done by the IE Black Belts on the outside with the support of the newly certified Innovation Engineering Black Belts on the inside of the company.  This education process can take 3 months to a year depending on the size of the organization.  Everyone - from the bottom to the top is taught the theory and methods of the new mindset.

Step 3: Cultural Transformation to the New Mindset.  The internal Innovation Engineering Black Belts - both Management Black Belts and Process Black Belts lead the cultural transformation with coaching support from the outside.  The leadership make the new mindset their #1 priority.  They spend 50% of their time supporting the cultural transformation.

By now, the new mindset is a sustainable habit with 50% of the company.   Now the Late Majority (34%) and Laggards (16%) start to transition or leave - either voluntarily or involuntarily.  This process can take 2 to 4 years to complete.

The company leaders have true Constancy of Purpose.  Their primary purpose is to ensure the long term survival of the organization - good jobs, growth in sales and profits, etc..   The purpose is not to make money.  Money is the consequence of the purpose.

The company scores mostly “green” on the Innovation Culture assessment.  It’s a great place to work - turn over is low - and patenting is high.

Every department manages every project using the mindset of - Learning More (Stimulus Mining), Cooperation (Diversifying thinking) and Fail FAST Fail CHEAP cycles of PDSA learning  (Making it real through words, math and experiments).

The status of most projects (except for a few secret products or services) is fully transparent across the organization - making it easy for anyone to share ideas and advice.

Leadership leads by focusing energy on the Innovation Pipeline more than the balance sheet.  “They Make Great Products and Services” that anticipate customer and market needs.

Cooperation between departmental silos and external partners is enhanced through an aggressive sharing of Idea Requests and responses.  A Company Innovation Marketplace shares the corporate makes it easy for everyone to access and understand the Intellectual Property that the company owns.

As stated above the thoughts above are my best thinking at this time.  Please add your ideas and advice as comments to to this posting.

Doug Hall