The six organizations did follow the same path on structure, however.
Whereas the Customs Service and Veterans Health Administration con- solidated, the Food and Drug Administration flattened; whereas Marriott dispersed, DuPont consolidated through its new Center for Creativity and Innovation. Regardless of their final structure, however, all six created inter- nal and external networks to accelerate the movement of new ideas from start to finish. Whereas DuPont created over 400 formal and informal net- works to transfer technology, Procter & Gamble created 20 communities of practice as part of its broad “connect and develop” initiative that tied new ideas to customer demand.
All six also invested heavily in information technology. Whereas the Customs Service invested in an entirely new tracking system that allowed shippers to monitor the movement of cargo in and out of ports, DuPont and Procter & Gamble invested in new e-mail and group discussion soft- ware to connect their research teams. At the same time, all six organiza- tions provided extra resources for new ideas, whether through innovation investment funds or new congressional appropriations, and increased their interactions with clients and customers, whether through first-ever cus- tomer satisfactions surveys in the government agencies or more rigorous measurement at Marriott.
Viewed from a distance, all six organizations adopted the same kind of systems thinking that has long characterized RAND’s other research.
They came to view their organizations as merely part of a larger system composed of competitors, clients and customers, and events that shaped their futures. Although their primary aim was either process or product innovation, all six organizations clearly improved their robustness along the way. Indeed, one can easily argue that innovation was a by-product of other organizational changes that made all six organizations more robust. In turn, I believe the robustness created the potential for innovation.
At least at Customs, it also created the organizational capacity to quickly change directions after September 11, 2001. Having focused on becoming much more agile in tracking cargo on behalf of importers and exporters, Customs was the fastest of the homeland security agencies to change its focus to the war on terrorism.
CONCLUSION
One of the reasons many organizations bet the future on a single future is that they do not have the resources to do otherwise. Robustness is not free.
It requires investment in all corners of the organization, and potentially dis- ruptive changes in how the organization operates. It is easy to tell an orga- nization to measure results, for example, but more difficult to develop the right measures and track them accurately. It is also easy to tell an organi- zation to delegate authority for routine decisions, but much more difficult to train employees to use that authority wisely. It may be easiest of all to tell organizations to regularly survey their clients and customers, but much more difficult to make sure they ask the right questions, invest in the best ideas, and use the results to calibrate strong incentives.
There are times when betting the organization on a single future is the only way to survive, however. As James Collins and Jerry Porras write, Boeing bet the company on the 707, leaving McDonnell-Douglas in its wake (at least until it bought McDonnell-Douglas in 1997). IBM made a similar big bet in the 1960s when it put its engineering muscle behind the 360 com- puter, which Collins and Porras describe as the “largest commercial ever undertaken.”13But adopting these big hairy audacious goals would have been nearly impossible if Boeing and IBM did not have the capital and orga- nizational capacity to survive. As the next chapter will discuss, robust organizations survive and prosper in part by placing the best bet across a range of futures. But this does not mean they never gamble. By strength- ening each pillar of robustness, they ensure that they can give a punch as well as take one.
Robustness also requires more than a broad embrace of alertness, agility, adaptability, and alignment. Organizations must also make those pil- lars present through a set of operating practices that actually produce the desired outcomes. It is one thing to celebrate alertness, for example, and quite another to accept the notion that there is no single future out there against which to plan. It is one thing to celebrate agility, and quite another to invest in contingencies that may never come to pass.
As the next chapter will show, robustness also involves a much more detailed set of organizational practices that occasionally challenge the pre- vailing wisdom about best practices. As much as one can encourage orga- nizations to connect the dots, for example, RAND’s research encourages organizations to collect the right dots first. As much as organizations are right to “think lean” about how they work, RAND’s research also suggests at least some redundancy for unanticipated surprise. And as much as an organization can celebrate the widespread embrace of balanced scorecards against which to track current performance, R AND’s research supports parallel efforts to unbalance the scorecard, whether to protect against cheat- ing or guard against complacency.
NOTES
1 Albert Wohlstetter, “Systems Analysis Versus Systems Design,” P-1530, October 29, 1958, accessed at www.rand.org/publications/classics/wohlstetter/
P1530/P1530.html.
2 The project was conducted by Debra Knopman, Susan Resetar, Parry Norling, Richard Rettig, and Irene Brahmakulam in 2002, and is cited in the
bibliography at the end of this book.
3 The study team cites J.W. Marriott and Kathi Ann Brown, The Spirit to Serve:
Marriott’s Way, New York:HarperCollins, 1997, in their case study of Marriott, which is contained in the larger report, Innovation and Change Management in public and Private Organizations: Case Studies and Options for EPA.
4 Truth be told, I stay at the Le Merigot whenever I can—small hotel, beautiful rooms, great staff. The only problem is that the previous owners did not buy the lot between the hotel and the beach—most Le Merigot rooms now look into an apartment building.
5 Gary Hamel and Liisa Välikangas, “The Quest for Resilience,” Harvard Business Review, September 2003, pp. 52-63.
6 Hamel and Välikangas, “The Quest for Resilience,” p. 53.
7 These statistics are from Its Only Rock and Roll, the Rolling Stones European Fan club, and can be found at www.iorr.org.
8 The quote is from the Rolling Stones press kit, accessed at http://www.stones.com/retro/press/stage.txt on June 16, 2004.
9 Mark Bowden, Black Hawk Down: A Story About Modern Warfare, New York:Atlantic Monthly Press, 1999.
10 These examples and the quote from the editor of Car and Driver come from Danny Hakim, “Robo-Cars Make Cruise Control So Last Century,” TheNew York Times, April 4, 2004, p. A1.
11 See James P. Womack, Daniel T. Jones, and Daniel Roos, The Machine that Changed the World: The Story of Lean Production, New York:Harper Perennial, 1990.
12 The discussion is part of a larger volume on accountability edited by Brian Stecher and Kirby, cited in the bibliography.
13 James C. Collins, and Jerry I. Porras, Built to Last: Successful Habits of Visionary Companies, New York:HarperBusiness, paperback edition, 1997, p. 101.
how robust organizations operate
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R
AND and its researchers have been asking how to build and strengthen the four pillars of robustness since the 1940s. They have invented new tech- niques for imagining alternative futures, monitoring performance, making choices, streamlining bureaucracies, managing and buying equipment, ignit- ing innovation, and enhancing command and control. Although they often say that the letters in RAND stand for research and no development, they have also imagined or invented a variety of tools for organizational success, from world-circling spaceships to computer-modeling techniques for sim- ulating the future.At least some of these techniques were designed to help R AND improve its own performance. In the early 1950s, for example, RAND engi- neers decided to build their own version of a new computing machine designed by Princeton professor and RAND consultant John von Neumann.
With IBM still years away from pursuing the 360, and just four other
“Princeton-class” computers under construction elsewhere in the country, the computer team staked out a few hundred square feet in the basement of RAND’s 4th and Broadway headquarters and began building the machine one vacuum tube at a time. Named in honor of its designer, the JOHN- NIAC started crunching numbers in 1953. (Nine years later in 1962, IBM president Thomas Watson, Jr., invited the head of R AND’s numerical analysis department to a dinner celebrating his company’s decision to switch from punch-card equipment to computers. “We were pushed into it,” Wat- son reportedly said, “and these guests were the people who pushed us.”1)
The JOHNNIAC gave RAND instant mathematical agility, but also required entirely new programming, data management, memory allocation, and storage space, as well as innovative mathematical algorithms designed to
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reduce computing time. In short, agility was not enough to assure high per- formance. RAND engineers had to develop the alertness to use the new tech- nology, the adaptability to extend its reach, and the alignment to manage its inputs and outputs.
A half-century later, RAND continues to work toward greater robust- ness, whether for itself or its clients. Although industries and organizations differ in important ways, all enterprises share common vulnerabilities and opportunities that respond to greater alertness, agility, adaptability, and align- ment. The challenge, therefore, is to convert the broad outlines of robust- ness described in this book into more specific advice, all of it based on a deeper, more interpretative reading of the RAND knowledge base. Accord- ingly, this chapter is built around four “mini-chapters” on how robust orga- nizations operate:
1. Robust organizations think in futures (plural) tense.They prepare for uncertainty by creating landscapes of possible futures; accept the inevitability of surprise; challenge their assumptions about the futures they face; reduce regret by adopting robust, adaptive plans, avoiding unintended consequences, and reducing vulnerability; and focus on the direct, indirect, and cascading effects of what they do.
As such they are highly alert.
2. Robust organizations organize for lightning. They recruit their
workforces for maximum flexibility; train for agility by drawing the right lessons from the past, reducing the cost of learning, and cultivating corporateness; set just-beyond-possible goals; provide authority to act; and think lean about every aspect of work. As such they are highly agile.
3. Robust organizations challenge the prevailing wisdom. They create both the freedom to learn and the freedom to imagine; aggregate expertise by creating teams and networks; unbalance their scorecards by measuring in futures tense, using multiple measures to avoid complacency and cheating, being careful about what they measure, and inviting intuition; and strengthen command and control to assure that investments are well spent. As such they are highly adaptive.
4. Robust organizations lead to mission. They grow and groom their own leaders; lead in futures tense; communicate through images and stories; anticipate their adversaries through careful study and assessment; and ignore irrelevant issues that impede command. As such they are tightly aligned.