"The starting point of all significant change is mindset." Tom Peters
We caught up with one of the great observers of the business of organizational change, organization effectiveness, and high performance work cultures, Pat McLagan, just after she launched her newest venture, theRITEstuff, Inc., a company with a variety of online subscription, assessment, speaking, and other services that help people and organizations everywhere to be GREAT.
[As of July 2007, the website, www.theritestuff.com, is no longer available.—CM]
tompeters.com asks ...
Pat, you've been an observer, thinker, speaker, and consultant to the corporate workplace for a couple of decades and you've written many books about it. Run through your books for us, please.
PM: This takes us back some time!! My first book was called The Learner's Guide to Efficient Information Processing and Learning in Changing Times. It sold over 20,000 copies, self-published, mostly to General Electric for their Leadership School in the 70s. Its update, Getting Results Through Learning, was a book about how to take charge of—and optimize—your own learning. It was a little premature in anticipating the learning-to-learn phenomenon that I think is resurrecting today. Helping Others Learn followed in the late 70s. Published by Addison-Wesley, it was a book about designing learning experiences with learning, not teaching, as a focus. It might seem obvious now, but back then it was an important message!
My early work focused on learning and the important self-management role we all have. I moved on, in the early 80s, to a broader performance view. Recognizing the tremendous need for shared responsibility performance communications, I co-authored, with Peter Krembs, a book called On The Level: Performance Communication That Works (Berrett-Koehler). We updated it in the early 90s. It's been a terrific seller—translated into seven or eight languages. It's a really hot little book; it talks about shared responsibility for performance and communication across power levels. When we updated it, we modernized it to reflect today's increasingly complex communication world, where it's not just the manager communicating to workers; it's worker to worker, worker to customers, worker to leaders, people to suppliers. On the Level reflects the whole complex, cross-directional, world that we live in. It just came out in Spanish.
In 1996, I co-authored, with Christo Nel, The Age Of Participation: New Governance for the Workplace and the World. This is one of my favorite books because it talks about the big shift in governance that's trying to happen today—from more authoritarian to more participative processes.
The Age of Participation makes the point that participative governance is actually a fairly difficult, rigorous, and disciplined way to manage and work. It's not the absence of control or hierarchy. It's a much more active and exciting kind of governance—tougher and with more payoff than any other form.
And, I've just finished my newest book, Change is Everybody's Business. Again, the title pretty much says what it is, that change isn't just the business of people who have formal authority. It's everybody's business. And it's important for everybody to take a stand, to influence change. I really like this book a lot. It's very short, 95 pages, illustrated with cartoons. I'm hoping the whole world reads it.
The reason I asked about the books is that they represent the set of broad themes that run through your professional life and practice. As I listen to you talk about them, I hear participation and shared responsibility as focuses.
PM: I think a real underlying theme is that we're moving into a more open networked world. And everybody—whether we like it or not—is a player in it. In order to be a player, it's not just a matter of having power, and it's not just having responsibility. It's a matter of having both. Without shared power and responsibility, high performance workplaces don't happen, can't happen.
I've heard many managers say, "We want our people to take on more responsibility," but some of these managers have trouble sharing the power. And I've seen people wanting to take power, but not accepting the responsibility that goes along with it. That really came home to me in my work with companies and institutions in South Africa in the 80s and 90s, because the power/responsibility themes were really exaggerated there. But they're at play everywhere. Participation and open-systems ways of operating are not something to "fall into;" they're something you really need skills for. You need an active, alert mind and a consciousness about how to design it so that it works.
I sense that you are somebody who has rebelled—I mean really railed against—authoritarian practices for a long time.
PM: Yes. And I know how difficult it is to not get caught up in authoritarianism. Because there's something in the human personality that wants to be in control or to be dependent. It's not really clear where the human race is on this issue yet! What is clear is that we are still often stuck in cycles of control and dependency that destroy or immobilize people and organizations.
So you, and theRITEstuff, are serving as a guide to what it takes to develop the willingness, the courage, the robustness to have open, participative workplaces.
PM: Yes, that's part of what's going on for me. I think this has been a key issue in my own life, in my own personal journey. Maybe that's why I'm so passionate about it.
Pat, you lived in South Africa for how many years?
PM: I lived there from 1992 to 1998, but I started working there in 1983. So I was in South Africa long before it was obvious to other people that there would be a change in governance. It was very clear to me then that apartheid was in its death throes. I worked with several high-profile companies in the run-up to free elections in 1994. Do you know that business organizations in South Africa actually played a huge role in bringing about the peaceful change? Actually, economics are playing a key role in opening up systems all over the world. In a global economy, you cannot have "closed system" ways of operating. And South Africa was killing itself because 70 percent of its population was disadvantaged and the system was holding them in a disadvantaged position. You cannot have economic viability with part of your human resource unfree and underutilized.
So I worked with corporations to begin to transform their governance systems, their management systems, their leadership practices. I worked with labor representatives to help them come into a more functional participation with some of the changes that were going on. I worked with illiterate people to help them begin to develop the skills of participation and with management boards to help them open up their own options, how they would lead. Through my work in private industry and some government institutions, I got to witness, and I believe participate in, the profound transformation of the end of apartheid.
It's fascinating to consider the positive influences of corporations on whole societies. I can remember being in Beijing at my first business meeting there. It was a roundtable of executives and one of them said Chinese companies had learned a lot about leadership development because of Motorola's early investment in leadership development.
PM: Corporations' influence is profound, and I think the reason is that there is this relatively clear cause and effect relationship between what you do and results. It's much easier to see how your practices influence "results" if you're an economic entity. In fact, if you are a business enterprise in a more open economic system and you don't use effective practices, you fail, you die. So there's really more incentive for business organizations to use effective practices. This creates lessons for all organizations—especially today when "operating like a business" is a theme in government and non-profits as well as the private sector.
Now, from that large backdrop, let's move to theRITEstuff. I wanted to lay out this larger context of your work before we dove into what theRITEstuff is all about. You are knee-deep in what we would call a very WOW!Project. Describe the inception of this project; how did this come about' Why did it come about? When did it start? Give us a little history.
PM: At its heart, theRITEstuff is—ideally—a global movement to accelerate change in our institutions, bringing really useful information about what works to everybody—to leaders, to workers, to consultants, to educators, to everybody. It's an attempt to light a fire under this shift that's trying to happen in our institutions. Something big is really trying to happen, and we haven't broken it loose yet. I want theRITEstuff to play a big role in that. The centerpiece of this acceleration is an attempt to bridge research and practice.
One of the things that's getting in the way of achieving the transformation that we all want is that there's so much noise out there. There are so many fads, there's so much in the air, that we miss some of the basic things that really do work and make organizations great.
And those basic things that really do work are being proven over and over again in research that very few people pay attention to. It's research in academic journals, it's research that is reported in a variety of business press, it's research that's going on with Gallup, McKinsey, Brookings, and Watson-Wyatt—institutions like that.
And people are not really paying attention to this body of research?
PM: Right, most aren't, because it's all over the place. And, the valuable learnings are found among a whole lot of other data that may or may not be good data. There's so much information out there—so many books, so many articles—that people are missing some of the core things that work. It's also hard to interpret the results of the research even if you find them. A lot of it isn't written in a way that the busy people who could put it into action can understand. In fact, a lot of it is downright incomprehensible!!
So in order for the world to have access to the "stuff that works," you want it summarized, and written in a way that people can read and use it.
PM: And that it's compelling when you do access it; it leads you to action! Because a lot of what research says works, people in their heart of hearts know. But, for some reason, don't do.
This is a problem I've been working on throughout my career. I've helped design leadership development programs. I've helped design human resource functions. I've worked on huge change initiatives and trained change agents. I've developed and implemented performance management and strategy deployment processes. There are lots of cures at our disposal to help organizations change. I'm always searching for what works.
Lately, I've been astounded at what happens when people at all levels see the connection between proven results and practices. In fact, I just gave a talk to some government leaders last week, and I put up statistics about the management practices that get results. I said, "Look, here's what happens in companies that use these practices: they have more revenue growth, they are more likely to retain customers and employees " I blasted them with some interesting statistics, but in a way that gave the practices legitimacy—and gave these leaders the confidence to sponsor, support, and use them.
Once again, I was blown away by these leaders who said, "We've never really thought about it that way." And their reaction isn't unique! I've had that reception from every group I've ever talked with about the researched connection between results and practices. Somehow, it's causing a switch to go on in people's minds that's making them pay more attention, and making them want to do a better job of creating a great organization.
There seems to be incredible hunger to know what really works—to cut through the fads—everywhere we go, and yet there is incredible cynicism that it can't be done because it's too "soft!"
PM: True. I want theRITEstuff to dispel this cynicism and give people a confident base for taking action, whether they want to create a better organization or have a better framework for individual action and decisions. I went to a conference about five years ago that brought together a lot of academics talking about their research. And at the end I asked Casey Ichniowski, who is a professor at Columbia University, "You've been watching the results-practice research for a long time; what conclusions do you draw?" And he said something like, "Companies that use high performance work practices not only do better than other companies, but they do so much better that it's not even a race. There are astonishingly high payoffs for using really good management practices." And that's true; all the researchers are saying that. Mark Huselid, who's been doing a lot of research in the people's practice area, says research clearly shows that strategy implementation is more important than strategy content. So just managing well appears to release an energy for success that overrides a lot of the other rational stuff that we focus on in organizations.
I just pulled out a Business Week article by Gary Hamel that talks about innovation's "new math." He says, "Forget strategy sessions. To find one great idea, you must have workers dreaming up thousands."
PM: That's pretty much the message, although it's certainly not an either-or. I think what's happening is that as we move into this more rapidly changing world, that the old rational planning methods are just not fast enough to respond. So we've got to have other ways of being robust, responsive, and innovative. Those ideas start with the right management and work practices required to release them!
As we talk about some of these ideas with our clients, one of the first questions we get is "How do you measure performance in this open, participative, networked workplace? How can you measure individual performance when it's so networked?"
PM: I think it really depends. I've done a lot with performance management systems, and the way I like to approach it is to say, "Individuals have to be basically in charge of their own work—but in the context of the larger organization's goals." Because if they are, they are going to be more responsive to changes and shifts. For example, you can have an organizational strategy and a set of goals that says, "We're going to accomplish this." And then you can have a process where individuals and teams all know where they fit in the larger scheme. And, to your measurement question, the focus has to be on deliverables. What are the deliverables of individuals and teams? Who gets them? Some are individual outputs, and others are the complex products of teamwork. Identify the deliverables and measure those. It's another kind of results focus and is the only real way to establish both individual and team accountability.
Does this work when creativity and innovation are premiums, and where there may not be a linear map for how we're going to get to a goal?
PM: Yes! We need to set goals that focus more on what we are going to deliver rather than our tasks and our activities. We have to leave a lot of task and activity flexibility and to create a high accountability environment where everybody takes charge of achieving and renegotiating goals. Everybody, in my mind, needs to have a really good fix on what his/her deliverables are, who the customers are. If you have a good fix—and everybody has customers, right?—then you can say, "what do I need to provide for these people that adds value so that they can play their role in making our organization great (if their contributions are internal) or so that the end customer has a terrific experience and comes back?" With ongoing learning, the answers to these questions may and will change, but unless everybody makes sure his or her current working goals are relevant for both the current situation and the larger business context, you have a mess.
Let's go back to theRITEstuff again. You just launched this business, and your website has been up since mid-June. How do people interact' How do they get involved?
PM: Well they can come to our site, and just do stuff on the site. There are free assessments, for example. They help people compare their organization to the best practices from research. People can have conversations, too, about critical issues—attracting and retaining customers and employees, creating a financially successful organization—or finding great organizations to invest in. These are some of the topics.
But, the focal points are theRITEstuff Reports. These are educational packages that distill the world's research findings about the practices that relate to business results. They are packaged for individual and team learning and are meant for EVERYBODY!!—managers, leaders, business owners, individual workers, educators, researchers. I've priced them so that people at all levels and everywhere can afford and use them.
We're also building a catalogue of solutions and resources: books, articles, e-learning, videos, tapes, and other resources. But we only list those that relate directly to the practices that come out of research. I want to make it really easy for people to bridge over—to get better—in these critical practice areas. I'm also wanting to encourage researchers to be on the alert for really good information that links results and practices and let me know about it, because then we'll put it on the site and share it with people.
It sounds like a beehive, like a hub.
PM: I want it to be a huge thriving hub; I want it to be a global meeting place focused on bridging research and practice, linking results and practice. I want to influence the world's research agendas and to support people everywhere in creating, leading, and working in great institutions. I want to spread information about the practices that work—bringing insight and actionable information to organizations regardless of size, global location, sector, or industry.
At this point, I'm trying to set it in motion, activate my network, get people excited, and have enough people involved that we can grow this thing together.
You talk about the best practices that you've learned from research. What are the exemplars of theRITEstuff doing? What are some of those key practices that you're highlighting on the site?
PM: Well, you know theRITEstuff takes a little bit different approach than most "best practice" efforts. I'm not starting with the exemplary companies and then asking, "what do they do? I'm starting with results areas that matter for success with different stakeholder groups. For example, companies want to be able to attract and retain and get high productivity and quality work from their people. So I start with those results and I look for research that focuses on the practices that relate to these results. So it's different than In Search of Excellence, which said, okay here are a few companies that everybody admires, that are really out there in terms of what they are doing. There is a role for that type of research, too. But, I'm looking across populations, across companies, at the sort of universal truths about what works—starting with results and working backwards. "Exemplars" are then , just that; examples of something bigger.
The primary focus of theRITEstuff is on exemplary practices, not exemplars. There are lots of exemplary practices. As I've reviewed them, I've noticed some important themes. I'll tell you about a few of them:
First, research has a big lesson for formal leaders. There's a lot of talk out there about everybody being a leader. Even though this is true—everybody's a leader—some people actually are paid to be leaders; that's their role, that's their job. They have huge control over resources and systems and the future. What the research shows is that really great organizations have really good people in formal leadership positions; that people in formal leadership positions take their leadership role seriously, and really work at being great managers and leaders. And it's not the old domination hierarchy; it's the more unleashing leadership that sets up systems and practices, has high standards, and exhibits stewardship and all of that. It's a rare thing, this kind of leadership. There's a new book coming out—Jim Collins? Good to Great. After looking at 1435 companies, he could only find 11 that had broken loose from their industry pack and had sustained market leadership. The formal leaders in these organizations were critical to sustained breakthrough ... and they did it through dogged stewardship, not charisma. Formal leadership excellence is important at all levels. There's tons of research showing how critical supervisors are to the productivity and commitment of the people they support. Many years of Gallup surveys, plus lots of academic studies prove this point beyond a doubt!
A second grand lesson from research is that great results today require a lot of attention to knowledge flows. Organizations that structure for knowledge sharing and innovation across levels and groups get better results. Creative use of intranets, incentives for global teaming, creating centers of excellence and communities of practice are among the methods that relate to success globally. Sony has kept itself viable by deliberately attending to this, for example.
A third clear theme is the importance of simultaneously caring about many stakeholder groups. This may seem obvious, but you can't review the relationships between practices and results (what happens to attract and retain customers, get and keep employees, and to be an attractive investment) without respecting how important it is to travel all the stakeholder roads at once. In fact, investors—contrary to popular belief—DO pay premiums for great people and customer management. Many even say it's more important than short term financial results. The investment community today is chastising itself for colluding in the dot-com fiascos. They momentarily lost focus on the sustainable things.
Pat, this seems to take the "Great Place to Work" research which Fortune is doing—which seems to be on everyone's tongue these days—much further and deeper?
PM: In fact, I've drawn on lots of Fortune data—when it's research based. I like them because they want the word about what works to spread. But theRITEstuff does take it further and takes a different approach. Fortune and others often start with a list of organizations—the 500, the 100. Or they get nominations of "great places to work." Then they look at the practices of those companies. There's been some criticism that starting with a list of companies isn't rigorous enough.
At theRITEstuff, we start with results that matter for the business, then find research that looks at the practices related to these results. Once we've identified the practices, then we find organizations to use as examples. This moves the search for excellence to a different vantage point. You see, although there's something great about being an admired company, it's possible that some of the admired companies are on the top end before the fall. You don't want to imitate their practices!! In fact, most of the research on innovation says that innovation starts in small and wild places. You know that from your own work. The companies that are doing leading things for tomorrow probably aren't on anybody's radar screen.
So, let me ask you this. You have just started this company, you have been working on it for how long before your Reports and website came to the public in June this year.
PM: Formally, I put my whole life into it about a year ago. But content like what's in the Reports has been part of my consulting practice for years—always getting great reception.
And I know that you've had an informal board of directors, a board of advisors, a pretty robust group. Can you talk a little bit about your strategies for how you made sure that what you were putting for in theRITEstuff.com was going to be the highest quality.
PM: I fortunately have really great people, real experts, in my network. And I'm experienced enough that I knew I couldn't do this all on my own, that I need people for all kinds of support. I actually asked people who I felt had different kinds of competencies, different kinds of connections, different kinds of interests to join as advisors. I wanted somebody who's really great in the customer area, so I got a two-time Fortune Best Book author on the customer side. I wanted somebody who is a terrific role model for managers. And I've got somebody on my board who has run small businesses, was a top executive for a major corporation, wrote articles for Inc. magazine, who I know personally as a role model, as living all of this stuff, and experiencing the financial success of it too. I also wanted the global view represented, so I've got a former company group chairman of Johnson & Johnson on my advisory group.
And there are others with special views and skills, including people who help keep the momentum going, help hold the energy. It's impossible to carry entrepreneurial energy all by yourself.
And this is one of Tom's huge precepts for a WOW!Project, which is to have a personal board of directors. And in the way you composed this board, you put together a tremendously stimulating, diverse set of ideas and minds to help you launch this thing.
PM: I've even got a Harvard Ph.D. Economist as an advisor, a former executive from the Red Cross, the editor of a prestigious journal, as well as an executive coach who's dedicated to being a "corporate Merlin" and spiritual advisor. And there's an executive from a small construction business. I felt that if theRitestuff makes sense to somebody who's on the line every day, then it has a really good chance of getting adopted by more people.
What have you learned this year as you've done this WOW!Project?
PM: I think I'm more aware than ever about how much wasted energy and time there is as we move from fad to fad ... how much human and financial loss there is because of it. That's been kind of a confirmation for this project. I must admit that I look back at my own career and think maybe I've promoted fads from time to time. I've learned how really important it is to have managers and leaders who take their role seriously, and how important it is for them to have the right kind of information to make the right decisions. Because of the positive reception I've had to theRITEstuff in many different audiences, I've also learned how much people WANT to support change if they are convinced in their own minds that it's the right thing to do. And I'm clearer in my purpose and what theRITEstuff is all about. It's about helping people see what's the right thing to do in a way that respects their economic as well as their ethical and moral goals.
This moral and ethical issue is an important one for me. At the beginning of this, I wanted to look through the clutter to find the practices that we can trust to support results. But, I've got biases towards participative and open-system management. I wanted to control for these biases, to find out what really works. I had to ask myself a number of times, "Will I continue this work if the research shows that authoritarian management systems actually have a higher productivity?" I had to answer that very clearly for myself. The answer was that I would not continue to research if that was the case. And fortunately, it isn't! I wanted to have that established, because otherwise I would be doing a disservice to people who expect theRITEstuff Reports to be objective.
I'm coming away from this more convinced in my own mind and heart about how important it is that our institutions change. It's critical for all stakeholders and for the human race itself. And constructive change is not a given, even though economics are forcing us into open-system management. It's not clear whether we'll be able to work through power issues and personal histories to rise up to the challenge. I feel very strongly that we've got a great opportunity here. But we have to face some facts. Remember that Jim Collins in a very rigorous research project found only 11 companies out of 1,435 that were able to break out of their industry norms and achieve dramatically better performance. There's also lots of evidence that many great innovations related to governance do not spread. The U.S. Department of Labor estimated in the 90s that less than 7 percent of U.S. companies were using even moderate amounts of high performance management practices. Many studies I've seen confirm this—even though the financial and psychic rewards of great practices are great. Look at Fortune's 100 Best Places to Work. Their share value rose an annualized 29.8 percent between 1997 and 2000 compared with 11.4 percent for the S&P 500. Sure, some are probably in the doldrums now, but the comparison still stands.
PM: It is very powerful. And that's the kind of information I want people to come to theRITEstuff for. I want people to say "I can't not pay attention to this if I care about performance." I really hope to see theRITEstuff grow and spread like wildfire so that it's big enough that people feel like they own part of it, and that they can use it to improve financial results as well as the quality of life in their own organizations and for all the stakeholders they serve.
To access theRITEstuff Reports 2001, or for more information and personal and organizational support for change, contact www.theritestuff.com.
[Contacting theritestuff.com is no longer possible, July 2007.—CM]
The Learner's Guide to Efficient Information Processing and Learning in Changing Times [Out of print]
Getting Results Through Learning [Out of print]
Helping Others Learn: Designing Programs for Adults
On The Level: Performance Communication That Works (coauthor)
The Age Of Participation: New Governance for the Workplace and the World (coauthor)
Change is Everybody's Business