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Overcoming barriers to work innovations
Organizational Dynamics, Vol. 30, No. 1, pp. 77– 86, 2001 © 2001 Elsevier Science, Inc. www.organizational-dynamics.com
ISSN 0090-2616/01/$–see frontmatter PII S0090-2616(01)00042-0
LEARNING FROM PRACTICE
Overcoming Barriers to Work Innovations:
Lessons Learned at Hewlett–Packard DEONE ZELL
T
he problem of successfully diffusing work innovations and best practices throughout firms has plagued scholars and practitioners alike for almost 30 years. In the mid 1970s, organizational expert Richard Walton discovered a paradox: Despite success in one location, innovative work practices often failed to diffuse to others, remaining as “islands of innovation.” As a result, companies were forced to reinvent new practices, resulting in costly duplication of effort. The problem of diffusing innovations persists, and is even more pronounced in today’s knowledge economy, where survival requires learning faster than one’s competitors. Best practices often linger in companies for years, unrecognized and unshared. A study conducted by the American Productivity & Quality Center, for example, found that it took up to two years on average for other sites in a company to begin adopting a practice that originated in any given organizational unit.
Barriers to the Diffusion of Innovations and Best Practices Years of research has uncovered a range of barriers to the internal transfer of innovations and best practices. Obstacles may stem from at least four sources. The innovation itself. Obstacles may arise because of characteristics of the innovation itself. Innovations may be rejected because they are not perceived to carry advantages over existing practices. Or, they may be dismissed because they are viewed as incompatible with the existing culture and structure of the organization. They may also fail to spread because of measurement problems. For instance, their financial impact may be difficult to determine because their benefits are indirect (e.g., reduced absenteeism or fewer layers of management), or because alternative measures are used (e.g., adoption rates vs. impact on bottom line). In other cases, the innovation’s effect may be hard to SUMMER 2001 77
separate from environmental influences (e.g., an improving economy), or measurement simply fails to occur.
Deone Zell is an assistant professor of management at California State University, Northridge, where she teaches classes in management, organization theory and organization behavior. She received her doctorate from the University of California at Los Angeles (UCLA) in 1994, and specializes in working as an “industrial anthropologist” to document organizational change processes. She is the author of Changing by Design: Organizational Innovation at Hewlett–Packard, published in 1997 by Cornell University Press, and the co-author of a forthcoming book on strategic change in higher education. She also has published articles in the Sloan Management Review and the Journal of Management Inquiry (forthcoming). Her research interests include knowledge management, organizational transformation, complexity theory and the diffusion of innovations. She can be reached at: [email protected].
Transferring innovations. Innovations may fail to spread because of problems that arise during transfer from the source to the adopting unit. Practices often deteriorate when they are forced on the host organization. While easier and faster, such top-down change efforts often backfire because they fail to develop the employee commitment or competence necessary for the innovation to take root. Innovations also often fail to spread because of inadequate or nonexistent communication or relationships between units. Such barriers are exacerbated when units are largely independent, or when organizations have highly segmented, or “silo” structures. Implementing innovations. Innovations often stall when problems arise during their implementation. Units may lack the resources or knowledge necessary to integrate the innovation into the organization. For example, managers are often unable to find time to implement new technology or production systems. They may also lack necessary resources to train employees, or sufficient leadership to manage a transition from old to new ways of working. Employee and manager turnover and rapid technological change can also produce discontinuity that disrupts adoption of the innovations. In other cases, innovations die because changes in policies and practices necessary to support them are not made. Human limitations. Finally, barriers may arise from human shortcomings like the “not invented here” syndrome so common in high-tech companies. Employees place such high value on innovation that they refuse to adopt ideas unless they’ve invented them. In other cases, successful pilot projects get too much exposure and become glorified by management. This causes resentment among employees who actively resist the innovation and ultimate isolation of the experimental unit.
78 ORGANIZATIONAL DYNAMICS
Hewlett–Packard Co. Work Innovation Network In 1990, Hewlett–Packard Co. (HP) was showing signs of corporate gigantism. Excess layers of management and uncontrolled costs made it nearly impossible for the electronics firm to keep pace with its smaller, more nimble competitors. Ironically, the company’s decentralized structure, long considered an asset, added to the problem. Running each division as an autonomous unit encouraged healthy competition but also exacerbated the “not-invented-here” syndrome. After a successful reorganization by chief executive officer (CEO) John Young eliminated excessive layers of management, a small group of internal consultants at HP’s headquarters in Palo Alto formed to help the company’s 60 divisions improve their competitiveness. Led by manager Stuart Winby, formerly at the American Productivity and Quality Center, the team began teaching managers from a handful of divisions how to develop self-managing teams. Winby believed that for teams to take root, they would have to grow from the shop floor, rather than be “installed” from above by management fiat. The consultants’ strategy was to work intensely with a handful of sites to establish redesign efforts—which, if successful, would illustrate the benefits of self-managing teams. News of substantial improvements in quality, productivity, and responsiveness achieved at pilot sites such as the Boise Printer Division spread quickly throughout the company, and the group soon found itself unable to keep up with the demand for consulting services. To expedite the spread of knowledge, the consultants formed a learning network called the Work Innovation Network (WIN). Four times each year, the network brought managers together to learn about work redesign and autonomous teams, creating a means for them to communicate as they implemented the changes. In this way, learning could be leveraged, rather than lost. In its first year, 54 managers from over a third of HP’s divisions met at the pilot sites
where redesign had taken root. Each meeting lasted two or three days, as participants learned from each other and from HP internal consultants about how to conduct redesign projects. Members made formal presentations on their own redesign projects and received advice and feedback from their peers.
Overcoming Barriers to Diffusion WIN was specifically designed to overcome barriers known to plague companies’ efforts to diffuse innovations and best practices, and was based on five principles (see Table 1). Pull mechanism. A fundamental conceptunderlying WIN was a “pull” principle, designed to create a network that was driven by the market, rather than by the hierarchy. Winby described the bottom-up approach as “making a few friends and lighting a few fires.” This principle shaped every dimension of the network, from the selection of its membership to the structure of learning activities. Membership in WIN was voluntary, and HP managers had to express an active interest in redesign. Managers who wanted to attend WIN meetings just out of curiosity were discouraged. WIN practiced what it preached, and was entirely self-managing. The format and content of each meeting was designed by a planning group of several internal consultants and a rotating group of WIN members who kept in close touch with other divisions so WIN could provide needed information just-in-time. Learning was guided by this “need to know” principle as well, as knowledge was pulled by managers on an as-needed basis. Networking. Based on the belief that learning is a social activity, knowledge was exchanged through the network by forming personal relationships and establishing communication between divisions. Observation at WIN meetings revealed that every gathering was carefully and subtly designed to promote face-to-face learning. Chairs were arranged in fours that formed squares like SUMMER 2001 79
TABLE 1.
WIN PRINCIPLES AND COMMON BARRIERS DIFFUSION OF INNOVATIONS
TO THE
Win Principles Barriers Innovation itself • No relative advantage • Perceived as incompatible with structure or culture • Impact not measured Transfer • Inadequate communication between units • Forced change from the top down Implementation • Lack of resources • Turnover • Rapid technological change • Supporting changes not made in policies and practices Human Dynamics • Not invented here syndrome • Resentment/jealousy leading to isolation
Pull Peer Safe Action mechanism Networking consulting environment research
X X X X
X
X
X
waffles. Couches were placed in hallways to encourage conversation—after planners noticed that participants lingered in corridors, talking intensely during sessions and sometimes long afterward. Light lunches that could be put on paper plates and taken into small groupings encouraged more interaction. As a reward for long and arduous days of intense work, social events—visits to local wineries or riverboat cruises—also helped the flow of knowledge. Face-to-face learning in “flexible learning periods”—where participants could discuss topics on their minds— helped implementation by finding solutions to problems that invariably arose. For example, one manager had trouble engaging his supervisors in the redesign process. His colleagues suggested that he help his supervisors transition from bosses to coaches and explore alternative career tracks to overcome the fear of working themselves out of a job. Face-to-face discussions also helped find solutions to vex80 ORGANIZATIONAL DYNAMICS
X
X
X
X
X X
X
ing policy problems like HP’s forced ranking performance appraisal system. Originally designed to promote individual contribution, the system pitted employees against each other and thwarted teamwork. Members formed a task force to document the negative effects of forced ranking and met with top executives from corporate compensation to explain. As a result, several pioneering divisions received sanction to experiment with alternative systems of pay that added a team component and relaxed the forced distribution, enabling the majority of individuals on a team to receive high marks. Peer consulting. Peer consulting helped HP managers accelerate the implementation of redesign efforts by sharing tips about what worked and what did not. WIN leaders created the practice after realizing that enormous amounts of untapped knowledge resided among the managers themselves,
making it unnecessary to hire external consultants for support. Members often described their cases in emotional detail, making presentations convincing and credible. After presentations, members broke into small groups to prepare feedback, categorized into “gems” (strengths), “blind spots” (weaknesses), and ”take homes“ (ideas that members planned to take home and implement). One manager said, ”I learned a lot. The Starship Simulation sounded powerful—we’ll definitely try that one—and the anonymous peer review as a precursor to peer evaluation was a real plus. But we’ll sure avoid downsizing and redesigning at the same time—that’s just asking for trouble.“ As managers became better at providing feedback to each other, they began to rely less on internal consultants and more on their peers for guidance and advice. Peer consulting also helped overcome the human barriers to the diffusion of innovations. Redesign was still considered radical, because it shifted power from managers to employees, who then managed themselves. After a presentation from one division whose redesign was publicly considered a success, other members pointed out that these managers were inadvertently isolating the effort by portraying their redesign as revolutionary. They had begun to call themselves the “lunatic fringe” and joke that their redesign would eventually be “nuked,” “zapped,” or “roto-tilled” by the higher-ups. WIN participants warned these managers that continuing to use such language would become a self-fulfilling prophecy and undermine the long-term success of the effort. Safe environment. Central to the effectiveness of peer consulting was the value placed on openly airing mistakes, which increased communication between divisions and helped overcome barriers to the implementation of work redesign. “By learning from each others’ mistakes, as well as successes,” explained Vivian Wright, an HP internal consultant, “we’ll be able to learn and change faster than our competitors.” Helping members feel free to disclose their errors,
however, required creating a safe environment where there would be neither blame nor negative consequences of doing so. Before long the practice of exposing one’s mistakes became the norm, assisted by the absence of top-level managers. At one meeting, a manager admitted that he tried to make his team self-managing, but failed. “I thought my absence would promote ownership, so I removed myself from the production floor. I did it too quickly. Instead of promoting autonomy, my employees felt abandoned and unappreciated, and productivity plummeted.” The practice of sharing mistakes proved so valuable that it was carefully protected as WIN grew. A year after WIN was created, a member suggested videotaping the peer consulting sessions. The idea was vehemently rejected, because members claimed the presence of a camera would encourage socially desirable behavior and discourage open and honest dialogue. The value that members placed on honesty could also be seen after several WIN meetings were held at hotels to accommodate growing numbers. Presentations became less personal and truthful, and as a result less credible. Some members began to grumble about presentations resembling “dog and pony shows.” A WIN member circulated an e-mail urging a return to presenting the whole picture of redesign efforts. “We’re veering away from honesty,” the memo said. “We need to return to personal disclosure about presenters’ sources of pride and disappointment, because that’s what the audience learns from most.” Action research. To accelerate learning and provide concrete evidence of redesign’s impact on performance, internal consultants taught WIN members how to conduct action research and required them to produce “white papers” documenting the progress and results of their redesign efforts. Papers often ran to 30 pages in length and described the redesigns’ objectives, methodologies used, lessons learned, and impact on organizational performance, when available. Papers were distributed at each WIN meeting SUMMER 2001 81
and collected along with other documentation in three-inch binders that were often filled by meetings’ end. At the Santa Clara Division, redesign leaders realized that no amount of strategic planning could overcome the problems arising from the division’s functional structure, leading to a controversial but ultimately successful adoption of a matrix structure. Learnings like these were documented in white papers and discussed during WIN meetings to help others navigate similar obstacles.
Evidence of Effectiveness WIN leaders knew the importance of measuring WIN⬘s impact on the bottom line, yet doing so proved difficult. Although many divisions included results of their redesigns in white papers, their methods varied greatly. Winby explained: “Some provided hard results—real numbers—and some were very soft. Some said we got a 24% decrease in overhead, and we improved time to market three-fold. And others would say things like, ‘The attitude of people has changed as a result,’ or ‘Look at our HP survey results and see how they’ve gone up.’” The value of WIN to its members was clear. According to a 1992 survey, 80% of managers said they received a full return on their investment in WIN. The network’s most significant contribution was to put managers in touch with others doing redesign. More than two-thirds said that WIN had given them moral support, as well as good ideas about how to implement redesign. WIN had also helped nearly 20% of managers decide whether they should adopt redesign. The network was considered more important as a source of information than HP’s internal consultants, books or articles obtained on their own, informal contact with other sites, or seminars. An overwhelming 90% of managers were in favor of continuing the WIN network. One member explained: “There is a tendency for corporate organizations to want to stay at the leading edge of change, which often results in discontinuing involvement once a few divisions have got82 ORGANIZATIONAL DYNAMICS
ten up to speed. The real payback of WIN to HP comes in supporting the many divisions in implementing changes that have already been proven in a few.” The effectiveness of members’ redesigns was less compelling. Half of all members indicated that redesign had brought about improvements in productivity, flexibility and employee motivation, while over a quarter said redesign yielded improvements in product quality and customer satisfaction. Many indicated that it was simply “too early to tell” whether redesign had an effect. A few respondents noted decreases in quality or productivity, which they attributed to factors such as a new production system or a change in business conditions. WIN members indicated that continuing barriers to redesign were existing corporate policies, economic or business crises, loss of leadership, loss of management support, and employee burnout. Anecdotal evidence of WIN⬘s impact also began to circulate throughout the company. For example, a manager from the Rhonert Park Division reported that shifting to a team-based work system had reduced delivery time by two-thirds, and lowered annual operating costs by $5 million. Managers from the Roseville Networks Division reported that the redesign had reduced workin-progress by half and reduced costs by 15%, exceeding managers’ expectations. The division manager of the Santa Clara Division, the first site to undergo redesign on a division-wide basis, credited the effort with saving the division by changing its culture from one that was technology-driven and inwardly focused, to one that was customerdriven and outwardly focused. Anecdotes included benefits accrued not only through work redesign, but as a result of serendipitous conversations with peers during WIN meetings. For example, a product engineer from the Spokane Division explained that through a short conversation with an engineer from another division, he learned that the market research capability he had planned to outsource existed within HP, saving him approximately $50,000.
The Growth of WIN By its second year, about a third of all 60 HP divisions— considered a “critical mass” by internal consultants— had adopted work redesign in one or more manufacturing units. In response to requests from managers, the network began teaching members how to conduct knowledge-work redesign (e.g., in R&D and sales), cross-functional redesign, and eventually redesign along the entire value chain (e.g., including suppliers and customers in the redesign process). WIN consultants also began teaching members how to “renew” existing redesign efforts to avoid employee burnout, and to expedite the redesign process by conducting “large group” or “whole system” change with groups of 100 or more employees, rather than the usual 20 member design teams. As the need for help with work redesign declined, WIN began focusing on contemporary topics like virtual organizations, leadership and high participation, and work innovation in hyper-growth environments. Demand escalated, and WIN leaders were asked to arrange spin-off meetings to focus on specific topics. Two spin-offs were a “Customer WIN,” designed to help HP’s research and development and marketing communities bring customers into the new product development process and a “General Manager WIN,” designed to focus on specific issues and concerns encountered by HP’s general managers. Plans were also laid to expand the conference to Europe, to meet the needs of HP’s European community.
WIN is Cancelled In 1995, at the height of its popularity, WIN was abruptly called to a halt. HP’s profits had slipped, and as part of a company-wide effort to cut costs, HP’s top executives restricted all travel and forbade meetings over 20 people. WIN leaders tried in vain to persuade top management to permit the meetings to continue. But executives explained that allowing WIN to continue while other
travel was cut would send the wrong message to the company.
The Virtual WIN For several years, WIN lay dormant as planners explored alternative approaches to keeping the network alive. One idea was to meet in local forums, called “nodes,” to reduce the cost of travel. Another, currently being explored, is to replicate WIN on the company intranet using group-conferencing technology. Internal consultants envision a virtual conference lasting several weeks that would enable managers to meet and share ideas in “different space, different time.” HP is currently using such technology to promote its “Rules of the Garage” initiative, aimed at returning the company to its roots and strengthening its focus on invention. While somewhat leery about on-line communication, internal consultants anticipate that the benefits of a virtual WIN would outweigh the costs. Internal consultant Peter Bartlett explained: “Even when we were highly successful doing face-to-face, we were only tapping a tiny percentage of the community. This way, we will be reaching far greater numbers.” The virtual network would certainly be less expensive, as all travel and lodging costs would disappear. No longer restricted by time and space, opportunities for networking would grow. And action research would be easier to conduct. At the end of each conference, documents and conversations would be organized and stored in knowledge “containers” to be “harvested” for future redevelopment, redistribution, or reuse anywhere in the company.
LESSONS AND DILEMMAS Two of the five WIN principles were at the heart of creating an environment that enabled learning to occur. First, the “pull” principle ensured that knowledge flowed on an “as-needed basis” and gave managers the choice whether or not to adopt redesign, SUMMER 2001 83
based on what they felt was best for their organizations. The element of discretion inherent in the pull method increased managers’ commitment to the innovation being adopted and raised the chances that it would be implemented successfully. As a result, the innovations spread based on market demand. Second, the safe environment was essential to learning— because it gave members permission to make mistakes. Had members feared negative consequences from discussing things gone wrong in their redesigns, they would not have been so forthright. The honesty associated with airing mistakes also increased the credibility of the message being delivered. As one member explained, “We don’t have anything to gain from baring our blunders except helping others avoid them.” Once mistakes were aired, everyone learned from them, reducing chances that they would be repeated. Other companies may in turn benefit from fostering an open environment in which airing mistakes is encouraged, rather than punished.
The Need for Top-Level Support Over the years, the company’s hallmark divisional structure had become taken for granted. Attention turned to engineering as the core competence, and organizational design became viewed as the “touchy-feely” side of the business. Internal consultants knew that translating organizational design into performance required a leap of faith that not many executives were willing to make. Anticipating top-managers’ lack of support for initiatives focused on design—and knowing that top-down efforts often fail—internal consultants deliberately designed WIN as a grassroots strategy. In retrospect, the internal consultants conceded that they might have gone too far with the bottom-up approach. Self-managing networks need top-level support to survive— especially when financial situations become tight. Wright explained: “One of WIN⬘s flaws was that it was a bit of a guerilla movement. We never tried to cultivate high84 ORGANIZATIONAL DYNAMICS
level sponsors. Next time around, we may need to think about that.”
Focus on Strategic Initiatives Also critical to a learning network’s long term survival is its link to company strategic initiatives. Winby explained: “Everyone knows learning is good, but it has to be clearly aligned with actual customer benefit.” Internal consultants now believe that the virtual WIN should focus explicitly on a strategic initiative such as service and support, rather than on organizational design. Wright explained: “The virtual WIN will not be about designing work systems, but about a shift in the game of service and support. It will be strategy-oriented.”
Dilemma of Measurement WIN⬘s case illustrates a difficulty common to most learning networks: providing evidence of their effectiveness. The consultants considered the network a success because they witnessed firsthand the learning that occurred during meetings. Additional evidence of WIN⬘s effectiveness, they reasoned, lay in the unabated demand for WIN meetings, in anecdotal evidence, and in the fact that after several years almost half of all HP divisions had adopted self-managing teams in one or more units. Top-level executives, in contrast, required hard and consistent evidence of work redesign’s effectiveness— data that was not readily available. This dilemma is common. In the absence of bottomline results, learning networks run the risk of being seen as luxuries or “extras” that are the first to be cut when profit margins shrink. Measuring the effectiveness of learning networks is complicated because there are two dimensions to evaluate—the diffusion mechanism itself, and the innovation it is designed to diffuse. Evaluating the former is tricky, because absence of adoption does not mean that no learning occurred. Many WIN members decided against, or postponed their redesign efforts to avoid failed attempts while their divisions were financially amuck.
Also complicated was measuring the impact of work redesign itself. Autonomous teams sometimes take years to develop, making bottom-line results difficult to obtain early on. Redesign efforts can also be hampered by factors outside managers’ control. One member explained: “We decided to do redesign, but four months into it, our effort was wiped out by a change in charter.” Finally, measurement is time-consuming. Redesign managers were often too busy to document the redesign effort and outcomes in white papers. As a result, the consultants had little more than anecdotal evidence to convince top executives of WIN⬘s value.
Remaining Questions While the expansiveness and accessibility of the virtual approach are appealing, questions remain about its potential as compared with face-to-face learning to produce fundamental change. WIN was originally designed
to diffuse work redesign, a practice that required radical alterations in employees’ beliefs and behaviors—and in divisions’ structures, policies and practices. Finding solutions to the barriers to diffusion required not only the exchange of “tacit knowledge,” but also the exchange of intense emotion. Often changes in behavior came about only after managers struggled as a group, shared experiences subjectively, and achieved important insights. Called “ah-ha’s” by HP managers and employees, such revelations would have been enormously difficult, if not impossible, to create in the absence of faceto-face interaction. Because of WIN⬘s early focus on redesign, therefore, bringing employees together to learn face-to-face was probably an appropriate strategy for its time.
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SUMMER 2001 85
SELECTED BIBLIOGRAPHY Richard Walton’s seminal article, entitled “The Diffusion of New Work Structures: Explaining Why Success Didn’t Take” appeared in the winter 1975 edition of Organizational Dynamics, 1975, 2–22. For a
86 ORGANIZATIONAL DYNAMICS
comprehensive and current review of the factors that influence the diffusion of innovations, see Everett Rogers’ Diffusion of Innovations, 4th ed. (New York: The Free Press, 1995).
ISSN 0090-2616/01/$–see frontmatter PII S0090-2616(01)00042-0
LEARNING FROM PRACTICE
Overcoming Barriers to Work Innovations:
Lessons Learned at Hewlett–Packard DEONE ZELL
T
he problem of successfully diffusing work innovations and best practices throughout firms has plagued scholars and practitioners alike for almost 30 years. In the mid 1970s, organizational expert Richard Walton discovered a paradox: Despite success in one location, innovative work practices often failed to diffuse to others, remaining as “islands of innovation.” As a result, companies were forced to reinvent new practices, resulting in costly duplication of effort. The problem of diffusing innovations persists, and is even more pronounced in today’s knowledge economy, where survival requires learning faster than one’s competitors. Best practices often linger in companies for years, unrecognized and unshared. A study conducted by the American Productivity & Quality Center, for example, found that it took up to two years on average for other sites in a company to begin adopting a practice that originated in any given organizational unit.
Barriers to the Diffusion of Innovations and Best Practices Years of research has uncovered a range of barriers to the internal transfer of innovations and best practices. Obstacles may stem from at least four sources. The innovation itself. Obstacles may arise because of characteristics of the innovation itself. Innovations may be rejected because they are not perceived to carry advantages over existing practices. Or, they may be dismissed because they are viewed as incompatible with the existing culture and structure of the organization. They may also fail to spread because of measurement problems. For instance, their financial impact may be difficult to determine because their benefits are indirect (e.g., reduced absenteeism or fewer layers of management), or because alternative measures are used (e.g., adoption rates vs. impact on bottom line). In other cases, the innovation’s effect may be hard to SUMMER 2001 77
separate from environmental influences (e.g., an improving economy), or measurement simply fails to occur.
Deone Zell is an assistant professor of management at California State University, Northridge, where she teaches classes in management, organization theory and organization behavior. She received her doctorate from the University of California at Los Angeles (UCLA) in 1994, and specializes in working as an “industrial anthropologist” to document organizational change processes. She is the author of Changing by Design: Organizational Innovation at Hewlett–Packard, published in 1997 by Cornell University Press, and the co-author of a forthcoming book on strategic change in higher education. She also has published articles in the Sloan Management Review and the Journal of Management Inquiry (forthcoming). Her research interests include knowledge management, organizational transformation, complexity theory and the diffusion of innovations. She can be reached at: [email protected].
Transferring innovations. Innovations may fail to spread because of problems that arise during transfer from the source to the adopting unit. Practices often deteriorate when they are forced on the host organization. While easier and faster, such top-down change efforts often backfire because they fail to develop the employee commitment or competence necessary for the innovation to take root. Innovations also often fail to spread because of inadequate or nonexistent communication or relationships between units. Such barriers are exacerbated when units are largely independent, or when organizations have highly segmented, or “silo” structures. Implementing innovations. Innovations often stall when problems arise during their implementation. Units may lack the resources or knowledge necessary to integrate the innovation into the organization. For example, managers are often unable to find time to implement new technology or production systems. They may also lack necessary resources to train employees, or sufficient leadership to manage a transition from old to new ways of working. Employee and manager turnover and rapid technological change can also produce discontinuity that disrupts adoption of the innovations. In other cases, innovations die because changes in policies and practices necessary to support them are not made. Human limitations. Finally, barriers may arise from human shortcomings like the “not invented here” syndrome so common in high-tech companies. Employees place such high value on innovation that they refuse to adopt ideas unless they’ve invented them. In other cases, successful pilot projects get too much exposure and become glorified by management. This causes resentment among employees who actively resist the innovation and ultimate isolation of the experimental unit.
78 ORGANIZATIONAL DYNAMICS
Hewlett–Packard Co. Work Innovation Network In 1990, Hewlett–Packard Co. (HP) was showing signs of corporate gigantism. Excess layers of management and uncontrolled costs made it nearly impossible for the electronics firm to keep pace with its smaller, more nimble competitors. Ironically, the company’s decentralized structure, long considered an asset, added to the problem. Running each division as an autonomous unit encouraged healthy competition but also exacerbated the “not-invented-here” syndrome. After a successful reorganization by chief executive officer (CEO) John Young eliminated excessive layers of management, a small group of internal consultants at HP’s headquarters in Palo Alto formed to help the company’s 60 divisions improve their competitiveness. Led by manager Stuart Winby, formerly at the American Productivity and Quality Center, the team began teaching managers from a handful of divisions how to develop self-managing teams. Winby believed that for teams to take root, they would have to grow from the shop floor, rather than be “installed” from above by management fiat. The consultants’ strategy was to work intensely with a handful of sites to establish redesign efforts—which, if successful, would illustrate the benefits of self-managing teams. News of substantial improvements in quality, productivity, and responsiveness achieved at pilot sites such as the Boise Printer Division spread quickly throughout the company, and the group soon found itself unable to keep up with the demand for consulting services. To expedite the spread of knowledge, the consultants formed a learning network called the Work Innovation Network (WIN). Four times each year, the network brought managers together to learn about work redesign and autonomous teams, creating a means for them to communicate as they implemented the changes. In this way, learning could be leveraged, rather than lost. In its first year, 54 managers from over a third of HP’s divisions met at the pilot sites
where redesign had taken root. Each meeting lasted two or three days, as participants learned from each other and from HP internal consultants about how to conduct redesign projects. Members made formal presentations on their own redesign projects and received advice and feedback from their peers.
Overcoming Barriers to Diffusion WIN was specifically designed to overcome barriers known to plague companies’ efforts to diffuse innovations and best practices, and was based on five principles (see Table 1). Pull mechanism. A fundamental conceptunderlying WIN was a “pull” principle, designed to create a network that was driven by the market, rather than by the hierarchy. Winby described the bottom-up approach as “making a few friends and lighting a few fires.” This principle shaped every dimension of the network, from the selection of its membership to the structure of learning activities. Membership in WIN was voluntary, and HP managers had to express an active interest in redesign. Managers who wanted to attend WIN meetings just out of curiosity were discouraged. WIN practiced what it preached, and was entirely self-managing. The format and content of each meeting was designed by a planning group of several internal consultants and a rotating group of WIN members who kept in close touch with other divisions so WIN could provide needed information just-in-time. Learning was guided by this “need to know” principle as well, as knowledge was pulled by managers on an as-needed basis. Networking. Based on the belief that learning is a social activity, knowledge was exchanged through the network by forming personal relationships and establishing communication between divisions. Observation at WIN meetings revealed that every gathering was carefully and subtly designed to promote face-to-face learning. Chairs were arranged in fours that formed squares like SUMMER 2001 79
TABLE 1.
WIN PRINCIPLES AND COMMON BARRIERS DIFFUSION OF INNOVATIONS
TO THE
Win Principles Barriers Innovation itself • No relative advantage • Perceived as incompatible with structure or culture • Impact not measured Transfer • Inadequate communication between units • Forced change from the top down Implementation • Lack of resources • Turnover • Rapid technological change • Supporting changes not made in policies and practices Human Dynamics • Not invented here syndrome • Resentment/jealousy leading to isolation
Pull Peer Safe Action mechanism Networking consulting environment research
X X X X
X
X
X
waffles. Couches were placed in hallways to encourage conversation—after planners noticed that participants lingered in corridors, talking intensely during sessions and sometimes long afterward. Light lunches that could be put on paper plates and taken into small groupings encouraged more interaction. As a reward for long and arduous days of intense work, social events—visits to local wineries or riverboat cruises—also helped the flow of knowledge. Face-to-face learning in “flexible learning periods”—where participants could discuss topics on their minds— helped implementation by finding solutions to problems that invariably arose. For example, one manager had trouble engaging his supervisors in the redesign process. His colleagues suggested that he help his supervisors transition from bosses to coaches and explore alternative career tracks to overcome the fear of working themselves out of a job. Face-to-face discussions also helped find solutions to vex80 ORGANIZATIONAL DYNAMICS
X
X
X
X
X X
X
ing policy problems like HP’s forced ranking performance appraisal system. Originally designed to promote individual contribution, the system pitted employees against each other and thwarted teamwork. Members formed a task force to document the negative effects of forced ranking and met with top executives from corporate compensation to explain. As a result, several pioneering divisions received sanction to experiment with alternative systems of pay that added a team component and relaxed the forced distribution, enabling the majority of individuals on a team to receive high marks. Peer consulting. Peer consulting helped HP managers accelerate the implementation of redesign efforts by sharing tips about what worked and what did not. WIN leaders created the practice after realizing that enormous amounts of untapped knowledge resided among the managers themselves,
making it unnecessary to hire external consultants for support. Members often described their cases in emotional detail, making presentations convincing and credible. After presentations, members broke into small groups to prepare feedback, categorized into “gems” (strengths), “blind spots” (weaknesses), and ”take homes“ (ideas that members planned to take home and implement). One manager said, ”I learned a lot. The Starship Simulation sounded powerful—we’ll definitely try that one—and the anonymous peer review as a precursor to peer evaluation was a real plus. But we’ll sure avoid downsizing and redesigning at the same time—that’s just asking for trouble.“ As managers became better at providing feedback to each other, they began to rely less on internal consultants and more on their peers for guidance and advice. Peer consulting also helped overcome the human barriers to the diffusion of innovations. Redesign was still considered radical, because it shifted power from managers to employees, who then managed themselves. After a presentation from one division whose redesign was publicly considered a success, other members pointed out that these managers were inadvertently isolating the effort by portraying their redesign as revolutionary. They had begun to call themselves the “lunatic fringe” and joke that their redesign would eventually be “nuked,” “zapped,” or “roto-tilled” by the higher-ups. WIN participants warned these managers that continuing to use such language would become a self-fulfilling prophecy and undermine the long-term success of the effort. Safe environment. Central to the effectiveness of peer consulting was the value placed on openly airing mistakes, which increased communication between divisions and helped overcome barriers to the implementation of work redesign. “By learning from each others’ mistakes, as well as successes,” explained Vivian Wright, an HP internal consultant, “we’ll be able to learn and change faster than our competitors.” Helping members feel free to disclose their errors,
however, required creating a safe environment where there would be neither blame nor negative consequences of doing so. Before long the practice of exposing one’s mistakes became the norm, assisted by the absence of top-level managers. At one meeting, a manager admitted that he tried to make his team self-managing, but failed. “I thought my absence would promote ownership, so I removed myself from the production floor. I did it too quickly. Instead of promoting autonomy, my employees felt abandoned and unappreciated, and productivity plummeted.” The practice of sharing mistakes proved so valuable that it was carefully protected as WIN grew. A year after WIN was created, a member suggested videotaping the peer consulting sessions. The idea was vehemently rejected, because members claimed the presence of a camera would encourage socially desirable behavior and discourage open and honest dialogue. The value that members placed on honesty could also be seen after several WIN meetings were held at hotels to accommodate growing numbers. Presentations became less personal and truthful, and as a result less credible. Some members began to grumble about presentations resembling “dog and pony shows.” A WIN member circulated an e-mail urging a return to presenting the whole picture of redesign efforts. “We’re veering away from honesty,” the memo said. “We need to return to personal disclosure about presenters’ sources of pride and disappointment, because that’s what the audience learns from most.” Action research. To accelerate learning and provide concrete evidence of redesign’s impact on performance, internal consultants taught WIN members how to conduct action research and required them to produce “white papers” documenting the progress and results of their redesign efforts. Papers often ran to 30 pages in length and described the redesigns’ objectives, methodologies used, lessons learned, and impact on organizational performance, when available. Papers were distributed at each WIN meeting SUMMER 2001 81
and collected along with other documentation in three-inch binders that were often filled by meetings’ end. At the Santa Clara Division, redesign leaders realized that no amount of strategic planning could overcome the problems arising from the division’s functional structure, leading to a controversial but ultimately successful adoption of a matrix structure. Learnings like these were documented in white papers and discussed during WIN meetings to help others navigate similar obstacles.
Evidence of Effectiveness WIN leaders knew the importance of measuring WIN⬘s impact on the bottom line, yet doing so proved difficult. Although many divisions included results of their redesigns in white papers, their methods varied greatly. Winby explained: “Some provided hard results—real numbers—and some were very soft. Some said we got a 24% decrease in overhead, and we improved time to market three-fold. And others would say things like, ‘The attitude of people has changed as a result,’ or ‘Look at our HP survey results and see how they’ve gone up.’” The value of WIN to its members was clear. According to a 1992 survey, 80% of managers said they received a full return on their investment in WIN. The network’s most significant contribution was to put managers in touch with others doing redesign. More than two-thirds said that WIN had given them moral support, as well as good ideas about how to implement redesign. WIN had also helped nearly 20% of managers decide whether they should adopt redesign. The network was considered more important as a source of information than HP’s internal consultants, books or articles obtained on their own, informal contact with other sites, or seminars. An overwhelming 90% of managers were in favor of continuing the WIN network. One member explained: “There is a tendency for corporate organizations to want to stay at the leading edge of change, which often results in discontinuing involvement once a few divisions have got82 ORGANIZATIONAL DYNAMICS
ten up to speed. The real payback of WIN to HP comes in supporting the many divisions in implementing changes that have already been proven in a few.” The effectiveness of members’ redesigns was less compelling. Half of all members indicated that redesign had brought about improvements in productivity, flexibility and employee motivation, while over a quarter said redesign yielded improvements in product quality and customer satisfaction. Many indicated that it was simply “too early to tell” whether redesign had an effect. A few respondents noted decreases in quality or productivity, which they attributed to factors such as a new production system or a change in business conditions. WIN members indicated that continuing barriers to redesign were existing corporate policies, economic or business crises, loss of leadership, loss of management support, and employee burnout. Anecdotal evidence of WIN⬘s impact also began to circulate throughout the company. For example, a manager from the Rhonert Park Division reported that shifting to a team-based work system had reduced delivery time by two-thirds, and lowered annual operating costs by $5 million. Managers from the Roseville Networks Division reported that the redesign had reduced workin-progress by half and reduced costs by 15%, exceeding managers’ expectations. The division manager of the Santa Clara Division, the first site to undergo redesign on a division-wide basis, credited the effort with saving the division by changing its culture from one that was technology-driven and inwardly focused, to one that was customerdriven and outwardly focused. Anecdotes included benefits accrued not only through work redesign, but as a result of serendipitous conversations with peers during WIN meetings. For example, a product engineer from the Spokane Division explained that through a short conversation with an engineer from another division, he learned that the market research capability he had planned to outsource existed within HP, saving him approximately $50,000.
The Growth of WIN By its second year, about a third of all 60 HP divisions— considered a “critical mass” by internal consultants— had adopted work redesign in one or more manufacturing units. In response to requests from managers, the network began teaching members how to conduct knowledge-work redesign (e.g., in R&D and sales), cross-functional redesign, and eventually redesign along the entire value chain (e.g., including suppliers and customers in the redesign process). WIN consultants also began teaching members how to “renew” existing redesign efforts to avoid employee burnout, and to expedite the redesign process by conducting “large group” or “whole system” change with groups of 100 or more employees, rather than the usual 20 member design teams. As the need for help with work redesign declined, WIN began focusing on contemporary topics like virtual organizations, leadership and high participation, and work innovation in hyper-growth environments. Demand escalated, and WIN leaders were asked to arrange spin-off meetings to focus on specific topics. Two spin-offs were a “Customer WIN,” designed to help HP’s research and development and marketing communities bring customers into the new product development process and a “General Manager WIN,” designed to focus on specific issues and concerns encountered by HP’s general managers. Plans were also laid to expand the conference to Europe, to meet the needs of HP’s European community.
WIN is Cancelled In 1995, at the height of its popularity, WIN was abruptly called to a halt. HP’s profits had slipped, and as part of a company-wide effort to cut costs, HP’s top executives restricted all travel and forbade meetings over 20 people. WIN leaders tried in vain to persuade top management to permit the meetings to continue. But executives explained that allowing WIN to continue while other
travel was cut would send the wrong message to the company.
The Virtual WIN For several years, WIN lay dormant as planners explored alternative approaches to keeping the network alive. One idea was to meet in local forums, called “nodes,” to reduce the cost of travel. Another, currently being explored, is to replicate WIN on the company intranet using group-conferencing technology. Internal consultants envision a virtual conference lasting several weeks that would enable managers to meet and share ideas in “different space, different time.” HP is currently using such technology to promote its “Rules of the Garage” initiative, aimed at returning the company to its roots and strengthening its focus on invention. While somewhat leery about on-line communication, internal consultants anticipate that the benefits of a virtual WIN would outweigh the costs. Internal consultant Peter Bartlett explained: “Even when we were highly successful doing face-to-face, we were only tapping a tiny percentage of the community. This way, we will be reaching far greater numbers.” The virtual network would certainly be less expensive, as all travel and lodging costs would disappear. No longer restricted by time and space, opportunities for networking would grow. And action research would be easier to conduct. At the end of each conference, documents and conversations would be organized and stored in knowledge “containers” to be “harvested” for future redevelopment, redistribution, or reuse anywhere in the company.
LESSONS AND DILEMMAS Two of the five WIN principles were at the heart of creating an environment that enabled learning to occur. First, the “pull” principle ensured that knowledge flowed on an “as-needed basis” and gave managers the choice whether or not to adopt redesign, SUMMER 2001 83
based on what they felt was best for their organizations. The element of discretion inherent in the pull method increased managers’ commitment to the innovation being adopted and raised the chances that it would be implemented successfully. As a result, the innovations spread based on market demand. Second, the safe environment was essential to learning— because it gave members permission to make mistakes. Had members feared negative consequences from discussing things gone wrong in their redesigns, they would not have been so forthright. The honesty associated with airing mistakes also increased the credibility of the message being delivered. As one member explained, “We don’t have anything to gain from baring our blunders except helping others avoid them.” Once mistakes were aired, everyone learned from them, reducing chances that they would be repeated. Other companies may in turn benefit from fostering an open environment in which airing mistakes is encouraged, rather than punished.
The Need for Top-Level Support Over the years, the company’s hallmark divisional structure had become taken for granted. Attention turned to engineering as the core competence, and organizational design became viewed as the “touchy-feely” side of the business. Internal consultants knew that translating organizational design into performance required a leap of faith that not many executives were willing to make. Anticipating top-managers’ lack of support for initiatives focused on design—and knowing that top-down efforts often fail—internal consultants deliberately designed WIN as a grassroots strategy. In retrospect, the internal consultants conceded that they might have gone too far with the bottom-up approach. Self-managing networks need top-level support to survive— especially when financial situations become tight. Wright explained: “One of WIN⬘s flaws was that it was a bit of a guerilla movement. We never tried to cultivate high84 ORGANIZATIONAL DYNAMICS
level sponsors. Next time around, we may need to think about that.”
Focus on Strategic Initiatives Also critical to a learning network’s long term survival is its link to company strategic initiatives. Winby explained: “Everyone knows learning is good, but it has to be clearly aligned with actual customer benefit.” Internal consultants now believe that the virtual WIN should focus explicitly on a strategic initiative such as service and support, rather than on organizational design. Wright explained: “The virtual WIN will not be about designing work systems, but about a shift in the game of service and support. It will be strategy-oriented.”
Dilemma of Measurement WIN⬘s case illustrates a difficulty common to most learning networks: providing evidence of their effectiveness. The consultants considered the network a success because they witnessed firsthand the learning that occurred during meetings. Additional evidence of WIN⬘s effectiveness, they reasoned, lay in the unabated demand for WIN meetings, in anecdotal evidence, and in the fact that after several years almost half of all HP divisions had adopted self-managing teams in one or more units. Top-level executives, in contrast, required hard and consistent evidence of work redesign’s effectiveness— data that was not readily available. This dilemma is common. In the absence of bottomline results, learning networks run the risk of being seen as luxuries or “extras” that are the first to be cut when profit margins shrink. Measuring the effectiveness of learning networks is complicated because there are two dimensions to evaluate—the diffusion mechanism itself, and the innovation it is designed to diffuse. Evaluating the former is tricky, because absence of adoption does not mean that no learning occurred. Many WIN members decided against, or postponed their redesign efforts to avoid failed attempts while their divisions were financially amuck.
Also complicated was measuring the impact of work redesign itself. Autonomous teams sometimes take years to develop, making bottom-line results difficult to obtain early on. Redesign efforts can also be hampered by factors outside managers’ control. One member explained: “We decided to do redesign, but four months into it, our effort was wiped out by a change in charter.” Finally, measurement is time-consuming. Redesign managers were often too busy to document the redesign effort and outcomes in white papers. As a result, the consultants had little more than anecdotal evidence to convince top executives of WIN⬘s value.
Remaining Questions While the expansiveness and accessibility of the virtual approach are appealing, questions remain about its potential as compared with face-to-face learning to produce fundamental change. WIN was originally designed
to diffuse work redesign, a practice that required radical alterations in employees’ beliefs and behaviors—and in divisions’ structures, policies and practices. Finding solutions to the barriers to diffusion required not only the exchange of “tacit knowledge,” but also the exchange of intense emotion. Often changes in behavior came about only after managers struggled as a group, shared experiences subjectively, and achieved important insights. Called “ah-ha’s” by HP managers and employees, such revelations would have been enormously difficult, if not impossible, to create in the absence of faceto-face interaction. Because of WIN⬘s early focus on redesign, therefore, bringing employees together to learn face-to-face was probably an appropriate strategy for its time.
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SELECTED BIBLIOGRAPHY Richard Walton’s seminal article, entitled “The Diffusion of New Work Structures: Explaining Why Success Didn’t Take” appeared in the winter 1975 edition of Organizational Dynamics, 1975, 2–22. For a
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comprehensive and current review of the factors that influence the diffusion of innovations, see Everett Rogers’ Diffusion of Innovations, 4th ed. (New York: The Free Press, 1995).