Kotter, the Solar System, and Organizational Agility

Charles Lambdin
Nov 2, 2018 · 15 min read

However beautiful the strategy, you should occasionally look at the results.

— Winston Churchill

Kotter, the Solar System, and Organizational Agility

John Kotter is one of the world’s leading experts on business transformation. In this post we’ll (mostly) look at his excellent 2014 book XLR8 (Accelerate), which presents an interesting “meta” take on the topic.

The Pyramid and the Solar System

Companies start small. If they’re successful they grow and change, progressing through several stages. They typically begin as informal networks of people on a mission, often clustered around a founder. At this stage, Kotter says, the company’s network of employees resembles a “solar system.” As a company continues to grow, more employees are added, and the informal network of innovators begins to coalesce into a formal management hierarchy.

We’ll call this the “pyramid.”

The pyramid begins to grow alongside the solar system. At this stage the company has both — a pyramid and a solar system. The solar system is what built the company. It’s the informal network of innovators, passionate about strategy, leadership, and inventing the future. The pyramid focuses on existing performance, on meeting the numbers, on conducting day-to-day business. What makes money now needs to be done reliably; and, slowly, managing this starts to take priority over everything else.

The pyramid gets larger and larger, and the solar system begins to shrink.

As the pyramid grows, its focus turns in on itself. Silos emerge, and communication is hindered as the nested pyramids start looking to their own interests.

People in the pyramid are insanely busy, but they’re primarily busy with “busyness.” Everything has a sense of urgency about it, but it’s more a short-term, tactical urgency. It’s “pyramid urgency.” As Kotter puts it, it’s an anxiety-driven, self-protective reflex that denotes life in a bureaucracy. The old startup networks are stifled, and the pyramid swallows the solar system. What’s left is the massive enterprise — a formal, management-centric structure and the emergent inwardly-focused status quo that results.

As Mills (2016) puts it, this focus is largely on driving people, not change — on whether direct reports are doing what they’re told, on time, and within budget. Work is increasingly seen as attending meetings, reporting to staff, as simply addressing the business of the day. This becomes such an ingrained reality that no one questions the growing spread of administrivia, what Mills calls “the whirlpool,” the growing flux of somewhat non-value-adding work.

As the whirlpool spreads, the status quo starts rewarding people for busyness, without bothering to question why everything is always on fire.

These aren’t all entirely new points either. Take, for instance, “Parkinson’s Law” and other similar observations, such as those described in Martin’s (1973) hilarious book, Malice in Blunderland. Parkinson’s Law states that, “Work expands to fill the time available.” Today this is often conflated with “the planning fallacy. Parkinson was more implying that bureaucracies will continue to grow even if the amount of real work to be done doesn’t. In other words, pyramids water themselves — bureaucracy perpetuates bureaucracy.

Martin compares this to multiple other “joke” laws, which often contain profound insights.

For instance, Jay’s Second Law of Hierarchy: Given an organization with six levels and 11 direct reports to each manager, there will be about 177k employees, and the top half of the org will consist of only 133 people. Due to Reich’s Law of Hierarchical Reality, given almost any problem, those 133 people will know the least about it, hence the growing need for more data, more presentations, more reports, more statements, more handoffs, inefficiencies, and busyness. Interestingly, Martin states, despite decades of evidence to the contrary, many persist in the belief that the “solution” to such hierarchical ailments is “better communication.” Thence follows a deluge of comms, quarterlies, newsletters, and staff and update meetings, further adding to the busyness and resulting in Martin’s own Restated Law of Communication: The more levels there are to a hierarchy and the more attempts that are made at interlevel communication, the less people will in general know what the hell is going on.

Joking aside, this follows, in part, from one of Claude Shannon’s laws of information theory: If the amount of information shared exceeds the capacity of the channel to accept it, communication is not reduced, it ceases altogether. People tune you out. You are now just part of the noise.

Kotter (2008) also makes this point, arguing that the information that matters often gets lost amidst a sea of comms and announcements. When people ignore it all, they miss the needed information as well. Information flowing through official channels in a hierarchy flows too slowly. Martin describes this as Antony Jay’s Second Law. Paraphrasing, in a hierarchy it will take so long to do anything that decisions will be stale by the time they’re enacted.

The irony, Martin concludes, is that contrary to popular belief the growth of a bureaucracy does not concentrate power at the top — it diffuses power altogether. The pyramid doesn’t grow in power; rather, as it ages it loses its potency.

We stick teams near the bottom of a bloated Waterfall structure, rendering them somewhat impotent. To add insult to injury, we tell such teams to become “Agile,” without fundamentally transforming the overstuffed non-Agile hierarchy. This is akin to demanding a pedicure when your leg has gangrene. Getting back to Kotter’s XLR8, the overall maturity process looks something like this (image adapted from Kotter, 2014).

Left Side and Right Side

It’s not that the pyramid is “bad.” Far from it — no pyramid, no enterprise. Rather, the problem is in today’s world pyramids crumble fast. It’s not a ride you can ride for very long. Consider that at current rates, within the next decade half the companies on the S&P 500 will be gone (Anthony et al., 2017). In the 1960s, the average company on the S&P 500 was there for 33 years. By 2027, that number will shrink to 12 years. The pyramid makes your money today, but it’s the solar system that will keep you alive in the long run.

Janice Fraser (2017) made the same point at last year’s MTPcon (Mind the Product). Large companies can no longer just protect their core business, she said. Higher-ups love HiPos (“high-potential” employees) but need to learn to love “pirates” — teams working separate from the core business to accelerate strategy and free up space for innovation. But be careful, Fraser said, these aren’t “rock stars.” They’re not your “HiPos.” Your rock stars, she said, are largely a distraction — they probably derail more real work than they get done. Your “high potentials” are mainly employees good at gaming the existing system. You actually don’t want them in your transformation efforts. They’re too focused on their individual success to experiment, fail, learn, and innovate. The “pirates,” the “network,” the “solar system,” should be staffed with teams of average employees given the space to experiment and discover their own way to achieve concrete outcomes tied to strategic initiatives.

This is why, to paraphrase Kotter, the ultimate point of transformation is to regrow the solar system — it’s to get back to the middle phase of organizational maturity when there were two sides to the company. Kotter calls this a company’s “dual operating system,” describing it as the “left side” and “right side.” Once an organization has matured to where it’s only a pyramid, it’s only left-sided, and the left side is only good at certain things. Remember from above, the pyramid is the formal management hierarchy. It focuses on the management of day-to-day work. It stresses consistency, efficiency, and reliability. It focuses on planning, reports, and meetings (image adapted from Kotter, 2014).

In another of Kotter’s books, A Sense of Urgency (2008), he takes on the distinction between false and genuine urgency. False urgency is commonplace in the left side of the dual operating system. False urgency begets busyness, begets Mills’ “whirlpool,” where meeting begets meeting to fill the time available. (Parkinson’s Law anyone?) As Kotter states, false urgency says, “We’ve got to have a project meeting today.” Real urgency says, “We’ve got to achieve this concrete outcome today.” If you want to model real urgency, Kotter says, then you need to start clearing your calendar.

Note the implications. If you’re questioning the value of certain people’s work, but you sit in meetings all day…. This can be a tough pill to swallow, but it will benefit organizations if people start looking in this mirror. Resist the easy comebacks: “Well, in meetings we make decisions,” etc. How many of those decisions are actually value-adding outcomes? (Paul Nutt, who spent years studying executive decision making, found that the way most executives make decisions their performance would be no different if they flipped a coin instead [see Nutt, 1999; 1993].)

Kotter’s dual-operating system is easily tied to Mills’ distinction between “driving people” and “driving change.” The left side, the pyramid, tends to sink more and more into driving people, into coercive command and control. As the work of Daniel Goleman (2017) has shown, this is not an effective leadership style. The focus is on personalities and compliance. When you’re driving people, you’re waiting for updates and reports and meetings. It becomes all about politics and posturing and internally-focused administria.

False urgency produces rituals wherein faux work gets done. As Kotter puts it, the system starts to pay attention to activity, not productivity.

The right side doesn’t care about this stuff, and, as a result, is not so encumbered. The right side better emphasizes “driving change.” It’s about proactively leading the way to desired outcomes. It’s about modeling desired behaviors and inviting others to join you. In Kotter’s model, the purpose of the “right side” is not to effect a particular transformation but to enhance the company’s ability to transform in general, in an ongoing, continuous way. The right side remains as a permanent service.

It starts with executives giving the green light to a guiding coalition to start building out the networks on the right side. As the networks of proactive change agents grow and start generating (and celebrating) win after win, the left side will start to take notice. The right side can then feed back and bake in changes to the left side. Without the right side, Kotter argues, transformations will typically fail.

This is a key insight: The left side is not interested in changing. Real change only happens when the right side grows to the point that the left side can no longer ignore it. Without this, you’re often left with bringing in large consultants to combat the existing left side, attempting to shift their gravity.

This helps circumnavigate the left side’s obstructionists. Remember, the people in the formal management hierarchy are focused on consistency. Many will see it in their own self-interest to stall, obstruct, and otherwise wait out what they see as the latest hullabaloo. These are the people Kotter (2008) dubs the “NoNos.” In his words, “A NoNo is more than a skeptic. He’s always ready with ten reasons why the current situation is fine, why the problems others see don’t exist, or why you need more data before acting” (p. 146).

These are the people in the pyramid who will stop at nothing to sabotage transformation, even if the org won’t exist much longer without it. Orgs typically make two mistakes with NoNos, Kotter says. They either ignore them, which is dangerous, or they waste time trying to co-opt them, which doesn’t work. You really only have three viable options with NoNos: 1. You can try to distract them and keep them focused on something else altogether; 2. You can expose their behavior and hold them accountable; or 3. You push them out of the organization.

Notice that in this model, “transformation,” properly understood, has nothing to do with the usual cliché left-side transformation goals, such as what amount to (when stated honestly), “increasing Waterscrumfall efficiency,” “increasing command-and-control velocity,” or “reducing dev team cycle time.”

When Kotter says “accelerate,” he doesn’t mean “accelerate velocity.” He’s instead talking instead about organizational agility. The fact remains: When you say “agility,” the pyramid hears “velocity.” It’s a common equivocation. Velocity is to do X with more speed. Agility is your ability to pivot and change from X to Y. Increasing agility means increasing flexibility and being less beholden to “plan.” The pyramid, however, hears what it wants to hear. Remember, the pyramid likes consistency and protecting the status quo. It’s listening through the vestige of 20th-century command and control.

So how do we get out of this trap? In Kotter’s model, transformation begins with the greenlighting of a guiding coalition. He outlines what he calls his “Five Principles” and “Eight Accelerators.” Let’s take a look.

The Five Principles

1. Many change agents, not just a few appointed executives. Remember, the network (or “solar system”) is outside the formal management hierarchy. If you ignore this and try to manage your transformation as just another program or project, you’re inviting failure. You’re trying to generate a flood of proactive change agents. Traditional avenues, such as a “task force” with an “executive sponsor” won’t come close to cutting it.

2. A “get-to” mindset, not a “have-to” one. You cannot conscript people into a change effort. You lead the way and invite proactive change agents to follow you. As you grow and start generating wins, the right side’s “gravity” will attract more volunteers from the left side. If instead you try to “appoint the right leaders,” the result will be tons of employees required to go to meetings — unless they can find a way out of it (and they will try). You’re not trying to make people do something against their will. You’re looking for the people who already want to do it so you can give them permission to join you.

3. Action is head- and heart-driven, not just head-driven. Just because you develop a business case and throw money at something does not mean anyone is going to care about it. Ordering people to do more work on top of their full plate of frantic busyness isn’t going to get you anywhere. Instead, find the people who know this work needs to be done, who are excited to accelerate strategy and start experimenting and innovating and achieving outcomes, and free them so they can actually go do it. The passion is already there. Find it and harness it.

4. More leadership, not more management. To move with agility and seize new strategic opportunities, you need leadership, not management. You need inspired action and innovation, not project plans and budget reviews. When building a strategic accelerator network, you want to liberate people who both see the rationale and are passionate about the change to go and start doing what needs to done, without waiting for higher-ups to give orders.

5. A partnership between the hierarchy and the network. As the strategic accelerator network grows, it forges more and more ties with leaders on the left side, the hierarchy. As ties between the left and right side multiply, this helps the right side bake new culture back into the left side, iteratively transforming and continuously improving it. The two sides — the pyramid and the solar system — need to exist in concert. If some change is successfully introduced and then the solar system goes away again, the company will be back in the same boat it was trying to escape. The pyramid will begin to resist change again and the company will be at risk of becoming, as Bezos would put it, “Day 2” (irrelevant).

The Eight Accelerators

1. A sense of urgency around a Big Opportunity. “Urgency” here is not about this week’s problems. It’s not about putting out fires. It’s not false urgency, about meetings, and PowerPoints, and report outs. What is needed is a genuine sense of urgency around a broad-vision strategic opportunity for the company.

2. Build a guiding coalition. A network of people arises who feel the urgency around the Big Opportunity. These are people from all levels and across all silos who proactively want to become change agents. They need guidance, however, as they will be apt to recreate the same practices from the management-centric hierarchy that they are used to, which will just produce more of the same. This is where the guiding coalition comes in.

3. Form a change vision and strategic initiatives. Craft a vision statement around the Big Opportunity. Create strategic initiatives to move the organization toward the vision. Executives need to approve the initiatives. Some may be pre-existing, but individuals only work on them if they proactively think they’ll help achieve the vision.

4. Enlist a volunteer army. The guiding coalition and other proactive change agents communicate the vision and initiatives back to the organization to attract more volunteers to the emerging network.

5. Remove barriers. The emerging network begins work on the initiatives and identifies new ones that are relevant to the vision and Big Opportunity. The work is very similar to a startup, which, if you’ll recall from above, is likely more similar to how the company functioned in its early days. Much of the effort at this point centers on removing barriers and constraints to strategically-important activity.

6. Generate and celebrate short-term wins. As strategically-relevant wins start to flow, find a way to publicly spotlight them. This helps to showcase the reality and activity of the new network. A “win” is any bit of progress toward the Big Opportunity.

7. Sustain acceleration. Break initiatives into sub-initiatives that can generate quick wins that can be celebrated. Breaking big things into smaller ones creates achievements that help sustain acceleration. This “snowballing” of wins will attract more and more people from the left to the right side.

8. Institute change. Institutionalize the wins and integrate them back into the management-centric hierarchy. This is where the right side starts feeding back into the left side, like fresh water transforming a stagnant lake (image adapted from Kotter, 2014).

This isn’t your standard carrot-and-stick approach. “Transformation” doesn’t mean piling more work on top of what people are already doing. It’s about simplification, not duplication. It’s not about creating more programs and teams and efforts; it’s about freeing up time so volunteers can proactively lead, help transform, and focus on strategic initiatives. Some of the work people are stuck in, that they feel is doomed to fail, that’s been going nowhere for a long while and yet the business keeps honoring sunk cost and throwing good money after bad, is what Fraser (2017) calls the “zombies.” As part of your transformation, she says, you need to get leaders to help you go “zombie hunting.”

Zombies suck the brains and budget out of your org. Pick 10 zombie projects at random, she says, then identify which is the biggest dog and “shoot it in the head.” Take that budget and throw it at your new strategic initiatives. Then go find the next biggest zombie. Keep doing this until you’ve gotten rid of 10% of them. If you have the authority, Fraser says, this is a quick and easy thing you can do to create a ton of value fast.

References

Anthony, S. D., Viguerie, S. P., Schwartz, E. I., & Van Landeghem, J. (2017). 2018 corporate longevity forecast: Creative destruction is accelerating. Innosight. Retrieved on October 10, 2018 from: https://www.innosight.com/insight/creative-destruction/.

Fraser, J. (2017). Growing the giant hairball: An opera about “innovation” in 3 acts. Presented at Mind the Product: San Francisco.

Goleman, D. (2017). Leadership that gets results. Boston: Harvard Business Review Press.

Kotter, J. P. (2014). XLR8. Boston: Harvard Business Review Press.

Kotter, J. P. (2008). A sense of urgency. Boston: Harvard Business Review Press.

Nutt, P. C. (1999). Surprising but true: Half the decisions in organizations fail. Academy of Management Executive, 13, 75–90.

Nutt, P. C. (1993). The identification of solution ideas during organizational decision making. Management Science, 39, 1071–85.

Martin, T. L. (1973). Malice in blunderland. USA: McGraw-Hill Book Company.

Mills, A. K. (2016). Everyone is a change agent: A guide to the change agent essentials. Cornelius, OR: Engine for Change Press.

Columbus’ Egg

Lateral thoughts on product strategy, coaching, and negotiation

Charles Lambdin

Written by

A husband, parent, and Product Strategy Consultant at Intel

Columbus’ Egg

Lateral thoughts on product strategy, coaching, and negotiation

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