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A tale of two curves

Porus P. Munshi

Everything that is born reaches a peak before the decline. But organisations do have the option to renew themselves and thereby avoid the inevitable decline. Here is how.

The Sigmoid Curve introduced by Charles Handy in the Age of Paradox, describes pictorially a life cycle. It indicates that everything must change and decline. The stars, the planets, biological life, organisations, products, all have a life cycle. There is a period of birthing, a time of growth, a time of plateauing, and finally a time of decline that ultimately ends in the organism ceasing to exist. After birth we face an unsettling and highly dangerous period whether as a star, a life form or as an or ganisation. We are weak and highly susceptible to outside influences and predators. This is the bottom of the curve when life is difficult. If we make it through this early difficult period however, we develop and grow in strength until we hit the top of the curve and then face the inevitable decline.

There is, however, one major difference between organisations and other life structures; after birth and before death, organisations can renew themselves, starting over with a new sigmoid growth curve.

The best place to start a new growth curve is at a point before the peak of the old one. Unfortunately, identifying the peak is difficult and many organisations leave it to too late. They try renewal when the decline has started. Sometimes this works, bu t the attrition rate for organisations that attempt renewal at the downside of the curve is much higher than that for those that begin renewal before the peak.

Unfortunately it is not easy to know when the J section of the curve will end and the top S section will begin. During the J phase, its very difficult to push for change. Prevailing attitudes are: Why rock the boat or the belief that if everything is fin e, were obviously doing the right things. The J phase is a period of exponential growth that, when resources are limited, is always followed by the S phase.

With changes occurring so rapidly all round the world, organisations today just cannot hope to hold on to their pre- eminent positions unless they continually renew themselves every two-three years. The days when companies had massive cost and product ad vantages that enabled them to rule the roost for several decades with little or no change, are gone forever.

Today, more than ever, the truth is that nothing is static: processes, products, services, everything is changing and is in a constant state of flux. Todays best operating practice is tomorrow's dinosaur. How many of the In Search of Excellence companies are still benchmarks for their industries? As John Harvey Jones says, There is never a perfect business simply one that is temporarily better than its competitors. Managers, as individuals, tend to see their job responsibility as being required to take decisions, maintain productivity, to oversee, to supervise, and hold a team together. The current realities dictate that they need to do all of the above as well as be the prime instruments of change and mobility. In the coming few years, change manageme nt will be the most sought after managerial skill.

Dealing with the Sigmoid

It is difficult to think in terms of a change paradigm when one is within a situation. Much like a frog in a well, ones perspective of the larger world outside or of alternate realities is distorted by the shape of the well one is in. One excellent way o f gaining fresh perspectives is for very senior managers to regularly meet fresh recruits who are no more than a few months old in the organisation. These recruits have different views, ideas and questioning minds that have not yet been influenced by the shape of the well they are in.

Another excellent way to deal with the sigmoid is to give younger managers a project to identify where the company is in right now, where its headed and what will be required of the company 25-30 years down the line.

In addition, to identify what first steps must be taken right now to reach that future reality. And most importantly, to begin implementing the suggestions. This shows commitment and also involves the future top managers in planning for changing realitie s.

The Gaussian Curve

This is the ubiquitous bell-shaped curve. In the humanities, it indicates that in almost any discipline, in any company or social structure, the population will be divided into the 15-20 per cent: 60-70 per cent: 15-20 per cent ratio where the first 15-2 0 per cent are the leaders in the grouping whether as managers, as customers, as teachers or anything else. The last 15-20 per cent are the laggards. And the middle 60-70 per cent are the average and make up the mass in the middle. If we take managers in any organisation, 15-20 per cent are excellent at their jobs. 15-20 per cent are poor, and 60-70 per cent are average.

Much energy is spent on the lead performers and the laggards. The mass in the middle, more often than not, is left to fend for itself and stumble along as best it can. This is often a mistake. While the top 20 per cent certainly need a lot of attention a nd support, a disproportionate amount of time is spent on the laggards. With laggards, its often not so much a lack of competence as it is a lack of initiative or execution ability.

Lack of initiative is often demonstrated if the most frequent reply to any suggestion is Yes, but lack of execution ability is demonstrated by a string of unfinished tasks.

Dont waste too much time on the laggards. They are always going to be present in any grouping. GE under Welch systematically identifies the top 20 per cent, the middle 70 per cent and the bottom 10 per cent at every appraisal.

And the bottom 10 per cent has to go. They may be top-notch performers in any other grouping.

But in this particular population, they are the laggards and have to leave. Spend a lot of time on the top 20 per cent of your population and the top 20 per cent of your mass in the middle. The former need stretching challenges and a lot of cheerleading. The latter need training, exposure and coaching.

If you are getting the two curves right in your organisation, yours just has to be a peak performing company.

The author is a Chennai-based HR consultant and can be contacted at porusmun@hotmail.com