Most older corporations have a structure and a modus operandi derived from the past. They are completely out of line with today's agile value-stream thinking and cybercorp mechanisms. The tragedy about many failed attempts at reengineering is that what they sought to achieve was in fact the right thing to do. The failure condemned them to obsolete operations. Nurit Cohen, a clinical psychologist, became what she describes as an "organizational shrink." She and William Cohen wrote an entertaining book called The Paranoid Corporation. Asking readers whether they have ever thought an organization's behavior was crazy, they conclude, "You may have been closer to the truth than you realized."

A paranoid corporation is one in which fear has become pervasive. Employees find the work environment hostile; few people are to be trusted. In such a corporation, performance goes to pieces.

When a traditional hierarchy is reengineered, employees know that after the transition there will be fewer managers, some departments will be dissolved and a substantial number of employees will probably be let go. Some employees may have an inside relationship that will ensure their survival. Most will be asked to do new and perhaps more difficult jobs instead of continuing to do what they are comfortable with. There may be a traumatic break with a deeply rooted culture. Bruce Rupport, senior vice president at Agway, commented: "You can survive the old way. You can survive the new way. It's the damn transition that'll kill you."

Dysfunctional behavior in employees is caused by uncertainty and lack of understanding, the loss of a role they were comfortable with or terror at the prospect of a corporate bungee jump accompanied by language about "shooting the stragglers." Employee emotions should be anticipated and dealt with in a caring manner with good communications, education and explanation of reasons. "Downsizing" causes fear, panic and anger at the breaking of the perceived employee compact that traded employee loyalty for job security. To deal with such feelings, sensitive human attention is needed.

Management needs to spell out in detail and with clarity why change must happen and how the results will be better. They need champions of the change who will spread their enthusiasm. The key to transition is relentless and clear communication.

When value streams are reinvented, it is desirable to implement them fast. If the change process takes too long, resistance to change usually prevents it from happening. The cybercorp must be designed so that employees expect rapid change and are very excited about it. Change occurs constantly within an environment of job security. The problem is not the nature of the cybercorp, but the difficulty of transition from old world corporations to new world.

The cybercorp should be designed to be both an exciting and psychologically nurturing place to work. Psychological comfort in an environment of rapid change needs the following:

  • Full explanation from management of the direction of the business and the reasons for actions;
  • Constant demonstration from management that innovation and experimentation is important and exciting;
  • Constant demonstration that management nurtures employees or teams with critical capabilities;
  • Rewards for innovation;
  • Careful coaching;
  • Good education and training;
  • Clear team goals; and
  • Most employees with stock options.

In general, when major changes are made, sensitive attention is needed to the fears and emotions of employees. A sledgehammer approach to reengineering can cause vitally needed changes to fail.
Just as lean manufacturing plants have caused some mass-production plants to close their doors, so learning-laboratory corporations will cause some static corporations to close.

A conventional operation will not grow into a learning-laboratory operation by a process of evolution. Learning-laboratory operations come into existence only by a strong, deliberate, well-thought-out act of top management.

If long-term survival requires a boundaryless, value-stream, learning-laboratory corporation, a critical question is, "Can you get there if you start from here?" It is impossible to turn a bureaucracy into a learning-laboratory. It is painful to transform a 1980s-style enterprise into a cybercorp. Brute force will not do it.

Fast corporate evolution is essential, but a woodchuck is not likely to evolve into a cheetah. New corporations should be designed to be cheetahs from the beginning. They should be learning-laboratory cybercorps, uncontaminated by old-style hierarchies, bureaucrats, bean counters, unions, lawyers or guardians of past methodology.

Paranoia where the enemy is the competition can be healthy; the whole company can unify with intense dedication. Paranoia where the enemy is internal is a disaster; the company tears itself apart.

When a sledgehammer approach is taken to changing an embedded culture, it almost always fails. In contrast, it is easy to generate excitement and energy in cybercorp start-ups that are beginning an adventurous journey into a new world. Creating thrilling new units is more successful than endlessly patching the old corpse.

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