Gone Fishin'

Friday, August 31, 2007

It's such a beautiful day here in southeastern Michigan, I've just got to play hooky. But be sure to check out my posting next Friday entitled "The Granddaddy of Them All." Also, my new and improved website is up and available for visiting at www.tollegroup.com.

Have a great holiday weekend.

Brian

Cue today's theme

The Power of Linking Tools

Friday, August 24, 2007

I was having coffee with a colleague last week and the conversation turned to Dr. Ichak Adizes’ work on the life cycle stages of organizations. I checked out his website and as I read through the different stages, it struck me that this model and the Denison model are quite complementary. In particular, the Adizes model recognizes that the Prime stage “is the optimal position on the lifecyle, where the organization achieves a balance between control and flexibility.” I immediately thought of the Denison model and its Adaptability and Consistency culture traits.

I think this idea of balance is critical to understanding how the Denison model plays out in the real world and the challenges that come with it. I think of the model as actually a plate that one would hold as if a waiter. The trick is to balance it among the four culture traits (Involvement and Mission being the other two) to produce the greatest organizational performance level. What the Adizes model helps us to see is why this imbalance can occur over time. It also identifies which of the issues that lead to this imbalance are normal problems -- that is, those that could probably go down lower on the priority list because “they tend to resolve themselves during the natural course of growth and development.” More importantly, the model also identifies the abnormal problems associated with each of the lifecycle stages. It is these problems that require as much of an organization’s limited time and resources as feasible to address and resolve if the organization is to move to the next lifecycle stage.

An analysis of organizational performance can benefit from integrating the two models because they each bring a unique dimension to the task. The Adizes model brings more of a time dimension while the Denison model brings more of a depth dimension to the analysis. If we think of an organization as a large-scale organism, it’s as if the Adizes model calls upon our skills as a developmental psychologist over time and the Denison model as an internist at particular moments.

For example, an organization can conduct a Denison culture survey and learn that its organizational capability of coordination and integration is relatively low. The leadership team may be tempted to devote time and resources to address this. But if the organization is at the Infancy lifecyle stage, it may be wasting time and resources because the higher priority at this stage for continued survival is being action-oriented and opportunity-driven. But the very next stage of the lifecycle, Go-Go, requires the ability to start adding structure and control if the organization is to transition to the next lifecycle stage, Adolescence. Integrating the two models gives you a better picture as to the health and ability of the organization and where to focus time and resources to keep the organization developing.

Integrating the two models can also provide insights as to why an organization may score low on the Involvement capability in the Denison model. At the Go-Go lifecyle stage, the Founder’s ability to “do it all” is reaching its limits. The need to bring in professional managers as well as decentralize decision-making is becoming more and more important. How the Founder views this situation and approaches this transition will play a critical part in moving the organization along its development path. The Denison model can point out the degree of deficiency in this capability and the Adizes model can point out the importance of addressing it.

These are two great tools to have at your disposal to help organizations achieve their full potential.

Wishing on a Culture

Friday, August 17, 2007


Two situations have unfolded over the past few weeks that either directly or indirectly concern organizational culture. In last week’s posting, I talked about AirTran’s attempt to buy out Midwest Airlines and the changes that would bring to Midwest’s vaulted service culture. As well, Robert Nardelli started his job as the new Chrysler CEO this past Monday and the business press has written much about the drastic changes he may bring to Chrysler to get it profitable once again.

What caught my attention in both of these stories is the idea that a culture is worth fighting for or protecting. I see this as wrapped up in an anthropological view of organizational culture. Anthropologists study cultures, observe behaviors and practices, and identify core beliefs and values that drive these behaviors. It seems to imply that the best cultures are those whose members are most satisfied or happy. In the organization development field, there is a school of thought that believes happy workers in a happy workplace equals company profits. What concerns me about this philosophy is that there is an acceptance that the company’s culture should be democratically-determined, that it can be defined by what we would like it to be or what we are comfortable with. Rather, my experience has taught me that it is the marketplace and its critical success factors that should define a company’s culture. What does the culture need to be in order for the company to compete in its marketplace? Happy workers and a happy workplace environment are not enough to drive profits.

I talked about the Denison model of organizational culture in an earlier posting ("Next Time Call Me," 7/27/07). I think it’s important to view organizational culture through this type of lens because it captures the importance of organizational balance between external and internal focus, and adaptability and stability. We can have a company that treats its employees well but has lost touch with its customers and the changing marketplace. This is not a recipe for success. So it’s not a question of who wins, the employees or the customers. It needs to be both.

In the case of AirTran and Midwest, the resistance of Midwest’s management to AirTran’s offer seemed somewhat tied to a fear of what AirTran would do to the Midwest culture. All of this seemed to open the door for other buyers to enter. Late last week, the private-investment firm TPG Capital said they would team up with Northwest Airlines and beat AirTran latest offer by 25 cents. (Northwest, I think, could care less about preserving Midwest’s culture. They are all about protecting their midwest turf.) Despite having three new board members supposedly sympathetic to the AirTran overture, on Monday of this week, Midwest said it had accepted the TPG offer. Not to be out done, AirTran came back late Tuesday and beat the TPG offer by another 25 cents, offering $16.25 per share. Just today Midwest reported that it will accept a cash offer from TPG at $17 per share.

So is this offer in the best interests of the company, given its many stakeholders? A majority of the Midwest shareholders were ready to sell but the Midwest management insisted that their go-it-alone strategy is superior to becoming a part of AirTran. Midwest customers would probably experience lower fares but with less room and kiss the cookies good-bye. Midwest management would have been out on the street.

But whatever view you take on the business wisdom of this deal, are we aware that in some situations, a desire to hold on to a certain way of doing things can cloud our judgment? Can we fall into the trap that a culture’s preservation can trump what’s good for the business?

Something’s Gotta Give

Friday, August 10, 2007

Now that I have recovered from my family vacation, I can get to a short blurb I saw in the local paper while out of town. It was an Associated Press wire service news item on Airtran’s possible buyout of Midwest Airlines. It’s short enough that I include here the entire piece:

Exec: Keep Midwest culture, not name

The top executive of AirTran Holdings, Inc. said Wednesday the company would try to keep Midwest Airline’s culture – but not is name – after a proposed buyout. AirTran Chairman and Chief Executive Joe Leonard spoke to journalists in Milwaukee a day after Midwest Air Group Inc. announced a committee of its board would start talks with AirTran and other suitors. Airlines that try to straddle two brands after a merger inevitably weaken both brands and leave consumers confused, Leonard said.

From what I know about Midwest and AirTran (having never flown either airline), AirTran’s business model is low-fare while Midwest’s is high service. Here’s how they describe themselves on their respective websites:

Midwest Airlines:

The minute you walk onto one of our aircraft, you know Midwest is different. Wide leather seats, superior service, chocolate chip cookies baked onboard and competitive fares have helped us earn our reputation as "The best care in the air". Add our Midwest Connect regional service and there's something for both business and leisure travelers alike.

AirTran Airways:

AirTran Airways is a low-fare airline designed for business travelers, offering Business class, new planes with XM Satellite Radio and EasyFit Overhead Bins, assigned seats, and our accommodating frequent flier program A+ Rewards. AirTran Airways' mix of low fares and an affordable Business Class with excellent customer service and one of the world's youngest all-Boeing fleets has continued to strike a chord with the public. People said an airline couldn't be all these things. AirTran Airways’ continued success has proven them wrong.

From a business standpoint it makes a lot of sense for AirTran and Midwest to combine. They share similar aircraft and very little of their routes overlap. But how do their business models compare and cultures, given that Mr. Leonard seems to put somewhat of a premium on Midwest’s culture.

Here’s a concrete example of the similarities and differences between the two airlines. Both extensively use Boeing 717’s in their fleets. Midwest’s seat configuration is four across, all coach class, for a total of 88 seats on board. AirTran’s configuration is five across, except in business class which is four across; twelve business class seats, 105 coach class seats for a total of 117 seats on board. This is 30% more capacity than Midwest for the exact same airplane.

So I’m trying to understand Mr. Leonard’s comment that AirTran would try to keep Midwest’s culture after the buyout. Does he mean its definition of customer service? Because if he is referring to a culture of service, that would come with a price tag. Midwest serves freshly baked cookie while you sit in wide leather seats with only one neighbor next to you. This level of service doesn’t come cheap. But I suspect Mr. Leonard wants to keep the friendly, personal service offered by Midwest flight attendants without the added cost of freshly baked cookies and 30% fewer seats on board.

He was quoted in the Milwaukee Journal Sentinel as stating that AirTran would replace most of Midwest’s wide, two-by-two seats with narrower seats, boosting the amount of revenue generated by each flight. I would assume the cozy quarters would be in steerage, I mean coach class, and not business class. Sound business plan but lousy service or culture-booster. I can’t see how Mr. Leonard can keep the Midwest service culture by making it fit into a low-cost, medium service AirTran business model. Something's gotta give. Southwest has done it but they have a very particular definition of service and even they are re-thinking what they offer to stay competitive, such as assigned seating.

So be clear about what you mean by culture, Mr. Leonard, because it may just involve putting on an apron and doing some baking.