Timothy R. Clark: How dysfunctional and resistant to change is your organization?
On a 1-to-5 scale, where 1 is low and 5 is high, how resistant to change is your organization? Consider two principles:
First, dysfunction is proportional to resistance to change.
Second, resistance to change is proportional to direct accountability.
Not surprisingly, then, different types of organizations have different resistance ratings.
Resistance rating 5: government organizations
On the spectrum of resistance, public sector institutions peg out the meter. Hopefully, the reasons are obvious. It’s in this sector that dysfunction cannot only survive, but even thrive. Why? Because government organizations tend to be the most separated from direct accountability. They don’t need a competitive advantage to survive. They need only be funded.
In the federal government, for example, we have organizations such as the U.S. Merit Systems Protection Board, the Office of Thrift Supervision, the U.S. Board on Geographic Names and the Broadcasting Board of Governors. I had never heard of them either.
Whether we need these organizations is another topic. The point is they don’t earn their right to exist. Take the United States Congress, an organization that is wickedly paralyzed and unresponsive to stakeholders. Regardless of performance, it’s funded. Therefore, it exists. Where direct accountability does not exist, resistance to change thrives.
Resistance rating 4: public educational institutions
Public educational institutions garner a 4 rating on the resistance scale. These organizations live in a world of monopoly or oligopoly competition, indirect accountability and thick buffers between them and market forces. Our K-12 system is in desperate need of reform, but would-be reformers, like Michelle Rhee in Washington, D.C., or Joel Klein in New York City, are ground to dust as the system wages its war of attrition.
The world of public higher education is a little kinder and gentler, but it too is a bastion of tradition and intransigence. I’ve worked with enough colleges and universities to know that most of them operate on the conviction that they have a right to exist. That’s what happens when your organization provides essential services in the absence of strong, direct competition. I was just in meetings with leaders from Stanford, Duke, Columbia and Johns Hopkins universities. They are moving fast and aggressively to adapt to changing conditions. The public side of higher ed clearly moves at a slower, lumbering pace.
Resistance rating 3: health care institutions
As a whole, the health care sector has a history of entrenchment due to low direct accountability and high resistance to change. That has been changing, though, as competition intensifies. In hospitals, for example, I see more attention and resource given to labor and nonlabor cost reductions, patient bed management, patient satisfaction and revenue cycle efficiencies.
The big question will be the net effect of Obamacare. When I was a student in England, I participated in the British National Health Service. At one point, I needed to get a physical. The health system has some strengths, but speed is not one of them. The wait time was more than two months, so I went to a private hospital the next day.
Resistance rating 2: nonprofit organizations
There is one cardinal difference between nonprofits and government, educational and health care institutions: They subsist on private funding. If the funding dries up, they die. This reality tends to imbue them with a little less resistance to change. They often don’t compete on their cost structure, so the operations of many nonprofits are slow and inefficient. If they have good fundraising, they live. So the fundraising function is a direct interface of accountability that keeps them hungry and responsive.
Resistance rating 1: business organizations
The private sector is the place where accountability is most direct and most continuous. Businesses die every day. But even here, there are subcategories of resistance to change. Basic industry tends to be the most recalcitrant. They are capital-intensive and have to invest on multiyear time horizons.Consumer goods are less so. Services even less. Finally, the technology sector least of all. The main reason is the length of the product development cycle. The shorter the cycle, the more agile the company. For example, most of the software companies I work with have 18-month product development cycles. They have a cadence and culture that reflects the velocity of the market and the disruptive potential of new entrants.
Timothy R. Clark is the CEO of TRClark LLC, a management consulting and leadership development organization. His newest book, "The Employee Engagement Mindset," has just been released from McGraw-Hill. Email: email@example.com