How a client engagement led Katzenbach Partners to put the power in the people's hands.
By Jacqueline Durett 2/27/2008 Too much red tape and too little innovation are a clear recipe for organizational disaster. But the consultants at Katzenbach Partners have found a remedy?and it's not in management appointments, memos or even weekend retreats. Partner Niko Canner and principal Zia Khan say instead that it's about integrating some of the firm's new ideas about tapping into a company's informal structure, and then expanding it. The concept is deceptively simple: Give the power to the people and get their input about process improvement. Every organization, Canner and Khan say, have informal elements to them?such as employees asking each other instead of management for help, and coming up with their own customer service strategies. The Katzenbach team started exploring the idea when they needed to make some swift and company-wide changes at client Bell Canada. The engagement even prompted Khan and firm founder Jon Katzenbach to start writing an as-yet-untitled book about the topic. "What was particularly intriguing to us about the [Bell Canada engagement was] we were focusing a lot on the pride that front-line employees take in their day-to-day work and how that can lead to performance change," Khan says. "But we were thinking about how you spread some of the behaviors that we saw as being particularly effective [and] we started to realize that the formal organization wouldn't quite be sufficient?we had to tap into the informal organization, those things like the networks and communities that exist at the company and the values that senior leaders express down the company." The Katzenbach team soon realized that the informal organization was something that existed in some form at every company and provided untold resources. The research the firm did following the Bell Canada engagement supports that theory?survey results showed that only 30 percent of employees depend on managers to solve their problems, and 54 percent cited the positive relationships they have with their co-workers as a factor in successful implementation improvements. "We started to realize," Kahn says, "[the informal organization] was more of an overarching theme that we could capture, [one that] most people recognize but don't take advantage of. [It] can actually be influenced to get performance boosts, and more importantly those performance boosts are really powerful when the informal organization is balancing the formal organization." "[It's] just like painting with more colors," says Canner, explaining that once companies embrace the ideas from employees at all levels, innovation can thrive. "Executives," he says, "have always done things that have had an impact on the informal organization. By being so conscious of these variables ourselves, it almost just gives us access to the kinds of solutions that otherwise wouldn't jump out at you." Adds Khan: "It almost enables more creative thinking." And once employees realize that their ideas will be met with openness and respect, a company can achieve an even higher level of success. "Often we find that the adoption of any kind of change is much more powerful when the source of that change comes from within rather than an external best practice," Khan says. "Not only is the answer better because you're finding out what really works, but it can get adopted much more easily and broadly." Zia Khan Jon KatzenbachThe informal organization, Canner says, is that intangible barrier that separates a good company from a great company. "There seems to be very little differentiation between companies in terms of how well they manage that formal dimension. But if you look at what makes a Starbucks or a Southwest Airlines or Goldman Sachs?they're distinctively high performing?the answer really lies in the informal ? how they use teams, how they create the right kinds of networks among their employees, and [how they go] beyond the base of their own employees." To visually illustrate how some of these informal companies operate, Canner says the firm is using a tool called organizational and network analysis in concert with Rob Cross, an associate professor at University of Virginia's McIntire School of Commerce. "And what this tool is able to do is create maps of different kinds of network connections among employees or among any group of people so you can look at the connections of energies [and determine] who do I find it energizing to work with in my job and who do I find it actively de-energizing to work with. You can look at connections around knowledge sharing or mentoring or any of a number other variables." The idea is one still taking shape for the team, Canner says. The idea will be further explored once Jon Katzenbach and Khan's book is released. Khan says the book will look at the informal organization concept through the eyes and ears of the companies he and Jon Katzenbach have been researching. "It's pretty anecdotal," Khan says. "We tell a lot of stories, and there are a couple of reasons for that. First of all, I think the informal organization really comes to life when you tell a story. It has a lot to do with people and emotional experiences, as opposed to a formal strategy book. Secondly, we don't really have a prescriptive seven steps or eight steps; they're more themes that we want to articulate, so the best way for us, I think, is to bring them to light in various stories." To that end, Khan shares the example of a Boston-based moving company where the CEO only hires athletes and makes them run together daily. Typically, Khan says, moving teams are fixed so they can get a working rhythm. But not at this company. "He was really clever," Khan says. "He deliberately mixes people up, and this is the real source of why he does it?he wants them to spend time in the truck telling funny stories to each other about different moving experiences with customers, which is just a really powerful learning mechanism for them." The story, Khan says, is just one of many out there. "You don't have to go far in a bookstore to find a book that says 'values are important,' but it's these really specific tactics that we're finding really intriguing." So can an organization be too informal? Absolutely, Khan says, and illustrates with an example. "We're doing this interesting pro bono work with an organization that we profiled in our book. It's an orchestra that operates without a conductor. But they've now gotten to a point where they just need more alignment across their organization. So what we're trying to do with them is create this formal process?this strategic planning process?in a way that very much reflects the values of the organization and how they operate, so in essence we're creating this strategy in a way that imitates how they create their performances without a conductor." Canner points out that not only is Katzenbach encouraging clients to embrace the informal workplace, the firm itself is a role model. "As an organization of about 200 people ourselves, we end up finding ourselves one of the most important clients on this dimension." The informal networks at the firm influenced the creation of a new knowledge-management system, and they continue to influence how business is done every day. "We found that we start seeing the world differently because of this research," Canner says, "and it has only convinced us further of the kind of pervasive impact that this way of thinking can have." 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