​How the management mindset kills organisations

Your mindset is the lens through which you see the world.

Your mindset is created by combining your different beliefs about the world into one unified belief-system. The purpose of a mindset is to help you filter the information in the world to be more effective at understanding your reality and operating within it. Everyone has a mindset because everyone has beliefs about the world.The management mindset is the worldview that the organisation is a machine that must be optimised. It is based on 5 beliefs:

1. I believe it is good to create stability
2. I believe it is good to follow the plan
3. I believe it is good to maximise efficiency
4. I believe it is good to reduce errors
5. I believe it is good to avoid risk

These beliefs create a mindset (worldview) that ‘I must create a stable organisation that is efficient and error-free and I do this by following the plan and avoiding risks’.

According to the management mindset, change is successfully ‘managed’ when there is stability, people are following the plan, efficiency is maximised, mistakes eliminated and risk is minimised. However, this mindset creates a culture of complacency within managers and organisations that they are ‘controlling change’ when in fact all they are doing is creating an artificial reality bubble. The management mindset creates the internal illusion that ‘we are ok’ because we are managing things and a culture of complacency and comfort emerges. This lays the foundation for what  Hoverstadt calls ‘the death spiral’, an organisation’s deadly descent into crisis.

In the death spiral, the cult of management has created a complacent organisation that is comfortable in its place in the market. For example, in 2007, BlackBerry was very comfortable in the niche it had created for itself as the leading smartphone manufacturer. It failed to detect and take seriously the changes that the iPhone and Android systems created. As these new products exploded into the marketplace, Blackberry suddenly faced a crisis as it was unprepared to compete with the iPhone.   Management felt like they were no longer in control of the situation and needed to ‘do something’ to regain control. Instead of a thoughtful strategic response, management rushed the Blackberry Storm to the marketplace. This inferior product was a disaster with nearly 100% of the Storms being returned and most of these customers switching to Apple. As the crisis deepened, management resorted to more quick fixes which meant they missed the even bigger shift in the market which was from Gen X business customers to Gen Y consumers. For a brief moment, BlackBerry messenger was the coolest thing in town but management understood this strategic shift too late and failed to capitalise on it because they were too busy fighting the fires created by their complacency. By now, BlackBerry was rapidly becoming irrelevant as its competitors quickly gained market share making it harder and harder for BlackBerry to stage a comeback. This descent into irrelevance is the final stage of the death spiral and today BlackBerry is a shadow of its once dominant position.

The management mindset is fatal for organisations because it creates a deadly complacency towards complex change. What specifically kills the organisation is that it takes too long for it to respond to the shock of unexpected change. By the time Blackberry had some idea of what was happening and was formulating a strategic response Apple, Samsung, Huawei, Xiaomi, One Plus etc. had already captured the market and were far ahead in their development cycles.
What should Blackberry have done? They should never have become complacent in the first place. By the time Apple launched the iPhone Blackberry’s destiny was largely set because it did not have the internal capacity to change fast enough. Blackberry should have been seeking to aggressively deploy advanced technology like the iPhone (which it could have developed) before its competitors. By disrupting itself, it would have prevented others from creating the disruption. A key issue is that management fails to understand how bad their organisation is at change. They think that issuing the command to ‘be more innovative’ instantly translates into more innovation. This is a hallmark feature of the management mindset which believes it can ‘command the machine(organisation)  to do its bidding’. As most managers know , this is simply not true; innovation does not come from diktats.
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In short, the management mindset kills organisations because its leaders take too long to formulate an effective response to the massive shock of unexpected change. While they are trying to work out what is actually happening and formulate an appropriate response, the upstart competitors are blazing away leaving the incumbent far behind. The competitors grow much faster than you can change and therefore you become irrelevant long before you ‘fix’ yourself. This happened to Kodak (replaced by Go Pro), Intel (replaced by Qualcomm) and nearly happened to IBM (who were basically killed by Microsoft but just managed to pivot into another industry).
The answer is to stop trying to manage change and instead move to a new paradigm of ‘leading agile innovation’ and I will examine that in more detail in my next post. ​​