I picked up my car this morning. The garage fixed it for two-thirds their estimate. Great. I came in my son’s car which had a misfire. The mechanic opened the bonnet (aka hood) and said “Yes. Such and such are the problems. I can smell it.” – a beautiful demonstration of brains in the fingertips.
These are the skills of Qiang Xue, a brilliant Chinese engineer who in the late 1980s added millions of £s to the profits of BOC Gases in the UK. I revive that story to explain my “reframing tool”.
Paul Watzlawick, in his book Change: Principals of Problem Formation and Problem Resolution describes two kinds of change:
- First-order change, within a frame of reference – like hitting the brake or accelerator of a car; and,
- Second-order change, to a frame of reference – like changing gear.
Get it wrong and we crunch the gearbox and squeal the tyres:
- Reframing when we shouldn’t – for example, squandering the cash generated in geographies where we are profitable on Utopian initiatives to enter markets where we can never make money (like changing up a gear too soon so the engine labors).
- Not reframing when we should – for example, endlessly reorganizing until “plus ça change, plus c’est la même chose” (like over-revving an engine and not changing up).
If we desire smooth and powerful organizational change, we will need both the imagination to embrace the unknown (touch the void) and the courage to challenge the known (discuss the undiscussable). Ioan Tenner calls this n ± 1.
To embrace the unknown
- Find the boundaries
- Describe the unknown
- Cross the border
- Seek a new place to stand
To challenge the known
- List the assumptions
- Probe the paradoxes
- Consider the consequences
- Test the feasibility
Time to flesh out my list.
EMBRACE THE UNKNOWN
To embrace the unknown, we need to raise the level at which a problem is addressed and managed. Expand the scope from a departmental perspective to the perspective of the whole firm, from local to global, from tactical to strategic, from short term to long term, from inside the company to the market and the industry, from static to evolutionary, from the details to the whole and, not least, from interface to complex relationship.
To embrace the unknown, we must look for the boundaries, describe what we don’t know and then step across these barriers to find a new place to stand.
Find the Boundaries
To establish the boundaries of what we know and can do about a problem, we first need to describe the present state.
What is the problem called, how is it defined, how does it work? In the industrial gas example, the problem was framed as an issue of plant utilization and unit cost.
Then we need to look at the time frames. We have to think about: when must change occur, what are the deadlines, how long are the durations, how frequent are the cycles? In the industrial gas example, Qiang noted two time frames – split by the time it would take a competitor to build a new plant.
Next, we need to consider the spatial boundaries: what are the volumes, what are the quantities, where are the geographic constraints? Geography is a key element in the profitability of an industrial gas plant. It is relatively cheap to produce industrial gases (raw materials are air, which is free, and power). However, it is expensive to transport industrial gas and plants rapidly become uneconomic when trying to service distant locations.
Finally, we must describe the issues: what are the problems, what are the threats, what are the needs, what are the challenges, what is the opportunity or vision?
Describe the Unknown
Having found the boundaries of the known, we should describe the unknown.
Explain why actions we would like to take are impossible. Explore what we need and want to do, determine what we can plan, and what we cannot predict. In the gas company example, it was thought impossible to quantify the price elasticity of nitrogen – an element many saw as a commodity “because it is impossible to differentiate a molecule”.
In describing the unknown, we need to try to consider what would be seen if the possible changes took place, and then consider what would be seen if the impossible happened. In the gas company example, Qiang did not know whether competitors would follow suit in raising prices.
Finally, we must consider the non-observable and intangible changes that would take place if either the possible or impossible were to happen.
Cross the Border
Having located the bounds of the known and described the unknown, we must probe and attempt to trespass across the boundaries into the unknown. we should reconsider each aspect of the boundaries: what might be bigger or smaller, what geographical limits could be widened, what time frame could be lengthened, what decision makers or constituencies could be changed, and so on. We must ask what improbable scenarios, what unlikely or unknown factors would radically change the situation?
In the industrial gas company example, Qiang refused to accept the conventional wisdom that nitrogen price-elasticity is unknowable. He found it was well known when he used a set of carefully structured questions to draw out the knowledge of the company’s own people.
Seek a New Place to Stand
Once we have crossed the borders, we must establish a new point of view with new boundaries, and act from that base.
Qiang widened our horizons by taking a higher-level perspective, by looking at the nitrogen pricing conundrum as an issue of maximizing profits, not reducing costs or increasing sales. This new place to stand, this unexpected perspective, gave him the power to open our eyes. What thrilled us was the happy reaffirmation that our business wasn’t so mediocre. This was a false impression gained by looking at it solely through the lens of accounting numbers.
If locating the boundaries, describing the unknown, crossing the borders and seeking a new place to stand are insufficient to help us clarify our aims, then we must go ahead and describe our desired future, detailing the actions or broader means necessary to close the gap between the present state and the future we desire.
George Bernard Shaw summed up the task of finding a new place to stand in these famous words:
You see things; and you say ‘Why?’ But I dream things that never were; and I say ‘Why not?’
If widening the scope to include the unknown is still not enough to redefine what it means to win then it is time to challenge the known.
CHALLENGE THE KNOWN
While embracing the unknown is a matter of stepping up a level, challenging the known proceeds in the opposite direction by drilling down into the details.
Challenging the known puts more weight on fresh perspectives than on data gathering or analysis. In the industrial gas company example, the difference between our view of the business and Qiang’s did not lie in numbers but in the way of looking at them. Appreciating the value of raising prices did not preclude an interest in reducing costs, but failing to raise prices exposed the limits of our understanding of our basic profit economics.
Why would a company fail to seek a profit-maximizing balance between supply and demand? At one level, the question was superfluous. Increasing utilization to reduce costs seemed obvious. There was no conscious thought or decision behind this. The company simply knew that cost reduction was right.
What did Qiang put into his questions that a less-capable agent of change might leave out? Surprisingly little. Qiang did some more fact gathering and analysis but mostly paid greater attention to those infinitesimal but critical details that create understanding rather than provide mere information.
To systematically challenge the known, we must first draw up a list of assumptions, then look for paradoxes, next consider the consequence of temporarily abolishing any axiom and, finally, explore the feasibility of doing so.
List the Assumptions
We have to describe what it is about the present situation that is taken for granted and considered un-moveable; to explain why a necessary action is considered possible or impossible. In the industrial gas case, it was deemed impossible to quantify price elasticity because there was a dearth of data on prices.
Next we will need to pinpoint the main certainties and describe the obvious assumptions about what makes the present state what it is and certain to persist. State clearly the obvious root causes, the axioms, on which the assumptions are founded. Spell out the laws, basic regularities, truth, and facts beyond discussion. Probe what makes the impossibilities (or possibilities) persist. Define how impossibilities stem from such assumptions. Determine what fuels the continuation of something we want to stop (but can’t), and what keeps preventing the things we need to happen from happening.
In the industrial gas case, the experience of sales and marketing people were too readily dismissed as opinions not facts.
Probe the Paradoxes
Having listed assumptions, we must probe the paradoxes: those contradictions that irritate us, stick in our mind, persuade us to be more critical of the obvious.
Some organizational paradoxes stem from the self-fulfilling prophecies of their founding fathers. Seeming correct for a long time, they are eventually exposed as Utopian. Other paradoxes are “ways to hell paved with good intentions”, “group-think” and the perverse effects of cultural bias.
A whole political system, like Nicolae Ceausescu’s Romania, can become one big paradox in which contradictions between thought, speech and action are carefully cultivated. In such worlds good is bad, truth is a lie, ugly is beautiful and everyone is born a sinner and a suspect doomed to prove their innocence forever. George Orwell (in Animal Farm and Nineteen Eighty-Four) and Franz Kafka (in The Trial) describe such tyrannies, seen at their extreme in Hitler’s Germany and Stalin’s Russia.
We need to become “Organizational Ghostbusters”, specialists in the dangerous activity of exposing sick visions, institutional blindness, fanatical optimism, lethal alliances, corrupt moneymaking, shallow strategies and corporate schizophrenia of various kinds.
As change makers, we must use paradox as a weapon to help reason break free of its chains. Such puzzlement, carefully administered, lets us to detect possibility beyond anything we may yet conceive.
Proclus Diadochus (412-485 AD), the Greek philosopher and mathematician who became head of Plato’s Academy, put it this way:
Just as sight recognizes darkness by the experience of not seeing, so imagination recognizes the infinite by not understanding it.
This isn’t mysticism. On the contrary, paradox motivates a more rational approach to those inner limits caused by pre-judged ideas, stubborn beliefs about insoluble issues, unshakeable values and other convictions too deep or too obvious to be a likely subject of critical discussion.
The exasperation of paradox challenges people to grow and gives them a hint of where to go. According to Socratic traditions in education, paradox creates the sensation of being helplessly ignorant where previously we had no doubt. This opens our minds to new things.
Paradox points to a frontier, a limit of the unknown and impossible. It is an instrument for creating change, newness and surprise. It destroys the barriers in our minds and multiplies our choices.
The paradox that spurred the industrial gas people to clarify their aims was the irritating thought that they were venting gases that, if sold, would lower their unit costs. This was the key detail that Qiang seized upon.
One must be at ease with the unfamiliar and the contradictory to navigate change and create newness. As change agents, we must learn to live with the unknown, untamed, for a while. Those mentally accustomed to vagueness, complexity and ambiguity are better prepared to produce original ideas and cope with newness. Familiarity with paradox is simply a necessity to survive the never-ending surprises of our rapidly changing world.
In particular, we must beware oversimplification. Simplification is deceptively appealing in its apparent lack of ambiguity. The breakthrough with the industrial gas people lay in realizing that there is more to maximizing profit than simply asking Production to reduce costs and Marketing to increase sales. In the industrial gas case, the company had not been looking at profit. They managed operations with a narrow focus on cost to block out complexities that might make it harder to hold a plant manager to account.
Consider the Consequences
The next step is to consider the consequence of temporarily abolishing each axiom – the upsides and downsides. Abandon realism and imagine what would happen if we alter each axiom. Determine the advantages and the disadvantages.
Why didn’t the industrial gas people look at pricing more holistically? It was not inattention or laziness but insufficient exposure to basic economics.
Nothing more surely discourages deep thought than less-helpful notions like management accounting. With no sinister intentions and often with great rigor, this can nevertheless have the effect of suggesting that there is a disheartening gap between a business and its potential for higher profitability. Making profit-maximization the aim means rethinking the ways Production and Marketing are managed.
Explore the Feasibility
Finally, we must establish what it will take to alter the situation, break down dysfunctional axioms or avoid their consequences. Explore the conditions of feasibility: what would it take to abolish the assumptions or move the issue out of its current context?
More concretely, we have to determine what means, what power, and what support is necessary and what cost would be incurred to make the ‘impossible’ possible and to implement the impossible? The only investment for BOC was the cost of reprinting its price lists!
* * *
Qiang joined BOC after he left MIT. His work is a reminder that, much as we yearn for strategic insight, common sense can add more value. His genius improved the discourse between Production and Marketing in such a way that all felt they discovered the answer by themselves. He got little recognition: the competent but ungrateful client is the mark of a great intervention.
So a wise leader may say:
“I practice inaction, and the people look after themselves.”
From the Sage it is so hard at any price to get a single word
That when his task is accomplished, his work done,
Throughout the country every one says:
“It happened of its own accord.”
Laoze, Daodejing, Verse 17